Dusted off an anecdote from 2013 about taking reckless risks. A harrowing story from my early years in the Chicago commodity pits. When you’re highly overleveraged with big positions and praying to manage your drawdowns with tight stops, the one risk you can’t mitigate is a big market gap, which of course is the tail risk that is growing quarter by quarter as the pod shops proliferate. I take July/August off from writing, to do more reading, recharge. Hoping the same for you all. Back again in September. All the very best, E

Week-in-Review: Mon: France’s split parliament is tied up as lawmakers jockey for position in the next government, Pres Biden attempted to quell calls for him to exit the presidential race with a leaked letter to Democratic lawmakers saying he is “firmly committed to staying in this race”, BOJ branch managers report elevated wages lending support to a BOJ hike later this month, US NY Fed 1yr Infl Exp 3.02% (3.01%e), S&P makes new all-time high reaching a record high for the 35th time this year, S&P +0.1%; Tue: Powell says “more good data would strengthen our confidence that inflation is moving sustainably toward 2%,” Democratic infighting over future of Biden’s campaign continues with Gov Pritzker and Sec Yellen voicing support while Sen. Bennet becomes first Senator to publicly call for Biden to step down saying he doesn’t think Biden can win and “Donald Trump is on track, I think, to win this election and maybe win it by a landslide and take with him the Senate and the House,” Hungary CPI 3.7% (3.9%e), Mexico CPI 4.98% (4.87%e) / Core 4.13% (4.14%e), US NFIB 91.5 (90.2e) S&P +0.1%; Wed: Malaysia said it’s near a deal with Singapore to develop Southeast Asia’s first cross-border economic zone, South Korea Unemp rate 2.8% as exp, Japan 2.9% as exp, China PPI -0.8% as exp / CPI 0.2% (0.4%e), New Zealand Cash rate 5.5% as exp, Turkey IP -0.1% (2.6%e), Russia CPI 8.59% (8.65%e), S&P +1.0%; Thu: US CPI surprises on the downside leading to a double-digit decline in bond yields across the curve, in the minutes following the CPI release the MOF conducted a ~JPY3.5trn intervention causing USDJPY to trade five big figures moving from 161.8 to 157.5, EUR touched 1.09 immediately post CPI before retracing, 30-year Treasury auction tails 2bps leaving yield curve steeper, US equities opened stronger then rapidly traded lower, Biden’s solo news conference with the White House Press Corps failed to silence critics, UK IP 0.4% (0.6%e), US CPI 3.0% (3.1%e)/Core CPI 3.3% (3.4%e), US Initial Jobless Claims 222k (235ke), S&P -0.9%; Fri: Japan IP 1.1%, Sweden CPI 2.6% (2.8%e), Canada Building Permits -12.2% (5.2%e), US PPI 2.6% (2.3%e)/ Core PPI 3.0% (2.5%e), US U. Mich 66.0 (68.5e), S&P +0.5%; Sat: Trump grazed by bullet in an assassination attempt at rally in Pennsylvania.

Weekly Close: S&P 500 +0.9% and VIX -0.02 at +12.46. Nikkei +0.7%, Shanghai +0.7%, Euro Stoxx +1.4%, Bovespa +2.1%, MSCI World +1.3%, and MSCI Emerging +1.7%. USD rose +1.2% vs Turkey, and +0.3% vs Sweden. USD fell -5.4% vs Ethereum, -3.9% vs Bitcoin, -3.4% vs Chile, -2.7% vs Mexico, -1.8% vs Yen, -1.3% vs Sterling, -1.3% vs South Africa, -0.9% vs Indonesia, -0.6% vs Euro, -0.6% vs Brazil, -0.5% vs Australia, -0.2% vs China, flat vs India, flat vs Canada, and flat vs Russia. Gold +1.0%, Silver -1.7%, Oil -1.1%, Copper -1.3%, Iron Ore -2.3%, Corn -2.2%. 10yr Inflation  Breakevens (EU -4bps at 1.98%, US -3bps at 2.24%, JP +1bp at 1.54%, and UK +1bp at 3.56%). 2yr Notes -15bps at 4.45% and 10yr Notes -9bps at 4.18%.

2024 Year-to-Date Equity Index Close: Argentina +62.3% priced in US dollars (+84.5% priced in pesos), Venezuela +54% priced in US dollars (+56.9% priced in bolivars), Turkey +32.4% in dollars (+48.1% in lira), Taiwan +25.3% (+33.4%), Denmark +23.6% (+25.6%), NASDAQ +22.6% in US dollars, Netherlands +18.4% (+20.1%), S&P 500 +17.7% in US dollars, Hungary +14.6% (+19.2%), MSCI World +14.5% in US dollars, Poland +13.8% (+13%), Colombia +13% (+15%), India +12.4% (+12.7%), Italy +12.3% (+13.9%), Greece +10.7% (+12.3%), Germany +10.3% (+11.9%), Euro Stoxx 50 +9.9% (+11.5%), Ireland +9.9% (+11.5%), Japan +9.8% (+23.1%), Spain +9.8% (+11.4%), Malaysia +9.4% (+11.3%), UK +8.6% (+6.7%), Czech Republic +8% (+12.5%), South Africa +7.5% (+6%), Israel +7.5% (+9%), Belgium +7.4% (+9%), HK +7.3% (+7.3%), Austria +6.4% (+7.9%), Singapore +6.2% (+7.9%), Russell +6% in US dollars, Norway +5.8% (+12.1%), Canada +4.9% (+8.2%), Sweden +4.6% (+9.8%), Australia +4.1% (+4.9%), Switzerland +4.1% (+11%), Russia +3.4% (+0.8%), Chile +2.7% (+5.7%), France +0.9% (+2.4%), Korea +0.8% (+7.6%), New Zealand -0.5% (+3.1%), Saudi Arabia -1.5% (-1.5%), Portugal -2.1% (-0.7%), China -2.2% (-0.1%), Finland -2.2% (-0.8%), Philippines -2.3% (+3.1%), Indonesia -3.7% (+0.8%), UAE -4.5% (-4.5%), Mexico -8% (-4.2%), Thailand -10.9% (-5.9%), Brazil -14.2% (-3.9%).

Anecdote (Feb 2013): “Yours,” I yelled, amidst the chaos. And the closing bell rang, surprising me. Frightening me. Leaving me short 100 wheat contracts, which may not sound scary, but in 1990 I was a pit trader, trading my own money. Which wasn’t much but was everything. And 100 contracts were 80 too many – to hold overnight anyway. Naturally, news hit the tape that Egypt had purchased wheat. So, I raced to call my roommate, who assisted Chicago’s biggest grain trader, and explained my dilemma. “Please dude, just ask where wheat is gonna open tomorrow,” I pleaded, shaking. In the background, I heard the famous wheat trader say, “Yep, Egypt will scare other buyers in, we’ll open up 12 cents, maybe 15.” I hung up. Stunned. You see, 5 cents higher would’ve wiped me out. 6 cents bankrupted me. And 15 cents, well… So, I stumbled out to LaSalle. Banged a right, to the lake, where I wandered for hours. Into the abyss. Praying for rain on the plains. A coup in Cairo. Some act of God. Anything. And I felt those conservative folks who told me to take the safe NY investment banking job were probably right. You see, I’d graduated nine-months earlier, and turned JP Morgan down. But what was done was done. So, at dusk I trudged home. Busted. Disgusted. Resigned to work for my clearing broker, to pay off my debts, swearing to never take reckless risks again, subjecting my future to dumb luck. And my roommate burst in, “Where you been? I’ve looked everywhere, thank God you’re ok, we were winding you up, the market expected the Egypt news - it’s already priced in!” So anyhow, I retraced those steps along Lake Michigan last week. Thinking how I loved Chicago, and the unique breed of cat that wanders off to The Windy City. And smiled. Remembering the day wheat opened a penny lower.

Good luck out there,

Eric Peters

Chief Investment Officer

One River Asset Management

Disclaimer: All characters and events contained herein are entirely fictional. Even those things that appear based on real people and actual events are products of the author’s imagination. Any similarity is merely coincidental. The numbers are unreliable. The statistics too. Consequently, this message does not contain any investment recommendation, advice, or solicitation of any sort for any product, fund or service. The views expressed are strictly those of the author, even if often times they are not actually views held by the author, or directly contradict those views genuinely held by the author. And the views may certainly differ from those of any firm or person that the author may advise, converse with, or otherwise be associated with. Lastly, any inappropriate language, innuendo or dark humor contained herein is not specifically intended to offend the reader. And besides, nothing could possibly be more offensive than the real-life actions of the inept policy makers, corrupt elected leaders and short, paranoid dictators who infest our little planet. Yet we suffer their indignities every day. Oh yeah, past performance is not indicative of future returns.