As I was wandering around on the “interwebs” the other night, I happened to run across an ad for a new short-form streaming service Quibi. In it, a staggering number of celebrities wearing hastily made costumes on haphazardly fashioned “sets” were re-enacting one of my all-time favorite movies, The Princess Bride.
I’m fighting off a summer cold at the moment – much like I was when my parents rented it from our local “Movie Shoppe” back in 1988 – so I just couldn’t resist the layers of nostalgia, and I watched the whole thing.
By far my favorite scene in the original movie is Fezzik and Inigo’s trip to Miracle Max in a desperate attempt to revive a “mostly dead” Westley. When Max (famously portrayed by Billy Crystal in the original, and by Seth Rogen in this cute celebrity remake) finds out that Westley is trying to survive for true love, he acknowledges that “Sonny, true love is the greatest thing in the world,” qualifying that with an aside, saying…
Except for a nice MLT – a mutton, lettuce and tomato sandwich, when the mutton is niiiice and leeeeeean, and the tomatoes are ripe!
(Smacking lips) – they’re so perky…I love that.
That bit just slays me every time… can’t help it.
But I’m on cold medication this time around, so my attention wandered a bit. This time it fixated on the word “mutton”… I thought “well that’s not a word we encounter very often anymore.”
And since I’m watching this while searching on the internet, I just typed it into Google and hit enter… which took me down a rabbit hole I wasn’t even remotely expecting.
Postwar Menus: A Mutton For Punishment
The first real article I came across was an NPR piece that pinned the decline of mutton to soldiers in the Second World War.
Apparently, mutton used to be widely available, as old restaurant menus from the New York Public Library point out. And perhaps counterintuitively, in almost all instances the mutton chops were more expensive than the roast spring lamb.
But during World War II, American G.I.’s were served canned Australian mutton. And that, according to mutton enthusiast and industry historian Bob Kennard, “by all accounts was just awful”.
From economic perspectives, mutton was a struggle as well. First off, mutton is sourced from older sheep, which increases the cost of raising them. In addition, the Sheep Wars, which culminated in the passage of the 1934 Taylor Grazing Act, had caused the industry so much trouble by then that it was ill-equipped to respond to the advent of refrigerated railroad cars, and the beef industry slowly began to claim market share.
So by the time demand for wool began to precipitously decline in the 50’s and 60’s due to competition from lower-cost cotton, rayon and polyester, there weren’t many options left, and market pressures proved too powerful to overcome.
The long, slow death of mutton echoed the nature of the meat itself – tough, gamey, and requiring long periods of time stewing to become truly consumable.
You know, kind of like economics.
Checking for Doneness in the US Economy
For a few months now, I’ve been writing about how drastically the global economy has slowed down.
But like mutton, these things take a long time to cook, and it was only a matter of time before we saw that weakness officially show up in US Economic numbers.
Well they’re here, and it’s bad… US Gross Domestic Product came in down 32.9% year-on-year.
That is the worst print in history.
To put that in perspective, if we grow at the same average quarterly pace that we did during the Trump Presidency, it will take us over 4 years to get back to even with Q2 of last year.
At the 3.3% growth rate we had during the Reagan years, it still takes over 3 years to get back to even.
Even if we grew at the 4.25% clip that we did during the early 70’s, it would still require the US economy 2 and a half years to claw our way back.
And that’s going to be hard to do at these high unemployment levels. Jobless claims data was released today, and while initial claims were in line with both expectations and with last month, continuing jobless claims posted a surprise increase, rising to over 17,000,000 people.
The market didn’t react well, either, with both the Dow Jones Index and the S&P 500 finishing down on the day.
And given that earnings have been lackluster and precious metals have remained strong despite today’s slight pullback, it seems to be indicating that some fear is finally making its way into the market.
When that happens, we all have to brace ourselves for an increase in volatility. So, to protect ourselves a little, let’s grab another ¼ stake in the iPath Series B S&P 500 VIX Short-Term Futures ETN (BATS: VXX).
All the best,