WHYTECLIFF FINANCIAL CORP.

By Bradley Parkes

Markets Trades

Investment ideas for 2015

(everybody should visit here)

AVOIDS

Let us be blunt. Three wordsEnergy and mining.

The double bottom has not been made one more spike down on oil and gold. AT LEAST, we are so close

to 100% deflation views that we are getting close to inflation.

SHORT IDEAS

OIL (HOD.to)

GOLD (HGD.to)

EUR (EUO.N)

LONG IDEAS

USD (DLR.to)

German DAX (EWG.N)

Japanese Stocks (EWJ.N)

China (FXI.N)

BONUS

Long DOW - With AAPL a new component in the DOW and with capital flows to the US from (Africa, Asia,

Europe...) the S&P500 and DJIA are likely going to peak at a level considered obscene...DJIA = 22,000. This

trade is the break down of European socialism and will violate cheap/expensive market metrics as money

flees to where it seems safe. It may not seem rational.

Trade Idea Reasoning

1) Long USD

The rise in the USD is not over, and in need to check the charts but a hold of 92-93 (approximately)

@ the lower Bollinger Band and let the weekly chart work of its RSI overbought status should be

a good entry point. Major support is in the 93-95 range.

The DLR.TO ETF is a buy should the DXY bounce off the 95 level with a decline in RSI on a weekly

-a stop at 93 (or the equivalent level on the DLR etf) would be the proper risk move

-the weekly chart on DLR looks like a cup and handle pattern

www.stockcharts.com

2) Long DAX

Money fleeing weak Europe leads to Germany as the DAX will eventually dividend out Marks

if/when the worst happens (Grexit and Brexit). If the Euro stays weak and the DAX is rising then

this trend is safe.

The trend is currently parabolic (mirror of the USD) and needs a rest and/or concurrent

retracement with the USD.

www.stockcharts.com

3) Long Japan

Japan is at the end of 25-30 years of deflation and the Japanese stock market and bonds have

confounded and frustrated an entire generation of investors leaving few interested. I like the

Dylan Grice trade from a few years ago, when he suggested a real cheap gamble would be to buy

way out of the market long dated calls and wait for Japanese hyperinflation. People used to speak

of Japan in reverence and now it is ignored and mocked....it will never recover is the mainstream

view. Yet the Japanese central bank has told the world they will buy stocks. Dont fight central

banks, there are easier targets.

Like the USD and Germany this trade is parabolic at the moment, need a bounce of $12.05 on the

EWJ and a quick recovery to $12.40 and this would suggest the return of the bull.

www.stockcharts.com

4) Long China

I think China is a counter cyclical investment at this point in the cycle. The purge must be close to

ending because the reserve requirements have been cut and interest rates set lower. Moving both

these down forces money into the economy, if you were worried about corruption, you would

not make this move, as free money moves to the corrupt first in China.

Lower commodity prices, especially oil, has made this trend more viable, yet surging imports could

suggest hoarding and stockpiling and not expansion. Nobody knows what to believe out of China,

but maybe the Chinese like looking weak. Sun Tzu was reckoned to say act strong when weak and

behave weak when strong.

www.stockcharts.com

5) Short Oil

I live in Calgary. My current profession is as a geologist. I hate typing this but to make the head

and shoulders bottom I expect to lead us to $70-75 by year end we need another leg down to the

low $50s. I do not think there is a trip to $20; I do not believe we are in a new era of oil. But I

do not think we have washed out the smart. I have hubristically called the bottom when it traded

to the low $40s. I still believe that, but the market enjoys shaking out the weak and punishing the

early. I do believe this sets up as one of the best investments in decades. Lets see what happens

to all the new era claims when ISIS bombs a Saudi mosque in Riyadh or hits a pipeline. We will

be back in the old era of violence and political instability in the Mid East.

www.stockcharts.com

6) Short Gold

When I first wrote this I said if gold were to break back above $1205 I would rethink my view. I

have changed the break above price to $1250. Gold is the metrosexual of trading instruments. Its

rugged, but very emotional. Those that promote gold have not been broken yet. It is manipulated

in their mind so they will never be wrong. That sort of thinking makes me wish gold would drop

to $200/oz and sit there until somebody commits suicide. Then back up the truck. I still think gold

needs to test $1000 and have one more sharp painful leg down. Central banks, China and smart

people all need to lose more money. Once $1000 is broken we would test the 1980s top. If that

holds the new bull should start after some consolidation.

I think this is the easiest of the trades listed. THAT COMMENT HAS ME VERY WORRIED ABOUT

BEING WRONG.

www.stockcharts.com

7) Short EURO

The EUR has had a rally in it, but its eventually going to test the all time low. The DXY, JPN, DAX

should all trade inversely to the EUR. I know this trade is obvious, but I bet you dont have it on.

It is so obvious nobody is interested in anymore. I do believe the EUR survives in some manner

with Germany still in, but a repricing is needed, which actually helps an export heavy Germany.

www.stockcharts.com

BONUS

8) LONG DOW

After typing that I had to go brush my teeth, but that is what makes this trade so amazing, it makes

you want to vomit a little. PE & CAPE should exceed all other peaks because this is the death of

Euro socialism + US QE; this is not like any other bull market. This one is hated, its vomit inducing.

AAPL should push the DJIA to metrics higher than the S&P500.

Disclosures:

Investors should carefully consider the investment objectives, risks, charges and expenses of

any investment. The above does not constitute investment advice or recommendations, just

crazy ideas I have when I cannot sleep. There is no guarantee that any investment (or this

investment) will achieve its objectives, goals, generate positive returns, or avoid losses. The

information provided should probably be disregarded and potentially treated as a contrarian

advice, with the expectations that I am 100% wrong on everything. Please consult someone

with a higher level of intelligence than the author with respect to investing money.

LONG TERM VIEWS FOR 2015-2016 BASED ON GAME

THEORY AND JUST FOR FUN

The BULL case scenario for 2015... NOT ALL OF THESE HAPPEN TOGETHER. THESE ARE BULL

SCENARIOS FOR EACH REGION AND ARE EXCLUSIVE BUT COULD BE INCLUSIVE.

USA:

Oil stabilizes in the $50-60 US a bbl range limiting the downside of employment cuts and

stabilizing domestic production at an elevated level of approximately 7.5MM-8.5MM bbls/d. The

high decline rate in ND keeps activity moving but only in the highly explored areas with decent

infrastructure and pipelines. The dollar remains strong further improving the trade deficit,

bringing it down to the $30MM/m range. The strong dollar and weakness in industrial metal prices

persuades congress to institute an infrastructure building program to repair roads, bridges and

upgrade the electrical grid. This will be passed under a Republican Congress and Senate, with a

Democratic President, allowing for cover from the accusations of socialism. Although this bill

passes, Congress and the Senate remain in gridlock and cannot make headway on Obamacare,

Keystone, climate change, ISIS and tax reform. Essentially nothing moves forward. This helps the

budget deficit to continue to shrink. It will be Hillary vs. Jeb, with Hillary winning in a landslide.

The FED successfully raises rates in Q3/15 first in 25bps increments and suggests further strength

in employment may require 50bps increments (the infrastructure program reverses the

participation rate in the short term). In this scenario the stock markets perform very well, the

DOW rises above 20,000, and the S&P finishes the year at 2300. Gold falters after a rally to the

mid 1200s and finishes the year testing $1000/oz.

Investment ideas:

-low gas prices increase US domestic travel leading to increases in REVPAR and occupancy rates

at mid level hotels making the hotel sector a good bet

-infrastructure investment program stems the decline in the participation rate, improving

government revenues leading to a shortage of short dated treasury bills and pushes the front end

of the curve down, making the yield curve very steep. This benefits banks and job placement

companies.

-low energy prices and strong growth in employment and stabilization of energy prices

incentivizes Americans to replace their aging automobiles. The sub $2 gas revives the American

love of SUVs and muscle cars. GM, Cummins, Ford and Chrysler all have great years.

EUROPE:

In early 2015 the EU CB announced the initiation of a QE bond buying program. The EUR gets

weaker until it approaches parity with the USD. Germans move their money to the US stock

market and the rest of Europe moves their money to the German stock market. Despite the

German pessimism, the program works sending long dated German bonds into negative real

interest rates and periphery rates rats return to manageable levels. This causes EU exports

(German cars, Italian wine, French champagne) to soar as well as boosts tourism. The Europeans

put up with more Canadian and American tourists and the stock markets begin to soar. The key

to this working is that periphery markets need to outperform German markets. With inflation

staying low, but deflation fears subsiding the demographic and debt problems in Europe are

delayed for another year. The successful policy coordination encourages further EU integration

and a common bond market. Its not a Grexit that happens but a Brexit. As things improve the far

right anti-immigration parties begin to lose appeal.

Investment ideas:

-gold denominated in Euros

-EU stock markets rally in unison, with peripheral markets leading the charge higher

-EU luxury brands outperform all other sectors listed in Europe, followed by hotels and tourist

related entities.

ASIA:

China:

China GDP growth decelerates to 6.5% as it transitions to a consumer society. The saving rate

declines and spending spikes, increasing imports and eliminating the trade surplus, or decreases

it to low levels. The new coal taxation laws shifts the energy input mix and leads to a boom in

domestic natural gas exploration, as Chinas large shale deposits are attempted to be exploited.

The Western oil majors who are seeing weaker growth in the developed non-OPEC nations give

China very favorable deals for long term access. Chinas weakening growth allows the turmoil in

the South Sea to subside for a year. China and Japan even meet for bilateral maritime territorial

discussions, The Chinese bull market in stocks continues from late 2014 well into 2016. The

liberalization of the Chinese markets continues, forcing emerging market funds and banks to hold

more Chinese stocks and renminbi. This leads to more mature money flowing towards China. The

renminbi holds steady, or maybe declines slightly versus the USD.

Investment Ideas:

-Gold priced in renminbi

-Chinese Market ETFs

India:

Reforms work! Modi applies the Gujarat model and India grows at 6%+. This stabilizes the

commodity markets, but at a lower level than 2013. The increase in Indian GDP re-establishes

India on the global scale. India pushes for a seat on the UN Security Council and to gain it opens

dialogue with Pakistan. India faces increased terror attacks from a new branch of ISIS operating

out of Pakistan and Afghanistan. However, a newly confident India takes it in stride and pushes

India close to the West, especially after source of uranium are secured from Canada. The use of

British common law and the language and the plethora of Indian computer scientists in Silicon

Valley further entrenches the growing desire to trade with the growing nation and further gives

America reasons to collaborate in containing Islamists.

Investment Ideas:

-Indian Stock Markets

Japan:

Abe is successful in breaking years of deflating consumer prices and breaks the Yen in the process,

with it beginning its move to 300 to 1 USD. This ignites Japanese stock markets, think the Dylan

Grice thesis. Japan has still yet to deal with the demographic issue but this is kicked down the

road, why worry when the party just starts? The successes of this policy endangers future

hyperinflation, but once again, why worry after decades of deflation or disinflation? Japans

weakened fiscal state leads it to attempt to negotiate with China over the Senakus. Long term

China wins this battle, but in the short term it benefits none. In the background Japan begins to

change its constitution and rearm to become aggressive. However, this is a 2020 issue, not a 2015

one.

Investment Ideas:

-Japanese bonds

-Japanese stocks

Africa:

Its a mixed bag. Just like when going through your trick or treat loot, Africa is very much like the

chocolate bar followed by the pear, as you pull out your loot. Terrorism flares up in the Sahel and

Northern Arab states. Nigeria enters a civil war, or the beginning phase of it, as it may not be

determined to be a civil war until hindsight is clear. Lesser viewed African nations, i.e. smaller

commodity producers continue the road to democracy. Botswana, Gabon, Ghana etc...All improve

in levels of governance but still suffer economic setbacks due to concentrated export economies

still based on resources. South Africa further deteriorates.

Investment Ideas:

None

The Bear Case: NOT ALL OF THESE HAPPEN TOGETHER. THESE ARE BEAR SCENARIOS FOR EACH

REGION AND ARE EXCLUSIVE BUT COULD BE INCLUSIVE.

USA:

QE in the EU causes a rush into treasures pushing the 10yr rate down to 0.5-0.8% and pushes the

DXY index to 120. The higher dollar reduces the trade deficit but chokes off US exports and stalls

re-shoring. Although the inflation rate drops well below the 2% target the FED maintains, the FED

scared of back tracking boosts interest rates 0.25% in September, inverting the US interest rate

curve by year end. By year end the economy has obviously slowed and the FED goes to cut rates

back to the zero bound. The FED is now caught in a trap as they have very little room to move

rates down and cannot operate conventional monetary policy. Regardless of this the USD stays

relatively strong vs. the major trading partners and this pushes a wave of deflation upon the US

economy freaking out the FED. The response is negative interest rates and making the yield curve

almost flat at 0%. Money goes into hiding and stores of value such as art and metals. This sets up

the final peak in the bond bull market and pushes US stock markets to bubble territory. As

valuations become unbearable for even the bulls, gold starts to attract attention and begins to

rally with the USD. Rand Paul loses to Elizabeth Warren and Wall Street moves to London.

Investment Ideas:

-US Market ETFS

-gold

-Canadian gold miners with projects in non US dollar regions

EUROPE:

QE does not have the effect that was desired. As the EUR rapidly declines money is moved from

EU stock markets in to the CHF, gold, and US stock markets (US bonds initially but that creates the

final peak). The QE policy drives the EUR down and bifurcates the EUZ markets. The peripheral

countries debt charge becomes cheaper yet exports only pick up in luxury goods. Further, angered

Germans refuse to support peripheral tourist markets out of spite. Inflation picks up in German

and France but not in the peripheral markets as the unemployed have no money. Shortages arise,

but regionally and import costs rise and export costs stagnate. Hungary, Romania and Bulgaria

inch closer to Russia and Putin plays games with energy exports to reward and punish. This game

of energy brinksmanship revives the German nuclear sector and France doubles down on nuclear.

Some non-EUZ nations, like Poland push forward with shale gas exploration. Regardless, the

bifurcation of the EUZ countries bolsters the prospects of far right parties and threatens war in

Europe and the EUZ in general.

Investment Ideas:

-European luxury goods companies

-10 year German bonds strip bonds if available

-10 yr German/Portugal spreads

-Gold in Euros

Asia:

China:

The property bubble collapses and shadow bank credit dries up and disappears. The world finds

out China has created a ponzi scheme of industrial metals and a huge out flow of Cu, Ni, Zn metals

hits world markets with massive ripples. Africa and South America is hit hard on this and rethinks

their relationship with China. Some move to the extreme of becoming anti-Sino. This affects

Chinas reputation and attempt to divest the USD system. China is now forced to buy huge sums

of US treasuries and the old game has returned. The renminbi plunges vs. the USD and growth

registers south of 4% in 2015-16. Purges happen and corruption is cracked down on. Money then

flows to HK, Vancouver, SF and NY further creating bubble like conditions in those nations housing

markets, further turning opinion negative vs. China.

Investment Ideas:

-real estate in locations Chinese flee to

-Gold in renminbi

India:

The much discussed reforms in India are derailed by a terror attack or just competing visions of

India and Modi responds like a dictator, similarly how he did in Gujarat, with the Muslim mass

killings. India launches a retaliation attack against Pakistan and world braces for nuclear war. The

war is short lived, and not necessarily nuclear. Indias growth drops to around 2% and to reboot

India starts a massive armament campaign and take notice of who their allies are, and in their

paranoid state they determine, very few are. Sri Lanka is threatened due to Chinese investment

and world awaits Chinas response, as their economy is weak too. Both nations suffer a condition

of too many young men, due to sex selection process at birth and the rest of the world braces for

the outcome.

Investment Ideas:

Nothing good comes from this so guns, bullets and cash

Japan:

Hyperinflation with no improvement in the domestic economy wipes out the elder generation.

Exports improve at first but the cost of importing machinery and material destroys any sort of a

profit margin. Firms go bankrupt on mass. There is only one policy left to divert the masses

attention and that is war with China. Japan pushes to control the disputed islands and Taiwan,

which was once a Japanese island (albeit well before anyone cared). The balance in SE Asia is

affected and Japan attempts to re-establish war time operations. Nothing good comes out of this.

Investment Ideas:

-Hedged Nikkei positions

-hedged JGBs