THEME: Not dancing with the stars
April 18, 2022
Michael’s CIO (Check It Out) Report on the week just past — events, sarcasm, and global macro reflections
THEME: Not dancing with the stars
- Easter of war: Pope Francis criticizes Russia over its “cruel and senseless” war in Ukraine — feels more like genocide as Russia tries to erase Ukraine and its civilians. Will Russia stop at Ukraine’s borders?
- Not dancing with the stars: The world’s major economies are out of sync. The U.S. has above-trend growth, uncomfortable inflation, and a central bank trying to temper growth by raising interest rates and selling bonds. China has below-trend growth with COVID lockdowns, a real-estate crisis overhang, and an easing fiscal policy. Europe faces an energy and humanitarian crisis, runaway inflation, slowing growth, and is on the brink of recession, with its central bank in a bind but still buying bonds and leaning towards raising rates from negative levels. Sri Lanka is close to a default; Afghanistan and Pakistan are fighting; and Russia and Ukraine have lost decades of growth. In Africa, China’s influence and investment capital continues to grow and a quarter of African countries (used to) receive a 1/3 of their wheat🌾and much of their fertilizers from Russia and Ukraine. Latin America’s central bankers face pressure to extend aggressive interest-rate hikes as inflation exceeds estimates. And in Brazil, where fiscal tightening has been underway since June, central bank interest rates are 11.75% and inflation is above 10%; in Argentina, inflation is above 50%. On the other hand, two of South America’s poorest countries are about to experience an offshore oil boom. At a high level, we remain constructive on the United States and cautious on Europe and several other regions
- Sony and Lego walk into a room and invest $2B in Epic Games, the creator of Fortnite, as they seek to capitalize on the metaverse — many corporations are seeking their metaverse dance ticket👯♂️
- Local Starbucks locations (over 200 stores in 30 states) and Amazon warehouses have begun to organize/unionize, reversing decades of trends since President Ronald Reagan (who also happened to be an ex-union president) broke organized labor’s motivation by firing striking air traffic controllers in August 1981 — A watershed moment in the fight against inflation according to ex-Federal Reserve Chairman Paul Volker
- Play it again Sam🎹Steinway, the piano maker taken private by Paulson & Co. in 2013, filed for an initial public stock offering (IPO)
- Tweet storm: Elon Musk sent mixed messages in his $43B hostile offer to buy Twitter — Twitter’s Board seems ruffled🦚
- CIO: A Wharton Pension Research Council study found that pension funds improve their performance by better than ½% annually when they were to pay their chief investment officers (CIOs) more — hint hint😏 — “CIOs with better compensation were also found to trade less often and be less prone to the disposition effect, in which investors sell assets that have increased in value and hold assets that have dropped in value. Additionally, those who were paid more were more likely to stay at the same job for a longer period of time, which was also associated with better performance”
- InfiReal: L.A. based metaverse pioneer Infinite Reality [cool website] will acquire esports conglomerate RektGlobal for $470MM; and Marina del Rey based Genies raised $150MM to make avatars
- Are your ears burning?🎧Skullcandy’s ridiculously cheesy earbud collaboration with Doritos nacho cheese flavored chips is already sold out of all 420 pairs — yes, that's how many they had🙄
- Venture Capital: Attended a small venture capital oriented dinner in Manhattan Beach and enjoyed a weekend hike [see photo]
- Nonprofit: Find me this week at a fun charity event in Palos Verdes supporting Grades of Green
Best wishes for the week ahead😊
Michael Ashley Schulman, CFA
Partner / Chief Investment Officer
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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-22–13
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