Friday, January 20

Things from my Newsblur - 2017: Part 1

In an effort to start 2017 off on the right foot, here's a “Things from my Newsblur (formerly Google Reader)” to start off the New Year.    It's quite the bumper edition, but hopefully the light (comic?) relief at the end will help!

There’s a massive restaurant industry bubble, and it’s about to burst
This is the third part of a series, and in it the author talks about the challenges facing restaurants and why America’s golden age of restaurants is coming to an end.  It’s something that resonates with Our Man, given the closure over the last 12 months of some of his neighborhood favourites.  Part 1 (about the Good Food Revival Movement) and Part 2 (about the impact of a shortage of cooks) are also both well worth a read.  (Thrillist, Kevin Alexander)

Brexit:  How rebel MPs outfoxed Cameron to get an EU Referendum 
While the result is far from universally popular, this article on the background of how the UK ended up with an EU referendum vote is intriguing.  In some ways, it is reassuring as this is how politics is supposed to work!  A small & determined band of backbench MPs required a lot of skill and discipline, along with some large slices of luck, and fortunate timing, as well as misjudgments from their opponents to just get the referendum that they wanted.  Our Man thinks that the minority/backbenchers should have some way to make their case, but that it should be hard and require those traits listed above.  (BBC, Mark D’Arcy)

Farewell to the Chief
A whole bunch of Bloomberg columnists assess President Obama’s two-term presidency; irrespective of your opinion of President Obama, there’s probably at least one view you agree with (and one you can’t stand) in there.  (Bloomberg, various)

The Fourth Industrial Revolution: a primer on Artificial Intelligence (AI)
“From Amazon and Facebook to Google and Microsoft, leaders of the world’s most influential technology firms are highlighting their enthusiasm for Artificial Intelligence (AI). But what is AI? Why is it important? And why now? While there is growing interest in AI, the field is understood mainly by specialists. Our goal for this primer is to make this important field accessible to a broader audience.” (Medium, David Kelnar)

The Great AI Awakening
A look at how Google used AI to transform Google Translate, and a broader look at some of the impcats of machine learning.
(New York Times, Gideon Lewis-Kraus)

2016 Blockchain Year in Review
While there are no mainstream uses for Bitcoin, or the Blockchain and though it seems to have been around for a while, it’s far from dead.  Here’s a brief primer on the blockchain & bitcoin and some of the most important data from 2016.  (The Control, Nick Tomaino)

How Blockchains Could Change the World
“Ignore Bitcoin’s challenges. In this interview, Don Tapscott explains why blockchains, the technology underpinning the cryptocurrency, have the potential to revolutionize the world economy.”
(McKinsey & Co, interview with Don Tapscott)

Finally, some light relief…
To be or not to be
After all there are just so many ways to say the iconic phrase.  Here’s the RSC with some special guests, at Shakespeare Live, pointing that out.   (Shakespeare Live on Vimeo)

Yes Minister – Why Britain Joined the European Union
Yes Minister (and the ‘sequel’ Yes Prime Minister) is a satirical British sitcom from the early 1980’s, and one of OM’s favourite shows.  Like all good satire, there’s more than a hint of truth to it and although this is ~30yrs old that still holds true.  (BBC on Youtube)

A Sushi Master’s Five Simple Rules for Not Embarrassing Yourself
Some simple rules on how to avoid embarrassing yourself, when you’re sitting at the sushi bar and the chef’s hard at work making your delicious dinner. (Bloomberg Pursuits, Kate Krader)

Friday, January 6

2016: Final Quarter Review


Portfolio Update 
-  Currencies:  In mid-October, as it became clear that the Federal Reserve were likely to raise rates in December, while the ECB and BOJ remained on hold, Our Man slightly increased the S Euro position (by ~15%) and substantially increased the S Yen position (by 150%).   By the middle of December, following the exceptionally strong performance of the S Yen position, Our Man sold all the shares he’d bought in October.  The much larger size of the remaining S Euro positon (it’s 2x the size of the S Yen one) reflects Our Man’s view of the respective opportunity set going forwards.

- Equities: In the middle of the quarter, Our Man added to the position in Vipshop Holdings (by 75%) in the week or so following the company’s earnings announcement in November.  Our Man also added 2 positions in December, Fannie Mae (FNMA) and the iShares Nasdaq Biotech Index (IBB) though both are undersized. 
In FNMA’s case, Our Man added the position following the nomination of Steve Mnuchin as Treasury Secretary and various public comments that he subsequently made on Government’s involvement in the housing market.  The FNMA position is so small, as it’s essentially an option – it’s either worth much less or multiples more of its current price depending on the path the Treasury (and Congress) choose.  While the prospect of a positive resolution is now likely higher (in OM’s opinion), it’s not overwhelming in part due to the shareholders of FNMA (largely hedge funds aka “Wall Street”) and the likely public reaction (irrespective of whether it’s legally correct) to seeing these shareholders as the beneficiaries of public policy.
In IBB’s case, OM has wrestled with the decision for most of the year – in OM’s view, it’s likely that Biotech is today where Technology was somewhere in the 1997-2000 period, he’s just not smart enough to tell you where (best guess, in the middle!).  Given this, the pull-back after the US election and Our Man’s subsequent more positive leaning towards equities, Our Man felt comfortable taking a half-position in IBB.

- International:  Good fortune smiled on Our Man, as following the US elections and with the US Dollar strengthening a number of Emerging markets sold off.  These included Brazil, where the ETFs (EWZ for large caps, EWZS for small caps) both fell ~20% from their peaks in early November providing Our Man with a very healthy entry point.  Given Our Man had largely been kicking himself during the second and third quarters for missing the opportunity to invest in Brazil, this was a welcome bit of fortune.  The simple case for Brazil is largely unchanged from Q2/Q3; (i) the equity indices have been in a substantial (~50%) and prolonged (5yr+) bear market which appears to have bottomed in Q1, (ii) the political situation, namely the ‘carwash’ corruption investigation, reached its nadir with the ousting of President Rousseff in Q3, and (iii) the Brazilian current account posting a surplus (historically a great time to buy Brazil) in the middle of the year.
Additionally, Our Man re-entered his position in Italy (EWI), in the days following the Italian referendum (at a mildly better price than he’d exited in January) – little has changed, Italy continues to look exceptionally cheap and in the run up to the referendum the sentiment was very poor.

Performance and Review 
For the 4th quarter, the portfolio returned a very healthy 799bps, taking the 2016 performance to 11.0%.  The year was a marked improvement on recent years, and ended up nestling between the S&P 500 Total Return (+12.0%) and the more global MSCI World Index (+7.5%).

The performance in the 4th quarter was driven by the Currency book (+748bps), as the US Dollar strengthened substantially.   Initially, this was it became clearer that the Federal Reserve were likely to hike interest rates in December and the belief that this rate hiking cycle in the US  (nascent as it is) substantially diverged from Japan and Europe, which were expected to continue easing.  This trend was further accelerated, following President-elect Trump’s election victory as investors looked at plans (tax cuts, stimulus program, etc) and concluded they were likely inflationary and hence the path of US rate increases would be steeper.   The Short Euro position (+232bps) was a consistent contributor throughout the quarter, while the Short Yen position (>+500bps) moved even more aggressively.  The small China Thesis (+9bps) position that currently is just very limited exposure to S Australian dollar was a marginal contributor.

The performance of the various equity-centric books was more mixed.   The Technical Book (+85bps) benefited from the rising US markets, especially in November.   The International/Country book (+80bps) also benefited from rising markets, in particular from its exposure to Argentina which contributed ~50bps, and where the individual names performed strongly (comfortably outpacing Argentinean markets).  Additionally, it saw a decent gain from GVAL and marginal gains from the new positions in Italy (EWI) and Brazil (EWZ/EWZS).  Unfortunately, the Equities book (-123bps) was a negative contributor, with substantially all of the losses coming from the position in VIPS; the company announced good earnings in November, but disappointed the market with relatively conservative guidance and investors had concerns over the company’s new financing subsidiary (JD/BABA suffered from similar concerns, a year or so ago).  Despite this OM remains positive on the company, taking advantage of the pull back to add to the position; the company’s issues stem from a turnover in investor base (as it went from uber-growth to a value name, though still growing 30%) and management’s limited credibility that’s yet to be earned back (following their poor handling of an earnings miss a year ago).

Portfolio (as at 12/31 - all delta and leverage adjusted, as appropriate) 
27.5% - International/Country (GVAL, Brazil, Italy and Argentina)
21.6% - Technical (DDM, QLD and SSO)
8.9% - Equities (VIPS, FNMA & IBB)

-1.6% - China-Related Thesis (CROC – Short Australian Dollar)
-53.2% - Currencies (EUO – Short Euro, and YCS – Short Japan)

25.3% - Cash  

Disclaimer:  For added clarity, Our Man is invested in all of the securities mentioned.  He also holds some cash and a few other securities (of negligible value).  You should not buy any of these securities because Our Man has mentioned them, but should do your own work and decide what’s best for you.

Tuesday, December 20

Things from my Newsblur (formerly Google Reader); 2016 Part II

Our Man was going to write an update along the lines of “Thinks I think I think”, as the portfolio has shifted far more than normal (and has likely only started down that path) since the US election, but he thought he’d try and avoid Trump-talk for a little longer.   Given it’s been an exceptionally long-time since Our Man posted a “Things from my...”, so here’s a catch-up bumper edition.  Our Man's New Year's resolution is to get at least 4 of these to you next year! 

- How to Sleep 
Politics getting you down?   Kids keeping you up?  Here’s some useful thoughts and research (though in largely lay terms rather than doctor-speak) that might help.  (The Atlantic, James Hamblin) 

- The Fourth Industrial Revolution: a primer on Artificial Intelligence 
Or you could just forget about sleeping, and read this.   Again, while the subject matter might seem daunting, the writing is very readable and understandable.  It takes you from “What is AI” to “Why AI is important” and “Why it matters today”.   If you only read one thing from this Google Reader, please make it this one!   (Medium, David Kelnar) 

- Unconventional Thinking Helps End Columbia War 
This is actually a video, which explores the various unconventional ways that helped lead the Columbian government and FARC to their historic peace.  For all the talk in the corporate world of thinking outside the box, this is vastly more impressive (and outside the proverbial box).  (CBS News, via the Big Picture) 

- A Conversation with Dan Ariely about what Shapes our Motivations 
Our Man enjoys reading almost everything Dan Ariely writes, and if you want to know more about behavioural economics and what motivates people to do things this is a good place to start (and he’s a good man to follow/read).  (Longreads, Jessica Gross with Dan Ariely) 

- Inside a Moneymaking Machine Like No Other 
A peek behind the curtain of Renaissance Technologies, and their Medallion Fund, which has one of the (probably just THE) performance histories in Finance.   (Bloomberg Markets, Katherine Burton)

And since it’s impossible not to talk about politics, I’ve saved these for below the fold… 
- Why Trump appointees will be effective, for better or worse 
I think this is a smart take by Tyler Cowen (a Professor of Economics at George Mason) which I’m in 100% agreement with.  I suspect too many on the left are making the mistake that those on the right did when President Obama was elected; just because you dislike something/one doesn’t mean that things they’re doing don’t have thought/a plan behind them.  (Bloomberg View, Tyler Cowen) 

- On Krugman and the Working Class 
Krugman’s super-smart and all, with a “Nobel prize” to prove it, but if he can’t see how he’s part of the problem then he’s unlikely to be any part of the solution.   Professor Duy, who’s very interested in that solution, points this out far more charitably than Our Man would.  (Tim Duy’s Fed Watch) 

- What Canada can Teach post-Brexit Britain 
“The main thing is simple. Canada likes being Canada. It's a good neighbor, but would rather not be part of the United States. Perplexing as it may be to many British commentators, that position is not in the least bit delusional. On the contrary, there's a lot to recommend it.”  That would be the simple synopsis.  (Bloomberg View, Clive Crook)

Saturday, November 5

2016: Third Quarter Review

Portfolio Update  
- Precious Metals:  As mentioned in the recent post, Our Man exited all of his positions in precious metals (GLD, GDX, SLV) very early in the 3rd quarter.  The positions were the largest contributor to performance in 2016, but Our Man is unconvinced that the rally is the start of a new bull market (especially given Our Man’s view on the dollar strengthening).

- Technical book:  Our Man’s technical indicators believe there’s a good probability (i.e. 50%+) that the rally from Feb-16 lows is the start of a significant up-leg in the markets (rather than a sharp bear market rally) and as such it recommended re-entering the positions (DDM, QLD and SSO).  Our Man duly did so, almost at the start of Q3.

-  Currencies: Our Man entered a small/medium size position Short Japanese Yen (vs Long US Dollar, YCS) early in the third quarter.  Following a strong rally in the Yen (to the 100 level vs. the USD), and the continued commitment of the Bank of Japan to easing monetary policy, Our Man felt comfortable re-entering this position.

Performance and Review   
The portfolio performed pretty well during the third quarter, adding 348bps which puts the year-to-date performance at 2.81%.

The primary driver of performance was the International/Country book, which added 185bps.  The Argentinean equity positions contributed almost the entirety of the profit – the new government has continued to impress international onlookers (lifting capital controls, taxation changes, settling with the bond holdouts and issuing new debt, etc) and MSCI put Argentina on review for possible inclusion into the Emerging Markets indices (potentially in mid-2017).   The early impact of this was most visible in the position in Pampa Energie (PAM) which contributed over 100bps on its own.  It’s a beneficiary of the move to market prices (removal of subsidies/etc), which although gradual will positively impact profitability over the coming years, and its decent liquidity/size and management history, has resulted in the stock being one of the first to attract large mutual fund interest.  The probability is Our Man will be looking to exit the Argentinean names during 2017, most likely in the run up to the MSCI decision.

Elsewhere, the other equity-orientated books were positive contributors during the quarter.  The Technical book (+50bps) benefited from the rising market (post it’s mid-July addition to the portfolio).  The Equities book (+81bps) currently holds just a position in Vipshop Holdings (VIPS), a Chinese Internet retailer, which rallied after announcing strong Q2 growth and earnings.  The company retains an interesting niche in the Chinese market, and unlike many peers is already generating a healthy profit.

Despite being in the portfolio for only a few weeks, the Precious Metals book (+99bps) nonetheless contributed strongly.  The Energy Efficiency book (-2bps) had a marginal impact, as the sole position was liquidated.

Portfolio (as at 09/30 - all delta and leverage adjusted, as appropriate) 
21.6% - Technical (DDM, QLF and SSO)
17.3% - International/Country (GVAL, and Argentinian names)
3.3% - Equities (VIPS)

-1.6% - China-Related Thesis (CROC – Short Australian Dollar)
-44.3.5% - Currencies (EUO – Short Euro, and YCS – Short Japan)

45.7% - Cash  

Disclaimer:  For added clarity, Our Man is invested in all of the securities mentioned.  He also holds some cash and a few other securities (of negligible value).  You should not buy any of these securities because Our Man has mentioned them, but should do your own work and decide what’s best for you.

Sunday, September 18

Some things I think, I think - Post-Brexit edition

- Donald Trump will (continue?) to do better than expected
Yes, in many ways he’s a very flawed candidate and he’s exceptionally unpopular one.  His opportunity lies in Secretary Clinton’s weaknesses as a flawed campaigner with her trust/honesty issues (whether they’re perception or real, is irrelevant) and a popularity level that’s in the Trumpian realm.  They’re literally the most unpopular candidates to run for President – they key for each, might just be avoiding appearing in the press in the final week!  In all likelihood, the favorable demographics and Mr. Trump’s weaknesses should be enough for Secretary Clinton to win, assuming she gets enough of those young voters who stubbornly only turnout to vote for President Obama, to the polls! That said, I wouldn’t expect a majority in the popular vote or much of a mandate despite the claims otherwise. 

- Limits of monetary policy and R*
One of the more thought provoking things that Our Man has read recently is this essay from San Francisco Fed’s John Williams that came out just before the staff of various Central Banks met at Jackson Hole.  In it, he argues the world has changed (and the neutral rate of interest is lower), thus monetary policy needs to change and that monetary policy is not the only answer.  Suggested changes on the monetary policy side include a higher inflation target, or replacing inflation targeting with a flexible price-level or nominal GDP targeting framework.  Both of these suggest a lower-for-longer (maybe forever) since with inflation (and GDP) undershooting existing targets (and thus increasing the distance to future targets) the pressure to increase rates diminishes further.  As for what lower-for-longer/ever means…well, there are some thoughts on that below. 

- People’s QE
It may go by a different name, and under many different guises, but it’s coming to a country near you…soon!   With monetary policy at close to its limits, and rising populist sentiment in numerous countries around the globe, the stage is being set for “People’s QE”.  What does Our Man mean by “People’s QE” – think massive fiscal spending, supported (directly, but possibly indirectly to get around legal issues) by an aggressive Central Bank QE program.   It will be done differently across countries, but the most successful will by those countries that realize “infrastructure spending” in the 21st century while not yet well defined likely doesn’t mean the same as it did in the post-World War 2 period!   Our Man’s sneaking suspicion is that Britain, with the readymade excuse of Brexit and seeking global competitiveness, will do it best with a mixture of old school infrastructure spending (bridges, roads, etc), new-style infrastructure spending (start with internet/cellular connectivity, but who knows what else, maybe it’s drones, etc), education (especially in very pro-Brexit areas) and healthcare (updating hospitals, from the bricks and mortar to processes/etc). 

- Regulation 
 Despite all the talk in the political realm, Our Man rather suspects that increased scrutiny on Banks and Financials (post-08) was the start of a trend rather than a one-off, and wouldn’t be surprised to see Technology and Healthcare cos next in the regulatory firing line. 

- The market will either be much higher or much lower within the next 12mos
Our Man just can’t tell you which but is pretty sure it ain’t going to hang around here.  The downside case is the clearest with investors able to take their pick of potential issues, including China, slow growth, falling Earnings/high valuations, Europe and the Euro, Brexit, etc.  The upside case is more complicated, but linked to negative rates (and the prospect of negative or low rates for some time).  At a certain level negative rates make sense; it’s an acceptance that we can’t afford our debts, and thus pricing the interest rate at the level at which we can amortize them.  If this is true, and as yields turn negative and assets fall in real terms (with central banks adding money to prevent nominal falls), then the answer is to buy duration, and stocks are exceptionally long duration instruments.  So if you think negative yields are here for the long-haul, you want to be buying stocks…hand over fist.


Portfolio Update 
Our Man’s felt that the market is sitting at the edge of the binary path for a couple of months now, and so he made some changes to the portfolio earlier in the third quarter.  Out have gone all the commodity-related positions (Gold, Silver, and Gold Miners) which have generated exceptional profits year-to-date, but are stretched following their strong runs and vulnerable to dollar-strength.  Into the portfolio have come some (levered) market equity positions, in particular as Our Man’s Technical book saw a tentative buy signal – expect to see more, if the market’s price action suggests much higher highs ahead.  The Currency and International positions remain unchanged, though the Argentinean equities are nearing the end of their (so far successful) investment horizon.  Our Man full expects to sit here, not doing much, and let price determine whether some of these positions are sold or are joined by substantially more equities.




Saturday, July 30

BREXIT and Power to the People

As noted, Our Man wasn’t particularly shocked by the Brexit result and given there have been numerous post-mortems, Our Man’s going to limit his thoughts. 

It seems pretty clear that “Leave” ran a much better campaign than “Remain”, starting off with just having a better and more productive name.  Strategically Leave had three prongs, (i) Sovereignty, (ii) Immigration, and (iii) Anti-status quo (and with the major parties both on the Remain side, status-quo has a wider scope than normal, i.e. politics/politicians/bureaucrats/etc); while immigration got all the attention (especially from the press and Remain campaign), sovereignty was much more important.  On the other hand, the Remain campaign’s strategy was primarily driven by the economic cost of leaving the EU (with a nod to apparent strategic benefits of being a member, which were never fully articulated).  The largest flaw in this being that using economic fear (even if justified) has a diminished impact, when the same population (if not electorate) have been exposed to it as the primary weapon in votes in 2014 (in the Scottish referendum) and 2015 (in the General Election).  People don’t have to be economic experts to figure out either (i) the world can only end so many times, or (ii) if the economy is so fragile that Scotland leaving/Labour getting into power/Brexit can each individually crash it, then there will be something else soon enough is Brexit is avoided.  Finally, on a tactical basis “Leave” had better leadership (say what you want about Boris/Gove and their behavior, but everyone knew who to listen to as opposed to Cameron/Osbourne’s the world is ending again, and Corbyn’s errr…errr…exactly) and a simple effective slogan (“Take Back Control”) that meant different things to different people (like Obama’s “Yes, We Can”, and Trump’s “Make America Great Again” – it’s hard to take the opposite side of a good slogan!).

While the campaign matters, the structural setting for a Leave vote was in place; it is readily apparent (to OM, at least) that there is the widespread popular discontent (be it in Greece, Spain, France, the UK and US) with the range of political choice offered and their policy prescriptions.  The widespread nature of this discontent is I think better understood by the population than by the political (and elite) class, and the attempts to ascribe it solely to immigration (more of a symptom) is reflective of this.   The lack of willingness to investigate and understand this discontent has helped create the opportunity for the populist characters on the left and right like Jeremy Corbyn, Nigel Farage, Bernie Saunders and Donald Trump.  Furthermore, the complacency shown by the major parties as these characters rose (due to their low quality and general incoherence), and still being shown towards Mr. Trump, reflects how badly the political class are underestimating the underlying message.  Finally, the distorting impact of QE on inequality and corporate incentives, has only added fuel to the fire of that dissatisfaction. 

That this manifested itself in a vote for Brexit, seemingly aided by stalwart Labour areas in England, should not come as a surprise.  For the last generation, as globalization and with it free trade and free movement of capital (with its negative impact on tax bases) have swept across the globe, the policy prescription has been to increase welfare to deal with the uneven impact.  Now however, the costs of welfare are becoming prohibitive both financially (on government budgets) and in terms of lost productivity.  While welfare is necessary, and one can easily understand how data and economic models suggest it is the best approach, Our Man suspects that likely reveals more about the models, and their over-valuation of the short-term than anything.  The extremes of the welfare state help foster a culture of dependency and while transfer payments help people live their lives, it constrains them to ones that are harder to develop meaning and self-respect.  Furthermore, on an economy-wide basis, it helps undermine productivity through the lost skills (and lack of development of new ones) limiting the economy’s potential.  In the fullness of time and with the repeated prescriptions of the same solution, these micro and macro factors swamp the easy fix of a cash transfer.

Finally, it is said that history rhymes, rather than repeats, and to that end Our Man has been surprised at the lack of mention of Britain’s exit from the gold standard in 1931.  After all, following 6yrs of austerity back then, Britain was the first country to come off the gold standard and its departure came after a naval mutiny (Invergordon revolt), which caused market panic and the Pound fell 25% in the aftermath!   Inevitably, it was deemed at the time to be sacrilege to leave the Gold standard, a tragic mistake from which the country would never recover and one that would doom London's financial centre.  Of course, it proved not to be in part due to the huge stimulus from that devaluation and within 2 years (1933) most other countries had followed Britain’s lead and left the Gold standard.

Now of course, we’ve just had 6yrs of austerity (Chancellor Osborne's first austerity budget was July 2010), and Britain voted to become the first country to leave the EU delivered by a different mutiny (the 2.8mn non-voters who delivered Brexit).  It too has caused market panic (albeit briefly), and (so far) the Pound has fallen 15% in the aftermath!   It’s also being called a tragic mistake, against the perceived wisdom of the day and London's financial centre is doomed.  Time will tell how different ending the UK will have this time…

Our Man, will return shortly, with some things he thinks in the aftermath of Brexit…

Friday, July 15

2016: Second Quarter Review

Portfolio Update  
- Equity:  Our Man finally managed to exit the Dr. Reddy’s (RDY) position late in the quarter, for a very marginal profit.

- Currencies: Midway through the quarter, after the strong rally in the Euro, Our Man added substantially to the S Euro position.

Performance and Review   
The second quarter proved far more generous than the first, with the portfolio rising +4.54%, leaving it -0.6% YTD.

The performance was primarily driven by the Precious Metals (+301bps) positions.  While both Gold (GLD, +27bps) and Silver (SLV, +68bps) contributed, it was the exposure to the Gold Miners (+207bps) that made the difference.  Our Man was too early into the Precious Metals positions in 2015, but the positions have more than recouped those losses and provided a healthy gain over 2015/2016.  The strong performance of the Precious Metals book (along with the Dollar strength, especially versus the Euro) meant that Our Man's portfolio was quite profitable in the days following ‘Brexit’.

The Equity book (-17bps) posted a small loss, as VIPS continues to work through its issues and the stock is between investor bases; while cheap (Internet company at less than 20x PE) and growing (40%+ p.a.), it’s also seen its growth slow from 100%+ p.a. and so is transitioning from being held by growth investors to more value-orientated ones.  The International book (+126bps) performed well, led by Pampa Energie (PAM).   Argentina continues to be the gift that keeps on giving – the pace of Macri’s reforms continues unabated, and MSCI moved the country to the watch-list for possible inclusion in the MSCI Emerging Markets Index.  

Finally, the Long Dollar positions were profitable with the China Thesis (+3bps) and the Currencies book (+41bps) generating returns as the dollar strengthened slightly against the Aussie Dollar and especially the Euro (post-Brexit).

Portfolio (as at 06/30 - all delta and leverage adjusted, as appropriate) 
16.1% - International/Country (GVAL, and Argentinian names)
14.4% - Precious Metals (GDX, GLD and SLV)
2.6% - Equities (VIPS)

-1.7% - China-Related Thesis (CROC – Short Australian Dollar)
-32.5% - Currencies (EUO – Short Euro)

49.8% - Cash  

Disclaimer:  For added clarity, Our Man is invested in all of the securities mentioned.  He also holds some cash and a few other securities (of negligible value).  You should not buy any of these securities because Our Man has mentioned them, but should do your own work and decide what’s best for you.