WASHINGTON, March 17, 2015 – The Maven hates days like today. For the entirety of March 2015 thus far, stock averages have been backing and filling like a construction project that absolutely refuses to get underway. That’s the way it goes sometimes, but when you’re trying to come up with a daily column like this one, this kind of endless market meandering, even with the high volatility we’re experiencing in the averages, becomes a genuinely boring topic after a time.
The CNBC blow-dries and talking heads, of course, always have a reason for what the market’s doing, although their reasons are consistently fatuous and wrong. That’s the price we pay, I guess, for the 24/7 “news” cycle both cable TV and the Internet hath wrought: endless blather by “experts” who essentially don’t know what they’re talking about.
So it’s increasingly tough to come up with an interesting image that symbolizes all this market stasis. We thought we might re-use our favorite “Waiting for Godot” photo. Then we tried to see if we could work in St. Patrick, since after all, this is the day, quite a few years ago, when St. Paddy drove all the snakes out of Ireland. Could you imagine driving all the snakes out of New York and Washington? At any rate, this became too complicated as well, so we dropped it.
What we were left with in the end was one irrevocable fact: this market is going nowhere definitive until the Oracle of the Fed delivers its pronouncement tomorrow which may or may not contain the magic word: “Patience,” which pertains to any potential increase in interest rates of course and when this might happen. Now patience, as the Maven’s late mother told him, is a virtue. Maybe not these days, at least if you’re an investor.
The average investor right now is flying blind as the averages go every which way, with great violence, mainly due to high-frequency traders spoofing prices to gouge many of us for cheap and illegal profits, while equally nefarious perm-bulls figure out who’s short and then blow them out for big losses with a massive short squeeze, buying until the shorts give up and buy stock to close their own positions, thus exacerbating margin calls and more short squeezing. What fun, if you’re loaded with capital you don’t need in the morning.
So, once again, albeit against great market volatility, we’re waiting and holding, waiting and holding for the Fed. Which reminded us of a recent Little Caesar’s pizza commercial Mr. and Mrs. Maven loved, in which an average Joe Sixpack sits in his easy chair, copper-wired phone to his ear listening to some competitor pizza joint’s elevator music message assuring Joe they value his business, while happily singing that he’ll be “Waiting and holding, waiting and holding for the rest of your life…”
The solution on the commercial, of course, was to order Little Caesar’s Hot ‘n Ready Pizza where you wouldn’t run into such problems. In the case of our currently hung-up market, though, there are no competitors to the Fed. So we’re waiting and holding until they make their pronouncements tomorrow. There’s no one else to call.
The Fed’s opinion, of course, is almost certainly something that TPTB (The Powers That Be) and the mysterious Gnomes of Zurich (those crafty Swiss bankers) already know and will start trading on at today’s close or Wednesday morning after the open. But as for you and the Maven… we’ll have to wait and hold for, maybe forever and ever… Because we’re little people and not important. There’s fundamental change for ya!
In the meantime, any move is the wrong move, so we didn’t make any today.
Near the close, we’ve noticed unusual buying in mortgage REITs (real estate investment trusts) like Two Harbors (TWO) and a pair of battered MLPs (master limited partnerships) we own, namely Calumet (CLMT) and Kinder Morgan (KMI), a multi-product refinery and a ginormous energy pipeline company respectively.
All this stuff pays high dividends, and such stocks have been under pressure lately, like bonds, out of fears that a Federal Reserve interest rate increase is more or less imminent, likely in June. So why today, less than 24 hours before the Oracle is to speak, are these stocks getting kicked up by “order imbalances” on the buy side?
Could it mean that the magic word stays in the pronouncement and we don’t see interest rates increase before the fall quarter? Who knows? Actually, the Wall Street Journal’s John Hilsenreth, the Fed’s designated Oracle Interpreter for many years now, probably knows. Let’s look for him to issue an early report perhaps this evening and perhaps after the dinner hour. It will run in the Wall Street Journal’s online edition, which is continuously updated. Otherwise, you’ll have to wait for the morning dead tree version of the WSJ.
The Maven has it both ways. In case he catches an early Hilsenreth report before hitting the sack tonight, he’ll post a quick update this evening.
Otherwise, both he and thee should stay away from stocks. Too risky. If the magic word, or something like it don’t appear, our next article will be headed by another Wile E. Coyote graphic, symbolizing where the market’s going if the magic is suddenly gone.
But if the bulls like what they hear, we may need to come up with a swell rocket picture, because that’s what will happen to stocks instead. “To the moon, Alice,” as the “Honeymooners’” Ralph Kramden used to threaten.
In other words, let’s wait, since we don’t get any special info like the really important people do.
See you tomorrow.