|During the last financial crisis, a manager at UBS commented that every investor should have a “SWAN” account—for “sleep well at night.”|
It’s a fool’s errand to try and explain daily gyrations in equity markets. The ride since the S&P 500 hit an all-time high just a few weeks ago has been dramatic, and any further declines should surprise no one.
“How many things were articles of faith to us yesterday, which are fables to us today?” Montaigne
Moving past more jawboning about the totally unprecedented shutdown of economic activity, the way forward is far from clear. The U.S. economy has been put into a forced coma in an effort to prevent further deterioration (which is not to make light of the terrible physical and emotional toll we see growing around us every day – it is simply a fact that I discuss investments here, not medicine – this analogy notwithstanding). It’s not certain that the government will be reviving its patient anytime soon. And it is possible that the restart will take far longer to achieve than we can imagine.
I suppose we could be generous and suggest that the government has thrown a financial bone (a few trillion dollars) to small businesses and their now unemployed minions. And despite some seeming confusion, it looks like the banks and really big businesses stand to make out pretty good too, again. Yet by implying (promises don’t exist in the House, Senate or Oval Office) that the Fed “will do whatever it takes” for the next couple of months we are being warned the worst may yet be to come.
So how do we save and invest now? Wall Street-ers will tell you that this, too, shall pass. Probably, maybe, or maybe not. Better to wait until the fog clears, or start buying equities now because the first bounce off of the bottom is where most of the gains will come as markets recover? Personally, I’m making assumptions that have led me to use this last updraft to sell some ETFs and build cash for when the time comes to get serious about buying again. I’ll be on the sidelines for a while yet.
“Don’t trust a brilliant idea unless it survives the hangover.” Jimmy Breslin
Two examples are shared here:
First, my enthusiasm for emerging markets has completely evaporated.
Considering the impact of COVID-19 on the United States and our uneven responses, the idea that countries like India (three times the size of the U.S. population with a fraction of the medical infrastructure) will not see economic chaos is unthinkable. The Pacific Rim (and even Russia) haven’t begun to be hurt like the U.S. but almost certainly will. My bet is that supply chains get shorter as the world acts more local than global. After a couple of decades, I’m finally eliminating this asset class from my portfolios. When the time is right, the proceeds will be reinvested into non-U.S. blue-chip companies.
Second, publicly-traded REITs and real estate tied to equity markets will likely struggle mightily over the medium term.
Known for their great yields and high payouts (in the case of Real Estate Investment Trusts, required by law to distribute the majority of earnings to shareholders) it will be tough to pay dividends when companies and people don’t have to pay rent. How many restaurants, nail and hair salons or tattoo parlors will still be needing retail space six months from now? And what are the long-term ramifications of businesses learning that much of what needs to happen to ensure happy customers does not have to happen in centralized locations? Physical real estate makes up the largest part of my investable assets (all of which I’ll note are debt-free) so it no longer makes sense to have real estate exposure through equity markets. These funds will be reinvested in my S&P 500 ETF.
Yet the most important takeaway might just be that cash is still king and liquidity matters more than ever. The focus today isn’t about making money, but preserving it. You don’t want to be forced into making decisions about your equity investments because one or another financial obligations have come due.
During the last financial crisis, a manager at UBS commented that every investor should have a “SWAN” account—for “sleep well at night.” Agreed.
|The last couple of years has witnessed some very good music standing on the corner of Jazz and Classical.|
When the riot broke out on May 28, 1913, during the first public performance of Igor Stravinsky’s Rite of Spring in Paris, it’s hard to believe the spirit of the new jazz music in America wasn’t standing backstage in the shadows. Charlie Parker was a big fan of Stravinsky and his Rites, and it just might be that Salt Peanuts found inspiration in its vicinity. The dissonance we associate with seismic shifts in the landscape of 20th-century music can be clearly heard in compositions and performances of both men. Yet as we have discussed here on several occasions, the intersection of jazz and classical music has found fertile ground even among more straight-ahead jazz players.
“We cannot observe the creative phenomenon independently of the form in which it is made manifest.” Stravinsky
The last couple of years has witnessed some very good music standing on the corner of Jazz and Classical. What might be most interesting about the albums mentioned below is that each includes a current mainstay from the straight-ahead jazz scene. More so than other jazz/classical works discussed here at Jazz-Notes, the classical influences of this younger generation are clearly heard in these songs. This can be partially explained by their having been trained as classical musicians before embracing jazz.
Let’s start with the well-known string quartet Brooklyn Rider and their collaboration with tenor great Joshua Redman (one our favorites here at Jazz-Notes). The album Sun on Sand was released in 2019 and is singularly successful in blending genres. First, the Riders can hold their own whether acting as a rhythm section or “solo” voice. Second, Redman also moves smoothly through both roles, as comfortable behind the band as fronting it. Finally, all tunes are original compositions of Patrick Zimmerli who is well regarded in both classical and jazz circles.
The opening number, “Flash”, does not immediately play to either side of the jazz/classical divide. Likewise, the slightly tremulous “Starbursts and Haloes” manages the same feat of being neither fish nor fowl. But the album’s closer, “Between Dog and Wolf: Reprise”, might just be the closest we’ll ever come to hearing echoes of what that collaboration between Stravinsky and Parker could have been.
The latest release by pianist and composer Victor Gould, “When Thoughts Become Things“, also includes a string quartet, as well as trumpeter Jeremy Pelt (whose powerful 2019 release, The Artist, pays tribute to sculptor Auguste Rodin). The title cut that opens the album sways back and forth between strings and piano, without staking a claim to preference. Likewise, the piano solo-track, “Brand New” finds Gould in a contemplative mood that carries through in his piano/trumpet duet with Pelt on the classic jazz number, “Polkadots and Moonbeams”. This is a thoughtful and contemplative sounding collection.
Finally, Meg Okura’s 2018 release, Ima Ima, featuring the Pan Asian Chamber Jazz Ensemble may offer the most curious blend of jazz and classical sensibilities. With help from another Jazz-Notes favorite, trumpet player Tom Harrell (whose 2015 release, First Impressions, includes compositions by Debussy and Ravel) Okura creates a wide-ranging sonic spectrum full of interesting sounds. In fact, the musical flourishes that appear around the edges of the music create atmospheres as varied as theatrical soundtracks, angelic choirs, classical chamber music, and straight-ahead jazz – and all this just in the song “A Summer in Jerusalem.” Even after repeated listens it feels like I hear something new every time Okura’s music plays.
|“Those who understand art only by what it looks like often do not understand very much at all.” -Sol Lewitt|
In 1965 Bridget Riley made a trip to New York City to participate in a show titled, “The Responsive Eye.” Her black and white works were already well known with one having been purchased by a dressmaker who just happened to be on the board of the Museum of Modern Art. He used the painting as the basis for a dress design, other designers quickly followed and suddenly Riley’s work was not only on dresses but lampshades and sofas. She was equally surprised and appalled by this use of her work – and received absolutely no compensation. Returning to her home in England, Riley assumed it would be decades before she would be taken seriously again. Fortunately for us, she was wrong.
Riley was asked about the earliest paintings, “Were you an angry young woman?” She responded, “I don’t think it was so much that.”
Today these early works – mostly synthetic emulsion on board then soon after simply oil on canvas – are too quickly labeled as Op Art. But Riley’s intention has never been about visual tricks to entertain spectators. In fact, Riley has described her early work this way, “I think they were beautifully aggressive.” When one of the grand old men of art criticism, E. H. Gombrich, inquired about her use of ‘the pure physics of the behavior of light’ Riley simply replied, “I haven’t studied the pure physics of the behavior of light.” The paintings are primarily intended to stimulate the brain, not the optical nerves. Her work is instead grounded in the long history of painting. In Riley’s intelligent conversations concerning artists, she has studied and admired we hear the importance of Titian, Poussin, Delacroix, Seurat, and Mondrian, among others. Her observations are quite sophisticated, “Titian takes two blues and an off-white from the colors in the sky – the farthest distance – and moves them down into the foreground as a skirt, a cloak, and a dress.”
“… color is wholly relative. Every hue throughout your work is altered by every touch you add in other places…” John Ruskin
Riley also discusses her progression as an artist by reflecting on the decision to move from black-and-white, to gray and then on to the color paintings for which she is now best known. She mentions the shift from black-and-white to gray was far more challenging than that when moving to color. Interestingly, many of the color paintings retain visual forms similar to some of those early black-and-white works. Despite the similarity in design, the color works have a startlingly different impact on this viewer. A trip to Egypt inspired both paintings and prints where the organization of colored stripes would influence later colorwork. Like her observation of how Titian uses colors to create “air” and cohesion in his works, Riley is very thoughtful in how she uses color in hers. Whether simple vertical stripes or wavy horizontal lines, these compare favorably to the later works featuring a mash-up of curves fragmented and interlaced diagonally.
“If you think of a square, or a circle or triangle, no matter what size it may be, you know exactly what form you can expect to see. But if you say red, yellow or blue you do not know at all what shade of colour you will be looking at.” Bridget Riley
The relationship between music and painting is another interesting topic Riley discusses. She said the impact of Stravinski’s lectures from 1939 that she read in book form became a sort of ‘bible’ to her (her word, her quote marks). Kandinsky also played in this space, but on a more esoteric level, “…we see the color green in the Key of D, only less dogmatically”. Again, for Riley color is more than something to stimulate the visual cortex. Like music, color can create feelings and emotions that are physical. Classical music, like classic paintings, can be studied across a spectrum of ideas and concepts.
“To treat them as historical documents or evidence of past concepts is wrong – they are particular solutions to continuing artistic problems…” Bridget Riley
A recent review in the Wall Street Journal (1-7-2020) was effusive in praise for an impressive Riley retrospective at London’s Hayward Gallery at the end of 2019. Yet, there remains a tendency to emphasize the visual over the cerebral. Over the top comments in the review included: “walking into a snail shell and discovering a turbulent seascape”; “the furious waves of Cataract 3” and; “the furious Indian reds” (are we allowed to use the word furious twice in one review?). It was a stunning show, but more because of the ideas and art history her paintings embrace, not just the optical effects. Today Bridget Riley is still making artwork that is more cerebral than visual, more lyrical than literal.
A series of interviews originally recorded in 1992 and reprinted in 1995 have been collected in an excellent new book, Bridget Riley Dialogues on Art, 2019. Most of the quotes here – hers and others – came from that book.