I’ve been thinking about ballhootin’ lately. Where I live among the steep slopes of the Southern Appalachian Mountains, folks have a word for that sickening sensation when your car starts sliding inexorably down an icy mountain road: ballhootin’. It expresses both the giddy excitement and grim inevitability of an uncertain outcome beyond human control.
This colorful regionalism is derived from the area’s lumbering legacy when trees cut high up the steep mountain slopes would be trimmed of protruding branches, their business ends rounded and, once winter delivered frozen ground and a lubricating blanket of snow, the logs would be sent ballhootin’ down the mountain. When logs were on their way, lumbermen would shout out ‘Ballhootin’!’ as a warning to those down the mountain.
It’s a term IROs may want to remember when thinking about the market environment over the next few years. With the slim Brexit victory and the unpredicted US election of Donald Trump, voters in the two largest global financial markets have set in motion significant changes in the international order. We’re still waiting for the full implications of each to land but the markets did what markets do: they reacted immediately. The pound fell and global markets swooned following the Brexit vote.
A shocked reaction to Trump’s victory sent markets down, but between election day and year-end the S&P 500 hit eight all-time highs, and closed the year up nearly 12 percent, with the financial sector in particular touching the high end of its historical trading range. Most recently we’ve seen markets shudder again in reaction to Trump’s hastily imposed and chaotically implemented travel ban.
The Brexit vote and Trump’s slim electoral victory were, in hindsight, explicable reaction to forces that have been building for years with the established political order struggling to cope. The 2008 market meltdown challenged the world with previously unimaginable conditions that defied notions of what we had come to regard as ‘normal’: a near-perfect correlation across markets and asset classes, a global recession leading to massive and persistent unemployment, stagnant economies and weak or non-existent recoveries and several governments taking the unprecedented step of issuing negative interest rate debt. Factor in the flood of refugees from ongoing conflicts across the Middle East and the new normal seems chaotic, unpredictable and dangerous. We are entering a time where sweeping political change will result in more market volatility.
In other words, it’s a ballhootin’ market.
Get ready for a diet of breathless news coverage of every market prognostication or economic forecast followed by panicky reactions and minute-by-minute coverage of stock market gyrations interspersed with ads to invest in gold. It’s all part of the non-stop WAH-WAH siren designed to keep us in a state of constant agitation so we don’t turn away. How else to command our attention in a noisy, media-saturated and short attention-span world?
As London navigates its way out of the EU and Washington rethinks 70 years of international arrangements, the financial markets will continue to calibrate and adjust perceptions of future risk and reward. While the market can be an efficient mechanism to discount the future in aggregate or a specific piece of company news, it is often a blunt instrument when crossing categories – applying broad trends to a specific firm or generalizing from one example to an entire sector. IROs need to remember that when the market comes ballhootin’ toward them.
Business and financial journalist Brad Allen is a former IRO and served as NIRI national board chair between 1996 and 1997
