Stock Exchanges and Beef Demand

While today we bemoan the high personal debt most Americans carry, the history of debt and the exchange of debt is long and colorful. Did you know that interest bearing loans are recorded in the Code of Hammarabi?

Code of Hamm

Corporate stock may have been traded as early as 1602 with the Dutch East India Trading Company, or, as some experts argue, may date back to ancient Rome.

On my first day in Japan, I will visit to the Tokyo Stock Exchange (TSE), headquartered (as one may expect) in Tokyo. I’m fascinated by how stock exchanges work to drive both world economies (indeed a linked, global economy) which, in turn, affects personal behavior and spending. If stock markets fall, investors lose money, making them more hesitant to spend money, which may result in a pullback, which may result in an overall decline in consumer spending. (I hear a voice saying “It’s the economy, stupid”, thank you, Mr. Carville). That is not very many degrees of separation between the Tokyo Stock Exchange and a beef producer!

Why do I care? Aside from the fact that (as I mentioned earlier in this space), I love to find linkages between seemingly unrelated things, I also care because the beef industry depends on consumers’ willingness to spend disposable income on foods they crave–like a prime filet at a premium steakhouse, or a juicy burger at the joint down the street. In times when personal, disposable income decreases (numbers I saw this morning indicated a decrease of roughly 1 percent in 2013) consumers are likely to trade down in the beef category (think filet to flat iron), or even out of the beef all together. So what happens at the TSE or the NYSE has an impact on beef demand and producers’ ability to sell product at a fair price (beef demand).

It is fascinating to me that many U.S. consumers cannot (or will not, perhaps they just don’t care?) name their senator, find South Dakota on a map, or balance a checkbook, yet they are affected daily, in a very personal way, by what happens at the Tokyo, or New York, stock exchange.

One of my favorite things so far about planning my Eisenhower Fellowship has been my growing understanding that the Fellowship encourages me to follow these links between seemingly unrelated things. I’m more of a systems thinker than a linear thinker, so the opportunity to pursue and learn about different areas (that some people might find odd to hook together) is one of the most exciting aspects of my coming journey.

On my visit, I hope to learn more about the organization of stocks within the TSE. Stocks are arranged into First Section (for large companies), Second Section (for mid-sized) and Mothers (high-growth and emerging stocks). Why are high-growth stocks called “Mothers”? There just has to be a fascinating story here, and when I find out, I’ll share it with you.

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