2021_08_30 — THEME: Pressing and Money

August 30, 2021

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

Credit: Photo and graphics by Michael Ashley

THEME: Pressing and Money

• Pressing: Running Point Capital was quoted twice in the international press by Reuters last week — woohoo! — regarding why market movements were so positive
• 3½ out of 5: The S&P 500 rose to a record high on 3 days (Tue, Wed, & Fri); the NASDAQ 100, on 4 days (Mon, Tue, Wed, & Fri)
• Confidence is the cheapest stimulus: Jobs recovery is the story to shout!!! Also, as long as people believe the Fed has their back, any constructive news will be a market booster💉[pun intended] — nonetheless, supply bottlenecks may be more persistent than expected
• Pow!: Federal Reserve Chair Jerome Powell said the central bank could taper (reduce) its monthly purchase of $120B of bonds (not a surprise), but that it won’t be in a hurry to raise interest rates (stocks and bonds reacted enthusiastically to this) — the Fed remains pedal to the metal helping the economy
• Money: Wages and salaries as well as Personal Spending increased for the fifth consecutive month in July — this is great!
• Mo money: House adopts $3.5 trillion Biden backed budget blueprint
• Less money: Consumer spending may drop when Federal government enhanced unemployment benefits end because people will have less time and free cash flow to spend — Delta will probably get the headline blame
• Auto money: Average automobile gasoline usage is higher than 2019 levels even with more electric cars on the road — more driving, less flying
• Sadly: As mentioned, two weeks ago, the Afghanistan situation could quickly become abysmal, and it has; our hearts go out to the killed and wounded U.S. service men and women as well as hundreds of other lives destroyed during a suicide attack in Kabul
• All that glitters: Afghanistan sits on $1 to $3 trillion of mineral and gemstone deposits, including possibly the world’s largest lithium reserves — the critical element electric vehicles need — China is interested and will offer economic investment!
• CitiBiti: Citigroup applied for approval to trade Bitcoin futures
• Once Bitten: Bitcoin briefly travelled above $50K again; can it hold? Bitcoin production follows a preset path, halving every four years until 2140 when the last of 21 million coins will be mined; unlike commodities — oil, copper, wheat, gold — higher prices don’t lead to increased production.
• EuroPE: European private equity (PE) firms, which raised $172B of dry powder last year, have snapped up over $80B of U.S. companies this year
• GooglExit: Google exits Google Health but plans to continue health initiatives — yeah, I’m confused too😏
• NatGa$: Kinder Morgan (#KMI) extended its decrease of natural gas supplies from the Permian Basin to California following a deadly explosion near Coolidge, AZ — expect prices to increase in California as end of summer temperatures rise
• Scritti Politti: German publisher Axel Springer pays over $1B for U.S. news website Politico and Forbes plans to go public in a $630MM SPAC deal — FYI: Bezos paid $250MM for the Washington Post in 2013
• SPACs: Apollo wants to raise a $500MM fund to invest in SPACs
• In Japan: China, Great Britain, U.S., and Russia lead the Paralympics medal count; Prime Minister Suga’s ally was defeated in Yokohama’s mayoral election; and cabinet approval ratings continue to decline
• Tosh 2.0: Toshiba Corp has engaged global private equity firms (as potential reformists/bidders) after shareholders ousted its chairman in June (after the company colluded with the Japanese government to pressure foreign investors)🙈
• Up: South Korea hiked interest rates, the first developed economy to do so in pandemic era — up 0.25% to 0.75%
• 16: Years to-the-day after Katrina, Ida strikes Louisiana — will disrupt industry and shipping for weeks

Best wishes for the week ahead😃,
Michael
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Michael Ashley Schulman, CFA
Partner / Chief Investment Officer

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