2021_08–09 — THEME: Feeling Squeezed

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

Credit: Manhattan Beach Pier Belly, photo by Michael Ashley
  • Feeling squeezed: PepsiCo (PEP) will sell its North American Tropicana, Naked, and other juice brands to French private equity firm PAI Partners for $3.3 billion (yet still retain a 39% stake in the newly formed joint venture) as it simplifies its product range and shifts away from high-sugar drinks😃
  • Hoodwinked: The brokerage firm Robinhood (HOOD) IPO’d and the press was quick to call it a flop because the stock price declined on opening day, but the press got it wrong😖! An IPO is supposed to maximize a company’s selling price and that is what seems to have occurred. Also the stock was up by the end of the week
  • How much for a layaway plan?: Jack Dorsey, CEO and co-founder of social media company Twitter (TWTR) and Chairman, President, CEO, and Co-Founder of payments company Square Inc. (SQ) has orchestrated Square’s purchase of Australian buy now, pay later provider Afterpay Ltd for $29B in stock — yes, that much for an online version of the old fashioned layaway plan😏; Afterpay had takeover interest from multiple buyers, including U.S. consumer banks, but Square and Afterpay were already exploring joint services
  • Fire, fire, everywhere: 100 large fires🔥 rage in the Western U.S. and the Dixie fire in Northern California (the largest single fire in state history and the second largest overall) wiped out the town of Greenville. Several large fires rage in Greece, including one that has ravaged Evia, its second largest island, devouring pristine forests and forcing the evacuation of thousands on boats. Multiple fires in Turkey made headlines and fueled anger towards the government for not doing enough. In Russia’s Yakutia region (Siberia) over 16,200 square miles of wetlands, forests, and land have burned this year.
  • Tap the brakes, mate: Royal Bank of Australia (the central bank down under) will start to taper in September; i.e., they will buy less of their own Aussie government bonds and thereby reduce economic stimulus
  • Mask-up: More cities and countries around the world reinstate indoor mask mandates and New York City requires proof of vaccination at indoor restaurants and gyms 😷
  • Greek to me: Headline concern is focused on the easily transmissible COVID delta variant🦠, but the lambda variant (from South America) may be more vaccine resistant. The World Health Organization designates variants Eta, Iota, Kappa, and Lambda “of interest” and tracks 13 more
  • Fit-for-55: The European Union’s proposals to reduce their own greenhouse gas emissions by 55% by 2030, “Fit-for-55”, will increase regulatory pressure and costs related to emissions from domestic production and imports. High decarbonization cost industries, such as European aviation, shipping, automotive, mining, and utilities could be among the most affected by additional costs.
  • I want half: Biden signs executive order for half of all automobiles sold in US to be zero-emissions by 2030⚡; for comparison, the European Union (EU) has proposed a de-facto ban on all sales of new gas-powered autos by 2035 and the United Kingdom has an earlier date of 2030
  • Positive job trends: The U.S. economy added 943K jobs in July (and job numbers for May and June were revised higher); unemployment is at 5.4%, in other words, 5.7MM less jobs than in February 2020, before the pandemic
  • Tokyo: Olympics ended with TV viewership down -50% — not surprising — and Britain’s gold medal diver, Tom Daley, finished knitting his Olympic charity cardigan

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Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm

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Michael Ashley Schulman

Michael Ashley Schulman

Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm

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