Doges were originally the elected leaders of Italian city-states during the Medieval/Renaissance eras. This note is not about them. Being an April newsletter, we're going slightly off the rails here. Not so much into our normal April tinfoil hat conspiracies, but most definitely into market absurdities. This time featuring delis and Shiba Inus.
Do you ever find yourself pulled back through history and imagining what life was like for a particular group back in the day? Like the Mayans, or the Romans, or the French aristocracy? Or maybe you looked at the Super Blood Wolf Moon eclipse this January and wondered how many past regimes had been overthrown and leaders axed (literally) because such things were perceived as having lost the favor of the gods? Or maybe not and we’re just weird like that.
In any case, this is an April newsletter, so dust off that aluminum foil and let’s pull back the curtain on the collective solipsism behind the not-so-invisible hand that guides our markets. Also, put 1984 back on top of your summer reading list. Ready? Let’s go.
Well, that certainly escalated quickly. The third quarter ended with the US market at pretty much all time highs (again) and the early February gyrations long forgotten by most. But then the calendar rolled over to October, the witching month, and much hell has broken loose. Not all hell, but much. As of last Friday, markets were down about 10% overall - and we mean all markets. Large Cap, Small Cap, International, Emerging...even bonds fell this month. In point of fact, in the last sixty years, this is just the 13th time US markets have sold off by 10% or more within a month after reaching all-time highs. (And yes, that stat is completely cherry-picked because it let us use “Friday” and “13th” in making the same point, and how else would we work a Jason Voorhees reference into this note?) Pretty much the only things that haven’t gone down this month are gold and cash. There has been a little bit of a recovery these last two days, but we are still well on track for all major asset classes to close the month below their average price level for the last year.
So. What was it that solved the puzzle box and unleashed the Cenobites on the market? According to anyone who gets paid to make up explanations for the daily movements of the stock market (and don’t kid yourself, they are made up), the proximate cause was rates going up.
From CNN: “simply put, stocks are sinking as Treasury rates rise...the 10-year hit 3.24% on Wednesday for the first time in seven years. That’s an about-face from 2.85% at the end of August.”
From USA Today: “the catalyst was the recent spike in the yield on a closely watched government bond to a seven-year high.”
There are some tangential things thrown into the mix as modifiers, usually about trade tariffs or geopolitical uncertainty or tech stocks falling, but the main culprit is this nasty “about-face” “spike” that happened in Treasuries. Let’s look at that for a second, shall we?
Check out a graph of the yield on that “closely-watched” 10-year government bond for the last 50 years. Hoo-boy! Take a look at that spike. No, not that first one, that’s the 70s. No, not the big one either, that’s the 80s. Yeah, it does kind of look a bit like a seismograph for the duration of the 80s. That spike? Nope, that’s 1995. Can’t you see it? On the far right-hand side of the graph? Okay, zoom in on just the last two years, since the most recent bottom.
Huh. Well, we’re not sure what that looks like to you, but to us there is neither a spike nor an about-face in that. An actual “about, face” is a two-step, 180-degree change of direction. This is more like “gradual sweeping arc around the entire parade ground, face”. The Fed has raised rates 7 times, or 1.75%, over the last two years. So yeah, yields are higher than they have been since 2011 because rates are higher than they have been since the Bear Stearns bailout in 2008! And what was the yield on the 10-year the last time the Fed Funds rate was at this level you ask? Between 3.5% and 4%. Versus the 3.25% that supposedly precipitated this market correction. If Freddy ever came after us, that would be our nightmare - stuck listening to market commentators whose entire world resets every weekend until our head explodes.
Okay, gratuitous sarcastic rant over. Let’s get to the rotting meat of this Halloween note - Zombies!
As yet another tax deadline looms (April 18th this year!), we are reminded of that old saying about nothing being certain in this life except for death and taxes. It is often attributed to Benjamin Franklin (because he wrote it in a letter), but Daniel Defoe actually wrote something to the same effect about 60 years earlier.
Despite what you may think, however, this will not be a letter about taxes. Other than to say “do them”, and we’re happy to help in any way we can. Also, Arby’s is giving out free curly fries on tax day this year, or so we hear. Possibly McDonald’s as well, though they won’t be curly.
No. This is, instead, a letter about death (Pincher Martin-style, not Robinson Crusoe-style, to work that Daniel Defoe reference in there). Specifically, the death of Alidade Wealth Partners. It has been a wonderful journey with all of you these last 9 months, but apparently our collective plans for world domination have ruffled some feathers up in Michigan, and the threat of the full weight of the United States Patent and Trademark Office was brought to bear on your humble author recently.
So. Alidade Wealth Partners is dead. Long live ATI Wealth Partners!
Over the coming months, expect to see a couple changes as a result of this phoenix-like rebirth...the email address we’ll use to send these newsletters out, the company name on your statements, the website (now www.atiwealthpartners.com), etc. Nothing will be changing about us or your money or how we manage it. Just a name change.
But for now, without further ado, and perhaps to alleviate a little of the tax season pressure, we present the Death of Alidade Wealth Partners, in two acts:
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