Thanksgiving: William Bradford’s first-hand account of the Mayflower voyage and the settling of Plymouth

Each year since 1961, The Wall Street Journal publishes an excellent account, translated to modern English, the account of the Pilgrims’ journey to Plymouth in 1620 that begins:

Here beginneth the chronicle of those memorable circumstances of the year 1620, as recorded by Nathaniel Morton, keeper of the records of Plymouth Colony, based on the account of William Bradford, sometime governor thereof. (full text below)

Of Plymouth Plantation

For those of us over 50, we were taught this account in public grade school in California in the early 1970s as it is essential to an understanding of the beginnings and the founding of this country. If this account seems esoteric to the modern reader, consider how much commentary is available regarding this remarkable account of those traveling to the new world, with courage, faith, and an astonishing will to survive. Alexis de Tocqueville in Democracy in America observes the opening comments by the early historian Nathaniel Morton and his attributing so much progress to providence:

Any reader of this opening paragraph must in spite of himself sense the solemn religious feeling thereof; one seems to breathe the atmosphere of antiquity and to inhale a sort of Biblical fragrance.
The author’s conviction heightens his language. In our eyes, as in his, it is not just a little party of adventurers going to seek their fortunes overseas; it is the scattering of the seed of a great people which God with His own hands is planting on a predestined shore.

…The immigrants, including women and children, numbered about one hundred and fifty. Their object was to found a colony on the banks of the Hudson; but after long wandering over the ocean, they were finally forced to land on the arid coast of New England, on the spot where the town of Plymouth now stands. The rock on which the Pilgrims disembarked is still shown.

This rock has become an object of veneration in the United States. I have seen fragments carefully preserved in several American cities. Does not that clearly prove that man’s power and greatness resides entirely in his soul? A few poor souls trod for an instant on this rock, and it has become famous; it is prized by a great nation; fragments are venerated, and tiny pieces distributed far and wide. What has become of the doorsteps of a thousand palaces? Who cares about them?

…It must not be imagined that the piety of the Puritans was merely speculative, taking no notice of the course of worldly affairs. Puritanism, as already remarked, was almost as much a political theory as a religious doctrine. No sooner had the immigrants landed on that inhospitable coast described by Nathaniel Morton than they made it their first care to organize themselves as a society.

…The population of New England grew fast, and while in their homeland men were still despotically divided by class hierarchies, the colony came more and more to present the novel phenomenon of a society homogeneous in all its parts. Democracy more perfect than any of which antiquity had dared to dream sprang full-grown and fully armed from the midst of the old feudal society. – Alexis de Tocqueville, Democracy in America, 1835 (trans. George Lawrence).

The State Library of Massachusetts has a remarkable facsimile of Bradford’s Manuscript, “Of Plimoth Plantation” where the firsthand accounts are journaled in longhand and includes, of course, the Mayflower Compact also available for review. 

Early Thanksgiving

History.com has provided an excellent account of what occurred in the early Thanksgiving at Plymouth:

In 1621, the Plymouth colonists and the Wampanoag shared an autumn harvest feast that is acknowledged today as one of the first Thanksgiving celebrations in the colonies. For more than two centuries, days of thanksgiving were celebrated by individual colonies and states. It wasn’t until 1863, in the midst of the Civil War, that President Abraham Lincoln proclaimed a national Thanksgiving Day to be held each November.

The remarkable narrative continues after the harsh winter that half of the travelers did not survive:

In November 1621, after the Pilgrims’ first corn harvest proved successful, Governor William Bradford organized a celebratory feast and invited a group of the fledgling colony’s Native American allies, including the Wampanoag chief Massasoit. Now remembered as American’s “first Thanksgiving”—although the Pilgrims themselves may not have used the term at the time—the festival lasted for three days. While no record exists of the first Thanksgiving’s exact menu, much of what we know about what happened at the first Thanksgiving comes from Pilgrim chronicler Edward Winslow, who wrote:

“Our harvest being gotten in, our governor sent four men on fowling, that so we might after a special manner rejoice together, after we had gathered the fruits of our labors; they four in one day killed as much fowl, as with a little help beside, served the Company almost a week, at which time amongst other Recreations, we exercised our Arms, many of the Indians coming amongst us, and amongst the rest their greatest king Massasoit, with some ninety men, whom for three days we entertained and feasted, and they went out and killed five Deer, which they brought to the Plantation and bestowed on our Governor, and upon the Captain and others. And although it be not always so plentiful, as it was at this time with us, yet by the goodness of God, we are so far from want, that we often wish you partakers of our plenty.”

The Desolate Wilderness (WSJ full text)

Here beginneth the chronicle of those memorable circumstances of the year 1620, as recorded by Nathaniel Morton, keeper of the records of Plymouth Colony, based on the account of William Bradford, sometime governor thereof:

So they left that goodly and pleasant city of Leyden, which had been their resting-place for above eleven years, but they knew that they were pilgrims and strangers here below, and looked not much on these things, but lifted up their eyes to Heaven, their dearest country, where God hath prepared for them a city (Heb. XI, 16), and therein quieted their spirits.

When they came to Delfs-Haven they found the ship and all things ready, and such of their friends as could not come with them followed after them, and sundry came from Amsterdam to see them shipt, and to take their leaves of them. One night was spent with little sleep with the most, but with friendly entertainment and Christian discourse, and other real expressions of true Christian love.

The next day they went on board, and their friends with them, where truly doleful was the sight of that sad and mournful parting, to hear what sighs and sobs and prayers did sound amongst them; what tears did gush from every eye, and pithy speeches pierced each other’s heart, that sundry of the Dutch strangers that stood on the Key as spectators could not refrain from tears. But the tide (which stays for no man) calling them away, that were thus loath to depart, their Reverend Pastor, falling down on his knees, and they all with him, with watery cheeks commended them with the most fervent prayers unto the Lord and His blessing; and then with mutual embraces and many tears they took their leaves one of another, which proved to be the last leave to many of them.

Being now passed the vast ocean, and a sea of troubles before them in expectations, they had now no friends to welcome them, no inns to entertain or refresh them, no houses, or much less towns, to repair unto to seek for succour; and for the season it was winter, and they that know the winters of the country know them to be sharp and violent, subject to cruel and fierce storms, dangerous to travel to known places, much more to search unknown coasts.

Besides, what could they see but a hideous and desolate wilderness, full of wilde beasts and wilde men? and what multitudes of them there were, they then knew not: for which way soever they turned their eyes (save upward to Heaven) they could have but little solace or content in respect of any outward object; for summer being ended, all things stand in appearance with a weatherbeaten face, and the whole country, full of woods and thickets, represented a wild and savage hew.

If they looked behind them, there was a mighty ocean which they had passed, and was now as a main bar or gulph to separate them from all the civil parts of the world.

Take a few minutes to reflect on our beginnings and how much we have to be profoundly thankful for. Reflect also on the progress over the centuries, overcoming the horrors that followed these astonishing beginnings and the sacrifices of many that have helped advance this progress.

CPI – reduction in the rate of increase is not a decrease but still lit the fuse of a tape bomb

There has yet to be a decrease or contraction in month-over-month inflation – and yet the market has another record-setting day in terms of volatility. The better-than-expected (7.7 vs 8% reduction in the rate of increase) squeezed off a tape bomb: 

S&P 500 makes historic leap…as investors went risk off, mostly predicated on the cratering of the cryptocurrency markets. And the unknown of the October consumer price index reading made the bulls less aggressive during the steep decline.

In what may be the biggest 1-minute green bar in the entire history of the index, it leapt nearly 110 handles, or 3%, (3,751.50-3,861) at the 8:31 a.m. mark. The stocks in the index were following suit. In retrospect, even buying at those elevated prices has been profitable. (ToS news, 11/10/2022)

But as welcome as a slowing of increase is, the response (and following wealth effect) is largely an illusion:

This morning’s CPI report does little to alleviate that call for further policy action. While the headline has come off peak levels, the momentum in prices remains robust, suggesting, as Fed Chairman Jerome Powell did last week, there is still a significant amount of work yet to be done.

As expected, shelter and energy costs continue to be key drivers of the headline rise. While housing prices have slowed, given the multi-year deficit of supply, even with demand off peak levels and supply rising from earlier lows, there remains a sizable gap between the existing need and stockpile of housing units, providing structural support to prices. (Stifel)

Whether 50 bps is priced in or not doesn’t matter. The lack of recognition of the ongoing damage is protracting the problem – the country is still at 40-year highs in terms of cost escalations:

Former Secretary of the Treasury Summers: “we can’t stop at curbing inflation”

In a post by former United States Secretary of the Treasury, Dr. Summers writes, “curbing inflation comes first, but we can’t stop there.” In this essay, a complexity of problems are addressed, including a few strengths such as an extraordinarily strong labor market, given the negative GDP growth of the first six months of this year. All have acknowledged this odd combination where recessionary threats exist but several jobs are still seemingly available to any looking for them – this is only due in part to the strength of the overall economy, but it is a point that should be acknowledged, alongside a bizarre mixture of the post-pandemic workforce that do not appear to be returning to traditional jobs, at least at this present time. 

Summers goes on to outline the “serious, interconnected problems demanding attention” regarding the following challenges (all emphases mine):

First, an economy that even progressives such as Paul Krugman recognize as overheated is operating with a core inflation rate that is close to 7 percent and is not yet declining — with the latest monthly figure exceeding the latest quarterly figure, which in turn exceeds the latest annual figure.

Second, the combination of the adverse effects of inflation and the adverse effects of necessary anti-inflation policies has prompted a consensus prediction of recession beginning in 2023. The most recent Federal Reserve projection suggesting that inflation can be brought down to 2 percent without unemployment rising above 4.4 percent is simply not plausible as a forecast.

Third, the Fed has raised interest rates in a way that markets would have thought unlikely in the extreme only a year ago. Markets are reeling from the shock, with the possibility that normal trading could break down in the Treasury bond market, an event that if unchecked would have significant ramifications for other markets.

Fourth, the global economy is everywhere challenged by rising U.S. interest rates and a dollar exchange rate at record levels against some key currencies. The fallout from the war in Ukraine has also been devastating to many economies. A weak and closing global economy hurts our exporters and markets and dangerously implicates vital national security interests.

But managing inflation not seen in four decades remains the grand central theme and cannot be overstated:

The objective of policy should be clear, at least. What is most important is that the maximum number of Americans who want to work are able to work at as high an income as possible, now and in the future. Other matters — from the level of government debt to the functioning of financial markets to business incentives to inflation — are not important for their own sakes but because of their effects over time on employment and income.

Put another way: Questions of macroeconomic policy are not about values but judgments about the ultimate effects of various actions. As Fed chair during the early 1980s, Paul Volcker famously tamed out-of-control inflation at the cost of a severe recession. But he did so not because he cared less about unemployment or worker incomes than his predecessors did but because he rightly recognized that delay in containing inflation would only mean more pain down the road.

This principle can be seen in the current labor market. Even as job openings have risen to unprecedented levels and labor shortages have empowered workers, Americans’ real incomes have declined significantly. Unless inflation comes down, workers will not see meaningful increases in their purchasing power — and many of them will continue to doubt the government’s ability to carry out basic tasks.

That’s why it’s vital that the Federal Reserve not waver. Chair Jerome H. Powell has vowed to impose sufficiently restrictive monetary policy to return inflation to within range of the Fed’s 2 percent target. The more confident that workers, businesses and markets are that the Fed will follow through on that, the less painful the process will be.

Dr. Summers goes on goes on to suggest policy measures in the out years that should not be overlooked, see the full discussion here. It is a sincere hope that Chair Powell and the other Governors will hear Dr. Summers and other voices of former Fed officials who have consistently warned for well over a year regarding the nature of cost escalations and excessive spending and liquidy. This is critically important as the capital markets continue a defiance that is likely to make things worse and prolong the solution, given the known impacts of the wealth effect – a topic that doesn’t appear to get enough attention or exploration. 

FOMC notes and updated indicators (2022 09 21)

FOMC NOTES*

  • Fed’s third straight 75 basis-point-hike drove “a much more hawkish dot plot that showed 125 more basis points of hikes this year” (so a potential fourth 75-basis-point increase in November) and a terminal rate of 4.6%
  • Policymakers substantially revised other economic projections and now see growth at just 0.2% this year, down from the 1.7% forecast in June. They now see the unemployment rate rising to 4.4% next year and inflation not falling to 2% until 2025
  • Chair Powell, “my main message has not changed at all since Jackson Hole” (recall: “historical record cautions strongly against prematurely loosening policy”) and “our job is to deliver price stability…central bankers see that as a precursor for health in the rest of the economy”
  • Powell said growth will need to be below trend for a while, and labor markets will need to soften, but he refrained from being too forceful on the subject of economic pain. Delays in restoring price stability could bring “more pain”

OTHER INDICATORS:

  • The Bloomberg Dollar Spot Index climbed to a record high
  • The yield on 10-year Treasuries advanced 12 basis points to 3.65%
  • US Leading Economic Index (LEI) fell 0.3% in Aug., vs. est. -0.1% (six-month annualized LEI narrowed to -5.3%)
  • US asking rents rose in August by the slowest pace in a year, a sign the hot rental market could finally be cooling, according to real estate brokerage Redfin. The national median asking rent rose 11% year-over-year to a record high of $2,039
  • Mortgage rates in US advance to 6.29% – the highest since October 2008

* source for many of these notes Stifel Economics

Consumer credit and spending momentum

Today’s Federal Reserve Consumer Credit Report (G.19) reported the following for July:

Consumer credit increased at a seasonally adjusted annual rate of 6.2 percent. Revolving credit increased at an annual rate of 11.6 percent, while nonrevolving credit increased at an annual rate of 4.4 percent. 

This reflects a month-over-month decrease in revolving credit from 16.8 billion to 11.6. See the full G.19 report here.

Directionally this is consistent with the most recent Visa Spending Momentum Index (SMI) which reported the following (Aug. 11):

Visa’s U.S. Spending Momentum Index (SMI) declined to 95.0 in July (seasonally adjusted), a 4.5-point deterioration from June. The SMI has now recorded a month-over-month (MoM) decline in five out of seven months in 2022 and the trend is clear: Most consumers are spending less via payment methods. All major components of the SMI declined in July—the indexes for discretionary and non-discretionary spending are both firmly below 100—indicating that spending activity is becoming concentrated among a smaller share of consumers.

The bottom or is this time it’s different?

A number of market analysts observe that historically, an index can retrace a very significant amount (up to two-thirds; cf. Colby) while still in a primary trend. Some interpret the Dow Theory as supporting this:

…signals that occur on one index must match or correspond with the signals on the other. If one index, such as the Dow Jones Industrial Average, is confirming a new primary uptrend, but another index remains in a primary downward trend, traders should not assume that a new trend has begun (Investopedia).

BofA Global believes this to be the case for a very specific reason: household majority position of the overall market that has not sold, yet:

U.S. households now own roughly 52% of the stock market. And a look at three major market plunges since 2000 (see chart) shows that equities only bottomed a few quarters after significant selling activity from households occurred.

BofA’s research investment team said a common refrain from July investor meetings was: “Everybody’s already bearish, might as well buy.” But they still favor cash, credit, and equities, in that order. Or at least until households, the “decision-maker,” decides to make a move and sell.

Gated article but full post access here.

July CPI – hot, cold, or goldilocks for the Fed?

For years the monthly CPI report has been rather routine, with decades of low inflation and the challenge, from the perspective of the Fed, to target slightly higher, target inflation rates – something that sounds almost absurd in our present time. As always, there is a challenge on the part of the Federal Reserve to not overreact in one direction or another. The conundrum is more than two years of highly stimulative activity that followed more than a decade of stimulative activity. The discussion of how behind the Central Bank may be is an entirely different discussion. For now, it is a question of how much, how fast, and a very interesting question on the part of the markets regarding interpretation. Below is an excerpt from the Chief Economist at Stifel who presents a balanced and thoughtful assessment:

July CPI is expected to rise 0.2% and 8.7% over the past 12 months, according to Bloomberg data. Although, some including the Cleveland Fed anticipate a slightly higher read at 8.8%. In either case, this would be a welcome reprieve from a 9.1% near-term peak in June, although from a monetary policy perspective, may prove underwhelming. Committee members, after all, have been clear several months of a marked reduction in prices is needed before the Fed can comfortably say inflation is trending back under control. Therefore, one month’s minimal decline does not make a trend and should not have a material impact on the Committee’s latest hawkish rhetoric, or plans to move forward with a potential third-round 75bp hike in September.

…Investors, meanwhile, are still unconvinced of the Fed’s resolve to fight inflation no matter the costs with the 10-year restrained relative to a federal funds rate of 2.50% and a likely rise to 3.50% by year-end. As a result, expectations continue to ping pong between a 50bp or 75bp rise next month. A cooler-than-expected inflation report will likely tip the scale in the direction of a smaller move, while a hotter-than-expected report will all but solidify forecasts for 75bps.

Graphic source/credit: Stifel

Employment Cost Index (ECI) from the BLS for JUNE 2022 – wages continue to inch higher

ECI for June 2022 (released today) demonstrates continued wage pressure, which is good and bad at the same time, especially in an inflationary environment:

Compensation costs for civilian workers increased 1.3 percent, seasonally adjusted, for the 3-month period ending in June 2022, the U.S. Bureau of Labor Statistics reported today. Wages and salaries increased 1.4 percent and benefit costs increased 1.2 percent from March 2022.

Compensation costs for civilian workers increased 5.1 percent for the 12-month period ending in June 2022 and increased 2.9 percent in June 2021. Wages and salaries increased 5.3 percent for the 12-month period ending in June 2022 and increased 3.2 percent for the 12-month period ending in June 2021. Benefit costs increased 4.8 percent over the year and increased 2.2 percent for the 12-month period ending in June 2021. (See chart 2 and tables A, 4, 8, and 12.)

WHY THIS MATTERS: inflation. Especially in a service economy (but everything else as well), this is a major “M & O” cost for companies and even local governments. If this cools as hiring slows down, great, but if not the Fed will have to continue to act. Below is a breakdown by employment type and one notable thing: local governments. Local governments (in California especially) typically follow CPI as a guide for collective bargaining adjustments. This year, soaring CPI has provided more leverage than there has been in decades for upward adjustments to wages. These adjustments are not reflected in the table below and my guess is they’re delayed.

The full report can be viewed here, FRED interactive chart here, and the trend below.

Pending Home Sales Fell 8.6% in June – Year-over-year, transactions DOWN 20.0%

Excerpt from the June pending home sales report from NAR:

Homes were 80% more expensive in June 2022 than in June 2019

    • Homes were 80% more expensive in June 2022 than in June 2019
    • Pending home sales declined 8.6% from May as escalating mortgage rates and housing prices impacted potential buyers.
    • Pending sales retreated in all four major regions, with the West experiencing the largest monthly decline.
    • Compared to the previous year, contract signings dropped by double digits in each region as pending sales in the West were down by nearly a third.

“The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, dipped 8.6% to 91.0 in June. Year-over-year, transactions shrank 20.0%. An index of 100 is equal to the level of contract activity in 2001.”

See full report here.

Where capital flows are moving to hedge against inflation

It has been so long for most of us and never for many to consider the impacts of inflation as a driver of investment decisions – but then again, the last two years of the pandemic have accelerated radical and essential changes to business and society (to use an old-fashioned summary phrase). 

There are traditional ways we have thought about inflation but many of these are tinctured with models we either grew up with, formally studied or both. The general thought is to divert money into tangible assets or as Elon Musk has advised, “physical things like a home or stock in companies you think make good products.” Warren Buffett in the same article advises investments in revenues generating assets such as great companies that produce products or deliver services and provides jobs. 

The Financial Times notes a distinctive shift:

Investors are buying more US farmland in search of a hedge against inflation as commodity shortfalls caused by Russia’s invasion of Ukraine drive world food prices to record highs.

Land values in the Midwest grain belt have gained 25-30 percent in the past year while auctions draw intense bidding for available ground.

FT notes that larger investors, funds, and institutions are not new to this asset class, but the volume of increase is what’s notable, which is driving inflation in the farmland itself, which in some cases has, “outstripped farmland’s earnings potential” which is thought to be offset by the overall value. 

Another post on Investopedia, 9 Asset Classes for Protection Against Inflation covers a blend of asset categories that may function as a hedge, including some that may address the impact of devalued currency. 

CPI: Consumer Purchasing Power (U.S. Dollars)

Healthy body and mind: America’s oldest competitive snowboarder

Absolutely inspiring – after practicing law for decades, in Life 2.0, “it’s time to do something else.” This something else involves healthy body and mind, and interaction with people. 

From the Los Angeles Times:

Dick Schulze, 76, didn’t take up snowboarding until his early 50s. Since then, he has competed in amateur and professional events around the world, including the 2006 Olympic qualifiers, in which he competed against Shaun White.

…Up he goes, toward the blue sky, scaling the bank of snow before a hop and quick pivot sends him sailing back down again. Down he glides, across the slope like a knife smoothing butter on toast, before pinwheeling through a series of small turns…Dick Schulze…at age 76 defies both age and gravity. He is the country’s oldest competitive snowboarder, a relative late bloomer who didn’t take up the sport until his 50s and plans, despite a titanium knee and a fall that crumpled his helmet and blacked him out, to keep going until he hits at least 100.

Because the combination of speed and agility — the sensation of skimming through a giant bowl of whipped cream, of hurtling forward like the brakes have gone out, of moving with the fluid ease of quicksilver — thrills him in ways he can’t describe. Unlike when he navigates a field of moguls…or flies down a black diamond run…Schulze struggles to explain his passion and obsession. “There’s something very sensual about the way a snowboard moves,” he finally said after grasping for the words. “That’s about the only answer I can really give.”