Happy New Year to you and your family. Dusted off an anecdote from 2011 that I reflect on often, at every meaningful fork, and always at the dawn of each year (see below). Back January 9th with full weekend notes. Wishing you all the very best in 2022 -- health, challenge, adventure, good fortune. E

Week-in-Review (expressed in YoY terms): Mon: Turkish regulator files lawsuit against economic commentators for their comments on the new FX-protected deposit tool announced last week, PBOC pledged greater support for the real economy during 12/24 meeting / vows to make yuan more flexible in 2022, Israel begins testing 4th Pfizer vaccine jab, Fauci warns cases will likely go much higher/ considers vaccination mandate for domestic flights, 10k Russian troops return to permanent bases after month long exercises near Ukranian border (60-90k total troops amassed near border), Japan ret sales 1.9% (1.7%e), Israel unemp 4.5% (4.9%p), US Dallas Fed 8.1 (13.5e), SPX +1.4%; Tue: CDC lowers isolation requirement to 5 days if you contract covid, largest number of cases globally 1.449m ever (US: 0.513m; EU: 0.791m), CB Turkey will charge 1.5% annual commission on banks’ required reserves that are in other currencies to disincentivize fx savings accounts, US says talks to revive Iran nuclear deal “far too slow”, rumors that Biden to nominate Sarah Raskin to be Fed Vice Chair, Palestinian president meets with Israel defense minister Gantz – first time since 2010, Japan unemp 2.8% (2.7%e), Japan IP 5.4% (2.9%e), HK expts 25% (18%e)/impts 20% (18.3%e), Brazil unemp 12.1% (12.3%e), US house px index 1.1% MoM (0.9%e), US Case Shiller home px 18.41% (18.5%e), US Richmond Fed 16 (11e), S&P -0.1%; Wed: Omicron shows to have shorter incubation period than other variants, Turkey CB will support the conversion of gold to lira and make up for losses incurred by lira depreciation – TRY weakens 6+%, CDC lowers share of Omicron cases from 73% to ~50%, national police in HK raid Stand News – most prominent remaining pro-democracy news outlet, US pending home sales -2.2% MoM (0.8%e), Russia unemp 4.3% as exp / ret sales 3.1% (4.3%e) / CPI 8.39% (8.26%e), S&P +0.1%; Thur: Biden/Putin held 50 min call to discuss Ukraine at Putin’s request, Ghislaine Maxwell found guilty, CDC highlights that few people are being hospitalized due to omicron, residents in Chinese city of Xi’an are highlighting the challenges of getting basic necessities (including food) amidst a strict lockdown for the city, ECB’s Knot says will be ready to hike in early 2023, Hungary delivered its 7th rate increase in as many weeks, NYC mayor Adams promised to keep schools open amid record infections, S. Korea IP 5.9% (3.4%e), UK house px’s 10.4% (9.4%e), Spain CPI 6.7% (5.7%e), US init claims 198k (206k exp), US Chicago PMI 63.1 (62e), S&P -0.3%; Fri: quiet markets due to NYE, Putin expresses satisfaction with Biden call, 2 people in HK test positive ending 7m streak of covid free island, UK regulators approve Pfizer’s covid treatment, Indonesia temporarily bans coal exports, Germany shut down 3 of its 6 remaining nuclear plants, Huawei reports -30% decline in rev due to US sanctions, S. Korea CPI 3.7% as exp/ exports 18.3% (23.9%e)/ imports 37.4% (40%e), S&P -0.3%.

Weekly Close: S&P 500 +0.9% and VIX -0.74 at +17.22. Nikkei +0.0%, Shanghai +0.6%, Euro Stoxx +1.1%, Bovespa -0.1%, MSCI World +0.9%, and MSCI Emerging +0.2%. USD rose +24.4% vs Turkey, +7.7% vs Ethereum, +5.9% vs Bitcoin, +2.6% vs South Africa, +1.4% vs Russia, +0.6% vs Yen, and +0.2% vs Indonesia. USD fell -1.8% vs Brazil, -1.5% vs Chile, -1.3% vs Canada, -1.0% vs Sterling, -0.9% vs India, -0.9% vs Sweden, -0.6% vs Australia, -0.6% vs Mexico, -0.5% vs Euro, and -0.2% vs China. Gold +1.0%, Silver +1.7%, Oil +2.2%, Copper +1.5%, Iron Ore -2.2%, Corn -2.2%. 5y5y inflation swaps (EU +4bps at 1.97%, US +2bps at 2.56%, JP +9bps at 0.44%, and UK +8bps at 3.93%). 2yr Notes +4bps at 0.73% and 10yr Notes +2bps at 1.51%.

Dec Mthly Close: S&P 500 +4.4% and VIX -9.97 at +17.22. Nikkei +3.5%, Shanghai +2.1%, Euro Stoxx +5.4%, Bovespa +2.9%, MSCI World +4.4%, and MSCI Emerging +0.9%. USD rose +24.1% vs Ethereum, +22.3% vs Bitcoin, +2.7% vs Chile, +1.7% vs Yen, +0.8% vs Russia, +0.4% vs South Africa, and +0.2% vs Sweden. USD fell -4.5% vs Mexico, -1.9% vs Australia, -1.8% vs Turkey, -1.7% vs Sterling, -1.1% vs India, -1.0% vs Canada, -0.9% vs Brazil, -0.5% vs Indonesia, -0.4% vs Euro, and -0.1% vs China. Gold +3.0%, Silver +2.3%, Oil +14.5%, Copper +4.2%, Iron Ore +14.4%, Corn +4.4%. 5y5y inflation swaps (EU +11bps at 1.97%, US +7bps at 2.56%, JP -3bps at 0.44%, and UK -4bps at 3.93%). 2yr Notes +17bps at 0.73% and 10yr Notes +6bps at 1.51%.

Q4 Quarterly Close: S&P 500 +10.6% and VIX -5.92 at +17.22. Nikkei -2.2%, Shanghai +2.0%, Euro Stoxx +7.3%, Bovespa -5.5%, MSCI World +7.7%, and MSCI Emerging -2.4%. USD rose +48.8% vs Turkey, +5.8% vs South Africa, +5.2% vs Chile, +3.4% vs Yen, +3.2% vs Sweden, +2.6% vs Russia, +2.4% vs Brazil, +1.8% vs Euro, and +0.1% vs India. USD fell -21.6% vs Ethereum, -10.3% vs Bitcoin, -1.4% vs China, -0.7% vs Mexico, -0.6% vs Australia, -0.4% vs Indonesia, -0.4% vs Sterling, and -0.2% vs Canada. Gold +4.0%, Silver +5.7%, Oil +2.5%, Copper +9.5%, Iron Ore -4.3%, Corn +8.8%. 5y5y inflation swaps (EU +13bps at 1.97%, US +12bps at 2.56%, JP +20bps at 0.44%, and UK +13bps at 3.93%). 2yr Notes +46bps at 0.73% and 10yr Notes +2bps at 1.51%.

2021 Annual Close: S&P 500 +26.9% and VIX -5.53 at +17.22. Nikkei +4.9%, Shanghai +4.8%, Euro Stoxx +22.2%, Bovespa -11.9%, MSCI World +20.3%, and MSCI Emerging -5.3%. USD rose +77.9% vs Turkey, +19.7% vs Chile, +11.5% vs Yen, +9.9% vs Sweden, +8.5% vs South Africa, +7.4% vs Euro, +7.3% vs Brazil, +5.9% vs Australia, +2.9% vs Mexico, +1.7% vs India, +1.4% vs Indonesia, +1.1% vs Sterling, and +0.4% vs Russia. USD fell -80.6% vs Ethereum, -40.2% vs Bitcoin, -2.6% vs China, and -0.6% vs Canada. Gold -4.4%, Silver -12.7%, Oil +59.3%, Copper +26.6%, Iron Ore -36.6%, Corn +34.6%. 5y5y inflation swaps (EU +71bps at 1.97%, US +25bps at 2.56%, JP +31bps at 0.44%, and UK +42bps at 3.93%). 2yr Notes +61bps at 0.73% and 10yr Notes +60bps at 1.51%.

2021 Annual Equity Indexes (high-to-low): UAE +68.2% priced in US dollars (+68.2% priced in dirham), Israel +35.5% priced in US dollars (+31.1% in shekels), Czech Republic +34.9% in dollars (+38.8% in koruna), Argentina +33.5% (+63%), Saudi Arabia +29.7% (+29.8%), Austria +27.9% (+38.9%), S&P 500 +26.9%, Taiwan +25.5% (+23.7%), Canada +22.9% (+21.7%), India +21.7% (+24.1%), NASDAQ +21.4%, Norway +21.3% (+24.4%), MSCI World +20.3% (+20.3%), France +20% (+28.9%), Netherlands +19% (+27.7%), Mexico +17.8% (+20.9%), Denmark +17.2% (+27.2%), Sweden +16.8% (+29.1%), Switzerland +16.2% (+20.3%), Russia +15% (+15.1%), Russell +13.7%, South Africa +13.5% (+23.3%), UK +13.3% (+14.3%), Italy +13.3% (+23%), Euro Stoxx 50 +12.7% (+21%), Poland +11.6% (+21.5%), Belgium +10.9% (+19%), Venezuela +10.3% (+344.3%), Hungary +10% (+20.6%), Finland +8.9% (+18.3%), Indonesia +8.3% (+10.1%), Singapore +7.7% (+9.8%), China +7.6% (+4.8%), Australia +6.9% (+13%), Ireland +6.6% (+14.5%), Germany +6.6% (+15.8%), Greece +2.8% (+10.4%), Thailand +2.8% (+14.4%), Portugal +2.6% (+10.1%), Spain -0.1% (+7.9%), New Zealand -5.1% (-0.4%), Korea -5.3% (+3.6%), Japan -6% (+4.9%), Philippines -6.2% (-0.2%), Malaysia -6.8% (-3.7%), Chile -14% (+3.1%), HK -14.6% (-14.1%), Colombia -17.4% (-1.9%), Brazil -18.1% (-11.9%), Turkey -29.4% (+25.8%).

Anecdote (Jan 2011): Pretty much everything I learned about climbing mountains, I learned from Vincent Ravanel. He’s 7th generation high altitude mountain guide from Argentiere, France. And from father to son, the Ravanel’s passed a simple mantra: “The Mountain never ends.” Like most things profound, it touches on something universal, fundamental. Because climbing mountains, physical and metaphorical, is what Man does, and has always done, and will always do. Vincent would calmly whisper that mantra high on the rock and ice when we faced a challenge, a fork, a decision. It served to humble us both, remind us to pace ourselves, and to only press for the summit if conditions and timing were optimal. It also served to inspire, to capture in a sentence our ambition to tackle something so large and enduring. You see, to bag a tough peak and return intact, of course you need skill/strength/tenacity, but you also need the right temperature/weather/visibility and a measure of good luck. Combine all those well, find the opening, push like hell, and bang – success. But fight the elements, force it, press your luck, and, well, you know the result. So I take a deep breath, and look up, a new quarter looms and above that, a new year, a new decade, a new century, even a new millennium. And on these first steps of this ambitious climb, I remind myself of the importance of patience and humility, optimal conditions and timing, and a little good luck. But mostly, I tell myself to listen carefully, at those tough and lonely points that surely lay ahead, for the Ravanel whisper, “The Mountain never ends.”

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, 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.