October 26, 2015
My point is different. Low interest rates for an extended period of time don’t damage economic growth directly, but they cause damage in a multiple of other ways – a point almost universally missed by the critics. That is what this month’s Absolute Return Letter is all about. ... central bank action has had the effect of de-linking equities from the global growth cycle, as equity investors have chosen to blatantly ignore the fall in global trade in favour of more risk-taking at the back of accommodating central banks. Risk-on, risk-off has miraculously turned into risk-on, risk-on. “Don’t fight the Fed”, as they say, and equity investors have obviously chosen not to. ... First and foremost, returns are going to remain subdued because GDP growth will stay low for a long time to come. Demographic factors, productivity factors and mountains of debt in the majority of countries all point in the same direction, and that is towards below average economic growth. ... The most structural of those factors – demographics – will remain a negative for the U.S. economy for another 10-15 years, whilst economic growth in the euro zone and Japan will be negatively affected by demographics until at least 2050. This does not imply that there cannot be extraordinarily good years every now and then, but the average growth rate will almost certainly be low, causing interest rates to stay relatively low for a lot longer than most expect and corporate earnings to disappoint as well.
Amex has faced trouble before. In the wake of the 1987 stock market crash, merchants started to turn away the Amex card because of its hefty swipe fees, which at the time were as high as 3.5 percent. In 1991, a group of 100 restaurateurs in Boston staged what became known as the Boston Fee Party. “There was a big recession going on,” says Steve DiFillippo, owner of Davio’s, a popular Italian restaurant in the city and one of the Fee Partiers. “The garbage guys and the meat guys were helping us out, but American Express wasn’t doing anything for us.” Visa did its best to make the situation worse with an ad campaign featuring celebrity chefs such as Wolfgang Puck and other merchants who didn’t take American Express. ... JPMorgan and Barclays have poached Amex’s high-spending customers with generous card offers and lower annual fees. Two years ago, Chase cards surpassed Amex in American households making at least $125,000 a year ... “Part of my job is to persuade,” Chenault said. Never mind that even the Black Card no longer has the same mystique with the young moneyed set that Amex desperately needs to attract. In 2004, Kanye West boasted about his, memorably referring to it in a song as the “African American Express card.” But last year, Young Thug, the rap icon and influencer of the moment, rhymed in the hedonistic hit Lifestyle about having a $1.5 million spending limit on his Visa card.
The stuff of ancient legend and high-end cuisine, matsutake mushrooms bloom briefly in the forests of Oregon. Subsistence harvesters flock there, hoping to find buttons that can earn a fortune in Tokyo’s bustling wholesale markets, halfway across the world. ... With a firm texture and notes of cinnamon and saffron, this fungus tastes like no other. It’s especially prized in Japan, where the name means “pine mushroom”: The flavor lends a subtle accent to rice and seasonal dishes such as dobin mushi, a seafood broth steamed in a clay teapot. Formerly abundant in the island country’s red pine forests, modern wilderness management and disease have made the mushroom scarce. As much as 90 percent of the matsutake harvested in Oregon is now exported to Japan. Before that country’s economic bubble burst, the highest-grade buttons, dressed up in a gift box with ferns and orange blossoms, could fetch upward of $100 each at auction in Tokyo’s Ota Market. No wonder pickers in the U.S. referred to the mushrooms as “white gold.” ... These days foragers are fortunate to get $15 a pound.
Jornet has, in just 10 years, won nearly 100 ultrarunning events, which are defined as races longer than 31 miles. Six of the past seven years, he has claimed the Skyrunner World Series title, the most prestigious award in mountain running. In the winter, instead of hanging up his sneakers and taking a sauna, he competes in ski mountaineering races, in which athletes climb several thousand feet up snowy peaks, ski down, and then do it again for hours. In that sport, Jornet has four overall World Cup titles. And he doesn’t just win races; he annihilates course records. ... In August 2014, FKT message boards began lighting up with some surprising news. A previously unknown Ecuadorean man named Karl Egloff had raced up and down Kilimanjaro in six hours and 42 minutes, destroying Jornet’s record by 32 minutes. Some considered it a fluke. Then, seven months later, he did it again, beating Jornet’s record on Aconcagua. ... “I’m not purposely trying to beat Kílian’s records,” he says with a chuckle. “But I decided I wanted to try to set records on all of the Seven Summits, and Kílian happens to have the records on a lot of those.” ... I’d asked Jornet about Egloff. We were at lunch, and he’d just taken a bite of a breaded-and-deep-fried-chicken sandwich (when you burn up to 7,000 calories a day, you can eat anything you want), wiped grease from his tanned face, and grinned. “It’s a cool thing,” he said of his competition. “And it’s cool for the sport. It shows what’s possible mentally and physically and generates more interest. I’m glad for Karl.”