Michael’s CIO (Check-It-Out) Report on the week just past — events, sarcasm, and global macro reflections
September 19, 2022
THEME: Duck, Duck, Goose
Duck, Duck, Goose is a children’s game where A) You know exactly what’s going to happen, B) You know who’s going to do it, but C) You don’t know who it will effect; i.e., you don’t know who will be the goose
GL🌍BAL
Duck, Duck, FedUp: A) We know that the U.S. Federal Reserve Bank will raise interest rates on Wednesday by 0.75% to 1% and we know that the Fed will likely push the U.S. into some sort of recession; B) We know that the Fed and Jerome Powell are the ones doing it; but C) There are differing opinions on where we are in this cycle and everyone is watching to see which investment strategies will be most affected—equity, debt, real assets, digital assets, private equity, commodities, or hedge funds🦆
Tug of War: The U.S. Fed is waging a war on inflation, but victory is rarely a gentle feat ⚠ especially when you don’t know what it looks like
Duck, Duck, Climate: A) We know that global weather is changing, the earth is getting warmer, ice caps are melting, glaciers are disappearing, and sea levels are rising; B) Its either happening because of pollution (which is bad by definition), cyclical changes in the earth, or both; but C) Everyone is watching to see which areas are affected next and hoping it’s not theirs—1/3 of Pakistan underwater, disappearing Danube, Elbe, and Tiber rivers in Europe, droughts in Switzerland, a shriveled Yangtze River, heavy rains in Qinghai, and the worst heat wave on record in China, superstorm Typhoon Nanmadol in Japan, catastrophic drought in Somalia, Yellowstone National Park flooded, freak hailstorms in Germany and Mexico, roasting in the U.K., derechos in the U.S. and Canada, eastern Kentucky washed away, scorching temperatures on the Iberian Peninsula, France, and India with thousands of heat related deaths, vanishing lakes around the globe, and historic floods in Dallas—“ask not for whom the bell tolls”🔔
Duck, Duck, StayFlation: Inflation will dampen when supply chain and labor bottlenecks ease, but not necessarily when we have a recession! Recessions do not necessarily solve supply chain issues; sometimes they make them worse because companies go out of business or are unwilling to invest in more efficient technology. Additionally, although inflation is peaking, it is still rising, just not as fast as earlier this year—Our StayFlation call from last year remains intact with inflation settling around 3% to 4%—Private real estate, credit funds, collectibles, and opportunistic investments may provide a hedge here
wHealth
A 720-degree wealth perspective🧭includes your total financial situation. It enables you and us to understand the interplay of liquidity, risks, and potential across your entire portfolio—across diverse assets, multiple money managers, public securities, and private assets—it can also provide you a better investment experience that balances your global household level asset allocation with priority-specific or account-specific tactical allocations and tax efficiency
CONTENT
Queen: Queen Elizabeth II👑was a thoughtful global presence who kept the ancient concept of monarchy kind, hip, and modern throughout her reign—she is missed
Patagonia: Patagonia founder and reluctant billionaire, Yvon Chouinard, gave his company away—🧥the outdoor clothing purveyor’s profits will now fund climate change activism☁
Lights, action, WhatsApp: WhatsApp’s first commissioned film features 2021 NBA All-Star MVP Giannis Antetokounmpo—🏀Naija Odyssey, his origin story, born in Greece to Nigerian parents
PERSONAL
Venture Capital: Running Point and I were quoted by Reuters regarding how a decline in initial public offerings and public stock market prices affect venture capital (VC) sentiment—”VC managers are looking for low or advantageous pricing so they can achieve their targeted multiples, which may take longer since the IPO market has slowed”
Wireless vs. wireline: We were quoted again by Reuters regarding T-Mobile’s sale of its wireline business (originally acquired from Sprint) for one dollar—the move allows them to focus marketing and capital expenditures on their main business services
The energy drink race🏁Running Point and I were quoted by The Food Institute regarding the crowded energy drink category and how energy drinks vie to differentiate themselves—multiple trends allow different energy drinks to appeal to distinct market segments
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-22-55
