Dusted off an anecdote from 2021 about youth, technology, and what real revolutions look like (see below). Back next Sunday with full weekend notes. All the very best, E
Week-in-Review: Mon: ECB chief economist warns “inflation could materially fall below target”. Incoming Energy Secretary in Trump administration expresses support for all forms of energy, including wind and solar power in confirmation hearing. Trudeau says Canada is ready with counter-tariffs if Trump imposes new levies. India CPI 5.22% (5.30%e), China Expts 10.7% (7.5%e) / impts 1.0% (-1.0%e), S&P +0.2%. Tue: Trump to create an “External Revenue Service” on Jan. 20 to collect tariffs on foreign imports. SEC sues Elon Musk over alleged late disclosures on Twitter share deal. Mexico pledges to shrink trade deficit with China. New French PM opens door to rolling back Macron’s pensions reform. China M2 7.3% as exp, Hungary CPI 4.6% (4.3%e), South Korea Unemp rate 3.7% (2.9%e), S&P +0.2%. Wed: Biden says ‘oligarchy’ emerging in US in final White House address. US unveils new regulations aimed at restricting China’s access to advanced chips from TSMC and other producers. Rio Tinto sees signs of stabilization in Chinese property based on iron ore demand. Polish PM warns that Russia is preparing terrorist attacks on air cargo. South Korea’s President Yoon arrested after stand-off with police. Saudi Aramco expands investments in lithium. US CPI 2.9% as exp, UK CPI 2.5% (2.6%e) / core 3.2% (3.4%e) / RPI 3.5% (3.8%e), France CPI 1.3% as exp, US Empire mfg -12.6 (3.0e), Russia CPI 9.52% (9.80%e), Indonesia BI-Rate 5.75% (6.00%e), S&P +1.8%. Thur: Gaza ceasefire announced after 15 months of war. Fed’s Waller sees more cuts sooner and faster if disinflationary trend persists. Trump to elevate crypto as a policy priority in an executive order. Former BoE governor Carney enters race to replace Trudeau as Canada PM. BoE’s Taylor believes a “more accelerated pace of rate cuts” to be appropriate. Bulgarian pro-Russia party joins coalition government. Germany CPI 2.6% as exp, UK IP -1.8% (-0.9%e), US Initial jobless claims 217k (210k e) / Cont claims 1859k (1870k e), S&P -0.2%. Fri: Trump holds first call with Xi Jinping since 2021. Israel’s security cabinet approves ceasefire deal with Hamas. Trump prepared 100 executive orders in a bid to act quickly after his inauguration. IMF warns deregulation too far could push the US on to a ‘dangerous boom-bust path’. Iran and Russia sign wide-ranging partnership. The Supreme Court upheld a law that threatens to shut down TikTok. EU and Mexico seal trade deal. Freeland joins race to replace Justin Trudeau as Canada PM. Brussels orders X to hand over documents on algorithm. China GDP 5.4% (5.1%e) / Retail Sales 3.7% (3.5%e), Eurozone CPI 2.4% as exp / core 2.7% as exp, US Housing starts 1499k (1327k e) / building permits 1483k (1460k e), S&P +1%.
Weekly Close: S&P 500 +2.9% and VIX -3.57 at +15.97. Nikkei -1.9%, Shanghai +2.3%, Euro Stoxx +2.4%, Bovespa +2.9%, MSCI World +2.7%, and MSCI Emerging +1.2%. USD rose +1.1% vs Indonesia, +0.7% vs India, +0.6% vs Russia, +0.4% vs Canada, +0.3% vs Mexico, +0.3% vs Sterling, and +0.1% vs Turkey. USD fell -10.1% vs Bitcoin, -5.6% vs Ethereum, -1.9% vs South Africa, -0.9% vs Yen, -0.7% vs Australia, -0.7% vs Chile, -0.5% vs Brazil, -0.3% vs Euro, -0.2% vs Sweden, and -0.1% vs China. Gold +1.2%, Silver -0.6%, Oil +1.7%, Copper +1.5%, Iron Ore +4.8%, Corn +2.9%. 10yr Breakevens (EU +2bps at 1.94%, US -1bps at 2.43%, JP +6bps at 1.57%, and UK -1bps at 3.62%). 2yr Notes -10bps at 4.29% and 10yr Notes -13bps at 4.63%.
2025 Year-to-Date Equity Index Returns (Dec 31-Jan 17): Israel +6.7% priced in US dollars (+5.8% priced in shekels), Korea +6.3% priced in US dollars (+5.2% in won), Norway +5.7% in dollars (+6.1% in krone), Hungary +5.4% (+7%), Italy +4.9% (+6.1%), Euro Stoxx 50 +4.5% (+5.2%), Poland +4.4% (+5.2%), Sweden +4% (+5.4%), Germany +3.9% (+5%), Brazil +3.8% (+1.7%), France +3.8% (+4.5%), Netherlands +3.4% (+4.1%), Greece +3.1% (+3.7%), Czech Republic +2.9% (+4.5%), Colombia +2.6% (+0.8%), Switzerland +2.3% (+3.4%), Chile +2.2% (+3.7%), Australia +2.2% (+1.9%), Spain +2.1% (+2.8%), Austria +2.1% (+3.2%), Russell +2.1%, Finland +2% (+3.2%), South Africa +2% (+1.1%), Saudi Arabia +2% (+1.8%), S&P 500 +2%, MSCI World +1.9% in dollars, Portugal +1.8% (+2.5%), NASDAQ +1.7% in dollars, Mexico +1.4% (+0.9%), UK +1.2% (+4.1%), Canada +1% (+1.4%), Turkey +0.9% (+1.5%), UAE +0.8% (+0.8%), Singapore +0.6% (+0.6%), New Zealand +0.1% (+0.2%), Taiwan +0.1% (+0.5%), Indonesia -0.2% (+1.1%), Belgium -0.8% (-0.1%), Vietnam -0.8% (-1.4%), Ireland -1.4% (-0.8%), Argentina -2% (-0.9%), HK -2.6% (-2.4%), India -3% (-1.9%), Japan -3.1% (-3.6%), Philippines -3.6% (-2.7%), China -3.6% (-3.3%), Thailand -4.9% (-4.3%), Malaysia -5.3% (-4.6%), Denmark -6.2% (-5.1%).
Anecdote (July 2021): Each generation believes it can create a better world. Were it not so, we would still live in caves. Some generations thirst for change through revolution. That probably has to do with longer-term economic and political cycles. But for whatever reason, amongst these revolutionary generations, some are more determined, effective. The 1960s-70s youth seemed radical, but they were far from French revolutionaries. Their actions failed to spark an inferno. My wife Mara grew up in a hippy enclave during that period. Her town sought to opt out of the system by going backward, living off the land, returning to simpler times. But history rarely turns back the clock for long. That generation never had a credible plan to replace the system with something better. Nor did it have new technology to amplify force. The establishment knew this. The youth back then presented no real threat, just the appearance of instability. Daisies and LSD. But today’s youth have built the technologies to power revolution. Their protocols remain nascent, but if they’re allowed to flourish (or if they cannot be stopped), they will credibly replace incumbent industries that the masses have come to despise (retail banks, commercial banks, central banks, wall street, money transfer agents, credit card companies, social media companies, exchanges of every kind, censors, and the list has just started). Someday these technologies may threaten our notion of centralized government control. In the 1960s-70s, incumbents knew the revolutionaries had no credible plan. This time, revolutionary technologies are already being rolled out. They are more efficient, cheaper, faster. They cut out the middlemen. And empower the individual. Today’s incumbents are threatened with extinction. In fact, if today’s business leaders were 30yrs younger, most would be racing to build their companies/wealth in this new field of blockchain. This is what a credible revolution looks like, waged by brilliant youth, impassioned, with fantastic ideas, immense wealth, and humanity’s most powerful technologies, applied in ways that incumbents can barely understand. And it is too early to tell exactly where this new generation will lead us, only that it is to a profoundly different future.
Good luck out there,
Eric Peters
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, 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.