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An Example of An SOM Theme And Strategies

Falling Housing Prices and Higher Rates Would Deflate US Credit Bubble

–(2007-8) Buy protection using CMBX and ABX: Housing price declines deflates real estate bubble

–(2008-9) Buy sovereign protection on the GIIPs: European periphery countries were very exposed to the US housing meltdown

–(2008) Short US financials (Banks, Mort Insurers, GSEs) because of exposed to the US housing meltdown and buy receivers in the US as its economy moves into a recession

Europe Exposed to US Housing Meltdown

-(2008) Short European financials and buy receivers on European rates as European banks have  a leveraged exposed to US mortgage assets financed through US commercial paper

Public Sector Takes on Private Sector Risk

–(2009) Buy US bank equities during their capital raises: TARP turns bank equity into cheap calls

–(2009/10) Buy distressed credit and equities: US QE pushes up all asset values

Europe Vulnerable To A GIIPS Default

–(2011) Short European banks: European banks are undercapitalized for their large exposure to the of problems in the PIGS


–(2012) Short Yen, buy calls on Nikkei: Abenomics will be implemented and that means QE

–(2014) Short Yen, buy Nikkei, BOJ will need to implement another round of QE

The US Grows and Rates Stay Low

–(2012-14) Buy calls on US equities: Uncertainty in the US abates and equity valuation reflects low level of yields

–(2014) Buy upside in US dollar as US grows as rest of the world slows

Slowing China and Stronger Dollar Would Deflate the EM/Commodity Driven Credit Bubble

–(2014-16) Short EM currencies and equities: EM growth will slow and pop credit bubble

–(2014-16) Short commodities and miners, commodity bubble is deflating

Draghinomics (2014/15)

–Short Euro and go long DAX as ECB will implement QE to offset impact of deflation on GIIPs debt load

Brexit/Europe (2016)

–Short the pound, the UK will do another round of monetary easing

US Economic Growth Is Not Sustainable (2016)

–Buy downside protection on US equities. Earnings will continue to fall, while vol is cheap

–Buy deep out of the money longer dated calls on Gold, The next major move from the Fed could be more easing

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