Running Point

NVIDIA released earnings—and provided their forecast for the next quarter—after market close today and we were asked about this by Reuters in an article by Stephen Nellis, Aditya Soni, and Arsheeya Bajwa, “Nvidia's supply snags hurting deliveries but mask booming demand.” Also quoted in the article were Ben Bajarin CEO at research firm Creative Strategies, Hendi Susanto at Gabelli Funds, and Nvidia CEO Jensen Huang. ???The last two days, #Nvidia earnings seem to hold more influence over stocks than war in Ukraine, jobs data, or Fed reticence to lower interest rates. ALLS WELL THAT’S BLACKWELL? ??Potential #Blackwell GPU production delays are a concern, but the anticipated demand from cloud, sovereign, and enterprise clients could drive growth through 2025-26. While gross margins might face pressure, they seem likely to maintain a stable floor around 74%, which provides some reassurance about the company's and the industry’s growth and outlook. GROWTH??With 94% year-over-year earnings growth and $35.1 billion of revenue, NVIDIA handily beat analyst expectations of 85% growth and $33.3 billion respectively. This is the bullish industry and #AI report that domestic and international analyst were hoping for. ??Gross margins declined slightly over last quarter but are still a very respectable 74.6% GAAP (75% Non-GAAP), and I don't think the markets going to fault them for slight decline, especially with net income of $19.3 billion GAAP ($20 billion Non-GAAP) trouncing estimates of $17.5 billion. OUTLOOK??Investors and analyst should be pleased with the company's fourth-quarter outlook of $37.5 billion in revenues, but might be slightly frustrated with lower projected GAAP and non-GAAP gross margins of 73.0% and 73.5% respectively. ??Data center announcements are the true highlight that most analysts will point to. Nvidia seems to be cementing its international dominance across Amazon Web Services (AWS), Microsoft Azure, Google Cloud, Oracle, Japan, #India, #Indonesia, #Taiwan, and Denmark. ??Automotive and robotics were up huge, gaming and professional visualization were up slightly but respectable amounts, nonetheless the real message here is that AI growth continues to lead the charge, even amongst Nvidia's other smaller multi-billion and half billion dollar divisions. BOTTLENECK??The announcement of supply constraints might be the main blemish on an otherwise terrific quarterly report. The demand will be there for Blackwell, but the apprehension is that any supply constraint may leave an opening for substitutes. QUOTED EXCERPT "There's the risk that the bottlenecks worsen rather than improve, and that could damage revenue projections," said Michael Schulman, chief investment officer at Running Point Capital. ~~ Running Point, “we are your family office”?? #taxplanning #estateplanning #assetmanagement #future #investing #taxes #wealthmanagement #economy

Thrilled to announce that I’ll be speaking about private placement life insurance (#PPLI) and private placement variable annuity (#PPVA) at the “Second Annual Art Basel PPLI & PPVA Forum”, hosted by Spearhead Administrative Services! I’m honored to join an esteemed panel of industry leaders from top RIAs to discuss “Building a Successful Separate Managed Account (SMA) Program.” Together, we’ll explore key insights and strategies for success in this dynamic space. At Running Point, we work with Prudential Financial, Investors Preferred, Axcelus Financial, and Crown Global Insurance Group LLC to manage PPLI & PPVA accounts for our clients as well as for top-notch #insurance brokers and other RIAs, wealth managers, and family offices that want to use this structure. The Forum will take place on December 3rd-4th at the beautiful Epic Hotel in #Miami during #ArtBasel week—an incredible setting for meaningful discussions, valuable insights, and networking opportunities. For more details about the event, contact the Spearhead team directly or email [email protected]. To learn more about how Running Point can help you manage PPLI/PPVA for your clients, email [email protected]. Look forward to seeing you there! ~~ Running Point, “we are your family office”?? #taxplanning #estateplanning #assetmanagement #future #investing #taxes #wealthmanagement ~~ Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. This is not investment advice and this is not a recommendation to buy or sell a security. 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. Past performance is not indicative of future results. 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-24-192

"Who will control the US economy after the election?" We were interviewed by 3x award-winning TV journalist and #business morning news anchor Cyba Audi of Asharq Business ?????? ????? with Bloomberg in an 8 1/2 minute live interview today for our thoughts regarding tomorrow's presidential #election! ?Who will lead the US economy? ??If #Harris wins, she is likely to have a divided Congress ??If #Trump wins, there is a strong likelihood that he carries the House and Senate ??Either way, the stock market elements are rooting for a divided government and the gridlock that comes with it. Both parties are intent on passing policies which would increase the federal gov't budget deficit and fan #inflation. Yet even so, the Fed is widely expected to cut short-term interest rates by 1/4% on Thursday—this feels like a mistake. ?A CAUTIONARY NOTE as we approach this election. ??Recently, it seems we've experienced a stock market rally based on strong GDP, robust earnings, low unemployment, a ?% decrease in Federal Reserve interest rates, and possibly a market assumption that Trump will win. ?So, what's my concern? At some point following Election Day—it may take a day, a week, or longer—a winner will likely be declared. ??If Harris wins: Half the nation will be satisfied; however, those who ran up stocks on the conviction of a Trump victory may quickly sell and exit the market (or at least reduce exposure). ??If Trump wins: Half the nation will be satisfied; but then it may be a classic case of "BUY THE RUMOR, SELL THE NEWS." In other words, stocks may have risen on the expectation of his victory, but immediately following a Trump win, that catalyst will be spent, the current administration will enter a lame-duck period for the next couple of months, and stocks may pull back. ??Essentially, this could be a scenario where the market sells off (in disappointment) or pulls back (because the catalyst has passed)—DIFFERENT SITUATIONS, SAME POSSIBLE OUTCOME. ??To top it off, the stock market has been in a melt-up phase and seems primed for a correction, potentially pulling back five or ten percent. Monetary and inflationary concerns are reflected in higher bond yields, while risk concerns are evident in elevated gold prices. ??The Bond market has reacted by selling US Treasuries since the Fed cut rates by 1/2% on Sep 18. We could be in a scenario where inflation either remains at current levels or rises as a result of Washington's economic policies. Powell might justify cutting rates again based on weak manufacturing and payroll numbers, but bond yields may rise in response or may fall if he signals a pause in further rate cuts. ??Core PCE (inflation) is still above 2.6%, more than 30% above the Fed's target. The Fed should not cut rates, but if it does, the long-end of the yield curve could shift further up. ?Unless we see clear results in the elections this coming Tuesday, do not expect financial markets to sail smoothly this week.

"Deteriorating office loans stress US regional banks' CRE portfolios" We were quoted by Reuters in an article by Niket Nishant?and?Manya Saini regarding the outlook for commercial real estate (#CRE) and regional #banks in light of the challenges that office leasing and RE loans face. ARE OFFICE SKYSCRAPERS STILL CRUSHING BANKS OR JUST TAKING A NAP? ??Concerns about a systemic crisis from regional bank failures, like those seen with New York Community Bank (NYCB), have largely subsided. However, banks with high exposure to office and multifamily sectors face ongoing challenges. Fortunately, the risks are well-understood, and regional banks have advised investors to expect earnings pressures as they work to normalize credit levels and increase loan loss reserves. Liquidity issues, including potential discounted loan sales, are not an immediate threat. ??The CRE sector will likely challenge regional banks beyond 2025, with nearly $2 trillion in loans maturing by 2026. Borrowers may need to either return property to the banks, refinance at higher rates, secure dilutive financing, or receive "extend and pretend" loans. Banks with high CRE exposure face added pressure from declining property values, especially in office spaces impacted by remote work and AI trends. ??The Fed’s recent 0.5% rate cut offers some hope for refinancing and sector improvement, though recovery will be uneven. Industrial and affordable housing may remain resilient, while office properties struggle. Further rate cuts aren’t guaranteed due to low unemployment and persistent inflation. ??Many banks are reducing exposure to distressed CRE assets, though this process may take years amid tighter regulations. Impacts will vary by bank, with some freezing lending and facing downgrades, while others, with stronger portfolios, continue business as usual. Geographic factors matter, as areas like San Francisco have been hit harder than regions like Knoxville, TN, or Greenville, SC. ??Office real estate may rebound as the economy grows, attracting investor capital and stabilizing prices. However, regional banks may be pressured to sell discounted CRE loans amid declining profitability and tight monetary conditions, though most hesitate to avoid signaling weakness. ?Addressing the office supply side—whether through upgrades, demolitions, or conversions—will take time. Though painful for those involved, CRE issues are unlikely to trigger an economic crisis like 2008 or the current situation in China. QUOTED EXCERPT Rate cuts "may not fully alleviate office pressures in the short term, as the shift toward remote and hybrid work and the increasing use of AI to supplement call centers and other services has fundamentally weakened demand", said Michael Ashley Schulman, chief investment officer at Running Point Capital. According to Running Point's Schulman, lenders must maintain adequate capital beyond 2025 to deal with such weaknesses.

?? Exciting News! ?? I have embarked on a new chapter and will be joining Running Point Capital as Tax Partner, effective November 1. Running Point's innovative multi-family office approach creates a powerhouse of financial capability and puts an exceptional team of seasoned professionals together all under one roof. I would love to connect. Here is my new contact info: [email protected] 310-872-9601 RunningPointCapital.com

What will #stocks do in 2025? We were cited about this in an in-depth Forbes article—by Catherine Brock, "Stock Market Predictions For 2025: What Is Coming Next Year?"—regarding our market #outlook for 2025. ??The global #economy may be a double edged sword for the U.S. stocks. We don't expect strong results from foreign developed markets as evidenced by the European Central Bank's (#ECB's) recent need to lower interest rates to stave off #recession fears, however this could motivate more foreign investors to increase their U.S. allocation in the search for performance which they've been reluctant to do. ??For most analysts, #globalmacro fears tend to surface as the largest lurking #risk, and usually I'd agree; but if markets have not been derailed so far by a proxy World War III playing out in Ukraine, a second multi-national war led by Iran against Israel that is wreaking havoc across Lebanon, Israel, Gaza, West Bank, and Yemen, saber-rattling in the South China Sea, a collapsing Venezuela, and increasing right-wing influence in Europe, then I question whether global-macro is the bogeyman of the moment. ?Depending on who takes office and the balance of power in #Congress following November's election, an increase in either #tariffs or #taxes or both could challenge equity and credit market gains. Higher tariffs could be inflationary which would be negative for #bonds and the #economy; and higher taxes could decrease corporate #earnings and reduce #consumer spending through lower wage growth and less disposable #income. ??Quality private investments (#privatecredit, #privateequity, #secondaries, #hedgefunds, #RE, and #art) should continue to provide attractive opportunities. QUOTED EXCERPT Michael Ashley Schulman, partner and chief investment officer for Running Point Capital Advisors, holds a midrange view. Schulman believes the S&P 500 will grow 7% to 11% next year, with volatility along the way. He notes economic growth, earnings expansion, rising mergers and acquisitions activity and lower interest rates as influential factors. ~~ Running Point, "we are your #familyoffice" #wealthmanagement #taxconsulting #estateplanning ~~ Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. This is not investment advice and this is not a recommendation to buy or sell a security. 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. Past performance is not indicative of future results. 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-24-169

Ahead of the Federal Reserve Board interest rate announcements?and projections later today, we were quoted by NTD—in an article by Andrew Moran, "Fed Expected to Cut Interest Rates—What This Means for Your Money"—regarding what to expect from the Fed's expected first interest rate cut in four years. QUOTED EXCERPT: Lower rates can be beneficial for stocks because they trim the cost of capital, says Michael Ashley Schulman, the chief investment officer at wealth management firm Running Point Capital Advisors. “Interestingly, at least in the initial phases, it is often the smallest, junkiest, or weakest stocks—the ones that investors had left for dead—that rally the strongest when rates decline,” ~~ Running Point, "We are your #familyoffice" #wealthmanagement #estateplanning #multifamilyoffice #uhnwi #outlook https://lnkd.in/gPJCSXsp ~~ Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. This is not investment advice and this is not a recommendation to buy or sell a security. 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. Past performance is not indicative of future results. 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-24-147