Sitting here at all-time highs in the S&P 500, but without much momentum to take us materially higher – and nary a trace of the will to sell.
Pressing us upward: the support from ultra-low and even negative interest rates driving flows into US large caps from around the world, the needs of the masses to earn a long-term rate of return that only stocks have historically provided, the perceived lack of alternatives for portfolio growth and income, the listlessness of foreign developed stock markets, the newfound American desire to simply index and ignore.
Keeping us penned in just below the record high: Stretched valuation, lack of economic growth and earnings growth to justify a new leg up, the impending will-they-or-won’t-they from the FOMC rates committee, the upcoming presidential election, the disinflationary threat telegraphed by oil prices, the open questions of what’s to come in Japan, Europe and China.
And so, with the absence of powerful catalysts and incentives to take us strongly in one direction or the other, we sit tight.
Volatility has been effectively squashed. We linger within one of the tightest trading ranges of all time.
What’s it going to be? In which direction will the next strong wind blow?
I take you now to the pages of Endurance: Shackleton’s Incredible Voyage – Alfred Lansing’s 1959 classic that wasn’t discovered by the general public until decades later. Millions have now read the true story of Sir Ernest Shackleton’s ill-fated crew, which sought to trans-navigate the Antarctic continent at the outset of the first World War. Michael, Ben, Kris and myself are now among the generations of readers who’ve been exposed to the book, thanks to friend of the firm Gary B.
When the Endurance is crushed by ice floes and abandoned in the treacherous Weddell Sea, Shackleton and his crew of three dozen sailors, explorers and scientists find themselves trapped on a frozen sea, praying for a northerly wind that will blow them up toward civilization, hundreds of nautical miles away. But the ice pack they’re camped on simply will not move. They’re stuck in a stasis of sorts, at the mercy of the forces pressing them in place, keeping them penned in.
It’s miraculous that they had a photographer among the crew and that both the images and the diaries were somehow preserved during their two-year ordeal.
They find themselves living on seal blubber, melted ice and tobacco for months and months on end, in a below-freezing nightmare situation with only the most rudimentary turn-of-the-century equipment to survive. And still the ice floe remains trapped, without even a hint of loosening up enough for their small boats to find open water and escape. The men sit idle in their tents, developing a mania of sorts as it pertains to the prevailing winds each day. They fixate on the only thing that can deliver salvation or doom, in either direction.
We get the following relayed from the many diaries being kept by the castaways that Lansing collects for his narrative:
…the ice was tighter than ever. The days of wishful thinking were over; there was nothing to do but sit down and wait.
Day after day after day dragged by in a gray, monotonous haze. The temperatures were high and the winds were light. Most of the men would have liked to sleep the time away, but there was a limit to the number of hours a man could spend inside his sleeping bag…
“Just now,” he continued, “we regard the panels of our tent most earnestly to see which bellies out under the influence of the wind…I long for a place where the direction of the wind does not matter a Tinker’s cuss.”
“We also suffer from ‘Amenomania‘” [literally – wind-madness], he wrote later. “This disease may be exhibited in two forms: Either one is morbidly anxious about the wind direction and gibbers continually about it, or else a sort of lunacy is produced by listening to the other Amenomaniacs. The second form is more trying to hear. I have had both.”
This week’s Barron’s cover story concerns the year-end outlook of the “top” Wall Street strategists. These seers, our own resident Amenomaniacs, are listening and looking desperately for the next big gust of wind. How else will they (or we) be able to perceive what’s to come – breakout or failure just below the high? The subheader of the article is accidentally hilarious in its studied ambiguity: