The pundits warned us that it would be prudent to be cautious about black-swan market events in August, but none could have imagined the shock to the system we'd experience in the first week of the month: Bill Gross writing in detail about his own sexual edification.
Gross is famous for managing unconstrained bond funds, first at Pimco and now at Janus, but he's probably equally famous for his unconstrained monthly market commentary. As Gadfly's self-appointed official literary critic of Gross commentary, I like to grade his work on two primary factors: First, the quality of the wacky anecdotes, and second, how well he segues from the anecdotes into the inevitable pitch for his bond fund.
He gets an A for his sexy anecdotes in this month's outlook (not going to spoil the fun with too many details in case you haven't read it yet, but it's ready right here for you whenever you are, ahem, in the mood. I will say I will never, ever, see "sex kitten" in the same way ever again). However, I'm afraid I have to give him a C- for the segue from sex to bondage. You'll see what I mean.
Elsewhere in the most important news of the week, we were reminded that there is, obviously, a big culture clash going on in our nation that is impossible to ignore. It has huge ramifications for everything from the economy to domestic peace. I'm talking, of course, about cargo shorts. The Wall Street Journal's Nicole Hong touched the third rail of men's fashion on Monday with a hard-hitting Page 1 piece exploring the controversy surrounding six-pocket shorts.
My only critique of this article is that it's at least a year or two late. For example, I was a big enthusiast of cargo shorts for a long time but stopped wearing them last year at the request of my wife. Apparently, a married man wearing cargo shorts in a public setting that is not in the 1990s is considered a sign of an epic failure of a wife, surpassed only by a husband wearing a fanny pack in public. As far as I can tell, the only men who haven't gotten the message are the very men of the Wall Street Journal itself, who came to work on Friday with enough excess cargo capacity in their shorts to send the Baltic Dry Index to a five-week low:
I was a bit skeptical about how important this issue is, but it is literally the only thing that our nation's oldest financial newspaper is focused on, so there must be something to it. As a result, exchanging your cargo shorts -- and cargo skirts and dresses for you ladies -- for a less-divisive pair of loin coverings is the obvious Trade of the Week.
Now for a review of the less-essential news of the week. There were some mixed signals from some of our most important billionaire thought leaders and influencers in politics and business this week: Donald Trump advised steering clear of the stock market, while Warren Buffett advised steering clear of Donald Trump. In unrelated news, the stock market rose to a record on Friday on better-than-estimated growth in jobs. Oh, and Buffett's company is getting investigated for its relationship with Wells Fargo, which is sort of like Opie getting investigated for his relationship with Andy.
In other probe news of the week, Goldman Sachs is being investigated for its relationship with Malaysia's government fund by the head of New York's Department of Financial Services, Maria Vullo, who goes to the back of the line of eight pages worth of legal proceedings summarized in Goldman's 10-Q. Disclaimer: I never worked for Goldman, but have many friends in the financial press who did. (Side note to the disclaimer: You know how you can tell when a member of the financial press is a Goldman alum? Oh, don't worry, they'll tell you. )
Meanwhile, in imaginary asset classes, the exchange that was robbed of $68 million worth of bitcoins by hackers said it might "socialize" the losses, meaning they'll be spread out among all its users. While that may sound like an unusual and brutal decision, isn't it is a wee bit reminiscent of what happened with Long-Term Capital Management?
That was certainly painful, but the bitcoiners aren't the only ones feeling the pain this week as America's equity market continues to defy the naysayers and reach nosebleed levels. The S&P 500 has now blown past the average year-end target among Wall Street brokerages surveyed by Bloomberg for the first time since 2014, as Oliver Renick and Bailey Lipschultz reported.
Being underweight U.S. stocks has been a “painful trade," as Citigroup strategist Robert Buckland put it. He pointed out that while some valuation metrics make stocks look richly valued, they're still relatively cheap based on metrics like free cash-flow yield and the payout yield from dividends and buybacks.
Who knows, maybe this advance is one big overshoot and those Wall Street crystal balls will prove to be accurate by New Year's Eve. But if not, it might be a bit embarrassing to have missed out on this rally. At least it's not as embarrassing as, say, wearing cargo shorts to work.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Footnote to the sidenote to the disclaimer: Not talking about Matt Levine, who has raised Goldman employment disclosures -- and footnotes -- to high art.
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