THEME: Mexed Missages
June 6, 2022 —
Michael’s CIO (Check-It-Out) Report on the week just past — events, sarcasm, and global macro reflections
THEME: Mexed Missages
GL🌏BAL
TurkFlation: Soaring food and energy costs propel Turkey’s inflation rate to +73% — the Turkish lira continues to weaken
China: China is reemerging (again) from large-scale COVID lockdowns that have further dented its economy as well as global supply chains — Thankfully, as the rest of the world re-opened this year, consumer spending has shifted from durable goods to discretionary services (like restaurants and entertainment) thereby reducing demands on global physical supply chains🛳
Sunny Delight: The U.S.’s clean energy agenda had been hindered by the administration’s tariff related freeze on solar imports, but Biden announced that he will offer new federal support for domestic solar manufacturing and won’t impose new tariffs on solar panel imports for the next 2 years—Stalled solar construction projects can finally resume🌞
ConfiDance: A confidence crisis is afoot with high inflation and fears of a rapid Fed tightening cycle (interest rate hikes and bond sales) feeding into recession even though the U.S. economy has low unemployment and consumer spending growth. Small business expectations, however, are very low — Confidence is the cheapest, but most important economic stimulus, in the U.S. and globally, and it is lacking
Platinum Jubilee: The U.K. celebrated 70 years with Queen Elizabeth II on the throne with entertainment from Diana Ross, Ed Sheeran, Elton John, Alicia Keys, Craig David — QE2 is two years away from breaking the record of Louis XIV of France as history’s longest reigning monarch👑
BIZNOMIC$
FHire: Large technology companies including Microsoft, Meta, Twitter, Netflix, Carvana, and Coinbase have stopped hiring in parts of their operations or are laying off employees to reduce costs. Companies in manufacturing and construction, on the other hand, face labor shortages and are still hiring — Tesla is doing a bit of both, threatening salaried staff while increasing factory workers — My take: wage growth is probably peaking
EmployMiss: Overall U.S. unemployment is at 3.6%, which is very low; but the U.S. still has 800,000 less workers on payrolls than before the pandemic. However, the total number of workers including self-employed, is back at pre-pandemic levels — My take: No matter how one slices it, the number of workers remains significantly below pre-pandemic trend lines, i.e., the levels one would assume from normal economic and social growth
Hurricane season: JPMorgan CEO Jamie Dimon sees an economic “hurricane” coming, Tesla CEO Elon Musk has “a super bad feeling” about the economy and wants to cut 10% of jobs, and other CEOs echoed negative sentiment. Is this capitulation? — Oh, and weather forecasters expect a worse than usual hurricane season🌪 — For everyone else, its 2 ounces light rum, 2 ounces dark rum, plus lime, oj, passionfruit, and grenadine to taste🍹
#EarnUP: US corporate revenue should rise over the next 12 months — The labor market is strong and the economy is growing, albeit slowly
#FedUp: Fed Chair Powell admitted what Running Point has said all along about the Fed, that “we can’t really affect supply with our policies. And supply is a big part of the story here”
aFORDable? CEO Jim Farley says that Ford will transition to 100% online non-negotiated fixed-price sales for its electric vehicles with “100% remote pickup and delivery” — could lead to dealer consolidation and smaller lots
Rent: National year-over-year rent growth has slowed from near 18% in January to a still pretty high 15% in May — We expect rents to keep increasing but at a slower pace
Rainforest is shrinking: And so too is Amazon’s stock price because of a 20 shares for every 1 share split effective June 6, 2022
Baby got back: Abbot has reopened its baby formula production facilities in Michigan — 🍼new supply availability is expected around June 20
CONTENT
#MexicanPizza selling out faster than Top Gun tickets as predicted here a few weeks ago!! Soon after restoring it to its menu, Taco Bell halted sales of Mexican Pizza amid demand 7x what it was the last time the item was available. The fast food giant is running out of Mexican Pizzas🌮🔔🍕 — There is even an FAQ page to assuage concerns🤔
Gas: The Los Angeles City Council has joined fifty other California cities and counties in banning gas stoves in new buildings — 🔥implementation and timing of the ban is to be determined
CryptoPotle: Chipotle aficionados can now pay with nearly 100 types of cryptocurrency using a system called Flexa🌯
PERSONAL
Forbes: Running Point and I were quoted May 21 by Forbes regarding online used car retailer Carvana’s 🚘 struggles amid higher interest rates and a bloated workforce
Reuters: We were the only firm quoted Wednesday June 1 in a Reuters article regarding stock movements, investor uncertainty, and market sentiment
Fox Business: We were quoted Sunday, June 5, in a Fox Business article regarding “10 ‘inflation-proof’ career and money tips” for college graduates — Our quote is lucky #7 😊 — Start saving now and avoid high interest debt: “You want your purchases to increase your happiness, not weigh you down”
Charity, Education, & Wine: Running Point was a Platinum sponsor of the sold out June 4, 2022, 28th Annual Manhattan Wine Auction — the largest charity wine🍷auction in Southern California — to support the🏫Manhattan Beach Education Foundation (MBEF)
Best wishes for the week ahead😊
Michael
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Michael Ashley Schulman, CFA
Partner / Chief Investment Officer
“We deliver custom 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-22–32
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Also published on LinkedIn.
