2021_11_08 — THEME: Headline Twists — offsite, trees, China, housing, work, quantum, EV, & ABBA
November 8, 2021
Michael’s CIO (Check It Out) Report on the week just past — events, sarcasm, and global macro reflections
THEME: Headline Twists — offsite, trees, China, housing, work, quantum, EV, & ABBA
- Nameless: A large silicon valley tech firm had their first “offsite” meeting since the pandemic; the meeting was at their corporate headquarters — in-office has become the new offsite!?!🤯
- Think it, don’t say it: Chairman Powell will reduce Federal Reserve bond purchases (taper) by $15B in Nov and Dec, but said everything possible to not say that he will raise interest rates🙊 — once bitten, twice shy
- Kill the Wabbit: COP26 in Glasgow agrees to keep deforesting for nine more years — politicians celebrated, news media framed this as a victory, trees and woodland creatures had no comment — Note: Amazon de-rain-forestation hit a 12-year high in 2020😖
- Alligators: Inflation is not going away, especially with easy corporate credit, companies sitting on +$1T of excess savings, and consumers sitting on +$2.6T of excess pandemic savings. We stick with our longer-term greater than >2% economic growth and >2% inflation outlook — it will take a while for the consensus to agree on this
- China: Chinese government crackdowns across tech (even Yahoo is leaving), education services, video games, and real estate may slow the economy and reduce commodity demand, thereby easing global inflation — a few even see deflation from this in 2022, which would catch a lot of us by surprise and be a new twist on transitory inflation😳
- Game of Homes🛡🗡 Home prices have continued their up-trend kept aloft by 1) Lack of supply, 2) Slow build out, 3) Strong residual pandemic demand, 4) Low interest rates, 5) Price inflation, 6) Demand from Millennials forming households (and there are more Millennials than Boomers), 7) Remodeling projects and additions that add value, 8) People escaping their high-tax state but not selling their old home, and 9) Individuals as well as large funds purchasing supply as an investment to lease out — nonetheless, annual price increases should slow, and in this season’s finale⚔️the aggressive house of Zillow🐉will stop flipping homes and disgorge 7K of them ($2.8B of inventory)
- Faces: Facebook eliminated facial recognition from its site (that was the big news); but no mention of it not being used in its METAverse — tiny pixels in your avatar, like a QR code, would make it recognizable everywhere😈
- No Skool / Back to Work: Online education stocks declined as a hot job market and post-pandemic internet fatigue led to significantly lower online instruction enrolment — many of these stocks have been on a downslope since February. Other pandemic champs are also lower: Peloton -66% from its highs, yet still worth $16B and never profitable😒 [insert your favorite inspirational Ted Lasso quote here]
- Quantum: Caltech and Amazon opened a 21,000-square-foot Center for Quantum Computing for researchers from MIT, Stanford, Harvard and more. Amazon, Microsoft, Google, Honeywell, IBM, Rigetti and various universities lead the quantum charge — but real Q-computing may be a decade away
- Scoot: Rentable electric scooter company, Bird (BRDS) fell from its nest in a SPAC merger, down -16% in two days🛴it is yet to make a profit, but at least losses have declined🤨
- Riveting: Electric vehicle company Rivian (RIVN) sets IPO valuation close to $65B, approaching Ford and GM valuations — yet still 1/19 of Tesla’s $1.2T
- ABBA: First new album in 40-years, Voyage, a ten song “smorgasbord of schmaltz and stompers” according to the Independent UK — also new album release from Los Angeles based Hana Vu🎶
- Agri: Wheat and cotton prices are at 9 and 10 year highs🌾 — just sayin’
Best wishes for the week ahead😃,
Michael
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Michael Ashley Schulman, CFA
Partner / Chief Investment Officer
“We deliver bespoke investment solutions, innovations, and unique perspectives to you and your family.”
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