THEME: Doublespeak

April 11, 2022

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

The Point — Photo and graphics by Michael Ashley

THEME: Doublespeak

The current confluence of investment market challenges is numbing: COVID policy differences (by country and industry), energy price shocks, Russian corporate risk, Ukrainian sovereign risk, commodity, energy, food and wage inflation, unionization, economic sanctions, China tech and real estate, complexity around global trade restrictions, high global tensions, and a devastating humanitarian crisis in Europe and Africa.

At least the U.S. consumer and corporate credit remain in good shape; unemployment is low and job availability is high.

TAXES

• L👀pholes: Unlikely, but if 1031 exchanges are eliminated or greatly reduced (as the recent White House budget suggests on page 132 (or p. 137 of 158)), our tax team will stay on top of other tax-saving opportunities such as exchanges or swaps with larger REITs (real estate investment trusts) that don’t trigger a tax event as well as Delaware Statutory Trust (DST) options — The White House is trying to reduce ten tax “loopholes”➰

GL🌍BAL

• wE & yoU: European Commission President Ursula von der Leyen offers Ukraine fast track to European Union (EU) membership — however not all EU countries are on board with this
• UKraine: In a show of solidarity, Boris Johnson walked with Zelensky in Kiev, shaking hands with Ukrainian citizens👏🏼
• TiRADE: Global trade volumes are at all-time highs with just physical assets (not even including digital assets), but as a percent of the total world economy, global physical trade has declined — Are we de-globalizing? Is it bad? — Green-energy production (wind, solar, hydro, nuclear) tends to be very anti-global because it decreases relative imports of coal and oil, yet it is arguably a good kind of de-globalization — No one talks about this!🌿Go green and go home
• Big D: Russia officially defaults on foreign debt because they can’t access their dollar accounts — But who gets hurt: Russia gets to keep their money versus the owners of Russian debt who aren’t paid?
• China: China’s Covid lockdowns may cost the country $46B a month or -3.1% in lost economic output, and the impact could double if more cities tighten restrictions according to Enodo Economics — To spur growth, China needs to invoke pro-market policies (i.e., loosen purse strings)
• Picchu-Picchu: Peru’s Machu Picchu may be misnamed; it was probably called Huayna Picchu by the Incas — Picchu means mountain peak

BIZNOMICS

• Trilling: Federal Reserve plans to shrink its balance sheet by more than $1 trillion a year while raising interest rates “expeditiously” to counter inflation — in plain English, the Fed will start to sell up to $60B of Treasuries and $35B of mortgage bonds per month
• Spirited Away: Jet Blue bids for Spirit Airlines not so much for the airline itself, but more for its pending orders for 120 Airbus jets through 2027✈ There is a 2 to 3 year wait for delivery slots and a shortage of new Airbus and Boeing jets is an industry problem✈There is also a shortage of pilots👩🏼‍✈️
• Screwgatti: French carmaker Bugatti recalled a single $3MM 2018 U.S. Chiron to inspect front frame screws
• Printing money: Someone in Omaha (Warren Buffett’s Berkshire Hathaway) bought a large, 11.4% stake in HP, a company that provides printers, inks, PCs, and business services — Is HP hip again?
• SUPREME: Ketanji Brown Jackson will replace retiring Stephen Breyer on the U.S. Supreme Court⚖
• TwittEDIT: Musk, inventor of the EV (Elon Vehicle) took a 9% stake in Twitter — now that’s something to tweet about🐤Twitter will also add an edit button
• Zuck bucks: Meta will push into digital currencies and unveil non-fungible token (NFT or non-replaceable token) trading and display options — second mover advantage?🤷🏽‍♂️

CONTENT

• UBER Uber: Uber U.K. to add plane, train, and hotel bookings in Super App initiative — John Candy and Steve Martin not included
• Diet Push: Bronx born rapper Pusha T asked American artist Sterling Ruby to create album artwork for his new track Diet Coke
• Skinny: World’s skinniest skyscraper and 2nd tallest in the Western Hemisphere, SHoP architect’s 1,428 foot-tall 111 West 57th Street, NYC, is ready for residents to move in — a $66MM 3-floor penthouse⛅unit is available — movin’ on up
• CitizenM may be the first major hospitality group to open a hotel in the metaverse (in The Sandbox) — because your avatar needs a place to sleep and brush teeth, right? Hope they have room service!
• Black-ish, the 8-season ABC sitcom created by Kenya Barris will end on April 19 — spinoff Grown-ish continues in season 5
• Britney Baby: Spears pregnant with her first child with fiancé Sam Asghari
• The Graduate: Microplastics were found deep in human lungs for the first time — they’ve already been identified in human blood — degrading the bio rather than bio degradable🙊

PERSONAL

• Venture Capital: Attended Expert Dojo’s venture event in downtown Los Angeles last week
• NYE: Celebrated a pandemic delayed New Year’s Eve resolution dinner with dear friends in Corona del Mar — we make both serious and fun resolutions and keep each other in check

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.”

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-22–12

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Also published on LinkedIn.com.