We laid to rest Ryan and Daisy McRandal’s beatific son Julian Lucas McRandal yesterday. Ryan is my great friend, partner and Deputy CIO. His son, Julian, was nine years old and fought a battle with brain cancer, forever inspiring us with his courage and spirit. The day was at once profoundly sad and magnificent. Ryan and Daisy wanted to share an anecdote from the ceremony (see below). Julian’s obituary is [here].

See you next Sunday with full weekend notes. E

Week-in-Review (expressed in YoY terms): Mon: Over-simplified Jackson Hole summary – generally hawkish apart from Kuroda (no surprise), European nat gas prices drop as EU storage filling up faster than exp / German next-year power trades at EU 1000/mwh for first time, EC president von der Leyen say EU preparing power market emergency intervention / energy ministers to meet 9/9, Kashkari happy that equities fell following Powell’s speech bc shows market understands how serious Fed is about fighting inflation, Iran rumored to have started enriching Uranium, US Navy ships pass through Taiwan strait first time since Pelosi visit, US Dallas Fed -12.9 (-12.7e), S&P -0.7%; Tue: US State Dept denies rumors that agreement reached with Iran, Fed’s Williams says 50 vs 75bp debate dependent on data, Fed’s Bostic open to a slower pace of hikes, China initiates more lockdowns due to covid, ECB’s Muller backs option for 75bp hike, ECB’s Knot says balance sheet should be discussed later in the year, European gas prices plunge for second day, Hungary CB hikes 100bp as exp, PBOC continues to lean against a weaker currency, Japan jobless rate 2.6% as exp, Spain CPI 10.3% as exp, Germany CPI 8.8% as exp (8.5%p), US house prices 18.65% (19.2%e), US cons conf 103.2 (98e), US JOLTS job openings 11.239m (10.375m exp), S&P -1.1%; Wed: PBOC continues to lean against currency weakness with strong fixings, NS1 goes down for 3d maintenance, California declares grid emergency / probability of blackouts, ECB’s Nagel says urgent need to act decisively, US life expectancy posted its biggest 2y slide in near 100 years (-2.7yrs), China mfg PMI 49.4 (49.2e) / serv 52.6 (52.3e) / comp 51.7 (52.5p), Australia private sector credit 9.1% (9%e), Japan cons conf 32.5 (29.5e) / housing starts -5.4% (-3.5%e), Germany impt prices 28.9% (28.8%e), France CPI 6.5% (6.7%e) / cons spending -4.3% (-3.9%e), Poland CPI 9.4% unch, EU CPI 9.1% (9%e) / Core CPI 4.3% (4.1%e), Italy CPI 9% (8.2%e), Poland final 2Q GDP 7.1% (6.9%e), India 2Q GDP 13.5% (15.3%e), Brazil unemp 9.1% (9%e), US ADP 132k (300k exp), US Chicago PMI 52.2 (52.1e), Russia ret sales -8.8% (-9%e) / Russia unemp 3.9% (4.1%e), S&P -0.8%; Thur: China to lockdown Chengdu (21.7m pop), G7 progressing towards a plan to cap Russian oil prices, Japan MOF notes mild concern as USDJPY breaks 140, Russia to direct $70b into “friendly currencies,” China Caixin mfg PMI 49.5 (50e), Indonesia CPI 4.69% (4.87%e) / Core CPI 3.04% (2.99%e), Germany ret sales -5.5% (-6.5%e), UK house px 10% (8.9%e), Swiss CPI 3.5% (3.4%e) / Core CPI 2% as exp, Italy unemp 7.9% (8.1%e), EU unemp 6.6% as exp, Brazil 2Q GDP 3.2% (2.8%e), US init claims 232k (248k exp), US ISM mfg 52.8 (51.9e), S&P +0.3%; Fri: US NFP 315k (298k exp) / unemp 3.7% (3.5%e) / AHE 5.2% (5.3%e) / participation rate 62.4% (62.2%e), G7 fin mins agree on Russian oil price caps / Gazprom says NS1 to remain shut after leak in turbine detected and requires repair, US calls Iran’s latest effort to revive 2015 nuclear accord “not constructive”, world food prices fall for 5th consecutive month, Taiwan shot down unidentified drone flying over islands near China mainland, EU PPI 37.9% (37.3%e), Brazil IP -0.5% (-0.4%e), US factory orders -1% MoM (0.2%e), S&P -1.1%

Weekly Close: S&P 500 -3.3% and VIX -0.09 at +25.47. Nikkei -3.5%, Shanghai -1.5%, Euro Stoxx -2.4%, Bovespa -1.3%, MSCI World -3.3%, and MSCI Emerging -3.4%. USD rose +5.3% vs Bitcoin, +2.5% vs South Africa, +2.1% vs Brazil, +2.0% vs Sterling, +1.9% vs Yen, +1.4% vs Ethereum, +1.2% vs Australia, +1.1% vs Sweden, +0.8% vs Canada, +0.5% vs Indonesia, +0.4% vs China, +0.4% vs Russia, +0.2% vs Turkey, and +0.1% vs Euro. USD fell -1.8% vs Chile, -0.5% vs Mexico, and -0.1% vs India. Gold -1.6%, Silver -5.0%, Oil -6.7%, Copper -7.7%, Iron Ore -5.3%, Corn +0.2%. 5y5y inflation swaps (EU -5bps at 2.12%, US -10bps at 2.55%, JP +1bps at 0.93%, and UK -17bps at 3.76%). 2yr Notes -1bps at 3.39% and 10yr Notes +15bps at 3.19%.

August Mthly Close: S&P 500 -4.2% and VIX +4.54 at +25.87. Nikkei +1.0%, Shanghai -1.6%, Euro Stoxx -5.3%, Bovespa +6.2%, MSCI World -4.3%, and MSCI Emerging +0.0%. USD rose +18.9% vs Bitcoin, +9.3% vs Ethereum, +5.0% vs Sweden, +4.7% vs Sterling, +4.3% vs Yen, +3.0% vs South Africa, +2.6% vs Canada, +2.2% vs China, +2.1% vs Australia, +1.7% vs Euro, +1.5% vs Turkey, +0.2% vs India, +0.2% vs Brazil, and +0.1% vs Indonesia. USD fell -1.7% vs Russia, -1.1% vs Mexico, and -0.5% vs Chile. Gold -3.1%, Silver -12.1%, Oil -7.4%, Copper -1.7%, Iron Ore -7.7%, Corn +8.1%. 5y5y inflation swaps (EU -9bps at 1.99%, US -9bps at 2.54%, JP +17bps at 0.95%, and UK +13bps at 3.80%). 2yr Notes +61bps at 3.50% and 10yr Notes +54bps at 3.20%.

YTD Equity Indexes (high-to-low): Chile +27.2% priced in US dollars (+31.2% priced in pesos), Turkey +26% priced in US dollars (+73.5% priced in lira), Argentina +20.5% priced in dollars (+63.3% in pesos), UAE +14.9% (+14.9%), Brazil +13% (+5.8%), Saudi Arabia +7.6% (+7.6%), Indonesia +4.4% (+9.1%), Singapore -1.4% (+2.6%), Portugal -2.7% (+11.2%), India -5.5% (+1.1%), Norway -6.5% (+6.4%), Israel -7.9% (flat), Venezuela -8.4% (+56.3%), Thailand -11% (-2.1%), Mexico -11.7% (-13.9%), Malaysia -11.8% (-4.9%), Canada -12.5% (-9.2%), Australia -14.2% (-8.3%), Philippines -15.7% (-6%), UK -16% (-1.4%), South Africa -16.4% (-9.2%), Greece -17.2% (-5.4%), HK -17.4% (-16.9%), S&P 500 -17.7%, China -19.4% (-12.5%), MSCI World -19.4% in dollars, Russell -19.4%, Spain -19.8% (-9%), Russia -20.2% (-34.7%), New Zealand -20.5% (-10.8%), Colombia -20.8% (-12.6%), Japan -21.1% (-4%), Switzerland -21.2% (-15.4%), Denmark -21.4% (-10.7%), France -24.5% (-13.8%), Netherlands -25.5% (-15%), NASDAQ -25.7%, Belgium -26.6% (-16.1%), Taiwan -27.2% (-19.5%), Finland -27.4% (-17.6%), Germany -27.6% (-17.8%), Euro Stoxx 50 -27.8% (-17.5%), Czech Republic -28% (-19.3%), Ireland -28.1% (-17.9%), Korea -29.2% (-19.1%), Italy -29.4% (-19.8%), Hungary -32.9% (-17.3%), Sweden -33.2% (-20.4%), Austria -34% (-25.1%), and Poland -38.7% (-28.3%).

Anecdote: “I know that it is difficult to make sense of Julian’s passing. Truth be told, I don’t understand it,” said Ryan, concluding the eulogy for his angelic nine year old son, having just shared a few beautiful stories about Julian with the packed church, standing room only. “But I do trust there is a plan at play. So let me share some thoughts on it,” he continued, having traveled the unimaginable path, helping us try and make sense of something that defies comprehension. “Daisy, Faith, Julian and I lived an extraordinary journey for the past one and a half years. It was a journey that I pray no one else should have to endure. And yet, each one of you, in your own way traveled this road with us. The journey brought us all together in unexpected and wonderful ways,” said Ryan, and indeed it is true, we are all forever changed, stronger, closer, better. “It was a journey of uncertainty, pain, relief, but also joy. Inspiration. I have never met another human being with the courage of Julian Lucas McRandal. It was breathtaking. He waged an impossible battle with great poise, and all the while maintaining a sublime joy and love for life that showed the magnificence of the human spirit. Julian’s example will give us all strength as we face our own battles in our own lives. We all prayed for a miracle, and we got it. The gift of his life and the journey that God brought us on to achieve the trust, faith, and peace we have today, is the miracle.”

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.