Do you ever wonder why we (as a society) care about celebrity endorsements?
In a lot of cases, there’s absolutely no connection between the celebrity and the product on offer. Shaq and Epson’s cartridge-free printers are a good example. The company’s pitch notwithstanding, Shaq isn’t known as an ink expert. And it’s a (highly) debatable proposition that he ever has occasion to print anything, let alone enough to exhaust so many ink cartridges that he felt compelled to help solve what, for people who do still print things, is an admittedly vexing problem.
Usually, though, there’s a connection between the celebrity and the product. But even in such cases, it’s not clear why you should care what, for example, Brett Favre, Jerry Rice and now Drew Brees, think about Copper Fit. If you’re in the market for a compression sleeve, chances are you want to know how it works for regular people and also how it holds up over time because, after all, you’re a regular person and you’re not going to buy a new one every other day. So, you might ask your doctor about the health benefits of compression sleeves and the girl down at the local activewear store about their durability. One person you surely won’t consult is Brett Favre, because in addition to being difficult to get ahold of, his needs when it comes to copper compression are in no way comparable to yours and he doesn’t have to worry about things like choosing which part of his body to support or the durability of the product, because he presumably has a garage full of every Copper Fit product ever made.
Why am I talking about this? Well, first because it’s funny and I was thinking about it on Saturday when I went on a rare, off-island excursion to buy some new running shoes. But also because everyday people are suckers for celebrity investor cameos, and in my opinion, that’s often detrimental to folks’ financial and psychological well-being.
On Monday, Paul Tudor Jones checked in with CNBC (or CNBC checked in with Paul Tudor Jones — it’s hard to know which), and regaled the network’s audience with his version of the obligatory billionaire monetary and fiscal policy critique.
Everyone is, of course, entitled to their opinion, but when you hear Jones say that “this Fed meeting could be the most important Fed meeting in Jay Powell’s career,” I’d gently note that that assessment is at odds with most Wall Street FOMC previews, the vast majority of which take the view that the June meeting is a non-event.
In the clip (above) Jones told Andrew Ross Sorkin (who apparently instructed his makeup detail to go with “Inside A Cave On A Moonless Night” when asked to choose a hair color for this week) that “so much data” has challenged the Fed’s models. That’s certainly true over the longer haul (the most obvious example being the Phillips curve), but it’s not entirely accurate in the current context.
Every, single breakdown of May CPI showed pandemic-/re-opening related factors contributing heavily to the surge, and when it comes to the labor market, the Fed is, if anything, relieved that persistent slack is affording them some plausible deniability when it comes to slow playing the taper discussion.
He did draw an ostensibly interesting distinction between the way the Fed approaches employment and the messaging around inflation. “With employment, they want to see outcomes,” he said. “With inflation they tell you ‘It’s transitory, trust our forecasts.'”
Jones called that an “intellectual incongruity” but, frankly, he’s the one being intellectually dishonest. The Fed has stated repeatedly (at this point hundreds upon hundreds of times) that average inflation targeting means overshooting 2% for a sustained period in order to “make up” for previous shortfalls. That, the story goes, will avert a scenario wherein, over time, a deflationary mindset becomes embedded in society.
Whatever you want to say about that (i.e., whether you think it’s “dangerous” or too nebulous or misguided or just downright silly), there’s no sense in which someone who’s being honest with you can argue that two months (or three months or four months) of data skewed by base effects (on the annual comps) and the collision of artificially-inflated demand with supply chain problems (on the monthly prints) can be relied upon when it comes to making policy. That’s a ludicrous assertion. If lightning hits a tree in your yard and it falls through your roof, you wouldn’t tell the roofers that your new roof needs to be strong enough to withstand a meteor strike. (Because after all, you had a normal roof and look what just happened!)
Sometimes, it’s as if folks would have you believe the pandemic never happened — that these extraordinary policy experiments just fell out of the sky. The world is coming out of a once-in-a-generation calamity that killed 3.8 million people and sickened 175 million.
Jones went on to call the current situation “bat sh–t crazy,” setting off a hilarious attempt by Bloomberg to navigate the choppy waters around working that into a headline. “Paul Tudor Jones Tells CNBC Things Are ‘Bat S Crazy’ Right Now,” read one initial attempt. A half-hour later, that was revised to “Paul Tudor Jones Says Things Are ‘Bat Sh–t Crazy’ Right Now.” Ultimately, that was nixed too in favor of the more pedestrian “Economic Orthodoxy Has Been Turned Upside Down, Jones says.” The URL still read: “https://www.bloomberg.com/news/articles/2021-06-14/paul-tudor-jones-says-things-are-bat-sh-t-crazy-right-now.”
Commenting further, Jones said investors may, depending on the Fed, need to “go all in on the inflation trade,” where that would mean “buy[ing] commodities, crypto and gold.” If, on the other hand, the Fed “corrects” its course, “you will get a taper tantrum and a selloff in fixed income and a correction in stocks.” If he were on the investment committee of a pension fund, Jones said he’d “have as many inflation hedges on as I possibly could.”
He also plugged Bitcoin (predictably), but also contended that if he were “king of the world,” he’d ban Bitcoin mining until such a time as it was eco-friendly.
The clip (above) also finds Jones delivering what somehow still counts as a “profound” assessment of the effect monthly Fed buying has on risk assets.
“I hope that we’ll mean revert back to economic orthodoxy,” Jones fretted. “I get nervous from a financial stability standpoint when the stock market’s 220% of GDP.”
That kind of rhetoric is what I find most distasteful about CNBC’s celebrity TV cameos. I’m not casting aspersions at Jones. That is, I’m not trying to single him out. But what I would say is that almost without exception, the network’s interviews with Jones, Stan Druckenmiller, Jeff Gundlach and their ilk, come packaged with ambiguous warnings that hint at some manner of “reckoning.”
Usually, the implication (it’s rarely explicit) is that some comeuppance is just around the corner — that we’re all about to pay for the “sins” of policymakers.
I’ll just be blunt, because I think that’s one reason readers come here every day. It’s obviously true that many of these legendary investors are able to do more good for humanity than you or I ever will simply by virtue of having unlimited resources to throw at philanthropy. Strictly speaking, they don’t “have” to do that, so they’re to be applauded for those endeavors. But (and this is the crux of my gripe), if you think for a second that any of these people are actually “nervous,” or “concerned” or otherwise distressed by the prospect of a policy mistake and what it might mean for the fortunes (figurative or literal) of everyday people, you’re naive, at best. At worst, you’re the kind of credulous fool who watches CNBC and reads tabloid content churned out by doomsday blogs.
Think about it this way. How much less nervous would you be about the future (in general) if you got a check tomorrow for $5 million? Now think about how much your stress level would recede if that check were $50 million. Jones is worth somewhere between $5 billion and $10 billion. Colloquially, he ain’t “nervous” about a damn thing.
Of course, that’s not to say billionaires don’t have problems or are incapable of suffering. Ray Dalio suffered a horrible personal tragedy late last year, for example. But parading these people on financial television and branding their market “concerns” as “Breaking News” (always capitalized), is pure entertainment. These types of segments are almost totally devoid of value.
Invariably, it’s all cross-promoted by the same collection of people, complete with hashtags and shoutouts. “@ptj_official interview with @andrewrsorkin is phenomenal,” gushed professional clout-chaser Julia La Roche. “A must-watch. Great job ARS!”
Yeah. Great job!
Now quick, everyone grab “as many inflation hedges as you possibly” can, allocate 5% to Bitcoin and cancel whatever you’ve got planned for Wednesday afternoon, because this week is “the most important Fed meeting in Jay Powell’s career.”