Dusted off an Anecdote from December 2025 about the stock market and its two big fat tails, that is as relevant today as it was back then (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
For Week-in-Review and Weekly & Year-to-Date market data, scroll to the bottom.
Anecdote (Dec 2025): “Let me tell you a familiar story,” I said, discussing market risks, opportunities, in Stockholm this week. Early in my career, Sweden hit the wall. Decades of economic math that hadn’t quite added up had compounded to a point where a market unwind was unavoidable. As the crisis climaxed in late 1992, the central bank hiked overnight interest rates to 500% to punish speculative short-sellers of kronor. We made a small fortune in that market chaos. That was my first of many crises. Every one looked different. In each, investors, high and low, were brought to their knees. Some combination of overleverage, overreliance on parallels to the past, intellectual overconfidence, inadequate risk management, and lack of a sufficiently expansive imagination, is to blame. With each successive crisis since my start in 1989, central bankers and politicians intervened ever more aggressively to forestall economic cleansing, borrowing from the future to repay the past and secure the present. Such interventions have transferred risks and excesses from individuals and corporations onto the government balance sheet. The math of our federal debts and entitlement commitments no longer adds up. The consequences are compounding. I suspect that before my career is over, a sovereign crisis like Sweden’s in 1992 will erupt in the US. The only practical way to forestall this is through a productivity boom that materially lifts non-inflationary growth and repays our policy sins. This is why the US government is all in on the AI buildout. If AI fails to deliver on its vast promises, the risk is far wider than the tech sector. It will lead to a deep recession and massive budget deficits, which will catalyze a debt sustainability crisis that could make 2008 seem trivial. Sovereign debt crises are the most devastating of all financial calamities, because the buyer of last resort is the one in trouble. But I suspect that the AI boom doesn’t end neatly with Cisco retaking its 2000 highs, as it did this week. The parallels with the dot com boom/bust are all too evident and well publicized at this point. Which means we should still be long this bull market, while also running substantial downside hedges. Positioned for a world with two big fat tails.
Good luck out there,
Eric Peters
Chief Investment Officer
One River Asset Management
Week-in-Review: Mon: US ISM mfg 55.6 (53.9e). Turkey CPI 31.75% (31.93%e). South Korea CPI 2.8% (3.0%e). Iran says Hormuz talks ongoing after Trump calls off strikes. US Treasury Secretary Bessent seeks Fed’s aid to defend yen in unusual public call. S&P +1.5%. Tue: US durable goods orders 0.5% (0.3%e), factory orders -0.3% (0.2%e), trade balance -$73.3b (-$73.0b e). Trump says Iran talks going well as hopes rise for Hormuz deal. OpenAI, Anthropic model tests reveal more “unsanctioned” actions. Saudi Arabia seeks to contain a renewed conflict with Houthi militants through diplomacy. Polymarket seeks investment at more than $20b valuation. S&P +1.8%. Wed: US ADP emp change 44k (65k e). Brazil Selic rate 14.00% as exp. India RBI repurchase rate unch 5.25% as exp. Trump readies tariffs and price floor to boost US polysilicon production and business. Iran said it is reaching an agreement with Oman on proposed route for shipping through Hormuz. S&P -0.2%. Thu: US init jobless claims 199k (205k e). Mexico overnight rate unch 6.50% as exp. China trade balance $112.50b ($107.10b e). Iran seeks to bar US and Israeli ships from the Strait of Hormuz and require compensation from hostile countries before they’re allowed to sail through it. Millennium partners with Anthropic to develop AI risk analyst. S&P -0.2%. Fri: US change in nonfarm payrolls -23k (80k e), unemp rate 4.1% (4.2%e). Mexico CPI 3.12% as exp. Canada unemp rate 6.4% (6.5%e). Trump touts $3b in US investments in critical minerals mining to wean the US off supply chains dominated by China. Data center firm Switch said to file confidentially for IPO. S&P +0.6%.
Manufacturing PMI (high-to-low): Sweden 55.8 (previous month 58), US 55.6 (previous month 53.3), Taiwan 55.1 (previous 55.2), Japan 54.5 (prev 54.8), Netherlands 54.4/55.5, Greece 54.3/53.8, Canada 53.5/53, India 53.5/54.2, Switzerland 53.2/54.3, South Korea 53.1/52.1, Vietnam 52.9/51.8, Czech Republic 52.2/53.9, Germany 52.2/50.3, UK 51.9/52.5, Austria 51.5/50.9, Hungary 51.4/51.6, Singapore 51.4/51.3, Italy 51.3/52.2, Mexico 51.3/51.3, Hong Kong 51/52, China 50.9/51.7, Russia 50.7/50.3, South Africa 50.3/50.5, Spain 50.2/49.7, Indonesia 50.2/46.9, France 49.8/51.2, Poland 49/46.1, Turkey 47.7/47.1, Brazil 47.5/50.8. Services PMI: Spain 58.3/54.2, Ireland 55.2/54.2, US 54.6/51.2, Sweden 54.2/56.5, Australia 53.6/50.5, India 53.3/57.4, Italy 52.5/50.2, UK 52.1/48.8, Japan 51.2/52.2, China 50.4/54.1, Germany 49.8/48.6, Brazil 49.7/51.3, France 49.6/46.8, Russia 49/48.2.
Weekly Close: S&P 500 +3.6% and VIX -1.09 at +14.90. Nikkei +1.9%, Shanghai +2.8%, Euro Stoxx +1.7%, Bovespa -3.1%, MSCI World +3.3%, MSCI Emerging -0.5%, Bitcoin +3.0%, and Ethereum +2.6%. USD rose +3.7% vs Russia, +0.4% vs Turkey, +0.2% vs Yen, and +0.2% vs Brazil. USD fell -2.3% vs South Africa, -1.9% vs Chile, -1.2% vs Mexico, -0.7% vs Australia, -0.6% vs Indonesia, -0.6% vs Canada, -0.3% vs Sweden, -0.3% vs Euro, -0.2% vs India, -0.1% vs China, and -0.1% vs Sterling. Gold +7.1%, Silver +9.9%, Oil (WTI) -7.7%, Oil (Brent) -5.0%, NatGas (US) -3.1%, NatGas (EU) -6.0%, Power (EU) -5.5%, Copper +1.9%, Iron Ore +1.3%, Corn -0.4%. 10yr Inflation Breakevens (EU -6bps at 1.98%, US -3bps at 2.25%, JP -2bps at 1.96%, and UK -6bps at 3.17%). 2yr Notes -10bps at 4.20% and 10yr Notes -9bps at 4.65%.
YTD Equity Index Returns: Korea +51.8% priced in US dollars (+48.5% priced in won), Taiwan +48.5% priced in US dollars (+52.7% priced in Taiwan dollars), Hungary +39.8% priced in US dollars (+33.9% priced in forint), Colombia +35.6% in dollars (+13.7% in pesos), Norway +30.4% (+22.8%), Japan +29.4% (+30.3%), Poland +25% (+29.5%), Singapore +23.4% (+22.6%), Austria +22.8% (+24.9%), Russell 2000 +22.3%, Thailand +21.9% (+28%), Greece +21.5% (+23.3%), Israel +18.2% (+11%), Italy +17.5% (+19.5%), Brazil +15.5% (+7.1%), Netherlands +15.1% (+16.8%), NASDAQ +14.8%, Spain +14.8% (+16.6%), Portugal +13.5% (+15.2%), S&P 500 +13.3%, MSCI World +13% priced in US dollars, Canada +13% (+14.7%), Australia +12.6% (+6.3%), Belgium +12.1% (+13.8%), Sweden +11.4% (+14.9%), Euro Stoxx 50 +10.9% (+12.6%), Turkey +10.2% (+22.4%), UK +10.1% (+9.8%), Mexico +9.4% (+4.1%), Ireland +7.7% (+9.3%), Switzerland +7.4% (+9.6%), Chile +6% (+7.4%), Germany +5.7% (+7.5%), France +5.3% (+6.9%), Finland +5.1% (+6.9%), New Zealand +4.5% (+2%), South Africa +4% (+1.5%), Saudi Arabia +2.9% (+3.1%), China +2.8% (-0.7%), Malaysia +2.5% (+3.3%), Czech Republic +1.8% (+3.7%), UAE +1% (+1%), Philippines +0.6% (+3.9%), Vietnam -0.6% (-0.9%), HK -0.6% (+0.1%), Argentina -1.9% (+1.2%), Denmark -2.3% (-0.5%), India -11.2% (-6%), Indonesia -30.4% (-25.9%).
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.