WASHINGTON, Nov. 4, 2015 – The Maven finds himself continually searching for metaphors to describe, in understandable terms, what’s wrong with 2015’s stock markets, which seem to be wandering aimlessly from irrational exuberance to catatonia and everywhere in between. Like today. After two nifty rallies earlier this week, it’s red ink all over the place Wednesday as most stocks seem to be wallowing in a Slough of Despond.
2015 markets like an obsolete literary nightmare of the ‘70s
But as the Maven watched all those red blinkers this morning, turning Tuesday’s green lights into that depressingly familiar scarlet hue, a stream-of-consciousness phrase from the past suddenly flitted across his cerebral cortex: “Lost in the Funhouse.” The Maven was an English and American lit scholar back in the day, and that phrase was the title of a then fashionable academic-style novel by a fellow named John Barth.
Barth was all the rage in the early 1970s, an era when hot-house academic storytellers and novelists played literary games akin to mental masturbation and often won rank and tenure for their efforts. He and others, like John Hawkes, Kurt Vonnegut et. al. were all the heroes of contemporary lit professors, praised for essentially eviscerating the American novel, the better to indulge in their own weird and destructive theories.
In a Hawkes novel, for example, you’d find no “hero” in the mold of John Wayne. Instead, Hawkes redefined the hero as a character who managed to survive his novel’s harrowing contents and actually survive until the final page.
In Barth’s case, the game frequently was to intrude the novelist himself into the story, interrupt the narrative and otherwise mess with the reader’s head, since linear plots were regarded by guys like himself as part of a dead and useless tradition, much like the Second Viennese School of music decided we no longer needed to have songs or tunes.
“Lost in the Funhouse” was a collection of short stories demonstrating Barth’s earlier expressed theory of “The Literature of Exhaustion” (actually the title of an earlier Barth essay), which meant essentially that the notions of conventional storytelling and narrative were tapped out and no longer worth pursuing.
The precious stories in “Funhouse,” which to your normal, avid novel-reader really made no sense, wandered about Barth’s world of literary theory, resulting, in the end, in readers who were literally more confused than when they started reading the book.
Which gets us back to the market’s post-post-modern 2015 narrative. Which, like Barth, takes us nowhere at all. Perhaps like a variation on navel-gazing 1970s fiction, it’s stock and bond markets and capitalism itself that have become so unrecognizable that traders and investors alike are wandering about trying to figure out exactly what it is they thought they were getting into.
Instead of a traditional trading environment, have investors found themselves instead trapped inside some weird money funhouse, tricked out with halls of distorting mirrors and other unexpected stuff they never learned in Investing 101? Like monster HFTs jumping out of a closet when you least expect them? Trading floors that keep moving when you try to cross them? The siren songs of spoofers and shills hawking their book on CNBC? Remaining small investors are indeed lost in the Wall Street Funhouse, unable to find their way out.
To stretch the metaphor to that sublimely weird comic book character Howard the Duck, small investors these days are “trapped in a world they never made.”
The Fed and that never-ending interest rate conundrum
The major reason for today’s market meandering, however, is renewed nervousness about the interest rate intentions of our currently waffling Federal Reserve. After the Fed abandoned its September target date for that first, minuscule raise, pundits immediately assumed they were done thinking about that issue for 2015.
Oops, well, maybe not. The fear is growing once again today that the Fed will really do it this time just before the end of the year in December, wrecking Christmas festivities and ruining what was starting to look like a nifty and moderately early-arriving Santa Claus Rally. In any event, the Maven’s portfolio at least seems to be covered in a sea of red this morning. Not good.
The Fed’s apparent utter confusion has been wreaking havoc (not “wrecking havoc” as we constantly see in print) on investors since it’s difficult to either buy or sell a given security with any conviction that they’re doing it based on a real world scenario.
This is just another example of the way the federal government has interfered with the economy since at least 2008—making it impossible for businesses, let alone individuals, to make any fiscal decision at all with the confidence that outside forces won’t come in to ruin that decision tomorrow. And it’s precisely this that’s halted the rally today.
Maybe a pause like this will help keep the bull going, climbing that proverbial Wall of Worry. But maybe it’s yet another example of a government that no longer knows what the hell it’s doing, why it’s doing it and what that means for the country moving ahead. And what makes it even more galling is that we, the taxpayers, are paying these clowns a lot of money out of our own pockets that we’re clearly more competent to use for our own clearer purposes.
On a day like today, where we do have a few bargains but not great ones to consider, the best thing to do is sit it out. Which is why we won’t be listing any trading tips today.
Let’s try again on Thursday.