Random Musings on Markets 2019: Musings on the Run

The weekend is nearly here, and with it comes another honestly-it-isn’t-weekly look at the wacky side of financial headlines. This week’s potpourri includes an extreme hypothetical of companies serving “stakeholders,” the presidential administration’s fast stimulus U-turn, a certain land transaction that was never going to happen … and more!

What If Apple Served Multiple Stakeholders?

If you read Elisabeth’s column earlier this week, then you likely know she thinks the Business Roundtable’s new statement of corporate purpose is both window dressing and probably a sop to politicians who think companies ought to be accountable to other entities beyond shareholders. You might also think we said everything we have to say on the topic, considering it topped 1200 words. But, well, we aren’t done yet, because Elisabeth lives a stone’s throw away from the House That the Steves Built^[i] and got to thinking: What would it look like if Apple had a fiduciary responsibility to her community?

You see, some residents in Cupertino are very very mad at Apple for employing thousands of workers in the city. The presumption here is that the onerous traffic and lack of housing are somehow Apple’s fault, as if Apple had any control over the city council’s many decisions to deny housing developers permits or Caltrans’ frequent diversion of transit bond revenue to BART. So, would an accountable Apple have to close its campus in order to relieve the housing and traffic strains?

Come on, of course that won’t do! Those tax dollars are too valuable! So are the jobs held by Cupertino residents. Maybe Apple could instead offer to build apartments on its own land, although local opposition to housing construction might block that. It would probably also have to build a school, because word of the local elementary school district’s declining enrollment still hasn’t spread far. And a light rail system, because its “we already have employee shuttle buses” argument probably won’t work. Except adding light rail might reduce traffic lanes, so the company might have to ask Elon Musk to drill a subterranean system instead. Those jogging trails on its campus would probably have to open to the public as well. Ditto for Café Macs.

Yet even then, community stakeholders might torpedo the whole lot of it—just as they did when a local developer wanted to turn the town’s dead mall into a mixed-use wonder with a public square, facilities for the local high school district and a rooftop park that connected to local trails. He also pledged to fund the re-opening of a long-shuttered public elementary school and kick in tens of millions of dollars for a new transit center and road improvements. The city would have gotten $20 million in new property tax revenue annually. Uproar ensued at city council meetings, and voters eventually rejected it in a contentious referendum. (A modified version is now in progress, thanks to state legislation, but some councilors are still fighting it.)

Seems to us like making the community an official stakeholder amounts to giving local politicians the green light to extort companies to serve their own pet projects and rile up voters. We … we fail to see how that does anyone any good in the long run? If anything, it probably sets us up for a return to the days of company towns. Come for the job, stay for the tenement?

Case Study: Don’t Overthink Trump’s Tweets and Breaking News

In this day and age of alerts, tweets and more, “Breaking News” is in your face near-constantly. In our experience, investors have a tendency to think reacting to such developments quickly is super crucial to success. But in our view, that is far from accurate. Dueling headlines from Tuesday and Wednesday constituted a case in point.

You see, after US President Donald Trump told reporters he was “looking at various tax reductions” to stimulate the US economy even though America is “very far from a recession,” pundits went wild. Now, to be clear, we aren’t blaming them. If the president tells reporters the administration is crafting some sort of stimulus or tax legislation or reform or whatever, it isn’t unreasonable for them to report it.

And report it they did! The Washington Post broke the news in a 945-word article detailing an array of potential options like cutting payroll taxes a la the Obama administration’s temporary move, inked in 2010, or Trump’s long-touted idea of indexing capital gains to inflation.^[ii] The Wall Street Journal followed up, dropping 1,186 words on the subject. Bloomberg ran two articles—a 917-word article covering the news and a 642-word opinion piece. The New York Times also ran two: a 1,510-word piece Monday and a 1,001-word opinion piece in its “Upshot” column Tuesday. We are sure there were more.

On Wednesday, Trump rendered these 6,201 words moot by telling reporters he wasn’t considering tax cuts any longer, which spurred its own series of treatises. It is almost as if Trump is trying to stimulate the economy through a government-induced rush of pixels, bolstering news industry employment.^[iii]

Again, we don’t blame the journalists for producing these articles—both the notion of tax cuts and their undoing are newsworthy, in our view. But we think all the wasted words here are a lesson for investors, who don’t have to react to every tweet, statement or alert. Acting fast is often acting worse, in our view, and it likely doesn’t bear long-term fruit in investing. While there is no cost to a journalist doing their job documenting fast-changing headlines, investors trying to trade along with them would likely do their portfolio great harm.

Greenland, Greenland, Greenland

Proving August is indeed the silly season in global politics, President Trump gave the entire world the chance to laugh their heads off this week. First he made some noises about maybe buying Greenland. Then he confirmed he was like actually serious. Then he posted a hilarious tweet with a gleaming gold Trump tower badly Photoshopped into a Greenland town, with a comment stating he promised not to do this if Greenland became American. Then, when the Danish prime minister said she wouldn’t sell Greenland because it wasn’t hers to sell, the president thanked her for her candor and promptly canceled their scheduled meeting. All the while, your friendly neighborhood Musers laughed and laughed and laughed. Then we laughed some more.

Then we got a little sad—wistful for what might have been. We know Greenland never would have become the 51^st state, because those glorious Greenlanders are delightfully self-determined. They even Brexited decades ago!^[iv] But still, a missed opportunity is a missed opportunity. Like:

• With Greenland in the fold, we could have joined the EU!
• And then left it, just as Greenland left the European Economic Community (the EU precursor) in 1985!
• The Wall Street Journal describes Greenland’s only golf course as a place where “players scramble over crags and stomp on wild berries to navigate from tee to tee while Air Greenland turboprops roar onto the airstrip nearby,” which sounds like golf we would actually play. We guess we still can, but it would have been easier if it weren’t an international trip.
• We could have tried convincing our bosses that Fisher Investments needed a Greenland office, and then we could have pioneered it. Imagine the hiking and fishing on weekends!
• All the Greenlanders interviewed about the potential US purchase over the last week just seemed like really awesome people, whom we would have been proud to call our fellow countrymen and women.
• We would have had an excuse to rewrite Monty Python’s “Finland” song to be about Greenland. Which we guess we still have, but we are just too sad now. *tear*

Anyway, as you enjoy your Friday evening beer, wine, cocktail or mocktail, join us by lifting your glass to Greenland, to Greenlanders, and to what might have been.

South Africa’s Finance Minister Really Gets Finance Twitter

Reports The Wall Street Journal: “South Africa’s finance minister stirs controversy, especially in the kitchen. Tito Mboweni, a former central-bank governor, came out of retirement last year to help resolve the country’s simmering economic crisis. Off-hours, the rotund 60-year-old shares his cooking secrets with more than 440,000 Twitter followers, whipping up feeds that are part Martha Stewart, part Alan Greenspan.”

This made our week! It is so fitting. If you have ever ventured down the bizarre rabbit hole that is Finance Twitter, you know it is where analysts post corporate rumors during the week and pictures of their adventures with barbeque on weekends. So, a finance minister who cooks? And posts pictures of his stews and various local delicacies on Twitter? And isn’t above using canned ingredients? Sign us up! We haven’t been this tickled since Ed Balls baked on national television!

And all you other finance ministers, catch up! Steve Mnuchin, show us your smoked ribs! Sajid Javid, we demand a glimpse of your veggie and ale savory pie! Giovanni Tria, please whip up a pizza diavola and show it to the world! Taro Aso, we bet you make a mean yaki udon! Bruno Le Maire, surely you have a special family bouillabaisse recipe to show the world! And Yanis Varoufakis, we know years have passed since you ran Greece’s treasury, but we haven’t forgotten you—or you and your wife’s moussaka.

Central bankers, you can get in on the fun too if you want. Grill it, fry it, roast it, steam it, stew it, braise it, sear it, bake it! (Just don’t overheat it.^[v]) Give us pictures of food. It will make the world a better place, one hungry laugh at a time.

Have a great weekend! And send us your weekend barbeque (or other food) pictures!