The Trouble With TINA

Although the above headline might be more suited for the adult film industry. When it comes to today’s financial “markets” a similar warning label should be applied for the pornography, as well as adulteration contained within.

No dear reader, these aren’t the markets once enjoyed by Mom & Pop stylized investors of yesteryear. Today they are nothing more than a “Red Light” district who want to sell you the illusion that “love” can be yours. After all, who are you going to believe? The gyrating, long legged siren in the window who’s asking price rises daily? Or, your tired old interest or money market rate that’s about to charge you for nothing – and return less?

Welcome to investing today – where the next retiring central banker will have just as much resume cred for an interview with Larry Flint, rather than the limiting options of just the banks or firms they once regulated. Yes, in the immortal words of Mel Brooks “It’s good to be the King.” But I digress.

For those who may be unfamiliar with the term TINA, it stands for “There is no alternative.” Today, this acronym is being used as a defense against criticism for investing.

Think about that for a moment: the major indexes (e.g. Dow™, S&P™, Nasdaq™ respectively) “markets” have just hit all time, never before seen in the history of mankind highs, simultaneously – and people (i.e., fund managers et al) are using terms such as TINA as a defense to preempt criticism for being invested. Does that make any sense to you?

I’m sorry, trick question, of course not. Yet, this is the overarching premise of these “markets.”

If you ask any investment manager with a shred of dignity (I know, don’t laugh, but there are a few) where one should invest today. The answer is something along these lines: “Anywhere, or in any firm that a central bank is currently intervening; whether it be in their bonds, an ETF, or a direct stock purchase – and forget the rest. And all of that comes with one caveat – don’t blame me if, or when, it all goes south. For I can’t make heads or tails out of it either!”

Welcome to investing today – central bank style.

However, with this “no alternative” to the investment dialogue – it is a double-edged sword.

As much as central bankers today are privately taking credit for their omnipotence for the salvation of these markets. It’s that “other edge” they may find is far sharper, and can reveal itself far faster to their detriment than they themselves may realize at this point. For the term “TINA” and it’s implications for another set of questions is not only attaching itself to central bankers themselves – it’s increasingly becoming far more conspicuous by the day.

What is that questioning? It is this: Central bankers are either: a) Absolutely clueless as to what to do about the current distortions they’ve created in the markets (e.g., pillaging of savers, the sustained crushing of bond yields which will all but wipe out pensions, insurance companies and alike in the very near future) and are paralyzed into inaction much like the old adage implied in “riding the tiger.” Or: b) They are intentionally doing so as to further solidify their stranglehold over both the business cycle and other dynamics promoting or enabling an even more robust environment for crony capitalism. i.e., “It’s good to be the King.” No pesky election or “divine” decree needed.

It’s one or the other. Or, said differently: “TINA.” And the implications contained are simultaneously just as frightening when considering either. For it’s becoming increasingly more difficult to argue, let alone or consider, any other alternatives. The questions are beginning to answer themselves.

One would think central bankers would be well aware of this. Yet, that seems not to be the case. Where once open dialogue seemed to be the preferred mode of communication, that “dialogue” is becoming increasingly more ancillary. i.e., Let’s not discuss why we are doing X, Y, or Z. Let’s just discuss that we are doing X, Y, and Z. And leave you to figure out why.

Markets are at all time highs, unemployment figures tout the narrative of “on the right track” with a headline rate (laughable or not) touting near statistically “full.” The President of The U.S. along with many in his economic cabinet openly take to the airwaves praising the current economy. Once again earnings season declares “beats” across the board (even though these beats come via the subsequent ever lowering of bars) Brexit has all but morphed into a “did it ever happen?” as far as one looking at these “markets” for any clue. China appears stable (at the moment) Japan and the ECB are buying up as much open market products as they can get their monetary hands on. And the Fed. not only doesn’t even consider a raise in rates prudent; even of the slightest increment during this time. Former “hawks” are now professing more dovish inclinations than ever!

For example: Over the last few years there has been one thing as consistent as BTFD (buy the f’n dip,) and that was St. Louis Fed. president James Bullard taking to the airwaves touting hawkish tones whenever the “markets” were sporting new highs, only to be the first to iterate “maybe I spoke too soon” soothing, dovish tones when the “markets” appeared panicked or spooked. So much so the last meaningful selloff in the last two years and its resulting reversal is now referenced by the investing world as the moniker-ed “Bullard Bottom.” And nearly every subsequent rise and fall since was a rinse, repeat. Until now.

Remember when the “Dot Plot” was all the rage? Remember when that infamous “negative rate” dot made its debut? That “dot” was attributed to then outgoing, presumed “uber dove” Narayana Kocherlakota. But in June of this year there was a change that seemed to fall well under the radar. In a twist that still has many (those who actually care) scratching their heads, non other than Mr. Bullard, someone considered, or at least perceived to be “hawkish” in his leanings became what many consider an “ultra dove.” Just don’t punctuate that turn of events. For he’s not using a “dot” to punctuate it any longer either.

One can only infer the disparity of his “dot” to his peers would be much harder to justify (remember he was considered one of the only “hawks”) when questioned, rather than just letting the question now go un-asked and into the unknown category. After all, he’s now switched to a new forecasting method that doesn’t incorporate a long-run estimate.  So, does that now imply others at the Fed. (or just his own voting decisions) are more focused, as well as influenced by more short-term metrics and fluctuations? You know like: a stock advisor? Hint: does that question not answer itself?

Something is terribly wrong with all this. The Fed. is vociferously declaring they are not governed by “short-term” fluctuations within the markets or economy. Yet, members are openly touting they are moving away from longer term prognosticating and looking shorter term. Not only has the Fed. moved the “goal posts” every-time a metric implied a required action. Many times they removed both entirely. And now, one of the more “hawkish” members has openly stated not only that he’s not using the same methodology as his peers, but has altered his views so dramatically, he is now considered not just a “dove” but quite possibly one of the more “uber” voting members?

Let’s see: a switch from hawk to dove, no longer will use the “Dot Plot” like his peers, moving from a longer term view to one considerably shorter, and to know where he stands you’ll just have to ask, Although all answers are implicitly wrapped in a cloak of “and you can quote me on that, subject to revisions, at any time.” Remember, this was a Fed. member many thought was at the least “readable.” What does this say for the others? And all this in the Fed’s eyes is considered as “transparent” and/or adding to “forward guidance?” It adds something, but it ain’t clarity is all I’m saying.

Again: All this is being done during an ever ascending, near unstoppable bull run in the U.S. “markets.” Something is not right. Period. And the questioning is not dulling with time passing. it’s growing louder by the day. And the implications of this overhanging “TINA” are horrifying.

What’s becoming even more concerning, as well as puzzling is this: Some of the most boisterous objections against current policies are coming from non-other than those one would think would be the biggest Fed. cheerleaders: i.e., Wall Street!

The problem? It’s not some lowly actuary manager in some dim-lit room sporting a green eye shade. No, it’s some of the largest names and/or assets under management that are decreeing: WTF! Enough!!

You have names like Soros, Gundlach, Druckenmiller, and Icahn just to name a few. You have others like Gross, Rogers, and now Tepper. But that’s not all, those are just a few of the people. You also have banks such as Deutsche Bank™ openly questioning and mocking central bank intervention, implying a “crash” is the only way to maybe right this “ship” again. And they are far from the only ones. Just ask any poor insurance or pension fund manager how well all this central bank interventionism is working out in their favor.

We keep hearing excuses (whether plausible or not) that a “highly accomadative” if not outright stranglehold to an “emergency” styled policy stance is warranted under the present circumstances. If it’s not a Brexit situation – it’s something else. Data dependence? Yes, just don’t ask which data. For it changes if it’s met. Can’t adjust rates during market instabilities. Even if that instability means a never-ending rising of prices in a bubble-icious nature. Not during an election cycle for it would seem to political. Even though a decision either way before or after will be seen as such, regardless of who wins.

It would seem there’s never a good time to make a decision other than a decision – to wait. So far, that’s the only decision that seems unanimously held.

But then again, there’s always this years’ upcoming Jackson Hole event taking place later this month. Here is where the financial/business press will all be attentive and acutely listening for anything remotely insightful as to where Fed. policy will be in the upcoming months.

I would dare to say there is no need to attend as to try to gain some insight. I’m of the opinion, they’ve pretty much made it clear as I iterated earlier. It’s either one or the other. For it would seem by dint: There is no alternative. And it’s hard to distinguish which is more scary. That, or BTATH (buying the all time highs.)

© 2016 Mark St.Cyr