Michael’s CIO (Check-It-Out) Report on the week just past — events, sarcasm, and global macro reflections
July 18, 2022
THEME: Bumps 🤜🏼🤛🏼
GL🌍BAL
99 problems but the euro ain’t one: The European Union’s currency💶 bumped below parity with the U.S. dollar last week. A year ago, a €5 meal cost $6; now it is only $5; but vacationing abroad won’t feel much cheaper because of high airline tickets and inflation — What will be the economic effect? A stronger dollar may mean less U.S. exports (because our goods are more expensive) and less global revenues for U.S. corporations as profits earned abroad translate back into less U.S. dollars — In other words, some corporate earnings may decline on the back of a stronger dollar💵
Baudi language: Biden visited Israel, Palestine, and Saudi Crown Prince Mohammed bin Salman Al Saud (MBS), and met with the leaders of Iraq, Egypt and the United Arab Emirates where fist-bumps were the de facto greeting — Resolve against Iran’s nuclear ambitions was strengthened and oil-rich countries were lobbied to increase global supply🤷🏽♂️Time will tell regarding results for global safety and lower oil prices
Mixing Water ‘N Gas: Drought in both the western United States and southern Europe will increase natural gas prices. How? — Prolonged droughts lead to lower reservoir levels and reduced hydropower which leads to the need for increased natural gas power generation. Also, increased weather extremes drive up consumer cooling and heating needs🔌
BOMBardment: Russia continues to attack civilians and civilian buildings across Ukraine in a prolonged war — Putin seems to have little incentive to stop
Drone Wars: Vladimir Putin will visit Iran next week and Tehran will deliver hundreds of war drones to Russia — Doubleplusungood
Cyber-Dome: Israel, home of the Iron Dome missile defense system, will create a Cyber-Dome. It will reduce online attack entry points, mitigate threats, and improve detection and response — All large nations and corporations may need to go this route and/or the wave of the future may be analog😏
WHEALTH
Protect your wealth through trust solutions: A comprehensive range of trust and estate advisory services can help protect your wealth — now and for tomorrow
Philanthropy: Optimizing your giving can help you give more and smile more
BIZNOMIC$
i-Bump: Based on strong inflation numbers, the Fed will probably bump up interest rates at least 0.75% at its meeting next week — Recall, I believe that Chair Powell is following Volker’s playbook of pushing the US. into recession to stop inflation ☹ Not the best strategy. And history remains undecided whether Volker or increased oil supplies stemmed inflation🤷🏽♂️
StayFlation: This has been one of our predominant themes since last year, and we are sticking to it — Inflation is not dissipating for a variety of reasons and will remain higher than we we’ve grown accustomed to over the last couple decades
Pure Barre: Looking ahead, bank flexibility may be tested when Michael Barr, President Biden’s nominee for the government’s influential Vice Chair of banking supervision at the Federal Reserve, is approved — What does this mean? Uncertainty for large regional banks regarding the potential expansion of capital regulations will weigh on investor sentiment — On another note, bank deposit growth has slowed; not surprising😏
Perfect Moment, the European luxury ski brand, has received investment and sponsorship from Priyanka Chopra Jonas and Nick Jonas, an entertainment power couple
Cry😢: Cryptocurrency lending platform Celsius Network imploded, filed for bankruptcy, and won’t let users withdraw funds, but has paid back $300MM of loans. Celsius used to pay digital coins depositors more than 15% interest and in turn would lend those coins out. Celsius claims assets between $1B and $10B, liabilities between $1B and $10B, and over 100,000 creditors — Even the Ever Given would fit through that ginormous $9B spread🙈
Cry3x: Voyager Digital also filed bankruptcy, the founders of bankrupt crypto hedge fund Three Arrows Capital are missing, and Open Sea (the largest NFT (digital art) platform) cut staff 20%
CONTENT
QUANTanglement: German researchers achieved record-setting quantum entanglement connecting two atoms simultaneously across 20 miles where communication, transfer ability, or bumps happens instantaneously, i.e., faster than light — Yes, Einstein theorized about this too🤯
Jen 4 Brad 2: Jennifer Lopez (JLo) and Ben Affleck, who originally dated in 2002/2003, wed over the weekend in Vegas— 🎊It’s all about second chances
HEAT🥵 Extreme heat waves, record breaking temperatures, hundreds of heat related deaths, and wild fires are sweeping across Europe — Devastated livestock and crops are will lead to less harvest income and higher food prices. Some regions have temporarily banned harvesting to prevent equipment sparks from igniting more fires🔥
PERSONAL
Mid-summer: Running Point, along with a couple brilliant VC co-hosts and Silicon Valley Bank, held a well-attended mid-summer venture capital mixer for GPs, LPs, and CEOs at our offices
Allocate: Attended a venture capital dinner for a promising venture capital investment platform — we are keeping eyes open for promising entry points into venture funds that can take advantage of lower valuations
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-22-41
