“Please find time to watch this video [here],” I texted to Liv, Teddy, Charlie, and Jackson on our family app. “It’s a lecture that was supposed to have been given recently at the Naval Academy but was not. It’s outstanding, on multiple levels.” Our military academies regularly invite exceptional speakers to address their cadets. Such lectures focus on character development, integrity, leadership, the inward journey, courage, conflict, battle, war, peace, topics of the greatest importance and enduring value.

Overall: “The US has recently sent messages to China through relevant parties, hoping to start talks with China,” said the Chinese Commerce Ministry on Friday. “China is currently evaluating this.” So much has changed in the month since Liberation Day. For instance, the White House disappeared Peter Navarro without a trace. Not since Beijing erased Jack Ma have we seen a man of the moment wiped so completely from the news. But unlike Ma who had the audacity to challenge Xi, Navarro was simply a fanatical advisor who overplayed his hand. And unlike China which is a great nation held hostage by an ideological autocracy, the United States is first and foremost a business, increasingly transactional, extortionary, brutish. When markets rejected Navarro’s extremist ideology on that chaotic April 9th morning, Bessent intervened and persuaded Trump to exercise his Put, reverse course, get back to business. While America’s international standing is permanently damaged by that humiliating episode, there was one notable positive. The whole world got a brief glimpse of what a real conflict might look like in our hyper-connected global economy. We now know that no serious player could stomach what was unfolding, and ever since, world leaders have been scrambling for a face-saving off-ramp. The greatest global risk is always a kinetic great-power conflict, so having stepped back from this street brawl over trade, hopefully the existential threat of a hot war has receded.  “Any Country or person who buys ANY AMOUNT of OIL or PETROCHEMICALS from Iran will be subject to, immediately, Secondary Sanctions,” posted Trump on Truth Social, always inclined to escalate, the adrenaline from revoking Harvard’s tax-exempt status still rushing through his veins, excited for the coming battles with SCOTUS. And with the stock market having now fully recovered its losses from both Liberation Day and the attack on Fed independence, all sorts of space has been cleared for new wars to be waged, institutions upended, norms abolished, alliances broken, creating yet more chaos for Bessent to navigate, as he tries to advance this business that we call America.

Week-in-Review: Mon: Treas. Sec. Bessent says ‘all aspects’ of the US government are in contact with China but Beijing needs to take the first step in de-escalating the tariff fight. Putin declares a new temporary ceasefire in Ukraine from May 8-10. Europe fears Trump preparing to walk away from Ukraine talks. Indonesia raises mining levies on nickel extraction companies. Mexico Unemp rate 2.22% (2.35%e), S&P +0.1%. Tue: Trump softens car tariffs after his visit to Michigan. Carney wins Canadian election. Amazon says it won’t display the cost of tariffs on products after the president called Jeff Bezos to complain. Putin insists Russia must take control of four regions of Ukraine it doesn’t fully occupy – Donetsk, Luhansk, Zaporizhzhia and Kherson – as part of any agreement to end his war. A judge opened an investigation into whether a cyberattack caused one of Europe’s worst blackouts that spread through Spain and Portugal. China waived the 125% tariff on US ethane imports. Italy Cons conf 92.7 (94.1e) / mfg conf 85.7 (85.9e), Eurozone M3 3.6% (4.0%e), US Conf conf 86.0 (88.0e), S&P +0.6%. Wed: UK and India in final stages of trade talks. Iran executes alleged Mossad spy as concern grows over Israeli sabotage. The Kremlin says the process of ending the war is too difficult to be solved quickly. Chinese investors accounted for half of global bullion ETF flows over past 4 weeks. Turkey arrests Istanbul municipal employees in widening crackdown. US GDP -0.3% (-0.2%e), China mfg PMI 49 (49.8e), Japan Housing starts 39.1% (1.0%e), France GDP 0.8% (0.7%e) / CPI 0.8% (0.7%e), Eurozone GDP 1.2% (1.1%e), Brazil Unemp rate 7.0% as exp, Mexico GDP 0.8% (0.7%e), Germany CPI 2.1% (2.0%e), US ADP emp chg 62k (115k e), Canada GDP 1.6% (1.7%e), US Personal income 0.5% (0.4%e) / spending 0.7% (0.6%e), Russia Ret sales real 2.2% (2.8%e) / Unemp rate 2.3% (2.4%e), S&P +0.2%. Thur: China signals opening for trade talks with US. US and Ukraine sign natural resources deal. Bank of Japan holds rates and slashes growth expectations but maintains intent to continue normalization. EU is offering to buy €50 billion more in US imports, including food and LNG. Trump to impose secondary sanctions on buyers of Iran’s oil and sacks national security adviser Waltz. Yellen says odds of a recession have gone ‘way up’ and tariffs will have ‘tremendous adverse’ effect. Renminbi borrowing by overseas companies (Panda bonds) hit a record $26.5bn in 2024. US Jobless claims 241k (223k e) / cont claims 241k (223k e), US PMI mfg 50.2 (50.5e) / ISM mfg 48.7 (47.9e) / prices paid 69.8 (73.0e), UK mfg PMI 45.4 (44e), S&P +0.6%. Fri: China exempts more US goods from tariffs. Trump calls for $163bn in cuts to federal spending (Federal deficit remains ~7% of GDP). Japan’s Finance minister Kato hints that $1tn+ invested in Treasuries could be ‘a card’ to play in trade negotiations, denies talks about a Plaza ‘2.0’ accord. OPEC+ brings forward meeting to discuss June production levels to Saturday. Oman announces US-Iran talks scheduled for tomorrow are postponed. France and Poland deepen defense ties. German intelligence agency labels AfD as rightwing extremist. TikTok fined €530mn for sending EU user data to China. US stocks recover all losses that followed Trump’s ‘liberation day’. US change in nonfarm payrolls 177k (138k e) / Unemp rate 4.2% as exp, US Factory orders 4.3% (4.5%e) / durable goods 9.2% as exp, Eurozone PMI mfg 49.0 (48.7e) / CPI 2.2% (2.1%e) / core 2.7% (2.5%e) / Unemp rate 6.2% (6.1%e), S&P +1.5%.

Weekly Close: S&P 500 +2.9% and VIX -2.16 at +22.68. Nikkei +3.2%, Shanghai -0.5%, Euro Stoxx +3.1%, Bovespa +0.3%, MSCI World +2.9%, and MSCI Emerging +3.3%. USD rose +1.4% vs Chile, +0.9% vs Yen, +0.6% vs Euro, +0.4% vs Mexico, +0.3% vs Sterling, +0.3% vs Turkey, and +0.3% vs Russia. USD fell -3.1% vs Ethereum, -2.3% vs Indonesia, -2.2% vs Bitcoin, -1.7% vs South Africa, -1.0% vs India, -0.6% vs Australia, -0.5% vs Brazil, -0.4% vs Canada, -0.4% vs Sweden, and -0.2% vs China. Gold -1.7%, Silver -3.2%, Oil -7.5%, Copper -4.5%, Iron Ore -0.3%, Corn -3.4%. 10yr Inflation Breakevens (EU +1bp at 1.79%, US flat at 2.27%, JP +1bp at 1.48%, and UK -3bps at 3.21%). 2yr Notes +8bps at 3.83% and 10yr Notes +7bps at 4.31%.

April Monthly Close: S&P 500 -0.8% and VIX +2.42 at +24.70. Nikkei +1.2%, Shanghai -1.7%, Euro Stoxx -1.2%, Bovespa +3.7%, MSCI World +0.7%, and MSCI Emerging +1.0%. USD rose +4.3% vs Ethereum, +1.5% vs South Africa, +1.4% vs Turkey, +0.2% vs Indonesia, and +0.2% vs China. USD fell -11.2% vs Bitcoin, -4.6% vs Yen, -4.5% vs Euro, -4.2% vs Mexico, -4.1% vs Canada, -3.7% vs Sweden, -3.1% vs Sterling, -2.4% vs Australia, -1.4% vs Russia, -1.1% vs India, -0.6% vs Brazil, and -0.3% vs Chile. Gold +5.4%, Silver -6.0%, Oil -18.0%, Copper -9.3%, Iron Ore -3.6%, Corn +2.6%. 10yr Inflation Breakevens (EU -19bps at 1.76%, US -13bps at 2.24%, JP -12bps at 1.47%, and UK -21bps at 3.19%). 2yr Notes -28bps at 3.61% and 10yr Notes -4bps at 4.16%.

2025 Year-to-Date Equity Index Returns: Poland +38.4% priced in US dollars (+27.2% priced in zloty), Hungary +29.1% priced in US dollars (+16.2% in forint), Czech Republic +28.8% in dollars (+17% in koruna), Greece +28.5% (+17.5%), Spain +26.9% (+16%), Chile +26.3% (+19.8%), Germany +26.3% (+16%), Colombia +23.1% (+19%), Brazil +22.7% (+12.3%), Austria +22.5% (+12.5%), Italy +22.1% (+12.1%), Mexico +19.7% (+12.7%), Ireland +19.7% (+9.4%), Euro Stoxx 50 +18.1% (+7.9%), Norway +17.6% (+7.5%), Finland +16.3% (+6.8%), Portugal +15.7% (+5.7%), Switzerland +15.5% (+5.6%), South Africa +15.4% (+12.4%), Belgium +15.3% (+5.4%), France +15.2% (+5.3%), Sweden +13.3% (-0.8%), HK +12.4% (+12.2%), Korea +12.2% (+6.7%), Netherlands +11.7% (+2.2%), UK +11.6% (+5.2%), Singapore +6.9% (+1.5%), Israel +6% (+5.4%), Canada +5.6% (+1.2%), Australia +5.3% (+1%), India +4.2% (+3%), Philippines +2.2% (-1.8%), UAE +1.7% (+1.7%), MSCI World +0.5% in dollars, Japan +0.3% (-7.7%), New Zealand +0.1% (-6%), Malaysia -1.3% (-6.1%), China -1.8% (-2.2%), S&P 500 -3.3%, Taiwan -3.8% (-9.8%), Saudi Arabia -3.9% (-4.1%), Vietnam -5.1% (-3.2%), Indonesia -5.4% (-3.7%), NASDAQ -6.9%, Denmark -8.6% (-16%), Russell -9.4%, Thailand -11.6% (-14.4%), Turkey -14.5% (-6.7%), Argentina -26.8% (-17.1%).

Flows: “Stocks and bonds are a hard trade in here,” said the risk-taker, running one of the city’s biggest trading businesses in London. “But the dollar has a far way to run,” he said. “People tend to focus on hedge fund flows, but in FX it’s the corporates and pensions to really watch when the big trends kick off.” These guys own assets and assume liabilities denominated in a range of currencies and then choose whether to hedge their exchange rate risk. “They got way overexposed to dollars believing the EU would continue to struggle economically, Ukraine, etc.”

Flows II: “Donny threw everything he had at your Canadian neighbors,” continued the risk-taker, flabbergasted by the president’s talk of 51st states. “But the US dollar couldn’t hold above the 1.44 level.” In markets, what cannot go up, soon comes down. “And here we are at 1.38 with every Canadian pension and corporate caught offsides, desperate to sell every rally.” Which is why they haven’t gotten one. “How many times in our careers have we seen stocks down, bonds, down, dollar down, gold up?” he asked. “Tells you people have way too many dollars.”

Flows III: “Donny can’t afford a recession if he’s going to get his tax cuts passed,” continued the trader. The US budget deficit remains ~7% of GDP. A recession would push it into the teens. “So, no matter what he says, its meaningless, or means less and less. He can’t play hardball if he can’t afford negative growth,” he said. “You’re at risk of a Lizz Truss moment. She too ignored experts and went all in on something that made no sense.” That’s dollar negative. “At least Bessent knows that if Donny blows everything up, he won’t get the agenda through.”

Pre-Election Close (11/4/24-5/2/25): It’s interesting/informative to measure how markets have moved in the aftermath of important events. At Friday’s market close, the S&P 500 had fallen -0.5% since Nov 4th, the day before the presidential election. The VIX +0.70 at +22.68. Nikkei -3.2%, Shanghai -1.0%, Euro Stoxx +5.3%, Bovespa +3.5%, MSCI World +1.9%, MSCI Emerging +0.3%, Bitcoin +42.23%, and Ethereum -24.49%. USD rose +12.2% vs Turkey, +5.0% vs South Africa, +4.3% vs Indonesia, +2.4% vs China, +2.3% vs Australia, and +0.5% vs India. USD fell -16.2% vs Russia, -9.9% vs Sweden, -4.7% vs Yen, -3.7% vs Euro, -2.6% vs Mexico, -2.4% vs Sterling, -2.2% vs Brazil, -0.7% vs Chile, and -0.6% vs Canada. Gold +15.3%, Silver -4.0%, Oil -16.3%, Copper +3.3%, Iron Ore -1.0%, Corn +6.0%. 10yr Inflation Breakevens (EU -7bps at 1.79%, US -1bp at 2.27%, JP +22bps at 1.48%, and UK -37bps at 3.21%). 2yr Notes -34bps at 3.83% and 10yr Notes +2bps at 4.31%.

Inauguration Day Close (1/20/25-5/2/25): S&P 500 -5.2% and VIX +6.87 at +22.68. Nikkei -5.3%, Shanghai +1.1%, Euro Stoxx +2.4%, Bovespa +10.0%, MSCI World -1.7%, MSCI Emerging +4.9%, Bitcoin -8.65%, and Ethereum -44.95%. USD rose +8.4% vs Turkey, and +0.5% vs Indonesia. USD fell -17.7% vs Russia, -12.3% vs Sweden, -7.8% vs Euro, -7.1% vs Sterling, -6.9% vs Yen, -6.2% vs Brazil, -5.4% vs Chile, -4.5% vs Mexico, -3.5% vs Canada, -2.5% vs Australia, -2.3% vs India, -0.8% vs South Africa, and flat vs China. Gold +15.9%, Silver +1.6%, Oil -21.3%, Copper +5.5%, Iron Ore -5.0%, Corn -5.1%. 10yr Inflation Breakevens (EU -14bps at 1.79%, US -16bps at 2.27%, JP -7bps at 1.48%, and UK -38bps at 3.21%). 2yr Notes -46bps at 3.83% and 10yr Notes -32bps at 4.31%.

Liberation Day Close (4/2/25-5/2/25): S&P 500 +0.3% and VIX +1.17 at +22.68. Nikkei +3.1%, Shanghai -2.1%, Euro Stoxx -0.1%, Bovespa +3.0%, MSCI World +1.5%, MSCI Emerging +1.9%, Bitcoin +13.58%, and Ethereum -1.47%. USD rose +1.6% vs Turkey, and +0.1% vs China. USD fell -3.9% vs Euro, -3.0% vs Canada, -3.0% vs Mexico, -2.9% vs Yen, -2.6% vs South Africa, -2.5% vs Sweden, -2.1% vs Australia, -2.0% vs Sterling, -1.9% vs Russia, -1.1% vs India, -0.8% vs Indonesia, -0.7% vs Chile, and flat vs Brazil. Gold +2.4%, Silver -7.8%, Oil -18.2%, Copper -8.1%, Iron Ore -5.8%, Corn +0.8%. 10yr Inflation Breakevens (EU -13bps at 1.79%, US -7bps at 2.27%, JP -11bps at 1.48%, and UK -14bps at 3.21%). 2yr Notes -4bps at 3.83% and 10yr Notes +18bps at 4.31%.

Anecdote: Quantico, Virginia. The U.S. Marines Basic School in our rear-view mirror. Minutes after graduation, in the parking lot, my oldest son swapped his uniform for civvies, and we hit the road. Jeep packed to the roof, boxes of crap, uniforms, gear. Always moving. I’m still not sure how we became a military family, three of our four kids now committed, our youngest leaning that way. It’s been another one of life’s unexpected paths, marked by moments that feel surreal, out of body. Jackson and his fellow graduates sang The Marines’ Hymn to end the ceremony. “From the Halls of Montezuma to the shores of Tripoli; We fight our country’s battles, in the air, on land, and sea; First to fight for right and freedom, and to keep our honor clean; We are proud to claim the title of United States Marine...” One of those moments. And what struck me was not so much the lyrics [here], as it was the wild, unrestrained enthusiasm, the pride, of the 240 Marines who sang it, shaking the hall, connecting them to those warriors who had come before, and those to follow. The ceremony focused on service, honor, duty, courage, heroism. On the road, Jackson spoke about his future, me riding shotgun, our roles slowly shifting, life’s cycle rolling, relentlessly. He talked a lot about the unknown. All our young officers are trained to move at a moment’s notice, abrupt change hanging in the shadows, deployments, missions. His years of classrooms, standardized tests, controlled environments, structure, rules, referees, had finally come to an end, the real game begun. And I shared something I’ve grown to understand about life’s great competition, an uncomfortable truth. Nothing exceptional is ever gained, nothing extraordinary is built, no glory won without embracing the things that others run from. And chief amongst these is uncertainty.

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.