In May of this year, our former CEO and Chief Investment Strategist, Jack Rivkin, posted a prophetic blog post entitled, “Beginning the Look Back at What We Expected for 2016 (and Beyond).”
As many of you know, Jack will never finish his 2016 review. He passed away from pancreatic cancer this past Election Day, Tuesday, November 8th. This was a cruel irony since there is no investment luminary, nor human being, generally, we would rather have spoken to that event on Election Day. Very few individuals come into our lives and make such a profound impact. From Jack’s intelligence, humor, empathy and love of his family, there is no comparison.
As homage to Jack, we invite you to read excerpts of his two most uncannily prescient blog posts:
In his May 2016 post, Jack led his section on the election with the late Leonard Cohen’s “Democracy.”
“I’m sentimental, if you know what I mean,
I love the country, but I can’t stand the scene.
And I’m neither left or right,
I’m just staying home tonight,
Getting lost in that hopeless little screen.
…I’m still holding up,
This little wild bouquet,
Democracy is coming to the USA.”
Jack wrote, “This may be one of the most democratic elections we have had in a long time. The constituencies have been motivated by non-establishment candidates on both sides to vote as they feel in terms of their innate fears and beliefs coming from the gut and the heart. This is in contrast to the more “enlightened” fears that would come from the head, calling for preservation of the system. This is what, historically, has been presented by the ‘Establishment.’
There have always been differences in the views between the two major parties of what really is important in the system, but the outcomes have been conventional and, ultimately, supportive of global commerce, finance, and an expanding role of government. In this election, the anti-establishment elements may end up determining what will appear to be a different path. Although, I would expect that the ultimate differences will not be long-lasting.”
On November 7, 2016, Leonard Cohen passed away.
Oil and the Environment
Many of you may not know that Jack was born in Oklahoma. He was also an avid follower of the impact of climate change on the environment. These two worlds collided in Jack’s January 2016 commentary, where he strayed from more conventional market outlooks; sounding alarm bells for the US oil market. While the price of crude has yet to be impacted by the recent spike in such earthquakes, however, this ‘tail risk” disruption could be just ahead.
An Earthquake on the Recently Discovered Cushing Fault causes Major Damage and throws US Oil Markets into Turmoil
“I don’t want to go the route of Iben Browning, forecasting an earthquake in late 1990 on the New Madrid fault that has yet to occur. However, we are seeing daily tremors in Oklahoma in the vicinity of the Cushing storage facility and pipeline system. In 2015 Oklahoma had more quakes of 3.0 or higher than any other state. Yes, that includes California. Some recent studies have identified a fault, named the Cushing fault, in the region where there is increased risk of a major earthquake in part from the introduction of ground water from fracking activity and tertiary recovery. I don’t know enough to make the mistake Iben did of putting a date on when an earthquake could occur, but if there is a disruption of the storage and pipeline systems in Cushing, for whatever reason at whatever time, it could push up the prices of refined product from shortages of crude and possibly lower further the price of crude as producers struggle to find storage and other shipment means for what they are producing. Gulf Coast refiners will likely bid up crude prices to keep the refineries going, but producers will need to move what they are producing by any means possible. It will be an interesting tug of war between the domestic producers and the refiners re who is in the best position to bargain. In the meantime offshore producers will step in to deliver oil to the Gulf Coast refiners who account for close to half of the production in the US.”
Cushing, Oklahoma experienced a 5.0 magnitude earthquake on November 6, 2016. Despite a swarm of earthquakes that occurred after his post in Oklahoma, this one hit the closest to where the US stores is largest number of crude oil barrels.
Jack will be sorely missed. We are truly honored to have worked with him, and aim to continue his legacy in our every day.
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