Merry Christmas. Happy Hanukkah. Happy New Year. To you and your families. Resurrected one of my favorite little memories, an opening note from Christmas past…

Christmas Day 2013: “Santa slipped down the chimney. Left big boot prints in the ash that spilled across our hearth. And the jolly fella stuffed stockings. Built a train set too. Sprinkled magic everywhere. Moments before the kiddies emerged, sporting their finest bedhead, Santa lit candles, warming our chilly pre-dawn living room. And hours later, as Mara and I basked in the Christmas morning afterglow, Osama bin Charlie (4yrs old), filled with sugar and spice, turned to his big brother. “Hey, you want some of my crap?” he asked, and threw a rubber eraser at Jackson’s head, officially ending our Christmas.

Dusted off an anecdote from 2014 about the Ten Superpowers, and how real money is made (see below). Back January 9th with full weekend notes. All the best, E

Week-in-Review (expressed in YoY terms): Mon: Leftist Gabriel Boric surprisingly won Chilean presidential election – CLP -3.6%, Erdogan continued to support lower rates driving USDTRY +10% before new intervention measures introduced reversed the move and USDTRY finished -20%, Russia says seeking urgent response to Ukraine demands, Omicron continues to spread globally, Manchin’s shocking move to block Biden’s “Build Back Better” economic package weighs on risk sentiment, Trump sues NY attorney general in attempt to stop investigation, Davos postponed, PBOC cut 1y loan prime rate by 5bp to 3.8% while keeping 5y rate unchanged, US leading index 1.1% (1%e), S&P -1.1%; Tue: New Zealand delayed border reopening to beginning of Feb from mid-Jan, Russia cut off key gas supply line to Europe (sending nat gas futures +15% on the day), news of Biden/Manchin call on Sunday night provides hope of negotiation, ECB’s Kazimir says prematurely removing monetary policy accommodation could harm economic growth, Omicron responsible for 73% of recent US infections, S&P +1.8%; Wed: 3 new studies suggest Omicron may be less severe, Biden says changes to fiscal plan can still be made in order to strike a deal with Manchin / Manchin took part in senate dem discussion about revised bill, European gas prices settle down due to decreased demand, FDA approves Pfizer covid treatment pill, US to secure 4m doses of covid treatments by the end of Jan, Fauci says US may ease its 10d isolation period for vaccinated people who become infected, Musk says he’s completed selling 10% of his Tesla stock, Amazon’s AWS suffered its 3rd outage in the past month, Biden extended the pause on student loan payments, UN security council supported resolution to allow aid to reach Afghanistan, UK 3Q GDP (final) 6.8% (6.6%e), France PPI 17.4% (15.2%p), Spain PPI 33.1% (32%p), Sweden PPI 18.1% (16.8%p), Russia PPI 29.2% (27%e), US 3q GDP (third est) 2.3% (2.1%e), US cons conf 115.8 (111e), US existing home sales 1.9% MoM (2.9%e), S&P +1.0%; Thur: rumors of potential FX swap line between Turkey and UAE causes lira rally to continue (USDTRY -38% from Monday highs) / rumors of ~$7b worth of intervention by Turkish CB done this week, Hungary CB hiked 20bps (10bps exp), Putin endorsed CB hawkishness to battle inflation rather than facing economic crisis like Turkey, European gas prices fell as 10 US vessels carrying LNG are enroute, Australia private credit 6.6% (5.7%p), German import prices 24.7% (22.3%e), Brazil IPCA 10.42% (10.46%e), Mexico unemp 3.66% (3.74%e), US init claims 205k as exp, US PCE deflator 5.7% as exp, US durable goods 2.5% MoM (1.8%e), S&P +0.6% (new closing ATH); Fri: Christmas Eve – quiet markets, more than 3k flights canceled due to staff shortages as Omicron rages, Germany to ban gatherings of more than 10 starting 12/28, Biden lifts travel restrictions on 8 African countries imposed last month due to Omicron, CSRC (China securities regulator) published draft rules for Chinese companies listing abroad, Japan CPI 0.6% (0.5%e), Japan housing starts 3.7% (7.5%e), SPX closed

Weekly Close: S&P 500 +2.3% and VIX -3.61 at +17.96. Nikkei +0.8%, Shanghai -0.4%, Euro Stoxx +1.8%, Bovespa -2.2%, MSCI World +2.1%, and MSCI Emerging +0.3%. USD rose +2.4% vs Chile, +0.7% vs Yen, and flat vs Sweden. USD fell -34.9% vs Turkey, -9.3% vs Bitcoin, -7.4% vs Ethereum, -1.8% vs South Africa, -1.5% vs Australia, -1.4% vs India, -1.2% vs Sterling, -1.0% vs Indonesia, -1.0% vs Mexico, -0.7% vs Russia, -0.6% vs Euro, -0.6% vs Canada, -0.2% vs Brazil, and -0.1% vs China. Gold +0.4%, Silver +1.8%, Oil +4.3%, Copper +2.3%, Iron Ore +1.9%, Corn +2.1%. 5y5y inflation swaps (EU +14bps at 1.93%, US +11bps at 2.54%, JP flat at 0.35%, and UK +12bps at 3.85%). 2yr Notes +5bps at 0.69% and 10yr Notes +9bps at 1.49%.

YTD Equity Indexes (high-to-low): UAE +67.1% priced in US dollars (+67.1% priced in dirham), Argentina +36.2% priced in US dollars (+65.6% in pesos), Czech Republic +34% prices in dollars (+38.8% in koruna), Israel +31.9% (+29.1%), Saudi Arabia +29.6% (+29.7%), Austria +27.9% (+38.6%), S&P 500 +25.8%, Taiwan +23.5% (+21.9%), NASDAQ +21.5%, Canada +21.3% (+21.8%), Norway +20.7% (+24.3%), MSCI World +19.2% (+19.2%), India +18.3% (+21.6%), France +18.2% (+27.7%), Netherlands +17.1% (+26.6%), Mexico +15.8% (+19.9%), Denmark +15% (+24.6%), Switzerland +14.9% (+19.4%), Sweden +14.9% (+27.3%), Russia +13.9% (+12.6%), Russell +13.5%, South Africa +13% (+19.6%), Italy +12.1% (+21.5%), UK +12% (+14.1%), Euro Stoxx 50 +10.9% (+19.8%), Belgium +9% (+17.8%), Poland +8.9% (+19.5%), Indonesia +8.6% (+9.8%), Finland +8.3% (+17.4%), Hungary +7.7% (+18.3%), Venezuela +7.6% (+331.1%), China +6.8% (+4.2%), Singapore +6.3% (+9.3%), Germany +6% (+14.9%), Australia +5.7% (+12.6%), Ireland +5.1% (+13.5%), Greece +2.1% (+10.1%), Portugal +1.4% (+9.5%), Thailand +1.3% (+13%), Spain -1.6% (+6.1%), Philippines -3.5% (+0.6%), Korea -3.8% (+4.8%), Japan -5.3% (+4.9%), New Zealand -6.6% (-1.6%), Malaysia -10.7% (-6.8%), Turkey -11% (+28.1%), Chile -15% (+2.9%), HK -15.2% (-14.7%), Colombia -16.4% (-2.5%), and Brazil -19.7% (-11.9%).

Anecdote (Mar 2014): “I knew that day, without a shadow of a doubt - I knew,” explained my new buddy. Before that break-through, before becoming a household name with $100mm+ in annual sales, he and his brother spent five years living in a van. Broke. Slinging T-shirts. “We didn’t care about clothing, still don’t, for us the T-shirt was a way of sharing a message.” And in search of something inspired, they turned to Shakespeare, Homer, Churchill, Einstein, Roosevelt. “We sought the essential source of strength in every great historical figure – and discovered the ten super-powers.” Simplicity. Humility. Humor. Creativity. Courage. Love. Gratitude. Fun. Authenticity. Optimism. “Throughout world history, no great people were pessimists, no one who consumed himself with all the things that are wrong with the world ever achieved anything of lasting value,” he explained, expecting an impassioned argument. You see he assumed those of us who ply dark-art hedge fund finance are out to destroy. A mutual friend had us hang out, expecting a colorful conversation. But much to his surprise, found we had little to disagree on. Because of course, the history of investing is a tale of the inexorable rise from lower left to upper right, dominated by those who possess superpowers. Investors have fueled mankind’s rise from the capital misallocation of King Tut to the triumph of Tesla. Some of us may side-step periodic corrections, even occasionally profiting from the fall. But the real money is made by betting on winners, funding transformational technologies, and salvaging the deeply distressed. Anyhow, he finished his tale. “With $75 in the bank, we printed 48 T-shirts with a smiling character and three simple words – they sold out in 45 minutes – hadn’t ever happened before, that’s when we knew.” You see, their message touched something in us all. Something simple. Profound. “Life is Good.”

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.