Michael’s CIO (Check-It-Out) Report on the week just past — events, sarcasm, and global macro reflections
June 27, 2022
THEME: Snake Oil and Recession Desires
GL🌍BAL
Snake Oil Recession: I’ve never seen a U.S. recession more desired by investors, news media, and market commentators. Much like snake oil, many market observers see a recession as a cure-all for all our economic woes. THEY BELIEVE IT WILL: end inflation, cause stocks to bottom out creating a desirable buy opportunity, end Federal Reserve interest rate raises, make bonds more attractive, reduce oil prices, end supply chain woes, and restore youthful looking hair — And maybe it will🐍, but recessions are inherently bad and usually lead to job losses, business failures, profit reductions, and severe disappointments
ECB++: The European Central Bank, led by President Christine Lagarde will stop bond purchases at the end of June and will raise interest rates in July and September, taking it out of negative territory for the first time in over a decade — This is a major policy reset💶 And for those keeping track, Greek and Italian government bonds are weakening relative to other European bonds
Bombs: Russia seems to have strengthened its hold in eastern Ukraine and has sent missiles fresh into Kyiv — The net effect of this war is a strengthening of NATO, increased defense spending, more diversified supply chains, increased inflation, a migrant/humanitarian crisis in Europe, recession in Europe, and famine in Asia and Africa
Switch: The U.S. Supreme Court remade Roe v. Wade (with a Dobbs v. Jackson Women’s Health Organization decision) — This along with general safety and the gun control debate will have huge ramifications for the mid-term U.S. elections in November and cause many to switch traditional party affiliations for some of their votes
China chain: Rolling COVID lockdowns in China continue to restrain global supply chains and growth. China is also still dealing with a real estate/property developer crisis typified by the collapse of Evergrande with over $300B of debt
India: The Indian Rupee hit a record low of 78.4 to 1 U.S. dollar on foreign fund outflows from Indian equity and bond markets, weaker growth prospects, a strong U.S. dollar, rising import costs, and high oil prices🛢
BIZNOMIC$
AIkea: IKEA used Geomagical Labs’s spatial computing, machine learning, and 3D mixed reality technologies to launch Kreativ, 🪑a design experience that bridges ecommerce with in-store customer journeys
Lipstick on a pig: The stock of bankrupt Revlon skyrockets nearly 8x as the Reddit and stonck crowd strives for gains while ignoring fundamentals — This will end badly for multiple players💄
Boring: Elon Musk’s Company will build the Vegas Loop, a 34-mile transportation network underneath Las Vegas — I remain unclear on the economics of this
Haze: FDA bans Juul e-cigarettes (a disastrous $12.8B investment made by Altria in December 2018)🚭 — burned!
Zentaway: Zendesk (which provides software-as-a-service products for customer support, sales, and customer communications) rebuffed a $17B takeover proposal in February only to now accept a $10.2B offer from the same bidders💻 — ouch!
Floaties: Hong Kong’s famous “Jumbo Floating Restaurant,” designed like a Chinese imperial palace, didn’t live up to its name; first it drowned in a decade of losses and then it capsized or sank in the South China Sea,…or did it?🕵🏽♂️It’s fate is a temporary mystery of conflicting claims
CONTENT
Exploding Kittens: The hit card-game that came to life on Kickstarter added an expansion, Zombie Kittens, 🐱👓a card game where players explode and then come back to life (and then maybe explode again) — They’ve sold over 20MM games🙀
MotorLIME: E-scooter company Lime will test rentable electric motorbikes called “Citra” in Long Beach, California🛵
Art Basel in Switzerland was back in full swing last week with solid sales🖼 — The physical art and collectibles market has performed well in correlation with global wealth
Time travel: A sealed VHS tape of “Back to the Future” sold for $75K at auction — VHS is an analog video recording on a large tape cassette which first debuted 45 years ago; people used to buy, rent and watch these in the era after shadow puppets but before streaming media
Ray of heavy: The world’s largest freshwater fish🎣 was caught on the Mekong River in Cambodia: a giant 300kg stingray that was named “Boramy” (meaning full moon), tagged, and released
PERSONAL
VC/CEO: Joined an informative venture capital/CEO networking event in Santa Monica — there is a lot of promise here, but valuations may need to decline in the near-term
Pickleball: CFA L.A. held its first Pickleball Tournament🎾 — fun event
Turn the TIDE: Find me July 6 and 7 at TIDE SPARK 2022, The Investment Diversity Exchange event in Dana Point, California, where I will host a roundtable session
Make it a great week😊
Michael
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Michael Ashley Schulman, CFA
Partner & Chief Investment Officer
Running Point Capital Advisors, your family office
“We deliver custom investment solutions, innovations, and unique perspectives to you and your family.”
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-22-36
