Morning Brief – Mary Poppins (1964) and Inflation

Mary Poppins (1964) and Inflation

Some readers have been asking for an example of the real cost of inflation given that so many appear to have either forgotten or perhaps never studied its pernicious effects. Screened in the UK on BBC on Saturday evening, the 1964 version of Mary Poppins grossed USD 103 million following its release . US Dollar inflation has averaged 3.91% annually in the intervening 57 years which means that that USD 103 million from 1964 is worth USD 920 million in 2021. That may seem rather a long observation period, but it is at least instructive to help understand the long term effects of a relatively low rate of inflation-at least in comparison to that at the end of the 1970’s. Taking the sum of USD 920 million today, it will lose 90% of its value by 2078 if inflation continues to average 3.91%. Klaar? As the Germans say.

Thanksgiving Week

With US markets closed on Thursday for Thanksgiving and with a short day on Friday, statisticians have been pouring over the figures to examine how the US stock markets have performed since WW2. In the intervening 76 years since 1945, the answer is that while the Monday and Tuesday of pretty much every year has seen small losses, overall the week has seen a gain of somewhere between 0.6 and 0.9%. So, maybe not enough of a reason to go out and buy, but certainly not a reason to sell-that is of course if history is indeed a reliable indicator. EUR/USD at 1.1288.

Investment Mix

Traditionally the combination of 60% Equities and 40% Bonds has served well with Bonds providing protection when Equities suffered. That combination has been proven not to work well at all in the recent past given the negative interest rates which global government bonds have been yielding. In fact, while it may not sound exciting, it has been better to have been in cash yielding nothing than suffering negative rates on a bond portfolio together with the prospect of rising interest rates. US 10 Year treasury yields at 1.55% with Japan at 0.08%, UK at 0.88% and Germany at -0.34%.

Tesla

Earlier this month London Uber drivers were offered subsidies to buy Teslas. Yesterday’s server shut down which admittedly only affected 500 drivers may have dented the Tesla reputation rather more than that number might suggest. The effect was to lock those 500 drivers out of their cars which would certainly cramp the style of Uber drivers if they were to suffer that indignity in the future. With a market cap of USD1.13 trillion and a share price of USD 1137 almost at an all time high, Tesla and the market does not care much about those 500 drivers.

The Beatles

With the release later this week of a George Martin directed film of previously unseen Beatles material from 1969, it is appropriate to remember that this day in 2018 the Beatles re-released their album called The Beatles but known as “The White Album”. It promptly sold 63,000 copies and stormed back into the Billboard 200. Here is one of their finest songs from that album: Back in the USSR:

Ohh!

Flew in from Miami Beach B.O.A.C.
Didn’t get to bed last night
On the way the paper bag was on my knee
Man, I had a dreadful flight

I’m back in the U.S.S.R.
You don’t know how lucky you are, boy
Back in the U.S.S.R. (Yeah!)

Been away so long, I hardly knew the place
Gee, it’s good to be back home
Leave it till tomorrow to unpack my case
Honey, disconnect the phone

I’m back in the U.S.S.R.
You don’t know how lucky you are, boy
Back in the U.S.
Back in the U.S.
Back in the U.S.S.R.

Well,
The Ukraine girls really knock me out (… Wooh, ooh, ooh)
They leave the West behind (Da, da, da)
And Moscow girls make me sing and shout (… Wooh, ooh, ooh)
That Georgia’s always on
My, my, my, my, my, my, my, my, my mind

Oh, come on
Woo (Hey)
(Hoo) Hey
Woo hoo (Yeah)
Yeah, yeah

Hey, I’m back In the U.S.S.R.
You don’t know how lucky you are, boys
Back In the U.S.S.R.

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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