THEME: www. world war web —We mentioned the unease in mid-November
March 7, 2022
Michael’s CIO (Check It Out) Report on the week just past — events, sarcasm, and global macro reflections
THEME: www. world war web — We mentioned the unease in mid-November
UKRAINE/RUSSIA
- WARning: Russian forces attacked Ukraine’s largest nuclear plant; migrant crisis worsens as over 1.5MM Ukrainians have crossed borders; hearts go out to the Ukrainian people under siege as well as the misled Russian soldiers; 😟Europe feels a little less secure. Surging commodity prices will slow global growth and lead to recession concerns — Wars diminish collective prosperity; during inflationary periods, it is even more pronounced
- Dr. Evil: Strong sanctions against Russia may slow the aggression — especially if the U.S. and Europe stop buying $100 billion dollars of oil🛢per quarter from Russia
- Nuclear: Low probability of nuclear missile use because there are stop gaps around Putin launching such an attack — however, do not overlook the possibility of Putin tactically employing a backpack sized nuclear bomb
- Ultimately unwinnable: Putin will not attain political victory over Ukraine’s people — but along the way, the outcomes will jar asset prices and everyone will have to deal with waffling cease fires, indiscriminate instability, and information that is chillingly inaccurate or intentionally deceptive
- Junk it: Russian stock funds are down -80% over the past month. MSCI, S&P, and Russell are dropping Russian equities from their stock indices and credit rating agencies cut Russia from low investment grade to junk because of economic disruptions from sanctions: Moody’s to B3, S&P to CCC-, and Fitch to B — Russia is likely to fall into a severe recession or depression
BIZNOMICS
- StayFlation: War makes inflation worse by destroying supply and straining resources. We remain with our StayFlation thesis — Inflation will stay with us at higher levels than we have been accustomed to. The knock on effects from sanctions against Russia will not help
- A quarter for your thoughts: The Federal Reserve will raise base interest rates by 0.25% in mid-March — The Fed is central bank not just to the U.S., but also figuratively to the world, and is crucial to maintaining global money flows in times of crisis (which seem to happen often)😕
- Bund shock: Last Tuesday, the 10-year German bund yield had its largest move lower in a decade, and its largest standard deviation move since German reunification because the Russian-Ukrainian war will hurt economic growth and cause the European Central Bank to postpone an interest rate hike
- That one time at Bandcamp: Epic Games, the maker of Fortnite, acquired indie music🎼platform Bandcamp — This will help Epic build a creator marketplace for content, tech, games, art, music, creativity, and possibly subscription revenue💸 [see “Subscribe to mine” from Feb 21, ‘22]
CONTENT
- Time to kill: TikTok videos used to be a maximum of 15 seconds long, then they extended to 1 minute, then 3 minutes, and now 10 minutes🍿(about the length of the defunct Quibi📽)
- Let there be content: Tens of millions of people comprise the creator economy. Most showcase and earn revenue through YouTube, Instagram, Twitter, Twitch, TikTok, Pinterest, and Snap as well as podcast, music, funding, publishing, education, and game platforms — this melds with the subscription economy we’ve previously referenced
- Web3 may herald the next iteration of the content economy as NFTs are used not only as digital keys to metaverse spaces, but also for real world (IRL) tickets, memberships, and experiences like VIP seats and access to exclusive merchandise or discounts
- Body Icon: Grammy winner Lizzo is the cover star of PEOPLE’s Women Changing the World👏🏽👏🏽
PERSONAL
- Niche real estate (RE): I’ll lead a discussion on niche RE investments this week at the marcusEvans 35th Private Wealth Management Summit — Industrial outdoor storage (IOS), Mobile home parks, Impact RE, Biolab space🧬, Virtual or metaverse RE, Cold storage 🧊, ⛵Marinas, Campsites🏕, Ghost kitchens🍴…
- VC and CLOs: I attended a terrific venture capital event in Santa Monica and have spoken recently with several collateralized loan obligation (CLO) managers — interesting times
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-22–05
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Originally published on LinkedIn.com.
