Tradition, Triumph, and Trends: The Intersection of Thoroughbred Racing, Fine Spirits, and Economic Insight

April 3, 2024

A Tale of Perseverance and Chance

The year was 1951 at Hamburg Farm in Lexington, KY, where a newborn foal faced a precarious start, struggling to breathe following a difficult birth. The legendary horseman, John A. Bell III, took a remarkable step, administering a shot of whiskey to the faltering foal. This unconventional remedy marked the beginning of a miraculous recovery. The foal, aptly named Never Say Die, would go on to defy the odds.

Three years later, having shown promise in England, Never Say Die was entered into the world’s most prestigious race, the 175th Derby Stakes at Epsom Downs, facing staggering 33-1 odds. In an extraordinary turn of events, before an audience of 250,000 that included Queen Elizabeth II and Sir Winston Churchill, Never Say Die triumphed over 22 competitors to become the first American-born horse to win this coveted title in over 70 years.

Across England, in Liverpool, Mona Best was captivated by Never Say Die’s story. In a bold gamble, she staked all her jewelry on the horse, securing a windfall that would fund the purchase of a Victorian home turned music venue, the Casbah Coffee Club. This venue’s basement stage would host the Quarrymen, featuring John Lennon, Paul McCartney, and George Harrison, marking the inception of a rock and roll revolution. The Quarrymen’s drummer, Peter Best, Mona’s son, would later make way for Ringo Starr, but the legend of Never Say Die and its ripple effect on music history remained indelible.

As the Keeneland Spring meet swiftly approaches, bringing its unique excitement to the Bluegrass, American Trust is pleased to collaborate with Never Say Die Bourbon in celebration of the rich heritage and the meticulous discipline that are hallmarks of wealth management, fine bourbon, and horse racing. In a nod to the storied traditions of horse racing, Never Say Day is a tribute to the legendary racehorse that shares its name, weaving together the spirit of Kentucky’s past with the present.

Keeneland Thoroughbred Sales Index

Kentucky’s rich heritage in horse racing and bourbon crafting, beyond their cultural significance, mirrors the intricate dynamics of the global economy. Keeneland thoroughbred sales, a hallmark series of events in the horse racing calendar, have historically served as an unconventional yet insightful economic barometer. The fluctuating sales prices of thoroughbreds reflect broader economic currents, offering a unique lens through which to view the complexities of inflation and consumer spending.

In November 2022, we wrote about the significant swing in thoroughbred sales prices between 2020 and 2022. Prices spiked sharply in 2021 but cooled significantly in 2022 just as consumer prices were hitting their peak.

In fact, after peaking in summer 2022, inflation has been on a downward trend for a year and a half thanks to a retreat of food, energy, and goods inflation. Inflation in the services sector—which heavily depends on wages as labor is the most important cost in the production of services— has decelerated more slowly and in lockstep with a gradual moderation of wage inflation.

The thoroughbred sales price index reflects inflation’s peak in 2022 and now suggests that prices may continue to fall through the October meet. The average price paid for a thoroughbred in 2023 was around $104,000 versus $106,000 in 2022. This represents a -2% decline in prices during 2023.

Serving as a leading indicator, peak thoroughbred prices in 2021 suggested that consumer prices may be heading toward inflation in 2022. The disinflation of thoroughbred prices in 2022 suggested that consumers may see prices peak and retreat in 2022. Sure enough, this is what happened, and now thoroughbred prices have declined in 2023 suggesting a continued cooling of inflation among consumer prices in 2024.

Inflation Outlook for 2024

Following a period of pronounced inflation, driven in part by the convulsions of a global economy emerging from the shadow of a pandemic, early signs suggest a tentative shift towards moderation. The Federal Reserve’s stance, finely balanced between the imperatives of fostering employment and tempering price growth, is a pivotal factor in this economic equation.

The increase in inflation rates in February 2024, albeit modest, hints at the enduring challenge of managing inflationary pressures without stifling economic vitality. Core CPI has edged upwards signaling that while the battle against inflation may be progressing, it is far from won. This backdrop of cautious optimism is tempered by the recognition that inflation, with its myriad drivers and diverse impacts, remains a formidable opponent in the quest for economic stability.

Closing Thoughts

For investors, this landscape presents both challenges and opportunities. The elevated interest rate environment, a direct consequence of inflationary pressures, necessitates a recalibration of investment strategies, particularly with respect to interest rate-sensitive assets like bonds. Equity markets, while potentially volatile, may offer avenues for strategic gains, especially in sectors poised to benefit from or resilient to inflationary trends.

This environment underscores the paramount importance of diversification and the judicious assessment of risk and opportunity.

As your partner, we are here to navigate these complexities, ensuring your portfolio is well-positioned to capitalize on opportunities and mitigate risks. Our team continuously monitors the economic indicators and market trends, ready to make informed adjustments to safeguard and grow your investments.

We invite you to reach out to your advisor to discuss your current investment strategy and how we can further align it with the evolving economic landscape. Whether it’s adjusting your asset allocation, exploring new investment avenues, or simply reaffirming your current strategy, we’re here to ensure your investment journey is both successful and reassuring.

Together, we can navigate the uncertainties of today’s markets, seizing opportunities and facing challenges with confidence. Let’s continue to build a resilient, prosperous future for your investments.

More News