Alternative Assets Update

Remember these are technical comments only. Just as you must aware of fundamental data of stocks we recommend technical based on technical criteria in the report, so too must you be aware of important data of delivery, market moving government releases, and other factors that may influence commodity market pricing, We try to limit our technical comments to the

The third quarter has come to a close, and with that we do our customary look-back at how the quarter fared. Overall, Commodities slipped on the proverbial banana peel. In fact, the past quarter is a mirror-opposite to what we saw in the first quarter. For Q1, the vast majority of Commodities logged gains, and in some instances, very sizable gains. But the opposite is true for Q3: all but six commodities finished in the red for the quarter. The best performers were Coffee [KC/] which was up +11.76%, and was closely followed by Feeder Cattle [FC/] which gained +10.65%. Rounding out the top five for the quarter were: Cocoa, Live Cattle, and Aluminum. On the flip side, significant losses were seen by many commodities, thereby serving to dampen the returns of the commodity indexes.

The Continuous Commodity Index [UV/Y] lost -9.99% for Q3, while both the DWA Commodity Index [DWACOMMOD] and the Goldman Sachs Commodity Index [GN/Y] fell -10.88 and -12.80, respectively. GN/Y was in part held back by the Energy complex, and namely Crude Oil [CL/] due to its overweighting in that area. Crude Oil fell -13.18% during the quarter, and for the year comes in -7.22%. The other big losers for Q3 are the Grains, as their leadership role was very short-lived. Soybeans [ZK/] was the worst performer, falling -34.79%; and Soybean Meal, Corn, Cotton, and Silver round out the bottom five performers. When we look at the year as a whole, we see that the strong Q3 performers are also the ones, by and large, that have the best performance YTD. The only exception to that is Lean Hogs [LH/], which suffered a notable loss this quarter, yet for the year is still handily in the black. In looking at the dispersion YTD, we find it much in line with the historic norms. For example, through the third quarter, the dispersion was 105% between the best performer and the worst performer.

The Commodity ETF and ETN performance, as no surprise, reflects the statements above. For example, the best performer was the iPath DJ-UBS Coffee ETN [JO], which gained 9.35%. Other top performers are: Base Metals and Livestock. Conversely, the laggards for Q3 are those related to Grains and Precious Metals.

The US Dollar [DX/Y] was up 7.70% last quarter, causing almost all of the foreign currency ETFs to end last quarter in the red. Just to get an idea of the broad weakness in the foreign currency space due to the strength in the US Dollar, the DWA Foreign Currency Index [DWAFXI], which is a basket of seven foreign currency ETFs, was down -6.75%. The best performing foreign currency ETF was the WisdomTree Dreyfus China Yuan ETF [CYB], as it was up 0.80%, making it the only one to end the third quarter in the black (other than the US Dollar). The worst performing currencies were the Euro [FXE], Japanese Yen [FXY], and the Brazilian Real [BZF], as they were down -7.87%, -7.74%, and the -7.34%, respectively. The best performing foreign currency through the year (outside of the US Dollar) is the Brazilian Real [BZF], even after much of its gains were taken away last quarter.