wknd notes: Don't Overthink It

Dusted off an anecdote from Thanksgiving 2015 about not overthinking things (see below). See you again next Sunday with full weekend notes.

Week-in-Review (expressed in YoY terms): Mon: Beijing tightens shadow banking regulations, Japan exports -0.1 to +14% (imports +6.9 to +18.9%), German coalition talks fail (Merkel calls new election), US sues to prevent AT&T/Time Warner merger, S&P +0.1%; Tue: Tencent market cap surpasses Facebook ($534bln vs $519bln), RBA “considerable uncertainty over wage gains,” Zimbabwe’s Mugabe steps down, Turkish lira record lows (bond yields record high), Draghi warns wages gains will take some time, Mexico boots minimum wage 50 cents to $4.70 per day, Uber paid $100k to conceal 57mm customer data breach, FCC overturns net neutrality rules, Treasury 2-30yr curve hits 98bps, existing home sales rise fastest in 7mths (home prices +6%), Moody’s forecasts 2017 US corporate cash to hit $1.9trln (+5%), Trump designates North Korea a state sponsor of terror, S&P +0.7%; Wed: China survey suggest Q3 industrial sector contraction (overcapacity remains severe), Bosnian General Mladic sentence to life for war crimes, Brussels warns France and Italy that 2018 budgets risk violating EU rules, Sweden’s Riksbank welcomes recent housing price decline “positive for stability,” US durable goods weaken, consumer sentiment declines from 2004 high, Fed minutes indicate Dec hike, S&P -0.1%; Thur: Chinese stocks fall 2.9%, Erdogan economic advisor appears to support rate hike (Lira jumps 1%), EU PMI composite +1.0 to 57.5 (6yr high), French business confidence 10yr high, Flynn cooperating with Mueller investigators, S&P closed (Thanksgiving); Fri: Japan flash PMI manu +1.0 to 53.8 (3yr high), S&P downgrades South Africa to junk, Zimbabwe’s new president sworn in, Egyptian mosque attack kills 300 (Isis takes responsibility), Germany’s SPD signals willingness to join grand coalition (lifting Merkel’s chances of retaining power without new vote), German IFO business confidence record high, UK’s May strikes positive Bexit negotiation tone after EU meeting, S&P +0.2% (record close 2,602).

Weekly Close: S&P 500 +0.9% and VIX -1.76 at +9.67. Nikkei +0.7%, Shanghai -0.9%, Euro Stoxx +0.7%, Bovespa +1.0%, MSCI World +1.0%, and MSCI Emerging +1.4%. USD rose +1.7% vs Turkey, and +1.2% vs Chile. USD fell -6.3% vs Bitcoin, -1.8% vs Mexico, -1.8% vs Sweden, -1.1% vs Euro, -1.1% vs Russia, -0.9% vs Sterling, -0.8% vs Brazil, -0.8% vs South Africa, -0.7% vs Australia, -0.5% vs India, -0.4% vs Yen, -0.4% vs China, -0.4% vs Canada, and -0.2% vs Indonesia. Gold -0.5%, Silver -1.6%, Oil +3.8%, Copper +3.3%, Iron Ore +8.5%, Corn -0.2%. 5y5y inflation swaps (EU +1bp at 1.68%, US +1bp at 2.24%, JP +6bps at 0.46%, and UK flat at 3.43%). 2yr Notes +2bps at 1.75% and 10yr Notes unch at 2.34%.

YTD Equity Indexes: Argentina +48.9% priced in US dollars (+62.3% in pesos), Poland +46.1% in dollars (+23.4% in pesos), Austria +43.8% (+27.1%), Korea +39.6% (+25.6%), Hungary +39.1% (+24.1%), Czech Republic +37.5% (+14.4%), HK +34.8% (+35.8%), India +33.6% (+26.9%), Portugal +32.4% (+17.1%), Italy +31.8% (+16.5%), Germany +28.6% (+13.8%), Singapore +28.5% (+19.5%), Chile +28.4% (+21.4%), NASDAQ +28% (+28%), Denmark +27.2% (+12.6%), Greece +27.1% (+12.4%), Taiwan +26.8% (+17.3%), Netherlands +26.5% (+11.9%), Norway +25.7% (+18.6%), France +25.4% (+10.9%), Belgium +25% (+10.5%), Brazil +24.1% (+23.1%), Japan +23.3% (+18%), Euro Stoxx 50 +23.1% (+8.8%), South Africa +21.8% (+23%), Spain +21.6% (+7.5%), Finland +21% (+7%), Thailand +20.7% (+9.9%), Philippines +19.7% (+22.3%), Turkey +19.6% (+33.8%), Ireland +19.3% (+5.5%), Switzerland +17.8% (+13.5%), New Zealand +17.1% (+18.2%), Sweden +16.7% (+6.4%), Mexico +16.7% (+4.8%), S&P 500 +16.2% (+16.2%), Indonesia +14.8% (+14.5%), Malaysia +14.1% (+4.6%), China +13.9% (+8.1%), Israel +12.1% (+2.4%), UK +12% (+3.7%), Russell +11.9% (+11.9%), Canada +11.4% (+5.3%), Australia +11.4% (+5.6%), Colombia +8.1% (+7.4%), Russia +1.6% (-3.2%), Saudi Arabia -4.6% (-4.6%), and UAE -5.7% (-5.7%).

Anecdote (Thanksgiving 2015): “Cliff jumping,” answered Jackson, without hesitation, taking charge. Olivia, Teddy and Charlie cheered, filling the air with the magic of mischief. I’d asked for ideas. We needed out. Thanksgiving had overwhelmed us. So we piled into the Suburban, in search of sanctuary, solitude. The Greenwich cliffs are hidden deep in back-country. And like so much in today’s wild, they’re forbidden. We whispered our way through the woods, Wolfie and Shackleton sniffing for squirrels. Blazing our own twisted trail, freshly fallen leaves in our wake. Now, truth be told, cliff jumping in November was not the first thing that sprang to my mind. But having learned a thing or two about parenting, I know that in certain situations there’s no better time to say yes than when they think you’ll say no. So without overthinking it, I’d instinctively agreed. Electrifying us all. We first went cliff-jumping in October, on my 49th birthday. The sun bright, leaves brilliant red, yellow. Our screams rippling across the lake, the water unknown, cold. With some mornings now blanketed in frost, we worked ourselves into a frenzy imagining the polar plunge. The cliff-top neared, the wind picked up, driving rain through the forest, drenching the dogs – we squealed with nervous excitement. Children allow us to relive life, if only we let them. And when we do, they help us see things all over again, afresh, the world anew; their gift. “My nuts are gonna turn to ice cubes!” shrieked Teddy, laughing, kind of. I stripped down. “Whatever you do, don’t overthink it,” I hollered, my greatest advice, the story of my life. They followed in rapid succession, my little lemmings. Screams echoed. The frigid water paralyzed our lungs. Fired our hearts. Breathed life. And what was once a quiet November lake, was somehow something new.

Good luck out there,

Eric Peters