Hope all goes well… Zipped down to Annapolis for a year-end celebration and the men’s lacrosse quarterfinals. Dusted off an anecdote from 2017 about sports, work, life (see below). Back again after Memorial Day with full weekend notes. E 

Marcel Kasumovich and Kartikey Sinha published an interesting piece on resilience in digital asset markets and the relationship between bitcoin prices, funding rates, and volatility [here].

Week-in-Review: Mon: Turkish elections result in runoff for President / Erdogan did better than polling was suggesting / Erdogan’s coalition won majority in parliament, opposition /pro-democracy parties perform well in Thai elections, S. Africa’s FinMin says US will not sanction SA over accusations of supplying weapons to Russia, Yellen sent follow up letter stating the urgency of the debt ceiling – reiterating the potential 6/1 X-date, PBOC kept 1y MLF unch at 2.75% / volume increased to 125b (100b exp), US to purchase 2m barrels of WTI to refill SPR for August delivery, Fed’s Goolsbee says a lot of the hiking impact is still to come, Dallas Fed’s banking conditions survey showed credit conditions tightened further in the first week of May, Japan PPI 5.8% (5.6%e), US empire mfg -31.8 (-3.9e), S&P +0.3%; Tue: Biden decides to cut G7 trip to Japan short to return to focus on debt ceiling / negotiating teams narrowed (positive sign), Fed’s Barkin comfortable with more hikes / Mester thinks rates are sufficiently restrictive yet / Logan says Fed needs to offset implications of the banking stresses but also the Fed’s response to the stress, RBA mins suggest April’s pause contributed to subsequent rise in house prices, McCarthy says negotiations are still far apart but structure is there to get a deal done quickly, Australia cons conf 79 (85.8p), China IP 5.6% (10.9%e) / ret sales 18.4% (21.9%e), UK emp chg 3m/3m 182k (160k exp) / unemp 3.9% (3.8%e), Germany ZEW survey -10.7 (-5e), EU ZEW Survey -9.4 (6.4p), EU 1Q GDP 1.3% as exp, S. Africa 1Q unemp 32.9% (33%e), Canada CPI 4.4% (4.1%e) / Trimmed 4.2% (4.1%e), US ret sales 0.4% (0.8%e) / Control grp 0.7% (0.4%e), US IP 0.5% MoM (0%e), US NAHB housing mkt index 50 (45e), S&P -0.6%; Wed: ECB’s de Cos says approaching the end of the hiking cycle, regional banks report deposit inflows, McCarthy says reaching a deal this week is ‘doable’ / TGA below $100b, Target sets cautious tone as consumers turn thrifty, Ukraine grain deal extended for 2m per Erdogan, Japan 1Q GDP 1.6% (0.8%e), France unemp 7.1% as exp, EU final CPI 7% as exp / Core CPI 5.6% as exp, US housing starts 1.401m (1.4m exp), S&P +1.2%; Thu: McCarthy / Schumer making plans for votes in coming days on debt ceiling, Fed’s Logan says current data is insufficient to justify a pause and if they do pause doesn’t mean that another hike is impossible, Hungary foreign min reluctant to back further sanctions against Russia, panel concludes CS AT1 CDS won’t trigger payout, commercial real estate prices down last quarter for the first time since 2011, Disney cancels moving 2k employees to FL amid spat with Gov DeSantis, Australia infl exp 5.2% (4.6%p), AU emp chg -4.3k (25k exp) / unemp 3.7% (3.5%e), US init claims 242k (251k exp), US Philly fed -10.4 (-20e), US leading index -0.6% as exp, S&P +0.9%; Fri: Powell signaled a pause likely / ‘can afford to be data dependent’, PBOC vows to curb speculation in FX market, reports that bipartisan debt ceiling talks are on a ‘pause’ as republican negotiators are rumored to have walked out of discussions midday, Yellen suggests more bank mergers may be needed, ECB’s Lagarde says the ECB will be courageous to bring inflation back down to 2%, Japan CPI 3.5% as exp / Core CPI 4.1% (4.2%e), Germany PPI 4.1% (4.3%e), S&P -0.1%; Sat/Sun: G-7 seeks stable ties with China while ‘de-risking’ / Zelenskiy attends G-7 in person, McCarthy says no progress on debt ceiling until Biden returns.

Weekly Close: S&P 500 +1.6% and VIX -0.22 at +16.81. Nikkei +4.8%, Shanghai +0.3%, Euro Stoxx +0.7%, Bovespa +2.1%, MSCI World +1.2%, and MSCI Emerging +0.4%. USD rose +3.3% vs Russia, +1.7% vs Chile, +1.7% vs Yen, +1.6% vs Brazil, +1.5% vs Sweden, +1.2% vs Indonesia, +1.2% vs Turkey, +1.1% vs Mexico, +0.8% vs China, +0.6% vs India, +0.6% vs South Africa, +0.4% vs Euro, and +0.1% vs Sterling. USD fell -2.0% vs Ethereum, -1.4% vs Bitcoin, -0.3% vs Canada, and -0.1% vs Australia. Gold -1.9%, Silver -0.4%, Oil +2.2%, Copper +0.1%, Iron Ore -2.1%, Corn -5.4%. 10yr Inflation Breakevens (EU +5bps at 2.31%, US +6bps at 2.25%, JP +5bps at 0.85%, and UK -2bps at 3.58%). 2yr Notes +28bps at 4.27% and 10yr Notes +21bps at 3.68%.

Year-to-Date Equities (high to low): Argentina +27.5% priced in US dollars (+67.6% priced in pesos), Mexico +23.6% priced in dollars (+12% in pesos), Ireland +23.4% in dollars(+22.2% in euros), Greece +23% (+21.8%), NASDAQ +20.9%, Germany +18.1% (+16.9%), Poland +17.6% (+13%), Italy +17.3% (+16.1%), Euro Stoxx 50 +17.1% (+15.9%), France +16.9% (+15.7%), Denmark +16% (+14.8%), Taiwan +14.8% (+14.4%), Chile +14.3% (+7.4%), Hungary +14.1% (+6.4%), Spain +13.6% (+12.4%), Netherlands +12.5% (+11.3%), Czech Republic +12.4% (+9.6%), Japan +12.3% (+18.1%), Sweden +11% (+12%), Russia +10.9% (+21.9%), Switzerland +10.6% (+7.8%), MSCI World +9.2% priced in dollars, S&P 500 +9.2%, Saudi Arabia +8.5% (+8.3%), Korea +8% (+13.5%), UK +7.3% (+4.1%), Brazil +7.1% (+0.9%), Portugal +5.5% (+4.4%), Canada +5.2% (+5%), China +4.6% (+6.3%), New Zealand +4.4% (+5.5%), Austria +2.2% (+1.1%), Belgium +2% (+1%), Philippines +1.6% (+1.5%), Indonesia +1.6% (-2.2%), Venezuela +1.2% (+52.4%), Australia +1.1% (+3.4%), Russell +0.7%, India +0.4% (+0.5%), HK -1.8% (-1.7%), Singapore -1.9% (-1.5%), Israel -3% (+0.6%), Finland -3.1% (-4.1%), South Africa -4.3% (+9%), Colombia -6.4% (-12.6%), UAE -7.2% (-7.2%), Malaysia -7.2% (-4.5%), Norway -8.3% (+1.4%), Thailand -8.4% (-9.2%), Turkey -22.8% (-18.3%).

Anecdote (July 2017): “Think hard about what you would like from your new coach and what you are prepared to give him,” I told Jackson (15). He’d requested a meeting with Darien’s head coach, a lacrosse legend. “Imagine two young people walk into my office,” I continued. “Person A says: I’d like you to help me build a great career. I’m really ambitious. Please help me.” Jackson nodded. “Person B says: It’s such a privilege to have this opportunity. I’m killing myself to help the team, but I’m sure I could be more effective. Would you please pull me aside periodically and point out how I can get better.” He nodded. “Which would you like to be?” And Jackson said, Person B, obviously, but what does that have to do with meeting my coach? “Everything.” So we discussed the one natural law that defies physics: If you give more than you get, you get more than you give. Despite ubiquitous evidence of this law’s existence, there’s nothing intuitive about it. Which, perhaps, is why it took decades to discover it myself. And now I’ll give anything to help my kids learn it earlier. Anyhow, Jackson talked me through what he’d say to his coach; his appreciation, commitment, determination, gratitude. We sat in the shade, a hot summer day. Coach arrived, mapped out Jackson’s next three years. Explained how he develops athletes, as players, leaders, students, young men. And Jackson simply said, ‘Thank you.’ We headed home. “What happened? Was that a joke? You were Person A,” I said, stunned, aggravated at the absurdity of what had happened, the thankless effort of it all sometimes. “I know Dad, I just kind of choked.” Which naturally led to a new conversation, as we wandered home, father/son, along our inextricably interwoven path. A reward unto itself.

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.