Dusted off an Anecdote from July 2015 about what I do for a living (see below). I take late summer off from writing for time with family, reading, altitude, solitude. Wishing the same for you. All the very best, Eric
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Anecdote (July 2015): “What were you guys talking about?” asked Jackson as we left the office. My 13yr old had swung by after practice, waiting for a ride home. Instead of answering directly, I asked him what he thought our investment team had been discussing. “You were all trying to figure something out, and it seemed like you kind of did, but it also seemed like you kind of didn’t.” He wasn’t wrong. And sensing an opportunity to explain what I do for a living, I told my son I went to Chicago after college to play this game because it seemed like something that would never grow boring. And in 26yrs – double his lifetime – it never has. Never will. The price of certainty is boredom, so I chose differently. But just because something’s fundamentally uncertain doesn’t mean you don’t try and make sense of it; digging deep, searching for patterns, market rhythms, rhymes, openings, opportunities, possible outcomes that are more likely than others. And all the time, you need to weigh the risks and rewards, some of which are themselves uncertain. Jackson’s a literal kid, his world painted black and white, and needed an example. So I asked why he likes lacrosse? “I don’t know, I just do.” What do you think about when you have a shot? “Where to put it.” What if both the upper right and left corners look good, which do you take? “Whatever’s best.” How do you know what’s best? “I just do.” So do you always score? “Obviously not.” Why? “Because sometimes I mess up, or sometimes the goalie’s just really good.” Do you remember every shot, your goals, your misses? “Yup.” Do you think about them, analyze them? “All the time.” Why? And Jackson just smiled.
Good luck out there,
Eric Peters
Chief Investment Officer
One River Asset Management
Week-in-Review: Mon: US set to impose a 7.5% tariff on Chinese goods over allegations of excess manufacturing capacity before planned summit between Xi and Trump. Trump administration proposes new $103k H-1B visa fee. Treasury Secretary Bessent unveiled sanctions against countries doing business with Iran as part of “economic D-Day” campaign to isolate the country. S&P -0.5%. Tue: US conf board cons conf 89.4 (90.2e), new home sales 607k (620k e). Xi Jinping signals defiance as US threatens sanctions over Iran help. S&P -0.7%. Wed: US GDP ann QoQ 1.5% as exp, durable goods orders 1.1% (0.5%e). Putin moves to escalate war in Ukraine as talks at dead end. Meta agreed to pay up to $18B in landmark settlements to resolve social media addiction claims from US states. S&P +0.2%. Thu: US init jobless claims 203k (208k e). Japan jobless rate 2.4% (2.5%e). Nvidia projected sales growth of 70% for the next fiscal year, bolstering confidence in the AI trade. Salesforce jumps most since 2020 on Anthropic partnership. S&P -0.9%. Fri: US UMich sent 51.7 (51.0e). Federal Reserve Chairman Warsh warned that price pressures have yet to meaningfully slow, with traders increasing implied probability of a rate hike in September to above 50% (2-30 year yield curve flattens sharply). OpenAI to end partnership with Cursor after SpaceX acquisition. US set to take majority control over a major portion of Venezuelan oil wealth. ICE explores purchasing robot dogs in enforcement tech push. S&P +0.4%.
Weekly Close: S&P 500 +0.5% and VIX -0.70 at +14.43. Nikkei +0.6%, Shanghai +1.2%, Euro Stoxx +0.1%, Bovespa +2.7%, MSCI World +0.3%, MSCI Emerging +0.01%, Bitcoin +0.6%, and Ethereum +0.9%. USD rose +3.5% vs Russia, +1.7% vs Chile, +1.4% vs Sweden, +1.1% vs Brazil, +1.1% vs Canada, +1.0% vs South Africa, +0.8% vs Euro, +0.8% vs Sterling, +0.7% vs Yen, +0.7% vs Mexico, +0.4% vs Turkey, +0.1% vs China, and +0.1% vs Australia. USD fell -0.3% vs India, and flat vs Indonesia. Gold -3.2%, Silver -3.6%, Oil (WTI) -4.2%, Oil (Brent) -4.9%, NatGas (US) +2.7%, NatGas (EU) +1.5%, Power (EU) +2.0%, Copper -0.4%, Iron Ore +2.6%, Corn +5.5%. 10yr Inflation Breakevens (EU +2bps at 2.15%, US -1bp at 2.32%, JP +1bp at 2.05%, and UK +5bps at 3.32%). 2yr Notes +11bps at 4.35% and 10yr Notes -2bps at 4.72%.
YTD Equity Index Returns: Korea +68.2% priced in US dollars (+61.1% priced in won), Taiwan +58.9% priced in US dollars (+60% priced in Taiwan dollars), Hungary +41.4% priced in US dollars (+35.7% in forint), Colombia +39.8% in dollars (+18.9% in pesos), Norway +36.2% (+26.7%), Japan +28.7% (+31.9%), Austria +25.6% (+27.4%), Greece +24.8% (+26.4%), Poland +24.2% (+29.6%), Singapore +23.8% (+22.7%), Russell 2000 +19.8%, Thailand +19.5% (+26.1%), Israel +18.7% (+11.4%), Portugal +17.7% (+19.2%), Turkey +15.8% (+30%), Netherlands +15.4% (+16.9%), Italy +15.4% (+17.1%), Brazil +14.7% (+9%), Spain +14.3% (+15.8%), Belgium +14.1% (+15.6%), Canada +13.8% (+15.3%), NASDAQ +13.6%, S&P 500 +12.7%, MSCI World +12.5% priced in US dollars, Australia +12% (+4.3%), Euro Stoxx 50 +10.6% (+12%), Sweden +10.5% (+15.5%), Finland +10.2% (+11.8%), UK +9.7% (+9%), Mexico +7.6% (+1.8%), Ireland +7.1% (+8.5%), Saudi Arabia +7% (+7.1%), Germany +6.9% (+8.5%), Switzerland +6.1% (+8.5%), Chile +6% (+9.2%), South Africa +5.1% (+2.5%), New Zealand +4.3% (+1.6%), Malaysia +3.6% (+2.7%), Vietnam +3.5% (+2.7%), China +3.4% (-0.4%), Czech Republic +3.4% (+4.5%), France +1.8% (+3.1%), UAE +0.5% (+0.5%), Denmark +0.3% (+1.9%), HK -0.9% (-0.2%), Argentina -6.2% (-2.4%), Philippines -6.8% (-1.6%), India -13% (-7.5%), Indonesia -29.1% (-24.6%).
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.