March 17, 2019


So, somebody finally did Frankie Boy. Did him Old School. Ran into the Escalade parked in his driveway, in – where else? The Richmond Hill Section of Staten Island. Plugged him with 12 rounds after he turned his back, and drove off into the night. Frankie’s wife and kids were in the house at the time. And here’s the best news of all: the hit appears to have been arranged, or at minimum, sanctioned, by Gotti’s kid brother.


While I abhor violence of every form, and though I’m not proud of the sentiment, part of me is feeling a warm nostalgia respecting these tidings. It was, according to published reports, the first mob boss hit in 30 years – which is a long time to go between New York Post front page photos of such a scene. But to me, it turns the clock back another half decade (or so), to late 1985, when the Gotti Crew took out another Gambino Crime Boss: Big Paulie Castellano, who was offed by three guys wearing identical Russian sable hats, in broad daylight, at the entryway of Sparks’ Steak House on 46th Street in Manhattan. Gotti and his perfidious sidekick Sammy the Bull watched the action from a parked car across the street.


Now, I have no idea what the beef was about, who authorized the hit, or how it changes the mugshot org chart posted in the police precinct conference room. But I will say that it gives me hope that we can return to a more vigorous time in our lives, when men were men, friends of ours lorded over friends of mine, when made guys outranked connected guys, and, as to everyone else?




Reagan was President, Koch was Mayor, Rudy was the United States Attorney for the Southern District of New York. I was 25, single, and still somewhat cool (or thought I was). The economy and the stock market were booming. That quaint 1987 crash was an un-thought of nightmare seven quarters into the future. The Gallant 500 was outstripping the heroism of even its literary forbears in Tennyson’s “Charge of the Light Brigade”:


SPX: 3/16/84 – 3/16/86

Of course, the modern-day SPX is currently enjoying its own significant rally at the point of this correspondence, but, somehow, it feels a bit tentative, a bit effete, if I may make so bold. Doubts plague our every purchase, while few divestitures are met with much regret.


In summary, the index feels as though at any moment, it could engage in ignoble retreat. Memories of the horrific pre-Christmas rout are still too raw and present in our psyches to truly rock us into a proper state of mojo.


So perhaps you’ll forgive me as I morph a sensationalized violent crime into a smarmy remembrance of things past. Perhaps such sappiness on my part is also a sign of the times.

Because there’s very little so encouraging in this trail of tears that I have selected as my lifelong career than a tape that reads negative, but keeps roaring upward. I review last week’s action as transpiring against the backdrop of news flow which can hardly be viewed as encouraging. As was perhaps pre- ordained by the Gods, the Brits enter the penultimate week before the Brexit deadline not knowing whether they will leave with a deal, leave without a deal, stay with a deal, stay without a deal, or even carry forward with their current parliamentary coalition. America’s only significant airplane manufacturer – which carries the largest weighting in the Dow Jones Industrial Average (~10%), and which is also the nation’s largest exporter, was compelled, by two deadly crashes in the space of six months, to ground its signature flying vessel. The love-fest between the U.S. and both Korea and China can be viewed as being on the rocks. Trump issued his first-ever veto. Yet another lunatic shot up a couple of mosques in the otherwise tranquil land of New Zealand, killing 50 poor souls in the process.


Oh yeah, and the shooter livestreamed the whole episode on Facebook.


“Cannon to the right of them, cannon to the left of them, cannon in front of them, volleyed and thundered” wrote Tennyson. And so it goes with our own Gallant index, which managed, foregoing notwithstanding, to post a weekly gain of 2.9% -- best since November. And, notably, that pre-Thanksgiving uplift transpired in the midst of a rout, during one of the worst quarters in living memory, whereas the current spike has manifested as an extension of a rally of 11 weeks standing, which now positions us a little over 3% from the all-time highs registered in late September.


And, of course, stocks weren’t the only market segment enjoying a rally. I’m pleased to report that the Wheat market lamented in last week’s epistle, has recovered at least a fragment of its vitality:



I’d like to think that part of this is owing to last week’s plea in this space for everyone to eat their Wheaties. However, further research suggests that perhaps our grain farmers may have been feeding these foodstuffs to their hogs (or, at any rate, to investors in same):



Hogs haven’t been this rich in nearly a decade, but, in the interest of full disclosure, it should be pointed out that some of the rally appears to be tied to a breakout of African Swine Flu among the porcine population of China. Given, of course, that 2019 is the Year of the Pig on the Chinese Calendar, this cannot be viewed as a unilaterally encouraging sign. For now, though, we’ll give it a pass.

Further, the love, by all accounts, has spread to the domestic private debt markets; let’s just say that across the entire credit curve, buyers have represented, and in force:

Investment Grade:                                                                                        High Yield:












One might go so far as to socialize a hypothesis that all of this bid for debt instruments might’ve negatively impacted the returns that the Gambino family is getting for paper they’re putting on the Street. That, someone had to take the blame, that this someone was Frankie Boy, and that he was compelled to answer in the time-honored fashion associated with these affairs.


I rather think, however, that my original hypothesis holds true. The global QE process, now a decade in standing, and re-invigorated most recently by the ECB, has created a paradigm where too much fiat currency is chasing too few investible assets, in the process turbo-charging bids for both equity and debt securities. With all of that cheap financing, mergers, acquisitions and buybacks abound. Adding further to the imbalance, there is currently a trend for successful, privately held companies to stay private over longer intervals, and in some cases into perpetuity, than had historically been the case. Time was, if a company thought it could go public at pittance-level valuations of $1B, it would crawl through broken glass to do so. Now, the bogie appears to be more like $25-50B. But we’ll cover that in future editions.


In the meantime, suffice to say that while the technicals of the market are remarkably strong, the current rally feels weary to me. I reckon it could lurch along for a spell, but I can’t enthusiastically recommend incremental risk assumption at this moment in time. One way or another, I’d exercise caution. The Franky Boy investigations now suggest that the Gottis may not even be involved, that the hit may have been an unauthorized act of a love-sick knucklehead pining for Frankie’s niece. If so, then it’s definitely NOT the Eighties; instead it’s the New Millennium Teens. I am old, and the prerogatives of decorum have lost their menacing edge. I reckon we’ll have to deal with the consequences, but in terms of the assertive seizing, sustaining and expanding of turf, I can only close, not with my usual salutation of TIMSHEL, but rather with: a forlorn:





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