Eclectica Asset Management LLP

“…the way I look at it, most days aren’t winning days and life is not always going well, so when it is, I make the most of it, while I can. I’m not a bad loser but I’m a bloody good winner…”          Dave Nevison, A Bloody Good Winner, 2007 Am I disheartened? Whilst the stock market has continued to rally - the MSCI World Equity Index rose a further 3.4% in May - the Fund lost 3.9%. Year-to-date we continue to sport an advantage, though diminished, with the fund down 1.8% and the broader stock market down 6.8%. On a rolling 12 month perspective this widens to -2.1% for the fund vs. -10.8% for the broader index. However, I have started receiving hate mail again, a sure sign that our troubles have bottomed. Of course it is tedious for everyone concerned that May should have tracked April so closely: good commodity-facing equity and futures performance undone by the fixed income book. But let me explain why I think you should keep us on your books. There has been carnage in fixed income markets. Rate expectations have risen considerably. Take as an example, the 2 Year Treasury yield. Today it is almost 2 standard deviations above its prevailing trend. At the end of February it was trading more than 3 standard deviations below. And yet everyone appears long risk again. Nevertheless, we continue to survive (though not yet prosper). We believe the notion of the Fed hiking interest rates 3 times this year is preposterous.

THE ECLECTICA FUND – APRIL 2008 The process of rebounding by equity markets, from their oversold readings earlier in the year, may have reached its climax in April with the MSCI World Equity Index soaring 6.7%. Whilst the Fund gave back 2.7% points, I am far from disheartened. For despite this asynchronous month we are up 2.2% year-to-date vs. a 10.2% slide in world equity indices and up 3.7% on a rolling 12 month basis, again with equity markets down 10% over the corresponding period. Furthermore, our stable of long-only mutual funds is amongst the very best performers in their respective fields. And, finally, we have not had to pare back our substantial bond market investments which, should the economy and stock market continue to deteriorate, could dramatically strengthen our performance. Be optimistic, be very optimistic; we have survived this pull back in risk aversion and are well placed for the future. In the time of chimpanzees I was a monkey                            Beck “Loser”, 2001. Our unusual combination of inflationary (commodity) assets and US swap curve steepener continues to keep us in the game. Unlike March, the book produced an orthodox hedge: our good showing in stocks and futures has allowed us to mitigate the horrors of owning interest rate related derivatives. March and April unleashed a terrible counter trend movement in the bond markets. The crush of a highly leveraged speculative pool, cashing in their chips after the landmark demise of Bear Sterns, has led to the absurdity of fixed income markets pricing in a tightening of rates by the year end. With bloodied investors and perhaps the worst economic downturn since the 1930s (according to George Soros, no less) we believe this presumption will be challenged over the summer and autumn months. As it was however, our curve steepeners cost the fund 11%, and CDS swap spreads a further 1%. We are of course positioned for the dual forces of food and energy inflation as well as a recession, and our equity and commodity books accordingly performed very well. Our collection of shares, despite being only three quarters invested and suffering from the US$ rally in April, made 6.5% as markets continued to positively appraise the prospects for energy, metals and mining companies, where we are almost exclusively invested. Prominent stock gains, each making over one percentage point, were accrued from Industries Qatar, the fund’s largest individual shareholding (4% of NAV) and from the Eclectica Agriculture Fund (9% of NAV). But for the present the market shows a willingness to forget things. It chooses to forget the banking crises. It chooses to forget the housing crises. It chooses to forget the negative savings rate in America. To quote George Magnus from UBS, it chooses to forget that “As deleveraging evolves, the risks to growth, employment and profits are much more likely to produce disinflation…banking crises and rising inflation make for improbable bedfellows.”

Just who is Keyser Söze? The tragic end of Mike Lynch The tragic end of Mike Lynch— a man who faced down the giant of US Justice , outmaneuvered the legal behemoths, took on the law and emerged victorious—only to be taken by the cold, capricious hand of Mother Nature. Imagine it: overcoming insurmountable odds, the weight of the world against you, and yet, you rise. Then, in a cruel twist, you're snuffed out by the very seas that should’ve carried you home on a joyous victory lap of vindication. And the loss of his number two, also acquitted by the US courts, on the very same day? That smacks of something truly out of whack—a malevolent force, a Keyser Söze-like figure, flexing its vindictive contempt. The unruly seas didn’t just take six lives; they dragged HP's corporate secrets to the seabed, locked away in the depths, perhaps forever. Was it mere misfortune, or was there something more sinister at play? Watch this video, and together we’ll explore what might just be the greatest unfinished story of the 21st century. The seas may have claimed their due, but the truth is still out there, waiting to surface. R.I.P. George Gammon Brent Johnson

Hey, those of you who've stuck around this far, you're not here for the fluff or the Wall Street gloss—you want the dirt, the real deal, not some highbrow economic lecture. So, here it is, another gritty acid-soaked ramble through the madness. Acid Capitalism, where finance meets philosophy, where gold isn’t just a metal but a reflection of our deepest existential angst. Prepare yourself for a contentious paper written by a Camus protagonist staring into the absurd void of today.

Dive headfirst into the chaos and opportunity that was 2008/2009 with my exclusive Eclectica Letters. These weren’t just years; they were seismic shifts in the financial landscape, and I was there, not just watching but acting, navigating the storm with the precision of a drunken sailor who had the audacity to see the future. Explore the raw insights, the contrarian bets, and the nauseating fear of seeing something that few could imagine. Turbulent times call for Acid Elucidation. These letters are more than just a record; they're a Hitchhiker's Guide to the Galaxy of Finance, a sort of digital travel guide for Acid Hitchhikers in surviving and thriving when the world’s financial system is on the brink of yet another deflationary flare. These letters are known for their witty, satirical take on my life growing up as a macro hedge funder, observing the unfolding descent of money, and commenting on everything from the absurdity of bureaucracy, the randomness of existence, and revealing the ultimate answer to seeing the future - stay high and aloof from the suits and their impeccable sartorial elegance and disdain for your wealth.

Microsoft Drops a Starbucks Hey folks, ACID Capitalist reporting from a sunny backyard in Venice Beach, California. Today, we're diving deep into the market’s initial disbelief and disappointment with this week’s Microsoft (MSFT) earnings. They dropped their results last night, and the initial reaction was a wild ride—stock down 8%, settling 4.5% lower for the day, with $120 bn knocked off their capitalization. To put that into context, MSFT lost the equivalent of a Goldman Sachs, or an American Express, or a Starbucks or a GE. So, what’s going on?

Yen Weakness Forces the BoJ into a Disastrous Rate Hike Hey everyone, ACID Capitalist back again with another macro snapshot. Today, we’re diving into the precarious world of the Yen and its fearsome widow maker, the JGB. I'm here to break it all down for you.

EV to Sales: An ACID Capitalist Valuation Methodology Hey everyone, it's Hugh, the ACID Capitalist, back with an attempt to lift the investment veil and help you trade like a pro. This time, I’m taking a hard look at the contract food services sector—think Compass Group, Sodexo, and Aramark. 

China Declares Economic War: An ACID Capitalist Deep Dive China has just ramped up the stakes with what can only be described as an economic declaration of war. In my latest video, I delve into the dramatic details of China's third plenum and its global implications. Xi Jinping's policies are pushing China's trade surplus to record highs, creating an immense imbalance—China produces 31% of the world's goods but consumes just 13%.

Acid Macro Desert Film Here’s the desert monologue from last Friday. Shout out to @benbrey and Spotify episode. I had just watched the full majesty of Dave Dredge, and it certainly seeped into my commentary as I vibed convexity and the pursuit of information in the tails from Yucca Valley. And why are those steel co CDS prices unchanged? It’s the yen, stupid. The devaluation makes them more competitive. But what if the red cabbage slides... tails, baby! It’s all in the tails.