DFCF, LLC
Drulard Family Capital Fund (DFCF, LLC)
High Plateau
Drulard Family Capital Fund
Fortnightly Macro View
JD Straight Up:
S&P 500 at 6940 – flat from 6916 two weeks ago
VIX at 16 – up 7% from 15 two weeks ago
10yr Treasury yielding 4.16% (down 1% from 4.19% two weeks ago)
Agg (US Aggregate Bond Index) at 100.05 – flat from 100.03 two weeks ago
Gold at 4588 per oz (up 3% from 4455 two weeks ago) - all time high
Crude Oil (WTI) at 59 per barrel (up 2% from 58 two weeks ago)
Bitcoin at 93k (down 1% from 94k two weeks ago)
JPM shares at 313 (down 7% from 336 two weeks ago)
Deutsche Bank shares at 38.88 (down 2% from 39.63 two weeks ago)
Truist shares at 49.99 (down 2% from 50.83 two weeks ago)
Blackstone shares at 163.50 (flat from 163.32 two weeks ago)
Magnificent 7 Index at 418 (down 2% from 425 two weeks ago)
US unemployment: at 198,000 in latest claims – down 1% from 199,000 two weeks ago
EUR at 1.17 USD (flat from 1.17 two weeks ago)
GBP at 1.34 USD (down 1% from 1.35 two weeks ago)
Macro Environment
US inflation continues at 2.7% with GDP growth projected to be 2.5%+ and unemployment maintaining 4.4%. Gold and silver continue to hit record highs. War continues in Ukraine and ceasefire is maintained in Gaza. US is increasingly active geopolitically, controlling Venezuelan oil and posturing for control of Greenland. Unrest persists in Iran.
Macro View
World finance leaders converge on Davos to try to understand what the next leg of this cycle looks like and what the US ringmaster is likely to do for the next trick in the circus. The US Fed has stalled shrinking its bloated balance sheet. US GSE's (Fannie, Freddie) are engaging in creating further liquidity in the US housing market. Affordability is being clumsily addressed in the US with potential caps on credit card rates and cash handouts to military personnel. Beyond this populist window dressing, what is the plan? Asset prices are sitting on a high plateau with many reaching all time historic highs. JPM market cap was approaching $1trn before its helmsman questioned some of the plans of the ringmaster. Has the value of JPM really grown by 3x in under three years? If so, why? Money center banks are hardly the critical and central distribution vehicle employed by central banks that they were historically. Is JPM the bastion of tech innovation that it claims to be sitting atop its fortress balance sheet? Is it poised to join the Mag7? How else can you justify its trajectory to $1trn? Or is it simply that $1trn is not what it used to be.
Relevance
USD dominance and reserve currency status will be a key factor in the further longevity of the cycle. Tens of trillions of dollars were created and pumped into the system to weather the GFC and the pandemic. $38trn of debt is outstanding and much of it will need to roll to continue to support the US and global economy and the ever-blooming US budget deficit that now approaches $2trn. Perhaps Davos can provide some insight or some alignment amongst financiers on how it can all play out without dislocation and its associated damage. Or maybe its just easier to sit back and confidently yet mysteriously predict that AI, AGI, and the Singularity will solve for all ills through the greatest improvement of knowledge and productivity in the history of the world.
Head Scratchers
1 - Why has tokenization not overtaken real asset purchases when friction is reduced and scale is delivered? Why buy a share or a property when only seeking the returns of such an investment? Why not just purchase the respective attributes, yields, rights, and returns in a synthetic instrument? Is the convergence of gaming, speculating and investing likely to deliver this? Will it have an impact on money supply or require a redefinition of it?
Drulard Family Capital Fund
Drulard Family Charitable Fund
#34- 19Jan26