Wasn’t exactly the August I’d expected. Wyoming, Connecticut, Zurich, San Diego, Los Angeles. And I drove a Jeep halfway across America with my oldest boy, pulling a U-Haul, heading to Camp Pendleton, California, his new station. Rolled through New Mexico, its Breaking Bad desolation, Arizona, the southern border, the dark metal wall snaking through desert. Wyoming loves its guns. Switzerland its money. Connecticut its perfection. West Texas loves its oil fields and wind farms. California loves its crazy. Remarkable how different we all are, and no one is changing. I kind of just love it. Every bit. Hope we can hold it all together.

Overall: “Today, humanity is once again faced with critical choices: peace or war. Dialogue or confrontation,” said Xi Jinping, celebrating the 80th anniversary of the victory in the Chinese People’s War of Resistance Against Japanese Aggression and the World Anti-Fascist War. “Win-win co-operation or zero-sum rivalry?” continued Xi, his People’s Liberation Army rolling its tanks across Tiananmen Square as it does from time to time. “The Chinese people firmly stand on the right side of history and on the side of human civilization and progress.” North Korea’s pudgy leader stood with Xi. Russia’s little dictator too. A proper Burning Man festival for autocrats. Xi pulled out his newest big boy toys. Pyrotechnics. Killer drones. Hypersonic missiles. Lasers. His nuclear triad, with weapons of mass destruction built to be fired from air, land and sea. Military strategists marveled at the innovations. But none of it came as a surprise. Everyone now knows the US and China have embarked on a multi-decade long war that neither can afford to lose, nor dare wage. The capital expenditure necessary to maintain a standoff will be as staggering as the deficits required to fund them. “Many Americans died in China’s quest for Victory and Glory. I hope that they are rightfully Honored and Remembered for their Bravery and Sacrifice!” posted Trump on his Truth Social network. “Please give my warmest regards to Vladimir Putin, and Kim Jong Un, as you conspire against The United States of America.” No one quite knows how to avoid direct kinetic conflict. The best we can reasonably hope for are low-level proxy wars. The Chinese appear to be implementing the strategy the US used to win its conflict with the USSR. The US, on the other hand, is adopting an unorthodox and isolationist stance, at least for now. It’s far too early to tell which approach will prevail. And if we, in finance, have learned anything, it is that governments tend to fight the last war, even as history tells us that future crises rarely resemble their predecessors.

Week-in-Review: Mon: Labor Day. Markets closed. Tue: US ISM mfg 48.7 (49.0e). Eurozone CPI 2.1% as exp, Core 2.3% (2.2%e). Brazil GDP 2.2% as exp. Judge ruled Trump violated federal law by deploying National Guard to LA in June, potentially affecting plans to send troops to other cities including Chicago. Kraft Heinz to separate into two publicly traded companies. S&P -0.7%. Wed: US JOLTS job openings 7181k (7380k e), factory orders -1.3% as exp, durable goods orders -2.8% as exp. Turkey CPI 32.95% (32.59%e). Poland Base rate 4.75% as exp. Fed’s Waller says he favors “multiple cuts” in coming months. Oil falls on announcement that OPEC+ to consider production increase. S&P +0.5%. Thu: US init jobless claims 237k (230k e), ADP emp change 54k (68k e), trade balance -$78.3b (-$77.9b e). Miran states intention to take White House leave if confirmed for Fed during confirmation hearing. S&P +0.8%. Fri: US unemp rate 4.3% as exp, change in non-farm payrolls 22k (75k e). Canada unemp rate 7.1% (7.0%e). Trump threatens trade actions after EU fines Google over ad tech. Kenvue sinks on report RFK will link Tylenol to autism. S&P -0.3%.

Manufacturing PMI (high-to-low): India 59.3 (previous month 59.1), Sweden 55 (previous month 52.1), Greece 54.5 (previous 51.7), Spain 54.3/51.9, Netherlands 51.9/51.9, Indonesia 51.5/49.2, Hong Kong 50.7/49.2, China 50.5/49.5, Italy 50.4/49.8, Vietnam 50.4/52.4, France 50.4/48.2, Mexico 50.2/49.1, South Africa 50.1/50.3, Singapore 50/49.9, Germany 49.8/49.1, Japan 49.7/48.9, Norway 49.59/51.1, Czech Republic 49.4/49.7, Austria 49.1/48.2, Switzerland 49/48.8, Hungary 48.9/50.5, United States 48.7/48, Russia 48.7/47, Canada 48.3/46.1, South Korea 48.3/48, Brazil 47.7/48.2, Taiwan 47.4/46.2, Turkey 47.3/45.9, UK 47/48, Poland 46.6/45.9. Services PMI: India 62.9/60.5, Australia 55.8/54.1, US 54.5/55.7, UK 54.2/51.8, Sweden 53.4/49, Spain 53.2/55.1, Japan 53.1/53.6, China 53/52.6, Italy 51.5/52.3, Ireland 50.6/50.9, Russia 50/48.6, France 49.8/48.5, Germany 49.3/50.6, Brazil 49.3/46.3.

Weekly Close: S&P 500 +0.3% and VIX -0.18 at +15.18. Nikkei +0.7%, Shanghai -1.2%, Euro Stoxx -0.2%, Bovespa +0.9%, MSCI World +0.3%, MSCI Emerging +0.2%, Bitcoin +2.7%, and Ethereum -0.6%. USD rose +0.6% vs Canada, +0.6% vs Russia, +0.3% vs Mexico, +0.3% vs Yen, +0.2% vs Turkey, +0.1% vs India, and flat vs China & Sterling. USD fell -0.7% vs Sweden, -0.4% vs Indonesia, -0.4% vs South Africa, -0.3% vs Brazil, -0.3% vs Euro, -0.3% vs Australia, and -0.1% vs Chile. Gold +3.9%, Silver +2.0%, Oil -3.3%, Copper -0.9%, Iron Ore +3.2%, Corn -0.5%. 10yr inflation Breakevens (EU -3bps at 1.70%, US -4bps at 2.37%, JP +1bp at 1.58%, and UK +5bps at 3.11%). 2yr Notes -11bps at 3.51% and 10yr Notes -15bps at 4.08%.

2025 Year-to-Date Equity Index Returns: Greece +56.1% priced in US dollars (+37.7% priced in euros), Hungary +53.9% priced in dollars (+30.1% in forint), Czech Republic +51.3% in dollars (+29.8% in koruna), Poland +50.8% (+32.7%), Colombia +50% (+35%), Spain +45.3% (+28.1%), Korea +41.9% (+33.6%), Austria +41.8% (+25.5%), Chile +41.3% (+37.3%), Israel +39.1% (+28.1%), Portugal +38.5% (+22.1%), Italy +37.5% (+21.7%), Mexico +36.3% (+22.1%), Brazil +35.7% (+18.6%), South Africa +34.3% (+24.9%), Germany +33.9% (+18.5%), Norway +32.3% (+16.6%), Ireland +31.4% (+15.9%), Finland +30.3% (+15.4%), Vietnam +27% (+31.6%), Belgium +26.8% (+11.8%), HK +26.2% (+26.7%), Sweden +24.5% (+5.8%), Euro Stoxx 50 +23.2% (+8.6%), Canada +22.2% (+17.5%), UK +21.7% (+12.7%), Switzerland +21.1% (+6.6%), Singapore +21.1% (+13.7%), France +18% (+4%), China +16.4% (+13.7%), Netherlands +16% (+2.3%), Australia +15.4% (+8.7%), Japan +15.2% (+7.8%), Taiwan +14.1% (+6.3%), MSCI World +13% in dollars, NASDAQ +12.4%, S&P 500 +10.2%, Indonesia +9.3% (+11.1%), Russell +7.2%, UAE +6.5% (+6.5%), New Zealand +6.4% (+0.9%), Malaysia +1.6% (-3.9%), India +1.6% (+4.6%), Thailand -3.6% (-9.7%), Philippines -3.7% (-5.8%), Turkey -6.4% (+9.1%), Saudi Arabia -11.4% (-11.5%), Denmark -16.5% (-26%), Argentina -40.6% (-21.2%).

Perhaps: The world opens at altitude, expands. The horizon infinite. Above us blue, deep, vibrant. The multitude of sagebrush, grasses, blend into vast meadows, sweeping across the valley below. The S&P 500 hit new all-time highs. And given all the things going on down below, it’s fair to say that if stocks were quite a bit lower, it would make perfect sense to most everyone. Economic and kinetic conflicts, chronic deficits, political dysfunction, social division, high real interest rates. And that’s just the start of it. Yet here we are, at all-time highs in stocks.

Perhaps II: Markets don’t lie. Which doesn’t mean they’re always right. It means they reflect the best judgement of those willing to put their capital at risk. So, when markets behave in ways that defy conventional thinking, it is worth considering why. Gold seems to be sending an interesting message, and despite the high real rates we see priced into US markets (10yr real interest rates are roughly 1.80%) the non-yielding yellow metal continues its powerful rally. Bitcoin stalled above $120,000 as long-term holders lock in their utterly massive profits.

Perhaps III: It appears that investors increasingly want hard assets. Perhaps all those years of deficit spending and money printing during Covid, and the unwillingness to bring the government’s books into balance ever since has finally shifted investor preferences. Back in 2019, before a secular shift took place, and the world changed forever, 10yr real interest rates were roughly zero percent. If they’d risen to today’s 1.80%, gold would’ve collapsed. In fact, anything that lacked a healthy yield would’ve struggled profoundly. Today is very different.

Perhaps IV: Perhaps all the money that was printed has worked its way through people’s bank accounts and as it oozes its way to society’s capitalists (as it has throughout history), it then moves into equities. So, what was at first a price inflation in real-world goods and services, transitions to an inflation in financial assets. And those people in society to whom money always moves know that there is no appetite for austerity within either party, so their preference is for inflation-resistant assets, which means they spread their inflows across stocks, gold, bitcoin.

Perhaps V: Real wages for blue-collar and hourly workers in private-sector industries like manufacturing, construction, and retail rose approximately 1.7% to 2.0% in the first 5mths of 2025. This is the fastest wage growth since Nixon’s first administration in 1969 and the only positive increase in the initial five months of any presidency during that period, except for Trump’s first term, which saw 1.3% growth. So, perhaps, for all the handwringing about the economy, the beginning of a healthy rebalance that defies conventional wisdom has begun.

Perhaps VI: A Cold War is underway between the world’s two great powers, and while it has many fronts, the battle for AI supremacy is clearly existential. Neither can lose. And this means that in one way or another, sovereign balance sheets of both the US and China will be leveraged to whatever extent is required to win this battle. Only a handful of investors alive today have seen something vaguely similar. In truth, nothing requiring this much capital, deployed so quickly, has ever occurred. Perhaps the equity market, at this altitude, cares about nothing else.

Anecdote: “Pack your running shoes and a Bible Charlie, I’m going to introduce you to God,” texted SEAL to my youngest, now 16, and somehow taller than I. An operation had been planned for months. Nineteen of us would meet in the Tetons for Labor Day. My oldest son Jackson would fly in his favorite Marine, drop to a knee, and make her his fiancé. They’d hop in a pickup, drive deep into the wilderness, meet us all at a cliff, and we’d jump into a mountain river. Naturally she had no idea, every aspect of the maneuver top secret, meticulously planned. But SEAL had planned his own mission, and it required that he first insert himself into Charlie’s head. For weeks in the countdown to Labor Day he sent a daily text. “Bible and running shoes Chuck.” One of the greatest joys of parenthood is seeing your children draw closer to one another as they grow up and begin their own journeys. Our family always travels in a pack, bringing our children’s close friends along for outdoor adventures. And these shared experiences weave the fabric of their relationships ever tighter. “You’re gonna meet God.” Somewhere along that path, with such a large squad, you find they all start to teach one another, test, challenge, knock down, build back up, stronger, together. SEAL went to the Naval Academy and has a special ability to bring out the best in his teammates. He’s always loved Charlie, like a little brother. So, the day had finally come. They left for their special operation, a rite of passage, pre-dawn, bear spray, the Milky Way, SEAL and my boy, frightened, heart racing. A proof-of-life photo arrived by text, Charlie vomiting in a dark forest. Then came a wild-eyed selfie of the two of them, 2,500 feet above the valley floor, sun rising, summit. Charlie stumbled home nearly 3hrs later. Our home filled with sleeping bags, slowly stirring, nylon caterpillars. “I’m totally fried,” he said, proud, alive, and collapsed.

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.