Report From New York

by JDH on March 15, 2014

I spent four days this week in New York City, purely for fun.  We had some great meals, with great wine, and took in two plays, including Waiting for Godot starring Captain Picard from Star Trek (Patrick Stewart) and Gandalf from Lord of the Rings (Ian McKellen).

Waiting for Godot was great.  Ian McKellen is 74 years old, and Patrick Stewart is 73, and watching these two “old guys” work the room for two hours was amazing.  The theater was packed.

So was a packed theatre confirmation that all is well in the city that is the heart of America’s financial system?

Not necessarily.

Waiting for Godot has a limited run, ending on March 30, so if you wanted to see it, time is running out, so it’s not surprising that they filled the place as the run comes to a close.  I suspect that was the main reason for a full theatre.

I did a somewhat unscientific survey, and asked every taxi driver and hotel employee a simple question: how’s business?  Some of them gave the standard answer of “it’s great”, but for the most part the answer was “business is okay, but you know this isn’t the busy time of year.”  Apparently the busy time of year in New York City is November and December, and particularly the period between the American Thanksgiving and Christmas, when everyone with money is shopping in NYC.  The early weeks of March are not peak season.

How is it possible that the DOW is just over 16,000, very close to all time highs, and the best I hear is that “business is okay”?  The S&P 500, at 1,841, is also just shy of all time highs, so how is it that even a broad measure of the markets is near all time highs, and yet the “man on the street” is not euphoric?

I’m not saying that New York City is dead; it isn’t.  Far from it.  The restaurants were busy, but not crazy busy; we had no trouble getting seated wherever we went, with no reservations.  The streets are still packed, and the stores are full of people.  We went to the Apple store near Central Park, and it was full of customers, although it appeared that a lot of them, like me, were just looking and not buying.

So what do I make of this?

If you are a market participant, you have lots of money. The market is good, so if you work on Wall Street, all is well.  You can afford to pay for the limo to take you to your favorite restaurant tonight, and you can order the $300 bottle of wine.  The market surge has increased your income, and your wealth.

If you are not “in the market”, your life may be somewhat different.

On Tuesday morning the weather was great, so I went for a run in Central Park.  While I was running, just north east of the Park, in Harlem, there was an explosion that leveled an apartment building and killed and injured many people.  Even though I was outside at the time, I didn’t hear or see anything.  Central Park, and New York City, is a big place.

The full details are not yet known, but speculation is that an improperly maintained gas line infrastructure was the cause of the explosion.  The cold winter, and the use of lots of salt to keep the streets clear, doesn’t help, and may lead to erosion.

It should be noted that the explosion did not happen in one of the hundreds of “doorman” buildings where the affluent live.  The explosion happened in a less affluent area.  Not a poor area, but not an area where the rich live.

What we have is a tale of two cities, as we have had throughout recent human history.  The rich are doing fine, but the less rich live in buildings that may not be properly maintained, and many are struggling to make ends meet.

A stock market at record highs does not mean that everyone is rich.

But isn’t that what it’s supposed to mean?  Isn’t the stock market a “leading indicator”?  If the market is high, doesn’t that mean the economy is also at a peak?

No, because the stock market’s gains are illusory, caused largely by Fed money printing, inflating financial assets, and making the rich even richer.  Unfortunately paper money can’t fix maintenance problems in old buildings.

What’s my point?

I don’t have one.  I’m merely sharing my observations of my trip to New York City.

That is all.