“My brain says jump, but my body won’t move,” whispered Teddy this morning, not looking at me, staring into the distance, the wind howling. “It means you’re thinking Teddy -- don’t overthink this, just jump,” I said, climbing my way out of the water, the rest of my little lemmings leaping off the rock, plunging into icy water. Charlie, Liv, Jackson. Kerplunk. Kerplunk. Kerplunk. Teddy closed his eyes, took a deep breath. “Ahhhhhhhh!” he screamed, flying, living. Another year of our Thanksgiving cliff-jumping ritual checked off the list. Teaching us that often the things we’d rather not do, are precisely the things we must.
Dusted off an anecdote from 2015, when our cliff-jumping tradition all started. Back before Covid, Delta, Omicron. Back when some people thought QE was temporary. Before crypto was a thing. Back before people said YOLO! Even though it was just as true then as it is today. See you next Sunday with full weekend notes. E
Week-in-Review (expressed in YoY terms): Mon: Jerome Powell reappointed as Fed Chair / Brainard as vice chair, Merkel says stricter measures needed to contain covid, Chinese tennis star Shuai reappears after accusing Chinese official of sexual assault, 5 dead / 40 injured in Wisconsin over the weekend after SUV ploughed through xmas parade, US report continues to show Russian military buildup along Ukrainian border, first round oEf Chile presidential election pits far left vs far right candidates in second round, PBOC quarterly monetary policy report struck dovish tone, EU cons conf -6.8 (-5.5e), US existing home sales 0.8% MoM (-1.4%e), S&P -0.3%; Tue: US(50m barrels)/ China (7m barrels)/ India (5m)/ UK (1.5m)/ Japan/ South Korea announce coordinated oil reserve release, Erdogan aggressively defends lower interest rate policy – sending Lira spiraling -12.6% on the day, ECB’s Schnabel said net PEPP purchases should end in March, French PM tests positive for covid as a new wave spreads across Europe, CDC advises against travel to Germany/Denmark amidst covid surge, German coalition finalizes deal putting Scholz as the new chancellor, Sweden elects first female PM, NZ retail sales QoQ -8.1% (-10.5%e), Singapore CPI 3.2% (2.8%e), Taiwan IP 11.25% (12.02%e), EU mfg PMI 58.6 (57.4e) / serv PMI 56.6 (53.5e) / comp PMI 55.8 (53e), Mexico ret sales 5.9% as exp, US mfg PMI 59.1 as exp / serv PMI 57 (59e) / comp PMI 56.5 (57.6p), S&P +0.4 %; Wed: RBNZ hikes 25bps (mkt was 50/50 between 25bp and 50bp hike), Fed’s Daly (among the most dovish) reiterates recent Fed views that she supports tapering faster if the data continues to support it, Fed mins show that there was debate about the speed of taper, Argentina eco activity 11.6% (8%e), Singapore 3Q GDP 7.1% (6.5%e), France mfg conf 109 (106e), German IFO 94.2 (94.6e), US init claims 199k (260k exp), Russia IP 7.1% (6%e), Russia PPI 27.5% (27.6%e), US Q3 GDP 2.1% (2.2%e) / PCE 5.9% (5.7%e) / core PCE deflator 4.1% as exp, US durable goods orders 0.6% MoM (0.5%e), US pers income 0.5% MoM (0.2%e) / pers spending 1.3% (1%e), US UofM sentiment 67.4 (66.9e) / 1y infl exp 4.9% / 5-10y infl exp 3%, S&P -0.3%; Thur: Thanksgiving in the US – quiet markets, BOK hiked 25bps as exp, Riksbank unch as exp, new covid strain with multiple mutations detected in S. Africa, German covid deaths surpass 100k, Jamie Dimon apologies for saying JPM would outlast China’s Communist Party, Japan services PPI 1% (0.9%e), Norway unemp 3.6% (3.9%e), Spain PPI 31.9% (23.8%p), HK expts 21.4% (20.7%e) / imports 17.7% (19.5%e), S. Africa PPI 8.1% (8%e), Brazil IPCA 10.73% (10.69%e), Mexico economic activity 0.92% (2.5%e), S&P closed; Fri: more countries confirm instances of the new omicron strain of covid – some countries implement travel ban from southern Africa countries, Japan approved $6.8b of extra defense spending amid China / N. Korea military buildup, Merck says molnupiravir is 30% effective at reducing risks associated with covid infection (50% initially reported), China asks Didi to explore delisting in the US, Mexican president AMLO announces surprise last minute nomination change for the head of Mexican CB, France / UK cancel talks concerning migrants as tensions rise, Ukrainian president warned of a possible coup, Australia ret sales 4.9% MoM (2.2%e), Sinapore IP 16.9% (14.5%e), France cons conf 99 (98e), Sweden cons conf 99.7 (102e), Swiss Q3 GDP 4.1% (2.9%e), Italy cons conf 117.5 (117e), S&P -2.3%
Weekly Close: S&P 500 -2.2% and VIX +10.71 at +28.62. Nikkei -3.3%, Shanghai +0.1%, Euro Stoxx -4.5%, Bovespa -0.8%, MSCI World -0.5%, and MSCI Emerging -1.1%. USD rose +9.3% vs Turkey, +6.4% vs Bitcoin, +5.2% vs Mexico, +3.7% vs Ethereum, +3.6% vs South Africa, +2.9% vs Russia, +2.4% vs Sweden, +1.6% vs Australia, +1.2% vs Canada, +0.9% vs Sterling, +0.9% vs India, +0.5% vs Indonesia, +0.2% vs Chile, and +0.1% vs China. USD fell -0.5% vs Yen, -0.2% vs Euro, and -0.1% vs Brazil. Gold -3.6%, Silver -6.9%, Oil -10.3%, Copper -2.4%, Iron Ore +14.3%, Corn +2.6%. 5y5y inflation swaps (EU -10bps at 1.81%, US -12bps at 2.45%, JP +1bp at 0.53%, and UK +5bps at 3.95%). 2yr Notes -1bp at 0.50% and 10yr Notes -7bps at 1.48%.
YTD Equity Indexes (high-to-low): UAE +67.6% priced in US dollars (+67.6% priced in dirham), Argentina +31% priced in US dollars (+56.9% in pesos), Saudi Arabia +30% in dollars (+30% in riyal), Israel +28.9% in dollars (+26.7% in shekels), Czech Republic +23.7% (+31.6%), S&P 500 +22.3%, Canada +21.1% (+21.2%), NASDAQ +20.2%, Austria +20.1% (+30.6%), MSCI World +19% (+19%), Taiwan +18.9% (+17.9%), India +18.7% (+21.8%), Venezuela +18% (+374.4%), Netherlands +15.7% (+25.1%), Norway +14.9% (+21.6%), Russia +14.2% (+15.9%), Russell +13.7%, Denmark +13.5% (+23.3%), France +12.3% (+21.4%), Hungary +10.1% (+21.2%), Switzerland +9.1% (+14%), Sweden +7.6% (+19.6%), Singapore +7.3% (+11.3%), Italy +7% (+16.3%), Indonesia +6.8% (+9.7%), UK +6.5% (+9%), Euro Stoxx 50 +6.4% (+15.1%), Belgium +5.4% (+14%), China +4.8% (+2.6%), Poland +4.2% (+16.5%), South Africa +3.6% (+14.8%), Finland +3.5% (+12.6%), Mexico +2.8% (+12.3%), Australia +2.4% (+10.5%), Germany +2.3% (+11.2%), Portugal +0.8% (+9%), Thailand -1.3% (+11.1%), Ireland -1.8% (+6.2%), Greece -1.8% (+6.2%), Philippines -3% (+1.9%), Spain -3.8% (+4.1%), Japan -4.3% (+4.8%), Chile -6.2% (+9.6%), Korea -6.9% (+2.2%), New Zealand -8.4% (-3.5%), Malaysia -11.8% (-7.1%), HK -12.1% (-11.6%), Brazil -20.4% (-14.1%), Colombia -21.8% (-8.3%), and Turkey -27.6% (+20.3%).
Anecdote (December 2015): “Cliff jumping,” answered Jackson, without hesitation, taking charge. Olivia, Teddy and Charlie cheered. Filling the air with the magic of mischief. I’d asked for ideas. We needed out. Thanksgiving had overwhelmed us. So we piled into the Suburban, in search of sanctuary, solitude. The Greenwich cliffs are hidden deep in back-country. And like so much in today’s wild, they’re forbidden. So we whispered our way through the woods, Wolfie and Shackleton sniffing for squirrels. Blazing our own twisted trail, freshly fallen leaves in our wake. Now, truth be told, cliff jumping in November was not the first thing that sprang to my mind. But having learned a thing or two about parenting, I know that in certain situations there’s no better time to say yes than when they think you’ll say no. So without overthinking it, I’d instinctively agreed. Electrifying us all. We first went cliff-jumping in October, on my 49th birthday. The sun bright, leaves brilliant red, yellow. Our screams rippling across the lake. The water unknown, cold. So with some mornings now blanketed in frost, we worked ourselves into a frenzy imagining the polar plunge. The cliff-top neared, the wind picked up, driving rain through the forest, drenching the dogs – we squealed with nervous excitement. Children allow us to relive life, if only we let them. And when we do, they help us see things all over again, afresh, the world anew; their gift. “My nuts are gonna turn to ice cubes!” shrieked Teddy, laughing, kind of. I stripped down. “Whatever you do, don’t overthink it,” I hollered, my greatest advice, the story of my life. They followed in rapid succession, my little lemmings. Screams echoed. The frigid water paralyzed our lungs. Fired our hearts. Breathed life. And what was once a quiet November lake, was somehow something new.
Good luck out there,
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, drink 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.