Michael’s CIO (Check-It-Out) Report on the week just past — events, sarcasm, and global macro reflections

July 25, 2022

THEME: Heat🌶

GL🌍BAL

Summer Fire Heat Drought Global Warming: You get the picture! Heat waves across Europe, Japan, China, and U.S. have led to fires, droughts, dead fish, ruined crops, heat related deaths, and stress on fragile power grids—England reached record temperatures above 104F (40C) that melted asphalt, buckled rail tracks, and warped runways—It will fuel even higher inflation with unexpected expenditures on infrastructure and healthcare as well as water and food shortages

MortGauge: Political popularity in China is re-gauged as citizens boycott mortgage payments across hundreds of stalled housing projects in over 90 cities aggravating a severe property sector crisis—In China, it’s common for people to place a deposit and start paying mortgages on yet to be delivered properties—Xi faces unrest on a range of issues, but declining property values loom large🏡🏢🏗

Billion-COVID: There is a strong probability that after Xi Jinping secures a third term at China’s Party Congress this fall (and is possibly designated people’s leader on par with Mao), he will relax China’s zero-COVID policy to boost social-economic growth—This could be a huge boost for global growth

Not Negative: After 8 years of negative interest rates, the European Central Bank raised the deposit rate for the first time in 11 years, increasing it from -0.5% to simply 0%—Greece and Italy, who have the highest ratio of debt relative to their economic output have the most to fear

Rightaly: Italy is taking a step to the right as prime minister Draghi feels the heat (i.e., resigns) and right leaning parties (who also happen to be more favorable to Putin) gain sway—The post-fascist Brothers of Italy party is led by Giorgia Meloni, who may become the next prime minister

Private EUquity: Following up from our July 5 note of the same name about record private equity (PE) purchases of European companies, Reuters and Dealogic show such PE purchases of public companies as a hot global phenomenon up +40% from last year. Sharp declines in stock markets mean that public companies trade cheap relative to private companies, creating tempting buying opportunities—Private equity and private secondary funds can allow investors to play an advantageous long-term view

$$$: A search for safety in uncertain global markets and the Fed’s aggressive interest rate increases have goaded the U.S. dollar to multidecade highs—Private credit funds should continue to provide a natural hedge to rising interest rates with their floating rate structures—And the Federal Reserve will raise interest rates again this week📈

wHEALTH

MultiFam: What is a private multifamily office? Who needs a multifamily office? Multifamily offices (MFOs) are private wealth-management advisory firms that serve ultra-high-net-worth individuals (UHNWI) with a holistic approach to taxes, estate planning, charitable giving, investment, governance, bookkeeping, insurance, PPLI, and/or trust services—MFOs offer total outsourced solutions to manage the financial, investment, and lifestyle side of an UHNW individual or family

Family legacy planning: We can help you prepare your family for the conscientious responsibility of inheriting wealth—Manage your wealth, grow your business, care for your family, secure your legacy

BIZNOMIC$

AmazONEmedical: Amazon wants to buy One Medical, a primary care provider with physical locations, for $3.5B to expand its virtual and physical footprint in the recession resistant area of healthcare—As Amazon, Apple, and other tech players pursue healthcare opportunities, the industry may not be retain its traditional safe haven qualities⚕

Oh Snap: Snap’s stock price plunged -35% after heated competition and an advertising slump crushed quarterly sales—Takeaway: advertisers have slashed budgets more than expected to save costs amid broad economic uncertainty. Also, new iPhone rules that require user permission to be tracked have made measuring and managing ad campaigns more difficult

StayFlation: This has been one of our predominant themes since last year, and we are “staying” with 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

Baby Googles: Alphabet stock had a 20 for 1 stock split—Amazon did a similar split last month

CONTENT

Barnstormer: Pottery Barn updated 150 pieces of its better-selling designs to suit people with disabilities, elderly, and injured—Accommodative dimensions for wheelchairs, tilting mirrors, and features like open storage to eliminate gripping and drawer pulling (I recall design lectures on this as a UC Berkeley undergrad)

RedHots: L.A. based Haim the Band added an honorary 4^th sister when Taylor Swift joined them onstage in London—Also, Red Hot Chili Peppers announced a new album, out on October 14🌶

Veltini with Velveeta-infused vodka, a mashup created with BLT Restaurant Group—Hard pass 😝

PERSONAL

AmEx: Running Point and I were quoted in a Reuters article regarding American Express’s earnings forecast and resilient consumer spending💸—the article was also picked up by NASDAQ

Doctors: Running Point and I were quoted in a Medscape article regarding inflation’s impact on a doctor’s practice and the cost of healthcare—you could call it our prescription😉

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.”

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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-22-46