From: Laurie Cameron
To: Jeffrey Epstein <jeevacation@gmail.com>
Subject: some thoughts
Date: Wed, 18 Dec 2013 19:01:50 +0000
Good morning (good afternoon now...)
I tried calling yesterday and this am to follow up on our conversation and here are a few
thoughts that I have
- you are right, French multinational revenue should never have made it to the short list of
why I think that the EUR will fall next year. I do believe that
- low (even if they stop falling) interest rates will dissuade speculative money from flowing
into europe
- lower oil/commodity prices will take away the usefulness of a strong EUR for managing
oil import prices
- growth is expected to be weak in 2014 (ECB forecast is for i.i% in 2014; .2% Q4 2013; and
that foreign export growth altho it is small could help the euro area
In the past 1.40-1.42 has been the level at which the european finance ministries/ECB
express concern with EUR strength. I do think that it will fall 15 cents over the next year
and a half, but it is not my favorite trade. I don't feel as strongly abt the EUR as I did the
AUD and the JPY this year.
As I write this, The headline has come out that the Bank of England has said that further
GBP appreciation "may threaten recovery." Just wanted to pass that along. I think that
GBP will trade most of next year in low 1.5Os, but this is not my favorite trade either.
2014
In general I look for opportunities in complacency, in opinions which are strongly assumed
by the market and not questioned. Upset complacency often leads to a longer market
move.
I think that there is complacency in the oil markets. I think that the opportunity is to
benefit from falling oil prices by shorting the Russian rouble. When I read Russian growth
forecasts based on management of the government's budget and not on the price of oil and
natural gas I worry that there is not enough concern for the impact that lower oil prices
would have on the Russian economy,considering it is most of the export economy which is
approx 30% of Russian gdp. Assuming that information made public by Russian govt is
true.
I think that oil prices will fall even if the FED does not taper. I think that the best time to
sell oil is when taper expectations are disappointed. Maybe even this afternoon. WTI
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currently around 97.22 waiting for FED.
I think that the CAD will likely sell off from 1.06 to 1.13-15 due to lower oil prices. The
caveat here being a scenario in which low US CPI would delay the taper and the
combination of low interest rates and falling gas prices would make the US auto industry
take off. Canadian exports to the US could increase significantly in this case, supporting
the CAD.
Short BRL is also a good albeit expensive trade. Buying a low delta BRL put (2.8o or 3
strike) would be a cost effective way of being leveraged for now. I like selling puts on ETFs
which are double short an underlying (I traded some GLL for you earlier this year). BZQ is
an ETF which is ultrashort the Brazil MSCI index. ALtho this is local stock risk Vol is
around 55% on these options (at or above 52 high for the 4-12 month vol). BZQ currently
83.65. May 2014 73 put pays $6 and gives a nice breakeven while searching for a better
time/strategy to short BRL.
Falling oil prices would benefit the Japanese economy and could smooth the economic
bumps which may result from Fiscal 2015 increase in sales tax. JPY will likely sell off
further; best time to buy usd jpy is 102 for a move to 108-no.
Wanted to get you this before 2 pm -- in case no taper results in opportunities to sell oil,
BRL or RUR.
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