Professional Documents
Culture Documents
Seeds of Thought
Cognitive Science Meets Investment Management
Issue 15-20
June 12, 2015
Current Views
Im on the road next week visiting clients, making an appearance on The Street and speaking at the
Bloomberg Volatility Conference in NYC. Before I head out, I wanted to provide a brief summary of my
views, even if they havent really changed. Happy to discuss in detail. If youre in the NY area and want
to discuss in person, let me know. I can possibly squeeze in an additional meeting or two.
EUR/USD
In the April 17, 2015 issue of Seeds of Thought, I stated its time to position for a potentially dramatic
reversal in EUR/USD. That day marked the lows, and I dont see any reason to unwind yet.
Equities
Nothing has changed regarding my bullish large cap US equities view either. Ive been bullish for more
than three years, and particularly vocal since the 9.84% pullback (see Seeds of Thought, 10/16/14),
when I showed that historically, the odds were stacked in the bulls favor after such an event. As a
reminder, this view should not be construed as bullish risk (see Risk Seek vs Risk Bleed).
CNY vs USD
Ive been pounding the table on CNY for a very long time as well, and nothing has changed about my
view. See CNY Still Under-appreciated for the most recent argument. There remains excellent value
in the options market.
Commodities
My bearish view on commodities, which I began positioning for in July 2012 when corn hit all-time
highs (see Corn5 Trade Write-Up), wont change until they hit the low end of their long term average
ranges. As an example, that would put oil around $20 per barrel.
Treasuries
I remain bullish 30 year US Treasuries, but am of the opinion that they should be treated as a trading
instrument until one to two months after the Fed raises rates, or it becomes apparent it is off the table.
Use the taper tantrum period, when we saw rates ebb and flow around Fed meeting dates, but with an
upward trend bias, as your guide. When this is out of the way, fundamentals will take over again and it
will be time to load up. Hopefully, that will provide trade entry around 4%.
Emerging Markets
I favor temperate emerging markets over the tropics for the exact opposite reason I had the reverse view
between 2001 and 2010. It all comes down to the year on year growth rate of the Chinese urban
population and its impact on commodity demand.
Overview
I see no reason to expect that what has worked since 2011 wont continue to work for some time to
come. The definition of inertia is a property of matter by which it continues in its existing state of rest
!
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or uniform motion, unless that state is changed by an external force. I dont believe the Fed is that
external force. Im watching for government action instead, and that is not on the immediate horizon.
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Copyright 2015 by Bija Advisors LLC.; BijaAdvisorsLLC.com
Reproduction or retransmission in any form, without written permission, is a violation of Federal Statute
Important disclosures appear at the back of this document