Memorial Day already. Another year, flying by. Dusted off an old anecdote about birth-order, the dinner table, and ringworm. Back next Sunday with full weekend notes. E 

Week-in-Review: Mon: Yellen says odds meeting all payments by 6/15 is quite low, center right (New Democracy) party does well in Greek elections – market positive, Fed’s Bullard expects 2 more hikes this year / Kashkari supports pausing in June / Bostic and Daly more balanced, Israel CB hikes 25bp as exp, Turkey’s Ogan (3rd place candidate in 1st rd) endorses Erdogan in 2nd rd, McCarthy/Biden have productive talks but still no deal / both agree default is off the table, G-7 communique strongly condemns China’s rising military threat / China bars Micron chips in escalation of tensions, Biden says US/China relations set to improve following G-7, UK house prices 1.5% (1.7%p), China keeps 1y & 5y LPR unch as exp, EU cons conf -17.4 (-16.8e), S&P unch; Tue: Saudi oil minister tells speculators to ‘watch out’, Hungary CB holds official rate steady / cuts 1d depo rate 100bp (some expecting 200bp cut – but largely as exp), Russia PM starts visit to China, ECB’s deCos says not done hiking, BOE’s Pill notes higher than exp immigration contributed 20bp to new eco forecasts, UK Public Sector borrowing 25.6b (19.1b exp), EU current acct 31.2b (24.5b prev), EU mfg PMI 44.6 (46e) / serv 55.9 (55.5e) / 53.3 (53.5e), US mfg PMI 48.5 (50e) / serv 55.1 (52.5e) / comp 54.5 (53e), US new home sales 683k (665k exp), US Richmond Fed -15 (-8e), S&P -1.1%; Wed: RBNZ hikes 25bp (37bp exp) / 2 of 5 voted for no hike / provides more dovish guidance than exp, Fitch places US’s AAA rating on negative watch as debt ceiling talks make little progress, FOMC mins confirm Fed split on pausing vs more hikes / cuts are unlikely, NVDA crushes earnings results after mkt close, DeSantis announces presidential run via Twitter live with Musk, UK CPI 8.7% (8.2%e) / Core CPI 6.8% (6.2%e) / RPI 11.4% (11.1%e), UK house price indx 4.1% (4.5%e), S&P -0.7%; Thu: BoK unch as exp, Indonesia CB unch as exp, Turkey CB unch as exp, S. Africa CB hikes as exp / warns that more ccy weakness appears likely, Oath Keepers leader sentenced to 18y for attack on Capitol, WH/Republicans rumored to be close to a deal – McCarthy says ‘only a couple’ issues remain, Fed’s Bostic says don’t expect cuts until ‘well into 2024’, BoE’s Haskel says rates will rise if signs of infl persistence, Germany cons conf -24.2 (-24e), US init claims 229k (245k exp), US 1Q GDP 1.3% (1.1%e), US KC fed mfg activity -1 (-9e), S&P +0.9%; Fri: debt ceiling negotiations looking to be getting close to a deal / market expecting a house vote next Tuesday, TGA account drops to $38.8b / Yellen estimates debt limit measures will run out by 6/5, Japan FinMin Suzuki ‘closely watching’ FX moves – close to where BOJ began intervening in Sept/Oct 2022, S. Africa pres Ramaphosa announced new powers for electricity minister to help stem Eskom crisis, Tokyo CPI 3.2% (3.4%e) / Core CPI 3.9% as exp / Japan PPI services 1.6% (1.4%), US durable goods 1.1% (-1%e), US PCE 4.4% (4.3%e), US personal spending 0.8% MoM (0.5%e) / income 0.4% as exp, US Wholesale inv -0.2% (0% exp), US UofM sentiment 59.2 (58e) / 1y infl exp 4.25 (4.5%e) / 5-10y infl exp 3.1% as exp, S&P +1.3%; Sat/Sun: Biden/McCarthy strike deal “in principle” for a 2yr debt limit extension (to be voted on this week).

Weekly Close: S&P 500 +0.3% and VIX +1.14 at +17.95. Nikkei +0.4%, Shanghai -2.2%, Euro Stoxx -1.6%, Bovespa +0.1%, MSCI World -0.5%, and MSCI Emerging -0.4%. USD rose +2.6% vs Sweden, +2.1% vs Australia, +1.9% vs Yen, +1.0% vs South Africa, +0.8% vs Sterling, +0.8% vs Canada, +0.8% vs Turkey, +0.8% vs Euro, +0.7% vs China, +0.2% vs Bitcoin, +0.2% vs Indonesia, +0.1% vs Russia, and flat vs Chile. USD fell -1.1% vs Ethereum, -0.9% vs Mexico, -0.1% vs India, and -0.1% vs Brazil. Gold -1.9%, Silver -2.9%, Oil +1.4%, Copper -1.3%, Iron Ore -5.3%, Corn +8.9%. 10yr Inflation Breakevens (EU +10bps at 2.41%, US +1bp at 2.26%, JP +14bps at 0.99%, and UK +11bps at 3.69%). 2yr Notes +30bps at 4.56% and 10yr Notes +13bps at 3.80%.

Year-to-Date Equities (high to low): Greece +31.4% priced in US dollars (+31.3% priced in euros), Argentina +27.1% priced in dollars (+69.1% priced in pesos), NASDAQ +24%, Mexico +23% (+11.5%), Ireland +21.2% (+21.1%), Hungary +16.8% (+8.6%), Taiwan +16.8% (+16.7%), Poland +16.5% (+12.7%), Germany +14.9% (+14.8%), Russia +14.5% (+24.5%), Euro Stoxx 50 +14.4% (+14.3%), Denmark +13.2% (+13.3%), France +13.2% (+13.1%), Italy +12.8% (+12.7%), Chile +12.7% (+6.6%), Czech Republic +11.8% (+9.6%), Spain +11.8% (+11.7%), Netherlands +11.5% (+11.4%), Japan +10.4% (+18.5%), S&P 500 +9.5%, Korea +9.1% (+14.4%), MSCI World +8.7% in dollars, Switzerland +8.5% (+6.6%), Saudi Arabia +7% (+6.7%), Sweden +7% (+11.2%), Brazil +6.9% (+1.1%), UK +4.4% (+2.4%), Venezuela +3.8% (+57%), India +2.3% (+2.2%), Canada +2.1% (+2.8%), China +1.6% (+4%), Portugal +1.3% (+1.2%), Indonesia +1% (-2.4%), Russell +0.7%, Philippines -1% (-0.6%), Austria -1.1% (-1.2%), Belgium -1.2% (-1.3%), New Zealand -1.9% (+3.1%), Singapore -2.4% (-1.4%), Australia -2.9% (+1.6%), HK -5.6% (-5.2%), Finland -6.1% (-6.1%), Colombia -6.6% (-14.4%), UAE -7.4% (-7.4%), South Africa -7.6% (+6.6%), Israel -8% (-2.7%), Thailand -8.5% (-8.3%), Malaysia -10.2% (-6.2%), Norway -11% (+0.6%), Turkey -22.1% (-16.9%).

Anecdote (Nov 2018): “What the hell Charlie?” said Teddy, “Cover up your arms while we’re eating. Those sores are disgusting.” Charlie shrugged, too accustomed to sibling ridicule to be embarrassed. “That’s what happens when you itch mosquito bites,” said Olivia (15), an authority on basically everything. “And look at your fingernails Charlie, they’re filthy, no wonder you’re infected,” said Jackson (16), always game for gang tackles. “They’re not bug bites and I don’t itch them,” declared Charlie (9), finally pissed. “You itch them in your sleep,” said Teddy (13), stripping his lifelong roommate of a defense. And while none of us believed Teddy heard Charlie itching at night, one look at the damage to his skin and it was hard to draw another conclusion. “Whatever you do Charlie, don’t touch the little one on your face,” said Mara, promising to cut his fingernails after dinner. On Charlie’s upper lip was a new sore. On his arm were another two, a few biggies dotted his legs. “Those mosquitoes really love you Chuck,” I said, and a wave of doubt washed across the table. “What if it’s something else?” asked Olivia. “Strip down Charlie,” ordered Mara. “Seriously?” he asked, nervous. “Jesus!” gasped the table in unison, his back and chest covered in circles. “Ringworm!” declared Mara. “You gotta be kidding me!” shrieked Charlie. But not one of us knew what that meant, not even Mara. Which didn’t stop her from Googling it, confirming the fake diagnosis, and treating it immediately with a fake remedy: tea tree oil. Such is the life of a 4th child, living in a home too busy to pay attention. And in a world preposterously micromanaged, eating away at our resiliency, we’re all better for it. At least that’s what Mara and I tell ourselves. “Tree tea oil? Seriously?” asked the doctor three days later, shaking her head. And Charlie laughed, prescription in hand, on the road to recovery.

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.