Spent the Juneteenth long weekend back in Annapolis with Charlie, my youngest, as the summer lacrosse season heats up for all the kids dreaming of playing college ball in a couple years. Dusted off an anecdote from 2021 when my oldest was down here in Annapolis, learning how to manage stress. Back next Sunday with full weekend notes. All the very best, Eric
For Week-in-Review and Weekly & Year-to-Date market data, scroll to the bottom.
Anecdote (2021): “I’m stressed Dad,” said Jackson, nearly twenty years old, preparing for mid-terms. I smiled, hearing in his voice the story of my life. “Stress is okay, drowning isn’t. Which is it?” I asked. “Let me put it this way, my easiest classes are Calc 3 and Physics.” I laughed, couldn’t help it. “What's your favorite class?” I asked. “Matrix Theory for sure. My professor is awesome.” Jackson and I discussed Matrix Theory this summer - back when I knew more about quantum mechanics than he - I explained how happy I was he’d earned the opportunity to study something so enigmatic. There’s nothing as gratifying as seeing our children surpass us. And I’d glimpsed the leading edge. “It’s wild the way he teaches, he’s young, unusual, incredible. He just told us the exam will be 80% what we’ve studied, and 20% things neither he nor we have ever seen.” I nodded. Young minds are sublime. The greatest teachers unleash them. Werner Heisenberg made his miraculous breakthrough at twenty-three, after a period of total isolation and fevered contemplation on Helgoland, a desolate island in the North Sea. Heisenberg’s uncertainty principle opened the field of quantum mechanics. “Our whole class was like, you’re kidding right? Of course, he wasn’t. But I get it, he’s training us to think for ourselves under pressure, to see what ideas form, to stretch us. Maybe himself too.” Stress is the prerequisite for growth, the key ingredient for an interesting life. I explained to Jackson I’ve spent a career over my skis, getting myself naked short, scrambling to cover, over and over. That’s how you build a business, or anything for that matter. It is what produces the pressure to perform. In time you come to see stress as a gift, a lever. “Your professor is exactly the kind of person you need to fill your life with; that’s something I wish I’d learned at your age,” I said. “I hear you Dad,” Jackson said, laughing, “but at this exact moment, I’m just kind of wishing I’d chosen an easier major.”
Good luck out there,
Eric Peters
Chief Investment Officer
One River Asset Management
Week-in-Review: Mon: US emp mfg 5.7 (13.7e). Japan BOJ target rate 1.00% as exp. China IP 4.5% (4.4%e), ret sales -0.6% (-0.2%e). Anthropic holds talks with US in bid to lift curbs on AI models. Fox to buy Roku in streaming video push. S&P +1.6%. Tue: US housing starts 1177k (1430k e). Australia RBA cash rate target unch 4.35% as exp. US, Iran prepare to formally sign interim peace deal with Iran to receive broad financial incentives as part of agreement. Oil falls to three-month low as US-Iran deal set to add to supply. S&P -0.6%. Wed: US FOMC rate decision (upper bound) unch 3.75% as exp, (lower bound) unch 3.50% as exp. Brazil Selic rate 14.25% as exp. UK CPI 2.8% (3.0%e), Core 2.6% (2.7%e). Eurozone CPI 3.2% as exp, Core 2.6% (2.5%e). Trump signed interim deal to end the war with Iran and reopen the Strait of Hormuz despite criticism from Republicans. S&P -1.2%. Thu: US init jobless claims 226 (225k e), cont claims 1810k (1780k e). UK Bank of England bank rate 3.750% as exp. US ends Hormuz blockade, with 60-day clock for working out details in the memorandum. Intel rallies after Trump touts Apple chip deal. S&P +1.1%. Fri: Russia key rate 14.25% (14.00%e). US-Iran nuclear talks stall as Lebanon clashes worsen. SpaceX receives investment-grade bond scores from three major ratings firms as it prepares to raise at least $20B from a debt sale. S&P 500 closed for Juneteenth.
Weekly Close: S&P 500 +0.9% and VIX -0.90 at +16.78. Nikkei +7.9%, Shanghai +1.5%, Euro Stoxx +0.4%, Bovespa -1.6%, MSCI World +1.0%, MSCI Emerging +4.3%, Bitcoin -1.1%, and Ethereum +1.9%. USD rose +1.8% vs Brazil, +1.3% vs Sterling, +1.2% vs Canada, +1.2% vs Sweden, +1.1% vs Russia, +1.0% vs South Africa, +0.9% vs Chile, +0.8% vs Euro, +0.7% vs Mexico, +0.7% vs Yen, +0.5% vs Australia, +0.4% vs Turkey, and +0.1% vs China. USD fell -0.8% vs India, and -0.4% vs Indonesia. Gold -1.6%, Silver -4.5%, Oil (WTI) -8.6%, Oil (Brent) -7.7%, NatGas (US) +2.5%, NatGas (EU) -10.0%, Power (EU) +9.4%, Copper -1.6%, Iron Ore -5.8%, Corn +0.9%. 10yr Inflation Breakevens (EU -8bps at 1.93%, US -6bps at 2.27%, JP -3bps at 2.13%, and UK -10bps at 3.18%). 2yr Notes +10bps at 4.18% and 10yr Notes -3bps at 4.46%.
YTD Equity Index Returns: Korea +101.8% priced in US dollars (+114.8% priced in won), Taiwan +59.6% priced in US dollars (+60.4% priced in Taiwan dollars), Japan +37.2% in US dollars (+41.5% in Yen), Hungary +32.6% (+24%), Colombia +32.6% (+21%), Norway +23.3% (+18.5%), Turkey +21% (+30.8%), Russell 2000 +20.1%, Israel +19.9% (+11.4%), Austria +19.6% (+22.6%), Thailand +19% (+24.8%), Italy +14.7% (+17.6%), Poland +14.5% (+18.4%), Greece +14.1% (+16.8%), NASDAQ +14.1%, Brazil +11.4% (+4.5%), Singapore +11.3% (+11.8%), Portugal +10.9% (+13.5%), Netherlands +10.8% (+13.3%), S&P 500 +9.6%, Mexico +9.5% (+5.3%), Spain +9.2% (+11.8%), MSCI World +9.1% in US dollars, Belgium +8.7% (+11.2%), Finland +7.8% (+10.5%), Argentina +7% (+7.9%), Australia +6.4% (+1.3%), China +6.4% (+3.1%), Canada +6.4% (+9.9%), Euro Stoxx 50 +6.2% (+8.7%), Saudi Arabia +5.9% (+6%), Sweden +5.8% (+10.3%), Chile +3.8% (+3.9%), Ireland +2.8% (+5.2%), UK +2.6% (+4.3%), Vietnam +2.1% (+2.2%), Switzerland +1.7% (+3.8%), France +1% (+3.3%), UAE +0.2% (+0.2%), Malaysia 0% (+1.9%), Germany -0.5% (+2%), New Zealand -0.7% (-0.4%), Philippines -1.7% (+1.4%), South Africa -2.8% (-3.4%), Denmark -6.7% (-4.3%), Czech Republic -6.7% (-4.5%), HK -7.3% (-6.7%), India -12.5% (-8.1%), Indonesia -32.9% (-28.6%).
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.