Spent the week in Hong Kong, twelve hours ahead, but somehow running behind. I’ll have more to share about my time there in next week’s note. But for today, I’ve dusted off an anecdote from 2019 about running down mountains with my youngest. The magic of moving your body to clear your mind, lift your soul. And Hotel California. All the best, Eric

Week-in-Review: Mon: Fed speakers hawkish / ECB speakers were relatively dovish over wknd, screenwriter strike came to a tentative deal with studios, Riksbank begins hedging program – strengthening Kroner, Moody’s warns that gov’t shutdown bad for country’s credit, Evergrande fails to repay onshore bond, Germany IFO 85.7 (85.2e) / Expectations 82.9 (83.0e), US Chicago Fed Nat activity index -0.16 (0.10e), US Dallas Fed mfg index -18.1 (-14e), S&P +0.4%; Tue: OpenAI considering share sale that would value company at $80-90b, FTC sues Amazon for monopolizing online marketplaces, Biden visits UAW picket line, Fed’s Kashkari (hawk) reinforces higher for longer stance, MOF’s Suzuki ‘closely watching FX moves with a great sense of urgency’, Japan PPI Services 2.1% (1.8%e), Brazil IPCA infl 5.00% (5.02%e), US New home sales 675k (698k e), US FHFA house px index 0.8% MoM (0.4%e), US case shiller home prices 0.13% (-0.1%e), US Consumer conf 103.0 (105.5e), US Richmond Fed mfg index 5 (-7e), S&P -1.5%; Wed: Evergrande chairman placed under police control in China, fixed income continues relentless sell off despite strong 5y auction, steep US crude stock draws add to supply concerns – send oil upwards, PBOC Q3 MPC statement acknowledges insufficient demand and vows to continue to support economy, Australia CPI 5.2% as exp, UK cons conf -26.5 (-26e), France cons conf 83 (84e), EU M3 -1.3% (-1.0%e), US Durable goods orders 0.2% MoM (-0.5%e), Russia IP 5.4% (4.5%e), Russia unemp 3.0% as exp, S&P +0%; Thu: Russian oil prices continue to defy western allies price cap, SEC comes to settlement agreement with dozens of investment advisors for record keeping lapses related to communication apps like WhatsApp, Fed’s Goolsbee warns on Financial conditions impact from higher long end rates, Mexico CB unch as exp / acknowledges activity is more resilient than exp, Italy sets 2023 fiscal deficit for 5.3% (up from 4.5%) and revises 2024 deficit to 4.3% (from 3.7%), Australia ret sales 0.2% MoM (0.3%e), Italy Consumer conf 105.4 (105.5e) / mfg conf 96.4 (97.0e), EU cons conf unch at -17.8 / eco conf 93.3 (92.4e), South Africa PPI 4.3% (3.7%e), Mexico unemp rate 2.96% (3.15%e), Germany CPI 4.3% (4.5%e), US final 2Q GDP 2.1% (2.2%e) / personal cons 0.8% (1.7%e), US initial claims 204k (215k e), US pending home sales -18.8% (-13%e), US KC fed mfg index -8 (-2e), S&P +0.6%; Fri: BOJ announced an unscheduled JGB purchase (third time since July’s YCC change), Senator Feinstein passes away, more firms charged in SEC record keeping crack down, Riksbank gov suggests November’s move is ‘rather uncertain’, UAW extends plans for walkouts at 3 more plants, Tokyo CPI 2.8% (2.7%e), Japan unemp 2.7% (2.6%e), Japan IP -3.8% (-4.6%e) / ret sales 7% (6.6%e), Australia private sector credit 5.1% (5.3%p), Japan cons conf 35.2 (36.2e), Germany ret sales -1.9% (-0.7%e), UK 2Q final GDP 0.6% (0.4%e), S. Africa M3 8.52% (9.05%e) / private credit 4.38% (5%e), France CPI 5.6% (5.9%e), Germany unemp 5.7% as exp, Poland CPI 8.2% (8.5%e), EU CPI estimate 4.3% (4.5%e) / Core 4.5% (4.8%e), Italy CPI 5.7% (5.4%e), Canada GDP 1.1% as exp, US personal income 0.4% as exp / spending 0.4% (0.5%e), US PCE deflator 3.5% as exp / Core deflator 3.9% as exp, US Chicago PMI 44.1 (47.6e), US final UoMich 68.1 (67.7e) / 1y infl exp 3.2% as exp / 5-10y infl exp 2.8% as exp, S&P -0.3%; Sat/Sun: US government shutdown averted (bi-partisan funding agreement passed through mid-Nov).

Weekly Close: S&P 500 -0.7% and VIX +0.32 at +17.52. Nikkei -1.7%, Shanghai -0.7%, Euro Stoxx -0.7%, Bovespa +0.5%, MSCI World -0.9%, and MSCI Emerging -1.2%. USD rose +2.0% vs Brazil, +1.3% vs Mexico, +1.2% vs Russia, +0.9% vs Turkey, +0.9% vs South Africa, +0.8% vs Euro, +0.7% vs Canada, +0.7% vs Yen, +0.5% vs Indonesia, +0.3% vs Sterling, +0.1% vs India, and +0.1% vs Australia. USD fell -4.4% vs Ethereum, -1.9% vs Sweden, -0.8% vs Bitcoin, -0.2% vs Chile, and flat vs China. Gold -4.1%, Silver -5.8%, Oil +0.8%, Copper +1.1%, Iron Ore -1.4%, Corn -0.1%. 10yr Inflation Breakevens (EU -8bps at 2.33%, US -3bps at 2.34%, JP +3bps at 1.23%, and UK flat at 3.85%). 2yr Notes -7bps at 5.05% and 10yr Notes +14bps at 4.57%.

Sept Mthly Close: S&P 500 -4.9% and VIX +3.95 at +17.52. Nikkei -2.3%, Shanghai -0.3%, Euro Stoxx -1.7%, Bovespa +0.7%, MSCI World -4.4%, and MSCI Emerging -2.8%. USD rose +4.6% vs Chile, +3.9% vs Sterling, +2.7% vs Turkey, +2.6% vs Yen, +2.6% vs Euro, +2.3% vs Mexico, +1.9% vs Ethereum, +1.6% vs Brazil, +1.5% vs Indonesia, +0.9% vs Bitcoin, +0.9% vs Russia, +0.8% vs Australia, +0.5% vs China, +0.5% vs Canada, +0.3% vs India, and +0.2% vs South Africa. USD fell -0.4% vs Sweden. Gold -5.1%, Silver -9.5%, Oil +9.4%, Copper -2.2%, Iron Ore +1.6%, Corn -0.3%. 10yr Inflation Breakevens (EU +4bps at 2.33%, US +10bps at 2.34%, JP +8bps at 1.23%, and UK +8bps at 3.85%). 2yr Notes +18bps at 5.05% and 10yr Notes +46bps at 4.57%.

3rd Quarter Close: S&P 500 -3.6% and VIX +3.93 at +17.52. Nikkei -4.0%, Shanghai -2.8%, Euro Stoxx -2.5%, Bovespa -1.3%, MSCI World -3.8%, and MSCI Emerging -3.7%. USD rose +12.1% vs Bitcoin, +11.1% vs Chile, +10.9% vs Ethereum, +10.5% vs Russia, +5.4% vs Turkey, +5.2% vs Brazil, +4.1% vs Sterling, +3.6% vs Australia, +3.5% vs Yen, +3.2% vs Euro, +3.1% vs Indonesia, +2.5% vs Canada, +1.7% vs Mexico, +1.2% vs India, +1.1% vs Sweden, +0.6% vs China. Gold -5.2%, Silver -3.8%, Oil +28.6%, Copper -0.9%, Iron Ore +5.1%, Corn -3.6%. 10yr Inflation Breakevens (EU +4bps at 2.33%, US +11bps at 2.34%, JP +15bps at 1.23%, and UK -2bps at 3.85%). 2yr Notes +15bps at 5.05% and 10yr Notes +73bps at 4.57%.

YTD Close: S&P 500 +11.7% and VIX -4.15 at +17.52. Nikkei +22.1%, Shanghai +0.7%, Euro Stoxx +6.0%, Bovespa +6.2%, MSCI World +9.6%, and MSCI Emerging -0.4%. USD rose +46.6% vs Turkey, +36.5% vs Russia, +13.9% vs Yen, +11.1% vs South Africa, +5.9% vs Australia, +5.8% vs China, +4.7% vs Chile, +4.6% vs Sweden, +1.2% vs Euro, +0.4% vs India, and +0.2% vs Canada. USD fell -38.6% vs Bitcoin, -28.6% vs Ethereum, -10.7% vs Mexico, -4.7% vs Brazil, -1.0% vs Sterling, and -0.7% vs Indonesia. Gold -2.1%, Silver -9.8%, Oil +16.7%, Copper -1.9%, Iron Ore +8.6%, Corn -21.9%. 10yr Inflation Breakevens (EU +6bps at 2.33%, US +4bps at 2.34%, JP +38bps at 1.23%, and UK +23bps at 3.85%). 2yr Notes +62bps at 5.05% and 10yr Notes +70bps at 4.57%.

Year-to-Date Equities (high to low): Argentina +40.9% priced in US dollars (+178.4% priced in pesos), Hungary +28.9% priced in US dollars (+27.5% priced in forint), Greece +28.5% in dollars (+30.1% in euros), NASDAQ +26.3% in dollars, Mexico +17.7% (+5%), Italy +17.7% (+19.1%), Ireland +16.9% (+18.4%), Denmark +14% (+15.8%), Poland +13.8% (+13.8%), Spain +13.1% (+14.6%), Brazil +12.1% (+6.2%), S&P 500 +11.7% in dollars, Taiwan +10.2% (+15.7%), Russia +10.2% (+45.5%), Czech Republic +9.8% (+12.3%), MSCI World +9.6% in dollars, Germany +9.1% (+10.5%), France +8.8% (+10.2%), Euro Stoxx 50 +8.7% (+10%), India +7.9% (+8.5%), Japan +7.1% (+22.1%), Saudi Arabia +5.8% (+5.5%), Chile +5.7% (+10.9%), Netherlands +4.5% (+5.8%), Colombia +4% (-12.8%), Turkey +3.2% (+51.3%), UK +3% (+2.1%), Switzerland +3% (+2.2%), Korea +2.5% (+10.2%), Venezuela +1.7% (+104.5%), Indonesia +1.5% (+1.3%), Russell +1.4% in dollars, Sweden +0.7% (+5.5%), Norway +0.7% (+9.5%), Canada +0.7% (+0.8%), Austria +0.1% (+1.3%), Singapore -3% (-1%), Portugal -3% (-1.8%), UAE -4.2% (-4.2%), China -4.8% (+0.7%), Belgium -5.2% (-4%), Israel -5.2% (+3.4%), Philippines -5.3% (-3.7%), Australia -5.4% (+0.1%), New Zealand -7% (-1.5%), HK -10.3% (-10%), South Africa -10.4% (-0.7%), Malaysia -10.7% (-4.8%), Finland -12.5% (-11.4%), and Thailand -16.4% (-11.8%).

Anecdote (Oct 2019): “Let’s run Dad,” said Charlie, and off he went down the trail. We’d spent the day at altitude, climbing cliffs. Charlie is our youngest of four, which means we rarely return from an adventure without my little man bumping up against his limit. Mountains have a wonderful way of helping you find that pressure point. From there, you must decide where to go – climb or crumble. Charlie melted down. And having worked my way through such situations, I had him take a break, breathe, search for inner quiet. But he couldn’t collect himself. So I had him sit alone, to look out at Mont Blanc, summon strength. Still, he remained captive, crying, helpless, imprisoned in his own mind. “Okay,” was all he said when I decided the rest of the family would take the Telepherique down, but he and I would return by foot. And as we stepped onto the trail, I explained that when you get caught up in your head, the greatest escape is through moving your body. A lifetime of trading had taught me at least that much. “Two hours and fifteen minutes to Chamonix,” said Charlie, reading the trail-marker aloud, more to himself than to me. I let him lead the way. “Which way Dad?” he asked at the first fork. I shrugged. He studied the signs, chose left. Then soon broke into a run, slow at first. As he bounced rock to rock, leaping logs, sliding into switchbacks, I saw it lift from him. When my little man spontaneously started singing Hotel California, I joined in, racing down the mountain, too fast for our own good. “One hour exactly,” cried Charlie, panting, exuberant. “We made it in less than half the time Dad!” he exclaimed, eyes electric. And I hugged him. Hoping he’d always remember.

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.