In case you couldn’t tell from the piece I wrote about Carl Reiner a couple of weeks ago, I’m a huge comedy nerd.
And while I didn’t really get to dedicate much space to the subject last time because Reiner’s 7-decade (!!!) career was so prolific, it was very much on my mind.
That’s because the principles and ideas that make a joke or a bit memorable are remarkably similar to those that make a memorable story, a memorable song… or (hopefully) a memorable article on macroeconomics.
Most are so pervasive, they even exist across cultures. And they’re personal too – sometimes people find certain parts funnier or more interesting than others.
So while we all share a common experience when we see, hear, or read the same thing, our own perceptions sometimes lead us in different directions.
And personally, I think that nuance and variance render it necessary for everyone to have at least some awareness of the process.
Because at the root of it all, humans are innate storytellers – whether we realize it or not. And the better we are at it, the more we learn about ourselves, others, and the world around us.
A Guy Walks Into a Bar…
We’re taught the basic premise and structure of jokes – setup punchline – literally from the moment we can smile and laugh.
And as it turns out, moms and dads are actually pretty good comedy instructors… seriously, try not to laugh at these goofballs. We understand pretty early on that eliciting one expectation – and then completely subverting that expectation – is the key to getting a chuckle.
Moreover, as soon as we learn we can get a laugh out of our folks, we instinctively start to play around with both setups and punchlines, trying to see if we can make it funnier.
For instance, my daughter’s favorite joke right now is the one about the interrupting cow. If you let her, she’ll tell it for a half hour straight and just keep testing out different animals. My personal favorite is the interrupting chicken…it’s ridiculous.
That process of figuring out what works is fascinating to me. The constant loop of feedback means not only that we eventually learn something about your audience, but the iterative process actually helps us learn how to think.
If I were to take those “thought games” to the extreme professional level, in my opinion there was no better manipulator of setups and premises than Robin Williams… and there was no better manipulator of punchlines than George Carlin.
Let’s Take a Look at All This “Stuff”!
If I had to pick one George Carlin bit as my all-time favorite, it would have to be “A Place For My Stuff”.
Partially, that’s because it is thematically expedient for this article… but also because it’s a great example of taking one singular idea and examining it from every possible angle.
In this case, Carlin takes the word “stuff” (already kind of funny-sounding in its own right) and uses it more like a “punch word” – with tons of different laugh lines peppered throughout, all using the word in an increasingly rapid-fire theme-and-variations fashion.
He is so zoned in to “stuff” that during the course of this bit – intentionally or unintentionally – he actually starts to think about things like an economist would.
Why? Because economics is the study of the production, distribution, and consumption of “stuff”.
In fact, after the Global Financial Crisis, it was the ultimate goal of the Federal Reserve to get the economy well enough back on track that we all might start to go back out and buy “more stuff.”
They succeeded… mostly by charging it to their credit cards.
Carlin next points out that:
“Everybody’s gotta have a little place for their stuff. Because that’s what all life is about…trying to find a place for your stuff.
Think about it – what is your house? It’s a pile of stuff with a cover on it.
And sometimes, you gotta move, gotta get a bigger house. Why?
No room for your stuff”!
So as we were buying all this stuff, were we also buying places to put that stuff?
You betcha… take a look at existing home sales, shown in the chart below.
Source: Bloomberg, FRED
Carlin also mentions that when you buy a bigger house, you wind up with an iterative problem…
“Hey, we got more places than we got stuff…we gotta go get more stuff”!
Mostly, we import that stuff – as we can see if we look at total US imports on the same chart as existing home sales.
Source: Bloomberg, FRED, US Customs
Now, this chart only goes up through January…and there’s been a lot happening since.
During the lockdown for COVID-19, roughly 20% of the global population was confined to their homes.
That means not only were we not buying stuff…
Source: Bloomberg, FRED, US Customs
We weren’t making stuff either, as global Purchasing Manager’s Indices show…
Source: JP Morgan, FRED
Which means there really wasn’t any stuff available for us to import every week… a trend that frankly has not turned around.
Source: Bloomberg, US Customs
And though in his bit, Carlin wisely noticed that…
Sometimes you leave your house to go on vacation…and you gotta take some of your stuff with you.
Gotta take about two big suitcases full of stuff…
… according to the TSA, we haven’t really been taking our stuff on vacation.
Shoot… according to Google Mobility Data, we aren’t really taking our stuff anywhere.
Source: Google, Seawolf Research
It’s not just our stuff that’s getting affected either… oil producers inexplicably keep making a bigger and bigger pile of stuff.
Source: Bloomberg, EIA
And even Carlin knows that when you have too much stuff, you either have to get a bigger house or maybe…
“You put some of your stuff…in storage.
Now imagine that – there’s a whole industry out there based on keeping an eye on your stuff”!
Sadly, we’re even starting to run out of that…
Source: Bloomberg, EIA
And now that we’re even headed out of peak vacation and driving season – not to mention that there are still a whole lot of people out of work as per the chart below – this trend is unlikely to get much better.
Source: Bloomberg, FRED
Where We Are Going to Put the “Stuff”
So now that we understand all the stuff, we should know what to do with it.
First, since there’s so much stuff in the crude oil market, the value is going to decline over time. But with OPEC+ meeting today, they may very well throw oil prices some lip service to keep them elevated.
Nevertheless, I think picking up another provisional ¼ stake of ProShares UltraShort Bloomberg Crude Oil (NYSEArca: SCO) is pretty reasonable.
But also, we have to realize that companies are getting paid to move all that stuff – even if it’s just into storage. For crude oil, that means we should perhaps make a bet on the midstreamers, or pipeline companies – and try to stay away from troublesome costly areas like the Bakken (where the DAPL pipeline was just shut down.)
One such company I like is Shell Midstream Partners, L.P. (NYSE: SHLX), as they operate one of the largest and most important pipeline systems in the country, they’re levered more to lower cost southern assets, and their massive parent company’s US business is all captive to them. They also happen to pay a relatively secure 16% dividend… a ¼ stake at current prices is a very solid entry point.
But there’s another longer-term play I like as well – one that is uniquely levered toward the only positive refined product market at the moment – Natural Gas Liquids, or NGL’s.
One NGL in particular has been performing better than others thanks to the summer months – propane.
Source: Bloomberg, Mt. Belvieu
As the weather has gotten warmer, dads everywhere have moved dinner preparation from the kitchen to the grill – and that has kept the propane market robust compared to other hydrocarbon markets.
And there’s one company in particular that’s moving a lot of it – and collecting tolls along the way – Enterprise Products Partners L.P. (NYSE: EPD). Moreover, they’re in the process of converting from a less attractive Master Limited Partnership structure to a C Corporation. When that finally takes place, it’s likely going to give the stock a boost.
Current levels look pretty attractive, so I have no problem establishing a ¼ stake here.
And though the structure conversion might take some time to unfold, it pays a 10% dividend while we wait.
And the best part is… with that money, we can all go get more stuff!
All the best,
This article is supplied courtesy of WealthPress.com