Winter break this week with Mara and Charlie, my youngest. New England’s Nor’easter appears determined to strand us out here in Wyoming for another couple days. Dusted off an anecdote from 2011 about fathers, sons, the tides, our folly (see below). Back next Sunday with full wknd notes.
For Week-in-Review and Weekly & Year-to-Date market data, scroll to the bottom.
Anecdote (2011): Teddy and I built a castle made of sand. He positioned it just above the water line. We are drawn to risky endeavors. We taunt Mother Nature, tempt fate – always have, always will. Yet before I knew it, his plan changed, they usually do. Teddy transformed the castle into a throne. There he sat, perched high, proud, defiant, smug, as the first waves gently swept in. We contained the damage, made repairs. But before long, the balance of power shifted. At first, he kicked the rushing water. Then resorted to lying prostrate, shielding his creation from the approaching menace. As it receded, he would jump to his feet, fists raised, growling – “Arghrrr.” I retreated to higher ground, watched, smiled, as his throne’s foundation wasted away. The little fella’s determined efforts grew frantic, manic. A final roller came in, and the once formidable throne slumped. That last wave was nothing special, it just capped the damage done by so many that had come before. And sobbing, Teddy joined me on dry sand. We sat, watching the foam spill over our creation. In no time, the folly of his efforts became clear. He grew quiet. We both did. I broke the silence, told Teddy something fathers have told sons since the dawn of time, “You know little man, no one can turn the tides.” He looked out at the sea, calm, “It’s okay Daddy, I don’t really care.” Most often the things we try so desperately to prevent, aren’t that bad in the end (applies to Fed Governors, Presidents too). Within minutes, his throne was reduced to a gentle mound, the adjacent hole filled to a shallow depression of pristine sea water. The landscape restored to balance, filled with possibility.
Good luck out there,
Eric Peters
Chief Investment Officer
One River Asset Management
Week-in-Review: Mon: Japan GDP ann SA QoQ 0.2% (1.6%e). Anthropic in talks to extend a contract with the Pentagon are being held up over Anthropic’s desire to place guardrails on Claude usage, with Defense Secretary Hegseth “close” to designating the company a “supply chain risk”. SpaceX to compete in Pentagon contest for autonomous drone tech. Presidents Day. Tue: US emp mfg 7.1 (6.2e). Canada CPI 2.3% (2.4%e). Germany CPI 2.1% as exp. New Zealand RBNZ official cash rate unch 2.25% as exp. Japan plans to invest up to $36b in US oil, gas, and mineral projects as part of the first tranche of its $550b commitment under trade agreement with the US. Meta deepens ties with Nvidia after agreeing to deploy “millions” of their processors over the next few years. S&P +0.1%. Wed: US IP MoM 0.7% (0.4%e). UK CPI 3.0% as exp, Core 3.1% (3.0%e), RPI 3.8% as exp. Australia unemp rate 4.1% (4.2%e). South Africa CPI 3.5% (3.4%e). Zelenksiy accused Moscow of prolonging the process after a second day of US-brokered meetings in Geneva between Russia and Ukraine broke up after 90 minutes. Fed minutes showed wariness at another rate cut as the risk of more persistent inflation remains. S&P +0.6%. Thu: US init jobless claims 206k (225k e), cont claims 1869k (1860k e), leading index -0.2% as exp, trade balance -$70.3b (-$55.5b e). Eurozone cons conf -12.2 (-12.0e). Japan CPI 1.5% (1.6%e). Trump and Indonesian President Subianto finalized trade agreement, lowering tariff rate to 19% with Jakarta facilitating the purchase of $33b in American goods. US imports more from Taiwan than China for the first time in decades, with US purchases of Chinese goods plunging 44% in December from a year earlier and shipments from Taiwan more than doubling over the same period. S&P -0.3%. Fri: US UMich sent 56.6 (57.3e), GDP ann QoQ 1.4% (2.8%e). US Supreme Court strikes down Trump’s global duties, ruling the President did not have legal authority to impose duties under an emergency law, but was silent on the topic of refunds as companies are set to battle to recoup as much as $170b in tariffs already paid to the US. Trump pledges to impose a flat 10% levy on foreign goods and to use different tools to work around the ruling. S&P +0.7%. Sat: Trump says he will increase the global 10% tariff (that he announced on Friday) to 15%.
Weekly Close: S&P 500 +1.1% and VIX -1.51 at +19.09. Nikkei -0.2%, Shanghai +0.0%, Euro Stoxx +2.1%, Bovespa +2.2%, MSCI World +1.0%, MSCI Emerging +0.8%, Bitcoin -1.6%, and Ethereum -4.0%. USD rose +1.5% vs Yen, +1.5% vs Sweden, +1.3% vs Sterling, +0.7% vs Euro, +0.6% vs South Africa, +0.5% vs Chile, +0.5% vs Canada, +0.4% vs India, +0.3% vs Turkey, and +0.2% vs Indonesia. USD fell -0.9% vs Brazil, -0.2% vs Mexico, -0.2% vs Russia, -0.1% vs Australia, and flat vs China. Gold +0.7%, Silver +5.7%, Oil +5.9%, Copper +0.6%, Iron Ore +0.0%, Corn -0.5%. 10yr Inflation Breakevens (EU flat at 1.82%, US flat at 2.29%, JP -6bps at 1.70%, and UK +1bp at 3.07%). 2yr Notes +7bps at 3.48% and 10yr Notes +4bps at 4.09%.
YTD Equity Index Returns: Korea +37.2% priced in US dollars (+37.8% priced in won), Brazil +25% priced in US dollars (+18.3% priced in reais), Turkey +21.3% in dollars (+23.7% in lira), Norway +19.7% (+13.2%), Colombia +19.1% (+16.9%), Thailand +18.6% (+17.5%), Israel +17.2% (+14.7%), Mexico +16.8% (+11.1%), Taiwan +16% (+16%), Hungary +15.2% (+13.2%), Japan +13.9% (+12.9%), Sweden +12% (+10.3%), Belgium +11.8% (+11.3%), Australia +10.5% (+4.2%), Portugal +10% (+9.6%), South Africa +9.8% (+6.3%), Singapore +9.6% (+8%), Austria +9.3% (+9%), Malaysia +8.5% (+4.3%), Philippines +8.5% (+6.8%), UK +7.9% (+7.6%), Greece +7.6% (+7.2%), Chile +7.5% (+3.6%), Netherlands +7.4% (+7%), Russell +7.3%, Canada +6.9% (+6.6%), Poland +6.9% (+6.7%), Switzerland +6.6% (+4.5%), Euro Stoxx 50 +6.3% (+5.9%), Finland +6.3% (+6%), UAE +5.9% (+5.9%), Spain +5.5% (+5.1%), France +4.9% (+4.5%), Saudi Arabia +4.3% (+4.4%), China +4.1% (+2.9%), Italy +3.6% (+3.4%), Vietnam +3.5% (+2.2%), Germany +3.4% (+3.1%), MSCI World +2.8% in US dollars, HK +2.6% (+3.1%), New Zealand +1.9% (-1.8%), Czech Republic +1.1% (+1%), S&P 500 +0.9%, Ireland -0.3% (-0.7%), Argentina -0.6% (-5.8%), NASDAQ -1.5%, Denmark -2.3% (-2.4%), India -3.1% (-2.1%), Indonesia -5.2% (-4.3%).
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.