Army’s helicopters crossed the 50-yard line slow and low. Thump, thump, thump. The stadium went wild. Eight thousand Naval Academy and West Point cadets. Navy’s jets tore the sky in two, the sound of freedom. The crowd roared. I had flown to DC directly from Abu Dhabi, our family together again, an increasingly rare event, friends too. The Army/Navy football game is a day everyone should experience at least once, there’s no sport event quite like it. The rivalry within our family is extreme, with Jackson a Marine now, Liv and Teddy at Army, and the three of them fighting over Charlie’s undecided future path.

Overall: The date palms were tucked tightly together, deep within the ravine, a burst of deep green surrounded by arid mountains. The earth was meticulously sculpted into shallow pools around each tree to capture rainwater that flashed through - a primitive technology that has stood the test of time. I made my way through, to begin a climb high into the mountains bordering Oman. Google had just announced a breakthrough in quantum computing. It solved a challenge that eluded mankind for 30 years. What was estimated to require the world’s fastest supercomputer ten septillion years to calculate was completed in five minutes, roughly the time it had taken Israel to obliterate the entirety of Syria’s military hardware. Google stock jumped to a new record on the news, bitcoin briefly tanked, culling the weak hands as unwarranted fear spread that the new technology might crack its encryption. Humans cannot properly conceive of ten septillion years. The universe is 13.8 billion years old. Ten septillion years is 724 trillion times the period from the big bang to present. Google scientists mentioned in the press release that their accomplishment “lends credence to the notion that quantum computation occurs in many parallel universes, in line with the idea that we live in a multiverse,” where a vast number of realities run in parallel, splintering endlessly, the sum of which compound toward infinity. This too is inconceivable. But perhaps if such a truth exists, and if a quantum computer can run in parallel across septillions of realities, then it might explain how they collapsed ten septillion years of compute into five minutes. What an utterly remarkable time to be alive, to dream, build, invest. With this exponential acceleration in technological advance, never have so many wildly different possible futures seemed plausible. Utopia, dystopia, abundance, deprivation, transcendence, obliteration, each entirely possible as the age of AI and quantum converge. Looking out from the summit, east across Oman, the landscape may have been Martian. The mountains baked a deep, dark red, seared by 300 million years of Arabian sun.

Week-in-Review: Mon: China loosens monetary policy stance for first time in 14 years, with politburo intending to “vigorously boost consumption, improve investment efficiency and expand domestic demand in all directions”. Trump calls for a ceasefire and talks to end the war in Ukraine after meeting with Macron and Zelenskiy. China opens antitrust probe into Nvidia. South Korean corruption office seeks travel ban on president. Western countries consider stance on Syria’s new ruling power. India replaces head of central bank. Japan GDP ann QoQ 1.2% (1.0%e) / Deflator 2.4% (2.5%e), China PPI -2.5% (-2.8%e) / CPI 0.2% (0.4%e), Mexico CPI 4.55% (4.60%e), China Expts 6.7% (8.7%e) / Impts -3.9% (0.9%e), S&P -0.6%. Tue: Israel seizes land in Golan heights in Syria and bombs military targets. UN urges Israel to stop attacks in Syria. Trump pledges to fast-track approvals for $1bn investments in the US. BIS head Claudio Borio warns governments to rein in spending or risk market turbulence. Netanyahu testifies in corruption trial. Brazil’s leader Lula in intensive care after brain surgery. RBA holds rates but strikes dovish tone. Germany CPI 2.2% as exp, NFIB small business optimism index 101.7 (94.8e), US non-farm productivity 2.2%, RBA target rate 4.35% as exp, S&P -0.3%. Wed: Bank of Canada "jumbo" cuts rates to boost growth. Brazil’s president Lula to undergo another medical procedure. OPEC cuts its demand outlook for fifth month in a row. Luigi Mangione was arrested with a notebook containing plans for the shooting of UnitedHealth CEO. Nasdaq closes above 20,000 for first time. US Core CPI 3.3% / CPI 2.7% as exp, BoC 3.25% as exp, South Africa CPI 2.9% (3.1%e) / Core 3.7% (3.8%e), Russia CPI 8.88% (8.90%e), Argentina CPI 166% (167.15%e), S&P +0.8%. Thur: ECB cuts interest rates and reduces growth outlook. Swiss National Bank halves its main policy interest rate to 0.5%. China pledges to increase public deficit, facilitate bank lending and boost consumption. Donald Trump invites China’s President Xi Jinping to his inauguration. Canada to add export taxes on commodities including uranium and oil if Trump carries out his tariff threat. Meta and Amazon make first ever donation to an inaugural fund to Trump. US Jobless claims 242k (220k e) / Cont claims 1886k (1877k e), Eurozone dep. facility rate 3.00% as exp / main refi. rate 3.15% as exp, SNB policy rate 0.5% (0.75%e), Japan Tankan Survey diffusion idx 14 (12e), South Africa PPI -0.1% (0.2%e), India CPI 5.48% (5.50%e) / IP 3.5% (3.6%e), Brazil Ret sales 6.5% (4.8%e), Mexico IP -2.2% (-0.6%e), S&P -0.5%. Fri: large Russian air attack targets Ukraine’s energy grid. Blinken meets Turkey’s Erdoğan to discuss Syria. Centrist Bayrou named French PM. OpenAI’s Altman to donate $1mn of personal money to Trump’s inaugural fund. McKinsey to settle opioid investigation for $650m. Tokyo plans 4-day working week in effort to boost births. Eurozone IP -1.2% (-2.1%e), UK GDP +1.3% (+1.5%e) / Consumer Confidence -17 (-18e), France CPI 1.3% as exp, China M2 7.1% (7.5%e), Russia GDP 3.1% as exp, S&P flat.

Weekly Close: S&P 500 +1.0% and VIX -0.74 at +12.77. Nikkei +2.3%, Shanghai +2.3%, Euro Stoxx +2.0%, Bovespa +0.2%, MSCI World +1.2%, and MSCI Emerging +2.5%. USD rose +1.9% vs Brazil, +1.9% vs Australia, +1.1% vs Canada, +0.3% vs China, +0.3% vs Sweden, +0.2% vs India, +0.2% vs Turkey, +0.2% vs Yen, +0.1% vs Chile, +0.1% vs Euro, and flat vs Indonesia. USD fell -9.6% vs Ethereum, -5.8% vs Russia, -0.9% vs Mexico, -0.9% vs Bitcoin, -0.2% vs South Africa, and -0.1% vs Sterling. Gold -0.8%, Silver +1.5%, Oil -1.2%, Copper +1.4%, Iron Ore +1.0%, Corn +1.6%. 10yr Inflation Breakevens (EU -4bps at 1.74%, US -2bps at 2.25%, JP flat at 1.38%, and UK -5bps at 3.46%). 2yr Notes -5bps at 4.11% and 10yr Notes -2bps at 4.15%.

Moves Since Nov 4th (pre-election): S&P 500 +5.9% and VIX -8.17 at +13.81. Nikkei +3.7%, Shanghai +2.5%, Euro Stoxx +1.4%, Bovespa -4.5%, MSCI World +4.4%, and MSCI Emerging -2.0%. USD rose +5.8% vs Russia, +4.7% vs Brazil, +3.6% vs Euro, +3.5% vs Australia, +3.3% vs Chile, +2.7% vs Sterling, +2.4% vs China, +2.4% vs Canada, +2.4% vs Sweden, +1.9% vs South Africa, +1.8% vs Turkey, +1.5% vs Indonesia, +1.0% vs Yen, +0.8% vs India, and +0.1% vs Mexico. USD fell -38.0% vs Ethereum, and -32.2% vs Bitcoin. Gold -3.4%, Silver -6.1%, Oil +0.4%, Copper -6.2%, Iron Ore +4.6%, Corn +2.8%. 10yr Inflation Breakevens (EU -5bps at 1.80%, US +7bps at 2.35%, JP +17bps at 1.43%, and UK -7bps at 3.51%). 2yr Notes +9bps at 4.25% and 10yr Notes +11bps at 4.40%.

2024 Year-to-Date Equity Index Close (high to low): Argentina +102.5% priced in US dollars (+155% priced in pesos), NASDAQ +32.7% in dollars, S&P 500 +26.9% in dollars, Israel +26.5% in dollars (+26.2% in shekels), Taiwan +20.8% (+28.4%), MSCI World +20.4% in dollars, HK +17.7% in US dollars (+17.2% in HK dollars), Hungary +17.4% in dollars (+32.2% in forint), Czech Republic +15.9% (+23.7%), Russell +15.8% in dollars, Germany +15.6% (+21.8%), Singapore +14.9% (+17.6%), Turkey +14.6% (+35.5%), Malaysia +14.1% (+10.6%), South Africa +13.7% (+11.3%), Canada +11.9% (+20.6%), India +11.8% (+14%), China +11.3% (+14%), Spain +10.4% (+16.3%), Italy +9% (+14.9%), Belgium +8.9% (+14.8%), Japan +8.1% (+17.9%), Greece +7.8% (+13.6%), Netherlands +7.7% (+13.6%), Ireland +6.4% (+12.2%), UK +6.1% (+7.3%), Euro Stoxx 50 +4.2% (+9.9%), Colombia +3.1% (+15.5%), Norway +2.4% (+12.9%), Australia +1.6% (+9.3%), Thailand +1.3% (+1.1%), Saudi Arabia +0.9% (+1.1%), Austria +0.7% (+6.2%), Poland +0.6% (+4%), Switzerland -1.3% (+5%), Denmark -1.6% (+3.8%), New Zealand -1.7% (+8.4%), Chile -2.4% (+9.2%), Sweden -2.5% (+6.7%), Philippines -3.2% (+2.6%), Indonesia -3.3% (+0.7%), UAE -3.3% (-3.3%), France -6.8% (-1.8%), Finland -10.2% (-5.4%), Korea -15.7% (-6.1%), Portugal -16.3% (-11.8%), Mexico -24.3% (-10%), Brazil -25.3% (-7.1%).

Industrialists: “We see Willow as an important step in our journey to build a useful quantum computer with practical applications in areas like drug discovery, fusion energy, battery design + more,” wrote Sundar Pichai, Google’s CEO, on X. Despite Google’s remarkable advances, the promise of practical applications for quantum computing resides in countless possible realities, just not the present. Skeptics seem to think it’ll take years, as in a few, not a septillion. Elon responded to Sundar with one word, “Wow”. And this led to a discussion between the two.

Industrialists II: Humanity is doomed without cheap and abundant energy. But with these inputs, anything becomes possible. Musk and Sundar discussed the Kardashev scale, a method for measuring a civilization’s level of advancement based on the amount of energy it is capable of harnessing. Musk believes we are 5% of the way to a Type I civilization that fully harnesses the energy resources of its home planet. To reach 30%, we would cover our deserts in solar. Type II civilizations harness the power of a star. Type III harnesses a galaxy. That’s capital investment.

The Merge: “I picked up a book and just asked ‘who wrote this’ without having to preface anything,” wrote the reviewer who had just demoed Google’s new smart glasses. “Then I flipped to a random page and asked for a summary, which it successfully did.” These next generation glasses are far superior to Facebook’s Orion AI glasses, which easily surpassed Apple’s Vision Pro. Integrating powerful compute, AI, video, camera, audio, and efficient batteries, these wearable devices will further tighten our relationship with technology, augmenting our reality.

The Merge II: Neuralink’s brain-computer interface is the logical next step in tightening our connection with technology. AI neural networks also power rapidly advancing autonomous driving capabilities that will transform transportation. Tesla’s Optimus robot autonomously walked down a mulch-covered hill, blindfolded. The age of general purpose bipedal, humanoid robots is fast approaching. And AI bots are beginning to transact autonomously in the crypto world. As AI advances, it’ll be increasingly difficult to distinguish between fact and fiction. Blockchain technologies are uniquely suited to solve this problem, and establish truth, trust.

On Your Mark: I once had a map that unfolded to eight feet. From left to right it traced the course of human history, the major branches of civilizations, their rise, fall. It detailed notable innovations, many of which allowed us to kill one another with ever greater efficiency. The appearance of new technologies influenced the flow of history. With each advance came benefits as well, which has led us from caves and arrows to the international space station and hypersonic missiles. And now the US and China are in an existential race for AI and quantum supremacy.

On Your Mark II: There is no price too high to pay in a race for your life. To the victor goes the choice to exercise supremacy with temperance or to impose utter dominance. The loser has no real options, only acceptance. So, as investors, we should be prepared for national policies in the years ahead that in our pre-AI/quantum reality we would have never considered. That process has started of course. Muscular industrial policy, technology export restrictions, CHIPS acts, trade wars, espionage, stimulus, deficits. It is not an aberration; the real race has only just started.

Anecdote: “I tried to help Charlie understand the importance of choosing his own path,” said Jackson, my oldest. We were walking, talking, high in the Tetons this past July. “I encouraged him to keep an open mind, watch us, collect information. By the time Charlie makes his choice, I’ll have been a Marine for nearly four years. Liv and Teddy will be off to the Army too. And none of us really know what’s ahead.” Two years ago, I took Jackson for a long walk, discussed what an important role he holds as the oldest of our four children – describing his opportunity to engage with his three siblings as a young adult, someone to help them, listen, care, guide, always. By doing so, he’ll help weave our family fabric tightly, in ways that Mara and I as parents cannot. When someday we’re gone, they’ll have him, he’ll have them, they’ll have one another. But as the oldest child, it’s incumbent on him to initiate the process, check in regularly with them, look for opportunities to connect on important matters. “I told Charlie why I initially chose a normal college, and after I got some distance from that decision it became clear that what I really wanted was the challenge of Navy,” said Jackson. “Charlie seems determined to follow me, and if not that, then West Point for sure. And I told him it’s entirely natural to feel that pull, and probably feel pressure from all the people in his life who ask him where he’ll go, assuming it’ll obviously be an Academy. But he needs to distance himself from that noise. See how this all unfolds for the three of us, and then he’ll be able to think more clearly about what he wants. It was a good conversation, we’ll have more I’m sure, but he listened, he heard me,” said Jackson, the valley stretched far below, Grand Teton overhead.

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.