wknd notes: No One Left To Speak

Dusted off an anecdote from 2013 about standing up, (see below). I take my late-summers off from writing, to squeeze in a little more reading. See you again in Sept with full weekend notes.

Week-in-Review (expressed in YoY terms): Mon: China ind production +6.8% (fixed asset investment +8.3%, retail sales +10.4%), PBOC fixes CNY 1yr high, Japan Q2 GDP +4.0% on strong domestic demand and capital investment (fastest GDP since Q1 2015), Germany’s Schulz insists he can beat Merkel Sept 24th, Schaeuble “ECB to quit ultra-loose policies in foreseeable future,” Fed’s Dudley “expects to hike once more this year and balance sheet reduction,” Trump authorizes inquiry into Chinese intellectual property theft, Trump denounces Nazis for Virginia protests/death, S&P +1.0%; Tue: China “will defend its interests in response to Trump’s inquiry into intellectual property theft,” Abe & Trump “we need to prevent North Korea missile launches,” Australia household debt record 190% of disposable income (RBA sounds alarm), US shale output to hit record in Sept, Trump press conference assigns blame for Virginia on both sides (sparks outrage across political spectrum), retail sales jump most in 7mths, S&P -0.1%; Wed: China outbound M&A declines 50%, IMF raises China GDP forecasts through 2020 +0.4 to +6.4%, EU Q2 GDP +0.3 to +2.2%, UK unemployment 4.4% (42yr low), US Fed minutes non-committal on balance sheet normalization timing and cite soft inflation, Kaplan “soft inflation means Fed can be patient on rate hikes and balance sheet reduction to happen soon,” Fed’s Fischer attacks moves to unwind banking regulations, Trump disbands business councils after mass-defections, Trump attacks Amazon on twitter, Bannon “there’s no military solution to North Korea,” S&P +0.1%; Thur: Fitch analyst Charlene Chu “China bad debts $6.8trln above official estimates,” Korea’s President ‘Goodnight’ Moon “if North Korea completes development of intercontinental ballistic missiles and weaponized it with nuclear warheads I will consider that my red line," Aussie unemployment unch 5.6%, Barcelona terror attack, ECB minutes show concern for euro strength, French unemployment 9.5% (5yr low), NAFTA renegotiations begin (Mexico and Canada rebuke Trump), Fed’s Williams “roughly at mid-point in rate normalization path,” Fed’s Kaplan “low rates warn of US economic weakness so Fed should be patient and judicious,” Mattis and Tillerson “military response to North Korea still on table,” rumors Gary Cohn to resign, Trump abandons infrastructure council plans, unemployment claims 244k, S&P -1.5%; Fri: China home price gains 11mth low, Erdogan calls Germany’s main political parties “Turkey’s enemies,” EU current account surplus -0.1 to +3.1% of GDP, Merkel faces largest protest of campaign, Canada CPI +0.2 to +1.2%, Bannon removed from post, Icahn quits as Trump advisor, consumer confidence 7mth high, new triple-leveraged EM bond ETF launches, S&P -0.2%.        

Weekly Close: S&P 500 -0.6% and VIX -1.25 at +14.26. Nikkei -1.3%, Shanghai +1.9%, Euro Stoxx +0.6%, Bovespa +2.0%, MSCI World -0.1%, and MSCI Emerging +2.0%. USD rose +1.1% vs Sterling, +0.5% vs Euro, +0.1% vs China, flat vs India, and flat vs Indonesia. USD fell -1.5% vs Russia, -1.5% vs Brazil, -0.7% vs Canada, -0.7% vs Mexico, -0.5% vs Turkey, -0.4% vs Australia, -0.1% vs Chile, and flat vs Yen. Gold -0.4%, Silver -0.9%, Oil -0.1%, Copper +0.8%, Iron Ore +3.7%, Corn -2.7%. 5y5y inflation swaps (EU -1bp at 1.59%, US flat at 2.25%, JP flat at 0.31%, and UK -1bp at 3.34%). 2yr Notes +1bp at 1.31% and 10yr Notes unch at 2.20%.

YTD Equity Indexes: Greece +42.8% priced in US dollars (+28.2% priced in euros), Poland +37.5% in dollars (+19.9% in zloty), Turkey +37.4% (+37.2%), Austria +35.2% (+21.4%), Hungary +31.2% (+15.5%), Mexico +30.2% (+11.9%), Czech Republic +29.3% (+12.1%), Chile +27.8% (+23.2%), India +27.5% (+20.2%), Portugal +27.1% (+14.1%), Italy +26.3% (+13.4%), Denmark +25.6% (+12.7%), Argentina +25.2% (+35.9%), Spain +23.7% (+11.1%), Korea +23.0% (+16.4%), HK +21.8% (+22.9%), Belgium +21.2% (+8.8%), New Zealand +20.8% (+14.4%), Netherlands +19.8% (+7.5%), Singapore +19.8% (+12.9%), Taiwan +19.3% (+11.5%), Finland +18.2% (+6.1%), Germany +18.0% (+6.0%), Brazil +17.7% (+14.1%), France +17.2% (+5.2%), Euro Stoxx 50 +16.7% (+4.7%), South Africa +16.3% (+11.5%), Norway +15.7% (+6.2%), NASDAQ +15.5% (+15.5%), Ireland +14.6% (+2.9%), Switzerland +13.7% (+8.0%), Malaysia +13.2% (+8.2%), Sweden +13.1% (+1%), Philippines +13.0% (+17.2%), Indonesia +12.7% (+11.3%), Australia +11.5% (+1.4%), Luxembourg +11.3% (-0.1%), China +9.6% (+5.3%), Thailand +9.5% (+1.5%), Colombia +8.7% (+8.2%), Japan +8.6% (+1.9%), S&P 500 +8.3% (+8.3%), UK +6.8% (+2.5%), Canada +4.6% (-2.2%), Israel +4.2% (-1.7%), Russell +0% (+0%), Saudi Arabia -0.4% (-0.4%), UAE -1.2% (-1.2%), and Russia -10.4% (-13.5%).

Anecdote (Sept 2013): “They came first for the Communists, and I didn’t speak up because I wasn’t a Communist,” whispered the bold black letters, engraved in granite. And recognizing the quote, I reached for Jackson’s shoulder, drew him near. We were in Boston, wandering. And had happened upon what appeared to be an artistic installation of unusual beauty. Grace. “Then they came for the Jews, and I didn’t speak up because I wasn’t a Jew.” As my son and I read from the cold stone, I felt the spirit of solemnity descend upon his body. He’s nearly twelve, and as we walked through the memorial, simple, striking, my younger children played innocently amongst its six glass towers (Auschwitz-Birkenau, Belzec, Sobibor, Majdanek, Treblinka, Chelmno) engraved with the serial numbers of many millions of silenced souls. “Then they came for the trade unionists, and I didn’t speak up because I wasn’t a trade unionist.” As fate would have it, Mara and I had just been discussing American Exceptionalism. Manifest Destiny. For all our mistakes, how dark the world would be without a Shining City on the Hill. And Syria – the inhuman horrors of civil war, its unique complexity, the impossibly difficult choices we now face. As Jackson listened, intently. “Then they came for the Catholics, and I didn’t speak up because I was a Protestant.” These topics have a particular hold on our family, because Mara’s grandparents were Russian Jews. Refugees. So I whispered to Jackson that he must always stand for the weak, the innocent, in the face of the bully. To hell with the consequences. How it all starts there. He leaned in closer, and having read every word, we walked away, softly, in silence. “Then they came for me, and by that time no one was left to speak up.”

Good luck out there,

Eric Peters

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, drink 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.

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