“I was really worried from the beginning about becoming this sort of decider of what is true in the world,” said Mark Zuckerberg. “That’s kind of a crazy position to be in for billions of people using your service,” continued Meta’s CEO, racing to adopt Musk’s approach to crowdsourced fact-checking on X. Zuckerberg is moving content moderation people to Texas to address user’s concerns over liberal bias. “We just got to this point where there were things you just couldn’t say on our platforms which were mainstream discourse,” explained Zuckerberg, referencing how Meta has silenced conservative voices. As the window opens.
Overall: “Wayne, would you like to be governor of Canada?” asked Trump, speaking with his buddy Gretsky, tugging at the Overton Window with all his might. “MAKE GREENLAND GREAT AGAIN,” the President-Elect tweeted on Truth Social, sending his oldest son north with a box of red hats. He wouldn’t rule out taking the Panama Canal by force. And with each such suggestion, the window widened further. The Overton Window is a concept in political science and sociology that refers to the range of policies or ideas considered acceptable in public discourse at a given time. Like most things in life, I learned about it rather late. “We’re going to be changing the name of the Gulf of Mexico to the Gulf of America, which has a beautiful ring that covers a lot of territory, the Gulf of America. What a beautiful name,” Trump said at Mar-a-Lago, prying the window open so wide that nearly anything seems possible, plausible, probable. Say such things enough times, amplify the words using our AI-enabled social media machines, and presto, nothing’s shocking. But not only that, AI will soon converge with quantum computing. “The Willow processor performed a computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion years. It lends credence to the notion that quantum computation occurs in many parallel universes, in line with the idea that we live in a multiverse,” wrote Google, presenting its latest breakthrough, cracking our perception of reality. As the window widens fully, not only is nothing impossible, but almost anything can seem reasonable. The right and left tails of every distribution lengthen and fatten. And we are left unanchored, adrift, in an endless sea of wild possibility, volatility. “I’m going to give you a report on drones about one day into the administration, because I think it’s ridiculous that they’re not telling you about what’s going on with the drones,” pledged the President-Elect.
Week-in-Review: Mon: Canadian PM Justin Trudeau resigns. US eases restrictions on humanitarian aid in Syria. US designates Tencent and CATL as Chinese military companies. Iran doubles number of upcoming military drills ahead of Trump presidency. Nippon Steel and US Steel launch lawsuits over Biden takeover block. Germany CPI 2.6% (2.4%e), US Factory orders -0.4% (-0.3%e) / durable goods -1.2% (-0.5%e), S&P +0.6%. Tue: Donald Trump refuses to rule out force to take Greenland and Panama Canal. Wildfires erupt in Los Angeles. Germany pushes for EU to ease sanctions on Syria. US sanctions Viktor Orbán’s chief of staff. Russia claims victory in Donetsk city of Kurakhove. Indonesia formally joins BRICS group of emerging economies. Death toll from Tibet earthquake rises to 53. US ISM Serv. 54.1 (53.4), France CPI 1.3% (1.5%e), Italy Unemp rate 5.7% (5.8%e), Eurozone CPI est 2.4% as exp / core 2.7% as exp, Eurozone Unemp rate 6.3% as exp, US Trade balance -$78.3b (-$78.2b e), Australia CPI 2.3% (2.2%e), S&P -1.1%. Wed: Fed minutes show the FOMC believes it “appropriate to slow the pace of policy easing”. BoE to further relax rules for banks and insurers. Italian journalist held in Iran freed, days after PM Meloni visits Trump. Uniqlo owner hands Japan workers double-digit pay rise. UK 10-year gilt yield hits highest level since 2008. US ADP emp change 122k (140k e), US Jobless claims 201k (215k e) / Cont claims 1867k (1860k e), China CPI 0.1% as exp / PPI -2.3% (-2.4%e), EZ economic sent. Idx 93.7 (95.6e), S&P +0.2%. Thur: PBoC launches largest offshore renminbi 6-month bill auction on record. China accuses EU of creating trade and investment barriers. Kanas City Fed Chief Schmid believes they are “pretty close to meeting dual mandate”. Deputy BoE governor Breeden expects further gradual policy easing. US preferred candidate and Army commander Joseph Aoun elected Lebanon’s president. EZ MoM retail sales 0.1% (0.3%e), Japan Household spending -0.4 (-0.8e), Mexico Core CPI 3.65% (3.64%e), S&P closed for President Carter funeral. Fri: PBoC suspends bond buying in open market. Kremlin says Putin ready to meet with Trump. Greenland prime minister expresses desire for island’s independence. US sanctions Venezuelan officials as Maduro is sworn in as president and two Russian energy producers. Trump receives no prison time in New York ‘hush money’ case. US consumers’ 5-year inflation expectations make rare jump above 3% in latest UMich survey. US Change in NFP 256k (165k e) / Unemp rate 4.1% (4.2%e), Canada Unemp rate 6.7% (6.9%e), US Mich sent. 73.2 (74.0e), S&P -1.5%.
Manufacturing PMI (high-to-low): India 56.4 (previous month 56.5), Spain 53.3 (previous mth 53.1), Greece 53.2 (previous 50.9), Taiwan 52.7/51.5, Sweden 52.4/53.7, Canada 52.2/52, Indonesia 51.2/49.6, Singapore 51.1/51, Hong Kong 51.1/51.2, Russia 50.8/51.3, Hungary 50.6/50.4, China 50.5/51.5, Brazil 50.4/52.3, Norway 50.29/50.5, South Africa 49.9/50.9, Vietnam 49.8/50.8, Mexico 49.8/49.9, Japan 49.6/49, US 49.3/48.4, Turkey 49.1/48.3, South Korea 49/50.6, Netherlands 48.6/46.6, Switzerland 48.4/48.5, Poland 48.2/48.9, UK 47/48, Italy 46.2/44.5, Czech Republic 44.8/46, Austria 43.3/44.5, Germany 42.5/43, France 41.9/43.1. Services PMI: India 59.3/58.4, Spain 57.3/53.1, Ireland 57.1/58.3, US 56.8/56.1, China 52.2/51.5, Brazil 51.6/53.6, Sweden 51.4/51, Germany 51.2/49.3, Russia 51.2/53.2, UK 51.1/50.8, Japan 50.9/50.5, Australia 50.8/50.5, Italy 50.7/49.2, France 49.3/46.9.
Weekly Close: S&P 500 -1.9% and VIX +3.41 at +19.54. Nikkei -1.8%, Shanghai -1.3%, Euro Stoxx +0.7%, Bovespa +0.3%, MSCI World -1.6%, and MSCI Emerging -1.5%. USD rose +9.4% vs Ethereum, +4.0% vs Bitcoin, +2.1% vs South Africa, +1.8% vs Sterling, +1.1% vs Australia, +1.0% vs Sweden, +0.6% vs Euro, +0.4% vs Mexico, +0.3% vs Yen, +0.2% vs India, +0.2% vs Turkey, and +0.2% vs China. USD fell -7.8% vs Russia, -1.3% vs Brazil, -0.5% vs Chile, -0.2% vs Canada, and flat vs Indonesia. Gold +2.3%, Silver +4.2%, Oil +3.5%, Copper +5.7%, Iron Ore -0.6%, Corn +4.4%. 10yr Inflation Breakevens (EU +9bps at 1.93%, US +10bps at 2.44%, JP +5bps at 1.52%, and UK +9bps at 3.63%). 2yr Notes +10bps at 4.38% and 10yr Notes +16bps at 4.76%.
2025 Year-to-Date Equity Index Returns (Dec 31-Jan 10): Argentina +10.1% priced in US dollars (+10.7% in pesos), Korea +4.8% priced in US dollars (+4.8% in won), Norway +3.7% in dollars (+4.4% in krone), Colombia +3.2% (+1.8%), Poland +2.1% (+3.3%), Israel +2.1% (+2.5%), Czech Republic +1.3% (+2.4%), Greece +1.3% (+2.3%), Italy +1.2% (+2.6%), Australia +1.2% (+1.7%), Hungary +1.2% (+3.1%), Mexico +0.8% (+0.2%), UAE +0.8% (+0.8%), Turkey +0.6% (+0.8%), Euro Stoxx 50 +0.6% (+1.7%), Saudi Arabia +0.6% (+0.5%), Switzerland +0.4% (+1.6%), Netherlands +0.3% (+1.3%), Germany +0.1% (+1.5%), Spain +0.1% (+1.1%), Singapore +0.1% (+0.4%), Brazil +0% (-1.2%), Canada 0% (+0.2%), Sweden 0% (+1.6%), France -0.3% (+0.7%), Indonesia -0.3% (+0.1%), Chile -0.5% (+1.6%), Finland -0.5% (+0.9%), Taiwan -0.6% (-0.1%), Denmark -0.8% (+0.7%), NASDAQ -0.8%, MSCI World -0.8% in dollars, S&P 500 -0.9%, UK -1.5% (+0.9%), India -1.6% (-0.9%), Belgium -1.7% (-0.7%), Austria -1.7% (-0.3%), South Africa -1.8% (-0.7%), Philippines -1.8% (-0.5%), Russell -1.8%, Japan -2.1% (-1.8%), New Zealand -2.2% (-1.6%), Ireland -2.4% (-1.4%), Malaysia -3% (-2.4%), Portugal -3% (-2%), Thailand -3.6% (-2.3%), HK -5.2% (-5%), China -5.9% (-5.5%).
Windows: John Overton posited that ideas travel through stages, moving from being seen as extreme or unthinkable to becoming widely accepted and adopted as policy. Democracy was once considered unthinkable. Universal suffrage too. Emancipation. Most things that matter have traveled this path. Here are Overton’s six stages: Unthinkable - outside of acceptable thought. Radical - at the edge of discussion. Acceptable - starting to gain traction. Sensible - reasonable and widely discussed. Popular - widely supported. Policy - acted upon and implemented.
Windows II: Overton introduced this framework to describe how the feasibility of a policy idea depends not on its inherent merits but on whether it falls within the range of public acceptance. He argued that public policy is constrained by this “window” of acceptable ideas and politicians tend to stay within the window to maintain public support. But what was yesterday’s unthinkable can become tomorrow’s policy as the window widens, shifts left, or right. And what moves the window is naturally tied into one of life’s great mysteries, the superorganism we call humanity.
Windows III: Overton’s framework helps us make sense of society, markets too, risks, opportunities. I try to look at emerging investment themes through this lens. With each move of the window, power structures shift, capital flows adjust, new winners emerge, incumbents struggle or fail. The nimble survive, thrive. With such stakes, those with influence are desperate to guide the process. Politicians, propagandists, business leaders, religious leaders, union bosses, authors, artists, athletes, advocacy groups, lobbyists, social media influencers, and now AI.
Windows IV: There was a time, not so long ago when it was radical or even unthinkable to call network news fake. No longer. And now we openly joke about Canada becoming our 51st state. Where that leads is anyone’s guess, but the window has widened. Greenland’s Prime Minister announced today that he’s ready to speak with Trump. I started trading in 1989 and never in that time has the Overton Window shifted this rapidly across so many dimensions. There’s no precedent for it in modern history. And this dynamic is becoming a new market fundamental.
Windows V: But it’s not just Trump. Javier Millei has thrown open an anti-statist libertarian window that had been nailed shut for as long as I’ve been alive. Argentina had the best performing stock market in the world last year. This is breathtaking change. And in roughly two short years, we went from the FTX apocalypse to serious talk of strategic sovereign Bitcoin reserves. That window is wide open. Intertwined with both Millei and Bitcoin is radical talk of sovereign insolvency throughout the western world. Before it’s over, make no mistake, we’ll be talking about massive entitlement cuts. But for today, that idea is stuck in the unthinkable stage.
Anecdote: “I’ve been here all my life, never left, and I’m not leaving now,” she said. It was 2008, Santa Barbara, California. She was our neighbor, an old widow, kind, stubborn, proud. “I’ll be fine, but you all get going. I’ll be here when you get back,” she said, waving me off. Mara had packed our four kids in the car, flames in the hills, the sky blood red, our car covered in white ash. “Ask her to come with us one more time,” Mara said, so I had. Back then locals warned that in a worst-case scenario, the wildfire would sweep through town and burn clear down to the Pacific, which for some would be the last escape. As a New Yorker who’d traveled the world, seen a fair bit, I didn’t believe it possible. But then I felt the Santa Ana winds, which need to be experienced firsthand to properly grasp. Once I envisioned super-heated 100mph gusts racing down from the burning eucalyptus groves, the whole town aflame, firefighters overwhelmed, what had once seemed impossible became plausible. That 2008 fire was bad, many homes were lost, but the city survived. Santa Barbara got lucky I suppose. The risk of total catastrophe was high, but the probability was low on any given day, month, year. The thing about these big events is that they happen so infrequently. In their aftermath, they often appear inevitable. Negligence, incompetence, ignorance, recklessness, laziness, and greed, combine with an unwillingness to face hard truths and make preventative investments. The catalyst is usually trivial, a bit of bad luck. A spark. Then of course, there are earthquakes, tsunamis, droughts, pandemics, wars, hyper-inflations, financial crises. The US will soon attempt to restructure and grow its economy aggressively, so that we can push out any real discussion about our unsustainable debt and entitlement dynamics. All the while, praying that it somehow works, before they combust.
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.