THEME: Gl🌏bal

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

L.A. Kings and Seatle Krakens at the arena — Photo and graphics by Michael Ashley
  • DeciMNation: Ukraine, Russia, and Eastern Europe will be meaningfully setback by the war — recession in these areas is inevitable, as tens of thousands have been killed and wounded, over 10MM displaced, and countless homes and livelihoods decimated and overturned
  • Poweuro: European energy supplies remain at risk because Russia supplies 10% of the world’s energy and a quarter of the eurozone’s energy
  • Slow: World growth forecasts cut as war intensifies inflation and destroyed Ukrainian farmland heightens famine risks
  • China is in economic easing mode— expect further interest rate and bank reserve requirement ratio (RRR) cuts which in turn will allow for more lending
  • Illiberal: Hungary’s authoritarian leader and Russian ally, Viktor Orban (and his “illiberal” Fidesz party), won a 4th reelection — this furthers problems for the European Union regarding issues such as immigration, judicial reforms and media freedom😐
  • Serbian President Aleksandar Vučić won a 2nd term and his populist Serbian Progressive Party will form the next government — Vučić has refused to impose sanctions against Russia despite seeking European Union membership for Serbia and Putin expressed hope of strengthening Russia and Serbia’s strategic partnership
  • Protests and weeks of turmoil in Sri Lanka sparked by inflation, currency devaluation, massive debt owed to China and other countries, electricity blackouts, and an earlier ban on chemical fertilizers (which reduced crop output) have put President Gotabaya Rajapaksa on edge — A state of emergency was declared and cabinet ministers and the central bank governor resigned
  • Newcomer and economist Rodrigo Chaves won Costa Rica’s presidential election amid low turnout; he campaigned as a maverick and an outsider and benefited from widespread discontent — I’ve heard that one before😏
  • Marchons: France has first-round elections this Sunday — President Emmanuel Macron versus the rise of the far-right’s Marine Le Pen and ten other candidates
  • Double braking: The Fed is raising rates as the economy and production and manufacturing indicators (PMI) slows. This occurred twice in the late 1970s, and again in the ‘80s and early 2000s — This can be challenging for stock prices
  • Stayflation: Inflation is a tax on consumers😫 — Consumer free cash flow is declining and is often a leading indicator of problems
  • Yes or no? Whether or not a recession comes will be the topic that dominates mindshare later this year — especially as the frequency of headlines increase
  • Slowdown: Fed tightening always leads to a slowdown, but not necessarily a recession — in 3 of 13 tightening cycles, a continuation of economic growth (aka, a soft landing) occurred🎲
  • Flat like the earth🌍 The U.S. Treasury yield curve continues to flatten and invert (when shorter maturity bonds yield more than longer maturities). Flattish and inverted yield curves are thought to portend economic downturns 6 to 24 months in advance — that’s great, but flattish curves have predicted more recessions than have occurred and on average a recession occurs once every seven years anyway🤷🏽‍♂️
  • Haxie: Hackers stole $625MM from the Sky Mavis’s Ronin blockchain network of the NFT-based game Axie Infinity — a huge crypto attack
  • Transamerica: Architects Foster + Partners will commence a $250MM makeover of the Transamerica Pyramid, including interior and exterior renovation and park area expansion; one of the largest building redesigns in the city’s history — I’m thinking Vegas style laser and digital light displays🚥
  • Venture Capital and Hedge Funds: Last week I attended an educational Barclays Hedge Fund Outlook, an informative female-led VC dinner hosted by The Bridge, and an NFT and Web3 networking event with people from across the country
  • Dojo: Find me this week at a couple of investment and VC events, including Expert DOJO 2022 in downtown Los Angeles

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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-22–11



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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