wknd notes: The Grand Teton

Milky Way overhead, vivid, alive, headlamps snaking their way up the mountain, rock, ice, snow. Summited the Grand Teton on Sunday with Mara, our kids, their friends, young pilots, Marines, guides, fifteen of us. Memories returned, of my early climbing days, before them all, what a journey it has been. Dusted off an old anecdote from one of those ascents in the French Alps (see below). I take July/August off from writing, to do more reading, recharge. Hoping the same for you all. Back again in September. All the very best, E?

Week-in-Review: Mon: Le Pen’s RN party wins most votes during 1st round of French elections, S. Africa’s Ramaphosa retains Godongwana as fin min and other mkt friendly cabinet members, PBOC says will borrow gov’t bonds from primary dealers, Biden spends weekend dismissing calls for him to step down from fellow Dems following his poor debate performance, ECB’s Lagarde pushes back on July rate cut, SCOTUS grants partial immunity to presidents – likely delaying Trump’s Jan 6th trial further, Bibi says committed to fighting Hamas until it is eliminated, S. Korea Expts 5.1% (4.4%e) / Impts -7.5% (-4.7%e), China Caixin PMI mfg 51.8 (51.5e), Japan cons conf 36.4 as exp, EU PMI mfg 45.8 (45.6e), UK house px 1.5% (1.2%e), Germany CPI 2.5% as exp, US PMI mfg 51.6 (51.7e), US ISM mfg 48.5 (49.1e) / prices paid 52.1 (55.9e), S&P +0.3%; Tue: Powell strikes dovish tone as he discusses disinflation progress but maintains call for patience, Dem’s calls for Biden to step down intensify, Trumps hush money sentencing delayed to 9/18, ECB’s Centeno expects a ‘few more’ cuts, Hurricane Beryl creates concern about coming storm season given its size this early in the year, S. Korea CPI 2.4% (2.6%e), EU CPI 2.5% as exp / Core 2.9% (2.8%e), EU Unemp 6.4% as exp, US JOLTS job openings 8140k (7946k e), S&P +0.6%; Wed: Biden tells key ally that he is weighing whether to continue campaign, Fed mins reveal little new info, China Caixin PMI serv 51.2 (53.4e) / comp 52.8 (54.1p), Turkey CPI 71.60% (72.60%e), EU final PMI serv 52.8 (52.6e) / comp 50.9 (50.8e), EU PPI -4.2% (-4.1%e), US ADP 150k (165k e) / Initial claims 238k (235ke), US Trade balance -$75.1b (-$76.5b e), US Factory orders -0.5% MoM (0.2%e), Russia Ret sales 7.5% (7.2%e) / Unemp 2.6% as exp, US final PMI serv 55.3 (55.1e) / comp 54.8 (54.6p), US ISM serv 48.8 (52.7e) / prices paid 56.3 (56.7e) / emp 46.1 (49.5e), S&P +0.5%; Thu: US holiday = light liquidity, Labour wins in landslide in UK election / conservatives a touch better than polls / Reform outperforms, Polls suggest RN will be far short of majority in French 2nd round, Germany Factory orders -8.6% (-6.1%e), S&P closed; Fri: US NFP 206k (190k exp) / -111k 2m revision / unemp 4.1% (4%e) / AHE 3.9% as exp – overall a bit softer under the surface despite strong headline number, PBOC says has hundreds of billions yuan of securities to sell, Hamas broadly agrees to US-proposed ceasefire / Israel sending negotiators to try to finalize an agreement, Fed’s Williams says still have ways to go on infl, Japan Household spending -1.8% (0.3%e) / leading index 111.1 (111.0e), Germany IP -6.7% (-4.3%e), EU ret sales 0.3% (0.2%e), Canada emp chg -1.4k (25k exp) / Unemp 6.4% (6.3%e), Russia GDP 5.4% as exp, S&P +0.6%.

Manufacturing PMI (high-to-low): India 58.3 (previous month 57.5), Russia 54.9 (previous month 54.4), Vietnam 54.7 (previous 50.3), Greece 54/54.9, Sweden 53.6/54.1, Taiwan 53.2/50.9, Brazil 52.5/52.1, Spain 52.3/54, South Korea 52/51.6, China 51.8/51.7, Mexico 51.1/51.2, UK 50.9/51.2, Netherlands 50.7/52.5, Indonesia 50.7/52.1, Singapore 50.4/50.6, Japan 50/50.4, Hungary 49.4/51.3, Canada 49.3/49.3, South Africa 49.2/50.4, United States 48.5/48.7, Hong Kong 48.2/49.2, Turkey 47.9/48.4, Norway 47.7/51.7, Italy 45.7/45.6, France 45.4/46.4, Czech Republic 45.3/46.1, Poland 45/45, Switzerland 43.9/46.4, Austria 43.6/46.3, Germany 43.5/45.4. Services PMI: India 60.5/60.2, Spain 56.8/56.9, US 55.3/54.8, Brazil 54.8/55.3, Ireland 54.2/55, Italy 53.7/54.2, Germany 53.1/54.2, UK 52.1/52.9, Sweden 51.8/49.8, China 51.2/54, Australia 51.2/52.5, France 49.6/49.3, Japan 49.4/53.8, Russia 47.6/49.8.

Weekly Close: S&P 500 +2.0% and VIX +0.02 at +12.46. Nikkei +3.4%, Shanghai -0.6%, Euro Stoxx +1.0%, Bovespa +1.9%, MSCI World +1.6%, and MSCI Emerging +1.7%. USD rose +16.0% vs Ethereum, +9.8% vs Bitcoin, +0.1% vs India, and flat vs China. USD fell -2.3% vs Brazil, -1.3% vs Sterling, -1.3% vs Mexico, -1.2% vs Australia, -1.2% vs Euro, -1.1% vs Sweden, -0.6% vs Indonesia, -0.4% vs Turkey, -0.3% vs Canada, -0.3% vs Chile, -0.1% vs South Africa, -0.1% vs Yen, and flat vs Russia. Gold +2.5%, Silver +6.6%, Oil +2.1%, Copper +6.4%, Iron Ore +5.6%, Corn +0.8%. 10yr Inflation Breakevens (EU +1bp at 2.01%, US -2bps at 2.27%, JP flat at 1.53%, and UK -4bps at 3.55%). 2yr Notes -15bps at 4.61% and 10yr Notes -12bps at 4.28%.

2024 Year-to-Date Equity Index Close: Argentina +54.7% priced in dollars (+75.2% priced in pesos), Venezuela +50.3% priced in US dollars (+52.9% priced in bolivars), Turkey +31.4% priced in dollars (+45.3% priced in lira), Taiwan +23.7% (+31.4%), NASDAQ +22.3% in dollars, Denmark +21.8% (+24.6%), S&P 500 +16.7% in dollars, Netherlands +16.1% (+18.7%), Hungary +13.5% (+19%), MSCI World +12.6% in dollars, India +11.6% (+11.9%), Poland +10.4% (+11.3%), Italy +9.6% (+12%), Colombia +9.2% (+15.8%), Greece +9% (+11.4%), Malaysia +8% (+10.7%), Germany +7.9% (+10.3%), Euro Stoxx 50 +7.8% (+10.1%), Japan +7% (+22.3%), Czech Republic +6.8% (+11.2%), Spain +6.8% (+9.1%), UK +6.4% (+6.1%), Ireland +6.2% (+8.6%), Austria +5.6% (+8%), Norway +5.6% (+10.1%), South Africa +5.1% (+4.6%), Belgium +4.5% (+6.8%), HK +4.4% (+4.4%), Russia +3.4% (+0.8%), Singapore +2.9% (+5.3%), Sweden +2.1% (+6.7%), Canada +1.9% (+5.3%), Australia +1.6% (+3%), Israel +1.6% (+5.6%), Switzerland +0.8% (+7.8%), Korea +0.6% (+7.8%), Russell flat in dollars, France -0.4% (+1.8%), Chile -1.5% (+4.6%), Saudi Arabia -2.6% (-2.6%), Finland -2.8% (-0.7%), New Zealand -3.1% (+0.2%), China -3.1% (-0.8%), Portugal -4.5% (-2.4%), UAE -4.6% (-4.6%), Philippines -4.8% (+0.7%), Indonesia -5.6% (-0.3%), Thailand -13.2% (-7.3%), Mexico -14.6% (-8.8%), Brazil -16.7% (-5.9%).

Anecdote (April 2012): The clank of ice axes shattered our silence. I spun, to see my pack tumble. Twirl. And come to rest, far below. A blue dot, amongst granite boulders. Vincent stood motionless, looking out across the vast glacier, to distant peaks, and said, “You never let go your pack on a ledge, you know this.” And I got hot, knowing then, he had kicked it. “You’re very tired, me too, which is why you will go get it alone, but you’re also very lucky it is only 40 meters, and not lost, we need that equipment,” he told me. Our friendship was simple, strong. We climbed together, trained nearly every day. I taught him basic English, he failed to teach me mountain French. When clients arrived, I was his Sherpa, helping others attain goals. Tethered to men, confronting fear, stress, obstacles. Theirs. Mine too. So it went, for a year. Vincent was 7th generation high-altitude French mountain guide and filled our climbs with tales into which were woven threads of wisdom, passed from father to son. Unsurprisingly, most lessons concerned risk management. Of course, life’s greatest risks emanate from within. So naturally, training was inwardly directed, developing physical stamina, core strength, balance, discipline, humility, mental toughness. We never really focused on bagging peaks, but rather, on perfecting the journey. And on each one, Vincent created an unexpected challenge, when I was least prepared, most vulnerable, mentally weakened. You see, in crisis, without mental toughness, the best rehearsed exit plans crumble. Anyhow, I descended that cliff. Retrieved my pack. Returned to the ledge, still a little hot, and told Vincent that indeed, I felt real damn lucky it had been only 40 meters. “You will not always get so lucky,” he replied, his cracked, blistered lips unable to hide a smile.

Good luck out there,

Eric Peters

Chief Investment Officer

One River Asset Management

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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.

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