THEME: Dollar Up

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May 9, 2022

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

Century City — Los Angeles, CA: Photo and graphics by Michael Ashley

THEME: Dollar Up

GL🌍BAL

  • DollarUp: The U.S. dollar hit its highest level in 20 years in response to the Federal Reserve raising interest rates — Also, on the heels of a -7% decline this year, the Euro hit 5 and 10-year lows vs USD as Europe’s economy strains under Russian embargoes and war — Note: Dollar strength makes inflation worse in other countries
  • Ireland: The Irish nationalist party Sinn Fein won enough seats to elect leader Michelle O’Neill as first minister; she promises diversity and inclusion — reunification remains a question
  • Mother Ukraine: In a strong show of solidarity, U.S. first lady Jill Biden made a Mother’s Day visit to Ukraine and met with Ukrainian first lady Olena Zelenska as well as Ukrainian children and refugees👏🏼 — Canadian Prime Minister Justin Trudeau also visited Ukraine on Sunday
  • AfriCrisis: Russia’s war on Ukraine will create a fuel and food crisis in Africa — the continent faces higher fuel, wheat, and import costs, US dollar shortages, and reduced production
  • Fall: Next autumn, the National Party Congress will decide on a third 5-year term for Premier Xi Jinping — expect China to ramp up economic stimulus and loosen property market and environmental regulations to improve growth
  • US Leak: We mentioned in our January 10, 2022 outlook, The Terrible Twos, 2022, that “the Supreme Court potentially remakes Roe v. Wade” and that, “This decision could have huge political and electoral ramifications regardless of which way it goes. At least one side, if not both sides, will be displeased with the eventual ruling (possibly around June 2022)” — Well, a draft opinion leaked and this will definitely be a huge issue through the November elections

BIZNOMIC$

  • Pow!!: The Federal Reserve’s tightening phase became decidedly aggressive with a ½% increase in the government’s short-term interest rates, but Chairman Powell still sees a soft-landing for the economy — of course he does! — To reduce inflation, the Fed wants to destroy demand, which in turn would increase the odds of a recession. In my humble opinion, the Fed needs to help increase supply and productivity by keeping corporate borrowing costs low
  • DodgeBall: Los Angeles Dodgers part-owner, Todd Boehly, leads group to buy/win Chelsea Football Club⚽for $5.25B
  • Citi Flash-Crash: Last Monday, a human trade-entry error at Citibank caused an intraday stock market crash in Sweden that spilled into Europe; Stockholm’s index was briefly down -8% and Europe, -3%🙊 — you may recall two years ago when Citi mistakenly sent $1B to Revlon creditors — can’t makeup this stuff (see what I did there?)😏
  • Coffee, Tea, or Web3: Starbucks will launch an NFT series later in 2022; a leader in loyalty programs, mobile payment, and mobile ordering with over 26MM members, Starbucks could technically have the most used crypto wallet in the U.S.☕
  • Global uncertainty: Spillover from inflation, China’s COVID resurgence and severe shutdowns, Russian and Ukrainian commodity repercussions, recession in Europe, Fed draining liquidity, and rising U.S. interest rates — yet U.S. households are in the best financial condition in over 80 years with +$2 trillion of excess savings since the pandemic and +$7 trillion more in untapped home equity
  • Bond Stock History: Since 1973, there has never been a year when both the long-term Treasuries and U.S. stocks were both down double digits — but year to date, that is the case now

CONTENT

  • Shake ‘n Bake: Red Bull’s Max Verstappen won Miami’s inaugural Grand Prix by nearly 4 seconds 🏁 — and Las Vegas will have its first F1 race next year🏎
  • Upset: 80 to 1 longshot Rich Strike won the 148th Kentucky Derby at Churchill Downs by 3/4s of a length 🏇🏼 — the second biggest upset in the race’s history
  • Cryptucci: Gucci will start accepting cryptocurrencies at its stores — interesting timing😶

PERSONAL

Best wishes for the week ahead😊
Michael
~~~

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-22–21

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Also published on LinkedIn.