Miss Me?
Merry Christmas from TBL.
Thanks to all of you who inquired about my TBL hiatus. I’ve been working on a book. But I thought I’d pop into your inbox to wish you a Merry Christmas.
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What Did I Miss?
In 1970, long-time journalist Louis Rukeyser began hosting Wall Street Week on Public Television (parodied by SNL here) on Friday evenings, a tradition he would continue for 35 years. “Money is one of the two biggest preoccupations of most people – and the only one you can put on television during the family hour,” he quipped. The image above notwithstanding, People magazine would describe him as the only sex symbol of economics, “the dismal science.”
Fifty years ago, on December 6, 1974, Rukeyser was anything but glib, describing market conditions as a “winter of despair” (watch the episode here).
“There’s no question what we should call the present state of the U.S. economy, let’s call it a mess.”
Rukeyser’s panel discussed potential economic fixes, including tax cuts, but rued how long the proposed solutions would take to matter.
Rukeyser’s “special” guest that week, a Wall Street securities analyst, honored by Institutional Investor as the best in his field, gravely explained why he thought the next year would continue to be terrible for stocks.
He was spectacularly wrong.
At the close that day, unbeknownst to Rukeyser and his guests, of course, the Dow Jones Industrial Average had struck rock bottom. After surpassing 1,000 in 1973, the 1974 decline reached 577, the lowest it had fallen since the Cuban Missile Crisis of October 1962, and lower than every other close since. Indeed, it exceeded 45,000 earlier this month.
The market’s recovery began the following Monday, as did the subsequent tax-cut revolution, perhaps because of a White House meeting, also that evening, among Donald Rumsfeld, Dick Cheney, Jude Wanniski of The Wall Street Journal, possibly Congressional aide Grace-Marie Arnett, and economist Arthur Laffer of the University of Chicago. At this meeting, Laffer first drew his famous curve, indeed on a napkin, showing that tax rates can be so high that if you cut them, tax revenues will increase.
The then top federal tax bracket was a whopping 70 percent (it’s now about half that), and ever more income and corporate revenue was subject to that level of taxation on account of inflation. The tax code was not indexed for inflation, and was running at an incendiary 10.1 percent per annum. By way of comparison, the December 2024 annual CPI level of 2.7 percent riled people and markets.
I may be overstating things a bit. It remains unclear who got wind of the meeting and, of course, nobody knew for sure what would happen or how long it would take. Indeed, no tax cuts were implemented until 1978 and they continued in fits and starts.
Still.
Anyway, with 20:20 hindsight, the lessons should be obvious.
Context is everything.
Stocks can be powerful long-term wealth creation vehicles.
Stocks can and sometimes will hurt you in the short-term.
Stuff happens, even though more things can happen than will happen.
We’re terrible at predicting the future.
Political risk is unwieldy at best and largely unpriceable.
Boy howdy is it tough to call the bottom.
What did I miss?
Text and Subtext
“Violence is never the answer, but people can be pushed only so far,” Sen. Elizabeth Warren intoned recently after a healthcare CEO was gunned down in the street. “This is a warning that if you push people hard enough, they lose faith in the ability of their government to make change, lose faith in the ability of the people who are providing the health care to make change, and start to take matters into their own hands in ways that will ultimately be a threat to everyone.” She later clarified that she certainly didn’t mean to imply that the killing was morally justified.
Rep. Alexandria Ocasio-Cortez made sure to be clear that murder is bad before describing this particular murder was a form of self-defense. “This is not to say that an act of violence is justified, but I think for anyone who is confused, or is shocked, or appalled, they need to understand that people interpret, and feel and experience denied claims as an act of violence against them,” she explained. “When we kind of talk about how systems are violent in this country, in this passive way, our privatized healthcare system is like that for a huge amount of Americans.”
In each of these instances, Jon Snow’s analysis from Game of Thrones is perfect.
Drop the Blanket
America’s most famous Christmas sermon was delivered by a cartoon character. In the wonderful, climactic scene of A Charlie Brown Christmas, wherein he shares “what Christmas is all about,” Linus provides a clear and simple explication of the Christmas story. I have watched it many dozens of times.
Notice how, at exactly the moment he utters the angels’ words “fear not” (at 0:44), Linus drops his security blanket. If we’re going to make a proclamation of “fear not,” we need to make an effort to give up those things that offer false security.
I am reminded of Moses at the burning bush, who threw down his staff, his source of security, at God’s command.
We know, of course, that Linus picks up the blanket again, just like we keep grabbing for false security in various forms. May we throw it down, too, and keep throwing it down as needed.
Totally Worth It
The oldest bond in the world turned 400 years old last week, a remarkable run for a financial asset and one that still pays out. A flood in the Netherlands in 1624 necessitated raising 23,000 Carolus guilders to finance repairs, and one of the bonds sold to raise that money was a 1,200-guilder bond sold on December 10, 1624, to a wealthy woman in Amsterdam, a bond that promised the water board would pay out 2.5 percent interest in perpetuity to the bondholder. It’s still paying out €13.61 of interest annually, and on Tuesday the current owner (the New York Stock Exchange, by way of a Dutch-American banker who bought it at auction and gave it to the NYSE in 1938) collected £299.42 of owed interest.
“His law is love and his gospel is peace.” At Christmas, the prophecy rings true.
It’s not your imagination. Coca-Cola products taste better at McDonald’s. This is largely due to the way it’s packaged. While the flavoring is no different, McDonald’s gets its Coke syrup delivered in stainless steel tanks instead of the more common plastic bags, which keeps the syrup fresher. McDonald’s also filters its water prior to adding it to the soda machines, and calibrates its syrup-to-water ratio to account for melting ice. Moreover, McDonald’s utilizes wider straws than normal, allowing more Coke to “hit your taste buds,” according to the company.
For me, the most powerful Christmas lyrics come from the “immensely moving, overwhelming” 1863 poem by American poet Henry Wadsworth Longfellow. They reflect their dark times. And yet (don’t miss the final stanza).
At 14, Pete Cancro started working at the local Mike’s Subs in 1971 while a student at Point Pleasant Beach High School. When the shop’s owners put the business up for sale in 1975, Pete’s mother posed a surprising question to her son: Why don’t you buy it? He did. And now Cancro sold it to private-equity firm Blackstone in an $8 billion deal, most of which he stands to pocket as the company’s sole owner.
Feel free to contact me via rpseawright [at] gmail [dot] com or on Twitter (@rpseawright) and let me know what you like, what you don’t like, what you’d like to see changed, and what you’d add. Praise, condemnation, and feedback are always welcome.
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For 41 years, the PNC Christmas Price Index® has shown the current cost for one set of each of the gifts given in the song, “The Twelve Days of Christmas.” This year’s total is $49,263.47, a 5.4 percent increase over last year.
You may hit some paywalls below; most can be overcome here.
This is the best thing I’ve read recently. The sweetest. The wildest. The bravest. The coolest. The most fun. The most insightful. The most important. The most significant. The most thoughtful. The most obvious. The most interesting thread. The most intriguing. The best thread. Murderbot. Heist. A billion beats. 52 things. Notre-Dame. The Fusion Ladder. FRED. ESPN. The GOAT. Rat-ism. Yikes. 2024.
Please send me your nominations for this space to rpseawright [at] gmail [dot] com or via Twitter (@rpseawright).
“I have a theory that the churches fill on Christmas and Easter because it is on these days that the two most startling moments in the Christian narrative can be heard again. In these two moments, narrative fractures the continuities of history. It becomes so beautiful as to acquire a unique authority, a weight of meaning history cannot approach. The stories really will be told again on these days because a parsing of the text would diminish the richness that, to borrow a phrase from the old Puritan John Robinson, shines forth from the holy Word” (Marilynne Robinson).
The TBL playlist now includes more than 275 songs and about 20 hours of great music. A Christmas edition is here. I urge you to listen in, sing along, and turn up the volume.
In the seventh and final book of the C.S. Lewis Narnia series, after the last great battle for Narnia, with the kings and queens and faithful servants of Aslan pressed to the uttermost by foreign invaders and Narnian traitors, those loyal to the last king of Narnia, Tirian, are forced into a small stable at the top of a hill. At the start of the story, the stable held an unwitting Aslanic imposter, and now houses the terrifying god Tash, unwittingly summoned by invaders paying lip service to their own god. As the loyal Narnians are forced into the stable, they do not meet the grotesque Tash in the darkness of the barn. Instead, they find themselves in another world. Unlike most of the other of Narnia’s royalty, King Tirian has never traveled between worlds. So he peaks back through the stable door to see the fading fire beside the stable, Narnia on its last evening.
Tirian looked round again and could hardly believe his eyes. There was the blue sky overhead, and grassy country spreading as far as he could see in every direction, and his new friends all round him laughing.
“It seems, then,” said Tirian, smiling himself, “that the stable seen from within and the stable seen from without are two different places.”
“Yes,” said the Lord Digory. “Its inside is bigger than its outside.”
“Yes,” said Queen Lucy. “In our world too, a stable once had something inside it that was bigger than our whole world.”
Benediction
This Christmas, with Seamus Heaney, may we have faith in an unseen future.
Human beings suffer They torture one another, They get hurt and get hard. No poem or play or song Can fully right a wrong Inflicted and endured. The innocent in gaols Beat on their bars together. A hunger-striker’s father Stands in the graveyard dumb. The police widow in veils Faints at the funeral home. History says, Don’t hope On this side of the grave... But then, once in a lifetime The longed-for tidal wave Of justice can rise up, And hope and history rhyme. So hope for a great sea-change On the far side of revenge. Believe that a further shore Is reachable from here. Believe in miracles And cures and healing wells. Call miracle self-healing: The utter, self-revealing Double-take of feeling. If there’s fire on the mountain Or lightning and storm And a god speaks from the sky That means someone is hearing The outcry and the birth-cry Of new life at its term. It means once in a lifetime That justice can rise up And hope and history rhyme.
We live on “a hurtling planet,” the poet Rod Jellema informed us, “swung from a thread of light and saved by nothing but grace.” To those of us prone to wander, to those who are broken, to those who flee and fight in fear – which is every last lost one of us – there is a faith that offers grace and hope. And may love have the last word. This Christmas and forever. Amen.
As always, thanks for reading.
Issue 179 (December 18, 2024)
I have missed your messages/music and thoughts. Thanks for reaching out again. Merry Christmas and Happy New Year