Interview with Eduardo Bastida: Trader and Portfolio Manager

This is a note from my friend and ex-competitor Eduardo Bastida.  He is one of the better macro, technical and event traders I know.  He, much like many of the traders for whom I have respect, grew up trading emerging markets derivatives with me in the early nineties.  At the time, he was a young Brazilian at "Banco" ING in Sao Paolo and I was at Chemical Bank (now JPMorganChase) and then Morgan Stanley.  Later, Eduardo moved to London (via New York) and to proprietary trading at Commerzbank then as a portfolio manager at WMG.

He was nice enough to let me reprint his comments here.   I fixed them up a bit to take out some trader jargon and instant messenger grammar.

"ola,

As you know i look at the world through technical eyes (with a bit of fundamental tint to it).

Equities: The market has gone down more than I expected, breaking the bullish trend established in October 2002 and March 2003 in the SPX [S&P 500], SX5E  [Eurostoxx 50]  and NKY [Japan's Nikkei 225].  I was surprised by that, so waiting there. If anything, I would go long NKY, short SPX/SX5E on a non-beta basis.

Dollar: I look at the DXY Index [US Dollar Index] and I think we can have a surprise on the upside, with the index attacking 90 and an acceleration towards 100, if 90 is broken.  What could cause an aggressive strengthening of the dollar?

Bonds:  I agree with you. I think we are just retracing a bit, but still look for some steepening on the 10-30 [year US treasuries] and a 50-100bps shift in the whole [interest rate] curve past 5 years.

Commodities:  A bit concerned there on what sort of bursting we can have in the base metals (and the further consequences for Emerging Markets). Don't think we will see oil bellow $65/bbl.

Credit: Lagging equities and currencies in Emerging Markets - is this the next class to burst? I don't think corporate or sovereign investment grade will suffer, but I am a bit concerned with lower quality credit (all the Merger  & Acquisition  generated debt and again the commodity supported lower quality Emerging Markets).

 

and that is it!

cheers,

Edu"

interview Eduardo Bastida