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February 26, 2015 (Thursday)

Since Inception June 2014:

Equity/Futures Account: +13.00% ($11,300,414)

FX Currency Account: +58.84% ($15,884,190)

Benchmark: S&P 500: +7.82%

Equities/Futures

Year Jun2014 Jul Aug Sep Oct Nov Dec Jan2015 Feb Mar Apr May Tot. Ret

2014-2015

+2.01% -1.02% +2.02% +6.28% -2.52% +4.29% -1.69% +1.07% +2.09% +13.00%

FX Currency

Year Jun2014 Jul Aug Sep Oct Nov Dec Jan2015 Feb Mar Apr May Tot. Ret

2014- 2015

-0.15% +4.84% +7.24% +20.17% +6.01% +4.47% +5.58% +0.37% +0.16% +58.84%

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2/26/15 Thursday The move today in the U.S Dollar Index gave clarity as to where the opportunities were and confirmed some of the suspicions I had about the market. One thats been really bothering me were the price action in crude/brent oil where the action simply felt heavy and lifeless. The chart screams, short and juxtaposing the move in oil with the CRB Commodity Index, it appears it was the pause in the dollar that gave rise to a short-term pop in oil prices. With a sense of direction now established, I put together a few related trades that continues on the thesis of the previous weeks (listed on the following page). Only difference being that I would stay away from the US and European equity indexes. In fact, as of today, I would rather be a tiny seller of the S&P 500. 2/24/15 Tuesday Raising cash level to 90% Today was a profit-taking day. Took money off the table on all positions except for the gold short. The dovishness of Yellen made it unwise to stay short the treasuries and the utilities sector at least in the short-term. I also took profits in all equity index positions (US, Europe, Japan, and Russia) because pretty much all major equity indexes are all very much over-extended (the positions were placed on 2/6 see page six) and believe its more prudent to reassess opportunities from the sidelines. 2/20/15 Friday Took a short a position in gold (GLD) testament to the idea that one should never get married to an idea/position or inanely disregard price action. 2/11/15 Wednesday The price action and the relative risk/reward setup of the positions placed last week (RSX, SPY, XLU, TLT, USD/JPY, Nikkei Futures) continue to be positive. Of the group, RSX has the most upside in the short/medium-term. First is the favorable price action and the technical risk/reward setup in the index. Second is the rally/stabilization in the oil market - which has been a positive catalyst for the index. And finally, the third is the possibility of a peace deal (accepting of a demilitarization zone) being inked brokered by Germany. What gives me hope is that troop movement on both sides have increased significantly and the fighting has intensified (with each side making advances) since the peace summit was announced. Military history has shown (the Korean War is a perfect example of this) that a peace deal is often preceded by frantic and daring military actions as it usually honors the territory gains up until the agreement. Its also an indication of each side trying to gain as much leverage before sitting at the table to discuss terms. Historical parallels keep me hopeful that an unexpected peace deal would catch the market by surprise. Even if it doesnt materialize, I expect the index to inch higher. However, Im also ready to cut the position at the slightest hint of negative price action.

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Current Equity Positions (as of 2/26/15 - Thursday) EPI WisdomTree India ETF: 80,000 shares = $1,891,200 (Long) GLD - SPDR Gold ETF: 12,000 shares = $1,382,640 (Short) SPY - SPDR S&P 500: 8,000 shares = $1,691,680 (Short) TLT - iShares 20+ YR Treasury ETF: 10,000 shares = $1,285,800 (Short) USO US Oil Fund ETF: 90,000 shares = $1,619,100 (Short) XLU - Select Sector SPDR Utilities ETF: 30,000 shares = $1,358,400 (Short) Account Cash Value: $11,300,414, Total Exposure: $9,228,820, Leverage: 0.82x Current FX Positions (as of 2/26/15 Thursday) Euro/US Dollar: $15,000,000 (Short) US Dollar/Japanese Yen Spot: $0.00 Account Cash Value: $15,884,190, Total Exposure: $25,000,000, Leverage: 1.57x US Dollar Index vs. CRB Commodity Index (I apologize for the horrible color scheme...)

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US Macro Surprise Indicator - Relative to S&P 500 it does make me second guess currently being long U.S. Dollar and short treasuries

Weakest Start in Five Years

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U.S. Dollar Index 2/26/15

SPDR Gold Trust Shares (GLD) 2/26/15

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SPDR Select Utilities ETF (XLU) 2/26/15

iShares Treasury ETF (TLT) 2/26/15

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2/6/15 Friday The trade for the S&P 500 since December has been selling the index into rallies in adherence to the trend already in place. But given the recent price action (reflected in the chart below), the risk/reward profile of that trade no longer offers much value. To gain clarity, upon reflection of the confusing trading month in January, I had taken risk exposure down significantly late last week. I also unloaded positions in gold and gold miners by 75% this week ahead of the jobs report. Fridays jobs report gave birth to trades that I think have a great risk/return profile for the next few weeks. Immediately after the announcement of the job news, I shorted XLU (SPDR Utilities ETF) and TLT (US Bond ETF), and have added to the short Dollar/Yen (USD/JPY) position as well as taken a small long position in the Nikkei 225 Futures (/NKD). 2/5/15 Thursday

1) The technical picture in the S&P 500 has changed from being slightly bearish to a rather bullish setup (please see the chart on the following page)

2) Ive reduced the gold long position by almost 75% - as I wrote in the previous update, certain price actions taking place in the market place have been downright confusing, and since the last update, Ive reduced exposure to the lowest point in more than three months. I realized over the years that whenever the mirror gets foggy, its always best to slow down and get rid of positions that I no longer feel confident in and keep things simple until trends become more identifiable and stories more coherent. As they say in poker, money saved is money earned.

3) Oil may be trying to find a bottom here, and if it does, a great derivative trade should still be the Russian equities (ETF: RSX - although Ive been stopped out once before due to the unfortunate timing of the credit downgrade by S&P). I also think that about Canadian equities (ETF: EWC). Ive taken a small position in both. I should be able to capture the upside of the stabilization of oil prices with half the volatility of the actual physical commodity.

1/23/15 Friday

I dont regret the decision to take profits by liquidating all currency exposure because I believe event risk should be avoided especially if one has built up a significant profit ahead of the event and if the outcome is heavily binary. Though it was difficult to see the euro fall another 2% against the U.S. dollar (missing out on the action), it wasnt all a loss. The yen traded down to 117 against the dollar even hours after the ECB announcement so I was still able to get back on the long side against the yen without giving up too much of the upside. In the last few weeks, the Russian ETF, RSX, seems to have been carving out a bottom and has started to trade independently from the headlines coming out of the region. Like today, despite Ukrainian separatists taking over Donestk airport, that didnt stem the rally in the ETF.

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I initiated a small long position in the ETF:RSX today (making up roughly 15% of the portfolio) with hopes that it can defiantly break $16.50 and establish an upward trend. On the downside, I plan to keep the initial position on a tight leash with $15 as the stop loss. 1/20/15 Tuesday From Grozny to Frankfurt Grozny, Chechnya

The chance of a peace accord taking place between Ukraine and Russia went from slim to none this weekend. The fact that the leaders on both

sides need the conflict to continue or even escalate further to stay in power is quickly elevating the danger.

One turn of events that can deescalate the situation is if Grozny becomes a bigger problem for Russia, as it did during the Yeltsin era, than Ukraine is

at the moment. Chechnya is quickly becoming a hotbed for Islamic jihadist activity, and part of the resurgence is due to many of Russias military

and intelligence assets being shifted to the Ukraine front (or within Ukraine itself) and, secondly, the formation of ISIS and some factions of Chechen

Islamists pledging allegiance to al-Baghadi and fighters returning back to Chechnya from Syria/Iraq.

The severe rise in attacks on Russian security forces in the region combined with a heightened fear of a pan-European terrorist network following

the recent tragic events in France may lead cooperation between Western Europe and Russia. Russia may be one major terror attack on its own soil

away from experiencing a strategic shift towards the Caucus rather than the Crimea. It may be a long shot, but monitoring the events in Chechnya

and the Caucasus region, which no longer has the coverage it used to, perhaps will offer insight into how the Ukrainian conflict concludes in the

short-term. Further deterioration in Chechnya would may become a buy signal for Russian stocks as it puts Russia on the same page as the West.

Such cooperation and mutual understanding occurred following 9/11 attack between Bush and Putin (Chechnya at the time was also in a period

of violent Islamic insurgency).

Euro

The short Euro trade benefited greatly from SNBs snap decision to remove the peg. The move has created an excitement for more downside

potential for the euro on the speculation that SNBs decision is to get in front of ECBs massive QE. As a result, the Euro has moved significantly

lower ahead of this weeks meeting on the 22nd reaching a 1.15-handle against the U.S. dollar.

Even the most optimistic size of the quantitative easing might be already priced in, so the risk has gone up significantly of staying short ahead of the

ECB meeting on Thursday. A temporary counter-trend rally to 1.20-1.21 where the currency really breaks decade-long support is not out of the

realm of possibility this would probably be a great level to re-short the currency against the dollar.

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2/26/15 - Tuesday Platform Snapshot

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Trading Account Rules: 1) Starting Account Size:

a. Cash equities/futures/option: $10million

b. Forex: $10million

2) For the cash account (non-forex), macro views will be reflected using listed equity indexed ETFs with deep liquidity/volume and net assets of

$1 billion or greater in order to best represent the odds of the strategy being scalable (single-stock, company specific stocks will not be

traded).

3) Most of the speculative positions can also be accurately expressed using futures, but because the volume is more constrained at different

times and because the platform fails to take volume into consideration (hence the trades' impact on the actual price), the use of futures will

be limited. Positions that I deem to be core/longer-term would be better expressed via equities. But for commodities such as crude oil,

silver, copper, etc., they will solely be expressed through the futures contract market due to contango/decay issues that most commodities

ETFs suffer.

4) The overall goal is to identify attractive opportunities with goals of holding the positions for multi-week/month periods. Importance will

always be put on liquidity and risk exposure. Also, being able to realistically liquidate all positions by end of trading day or vice versa, scale

up risk, will be an advantage of the strategy.

5) Daily updates will be simple and short, as youll receive a time-stamped screenshot of the account summary where detailed positions and

P/L will be all within a single image.

6) Leverage for spot currency position will be limited to 2.5x the underlying cash

Leverage for equity/futures account will be limited to 1.3x the underlying cash with net aggregate overnight risk exposure (net liquid

value) often falling well below that limit.