Fair warning to those have somehow failed to notice: as the rings embedded in my tree stump increase to uncountable magnitudes (i.e. as I grow older), I find my expository focus increasingly centered on eulogies, elegies and other forms of tribute to the dearly departed. I don’t think I can stop this trend, because (let’s face it), the passage of time only increases the inventory people and things that went before, while my interest in everything else inexorably wanes.
So I noted with unmixed regret last week’s announcement by owner Peter Barbey (among other things the heir to the North Face/Timberland/Lee Jeans outdoor clothing dynasty) his intention to discontinue the printing and physical distribution of the venerable “Village Voice”. Oh, the publication will forge on in the crowded and complex ionosphere, competing for what used to be called “mindshare” with a bajillion other on-line periodicals, but soon, those accustomed to the ritual of grabbing a copy of The Voice outside their favorite bodega, will find their routines rudely disappointed, and for all time.
Volumes can and will be written about the periodical: how it was founded in 1955 by Norman Mailer and a couple of his pals out of an apartment located in the neighborhood for which it is named, how it became a portal of passage for writers and artists, ranging from Literary Giants Alan Ginsberg, Ezra Pond, Henry Miller, James Baldwin and E.E. Cummings, to Music Critics Lester Bangs and Nat Hentoff, to cartoonists Jules Feiffer, R. Crumb, Matt Groening and Lynda J. Barry. How it chronicled the cutting edge sensibilities of the Beat Generation, the Flower Power era, Punk and post-Punk. And how, above all, and against significant odds, it endured for decades as the bible for local popular culture; its reach, extending well beyond Bleeker Street, well beyond Manhattan, well beyond America’s borders, extending, at least for a time, around the world.
The Voice, of course, has always been free in New York, but I actually used to plunk down the hefty sum of 5 clams to pick up a copy from time to time in Chicago. It was the late ‘70s, and I was already casting my eyes eastward. When I finally reached the, er, Promised Land of Gotham, I never missed an edition. I eagerly checked the live show listings (chock full of formatted ads from venues long shuttered, including the Bottom Line, the Ritz, the Felt Forum, the Lone Star Café and, of course, CBGBs), sneaked a peek at the Personals, and read what articles captured my interest.
It was in the Village Voice, for instance, that I first read of an epidemic of untreatable viruses that were plaguing the neighborhood: a problem that a few months later rose to the dignity of a full blown global crisis: the spread of Acquired Immunodeficiency Syndrome – otherwise known as AIDS.
But in the end, The Voice almost certainly fell victim to the inexorable forces of what transpires at the intersection of cultural change and technological advancement. The music clubs shut down. Those looking for hookups found more efficient means of sourcing them. Its (dubious in my judgment) progressive sensibilities got lost in an interminable stream of such doggerel – made available every microsecond on the web. In sum, it might be fair to state that The Voice lost its voice, and this is hardly cause for celebration.
I reckon, though, we’ll survive, but I don’t think we’d doing ourselves any harm by taking a moment to mark the changing of the guard downtown.
Anyway, I’ve got a suggestion for moving on from our lamentations, for a new VV has emerged. SaVVy investors already know this, but for the last couple of years, those looking to trade in the nooks and crannies of what is known as Volatility can avail themselves of something called the VVIX. It measures the implied volatility embedded in options on the VIX index, which in turn measures the implied volatility priced into options on the S&P 500.
Got that?
Good. Because unlike the VIX, which aside from the odd palpitation, has been a sleepy ride down a Local (i.e. as opposed to an Express) elevator, the VVIX has been quite lively of late:
VIX: VVIX:
If you’re a bit confused here, I suspect you’ve got company. But trust me, the VVIX is where the action appears to be. To wit: while the VIX graph indicates that the implied vol of the SPX is a dreary, high-single/low-double digit affair, the VVIX rises and plunges to levels routinely around (and sometimes above) 100%!
Now, back in the days when Mailer and Co were cranking out The Voice on an inky, noisy, hand-operated printing press (i.e. when I first studied options theory), I was taught that an implied volatility of > 100% is, shall we say, problematic. It implies that the underlying instrument, with significant one-standard deviation probability, can manifest a price change equal to or greater than its entire value. I can see how this is possible on the upside, but if my increasingly waning arithmetic skills have any juice at all left, this suggests that a single, high probability move will take the underlying instrument (in this case the VIX) into negative territory.
Somebody wake me up if the VIX goes negative, because it suggests that there are investors out there who will pay me for the privilege of holding options, and under the circumstances, I’ll take all I can get.
In fact, such a trade might be about the only low hanging fruit left in the entire global market complex, which continues to show very little sign of reaction to stimulus (positive or negative). Last week featured some interesting news flow, but many markets barely budged. The SPX did in fact manage to break a 3-week losing streak, but only to the tune of about 60 bp. For all of the talk of equity strength, our favorite index has traded inside a 24 handle since just before Memorial Day, and, as I hardly need to tell you, Labor Day is just around the corner! Mathematically, the entire summer season range is under 4%, and at the moment, the SPX is below its midpoint. So perhaps we should be-calm ourselves as to the strength of this market.
Selected other asset classes are showing a little less sloth, perhaps as led by the decline to YTD lows of the US Dollar Index, and the impressive climb of Gold:
US $ Index: Gold:
Now, I should inform you that us stone cold ballers think of Gold as a currency, so the yellow rock rally can at least in part be viewed as yet another forearm shiver to our beloved green paper.
The main beneficiary, apart from Gold, of the dollar’s poor performance, was the Euro, which gained over 1% on Friday, most of which it copped in the afternoon, subsequent to the Central Bank speechifying at Jackson Hole. It does appear to me that as is consistent with the urban myth, FX traders are displaying more sensitivities to global affairs than are stock jockeys.
I think, again, they may be on to something. While next week, if there’s a God in heaven, should be quiet, we’ll have to burst out, from a standing start, come Labor Day Tuesday. Perhaps top on the agenda will be untangling a brewing budget crisis, and who among us is brimming with confidence that we can avoid turning this routine exercise into a clown rodeo? Data will start streaming in, and the market action could come from any corner of our awareness, from Washington to Pyongyang, from Corporate C-Suites to the mean streets of Berkley. We’ll be well-advised to remain on our toes.
I also want to reiterate (in part because I believe I was the first to record this thought) my belief that if investors want anything out of this congressional session, they bloody well better gin off some sort of selloff. If bad behavior from the White House to Capitol Hill is met with nothing more than a collective market shrug, accompanied by a sustained unwillingness to part with favored holdings, then said bad behavior is rendered politically inconsequential, and will continue. By contrast, if the market took a dive, I believe you’d see them pols busting their collective humps not only to pass a budget, but also to do something useful on Health Care, Tax Reform and Infrastructure.
I reckon, though, we’ll just have to see how that plays out. In the meantime, if the spirit moves, I think you should pick up a print copy of the Village Voice – while you still can. Put it aside for your progeny. Let them know how we used to do it. It will do them less damage than obsessing about the latest moves in the VVIX. And, for those who were wondering, yes you can trade options on this index, raising the likelihood that, ere long, we’ll have the opportunity to turn our attentions to the VVVIX.
Good luck with that one, kids. Because, like James Baldwin, Alan Ginsberg, Norman Mailer, the Bottom Line and (soon) the Venerable Village Voice itself, I hope by then I’ll be out.
TIMSHEL