Option On Ags. For Personal Use Only Do Not Forward

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1 Option On Ags At right we update commodity returns over the past six months. As shown, the worst performer has been agricultural commodities, which have delivered % total return over the period. And there are plenty of good reasons for that. At below right, we show current stocks (updated today by the USDA) and total production for the United States. As shown, production is near an all-time high while stocks are dramatically higher for key agricultural commodities than they were last year. Please note that both stock and production figures have been indexed to 1 as of 199. That said, in our view, commodities represent a material opportunity to the upside. First, we would note that positioning in agricultural commodities is at its most extreme levels of the last decade, with corn, wheat and soybean futures all registering a dramatic short position from managed money. In the chart below, divide the net positioning of managed money reportable entities then divide it by total open interest. Negative readings represent a net short, positive readings represent a net long. All series are then measured in z-scores: the current reading minus the average of all readings, then divided by the standard deviation of all readings. The result is a normalized figure that we can compare across contract series. As shown, managed money isn t just short agricultural commodities, they re historically short agricultural commodities Positioning: MM Net Longs As % of Open Interest (z-score) -2 Corn Positioning Wheat Positioning -3 Soybeans Positioning Copyright 215, Bespoke Investment Group, LLC. Bespoke Investment Page 1 of 5 BBG Commodity Total Return Indices: 6 Months, %) All Commodity Livestock Precious Metals Energy Industrial Metals Agriculture /14 1/15 2/15 3/15 4/15 5/15 6/ Supply Heavy: Indexed to 1 a/o Corn End Stocks Soybeans End Stocks Wheat End Stocks 2 21 Corn Production 19 Soybean Production 17 Wheat Production With price-sensitive players extremely short ags, we think that the professional community would be caught quite badly by surprise in the event of a spike in prices for basic foodstuffs. We would note that positioning is much less clear amongst other contracts (soybean oil, cotton, sugar, coffee, etc) but the largest chunk of most agricultural commodity indices is composed of the three we have discussed on this page. Group, LLC believes all information contained in this report to be accurate, but we do not guarantee its accuracy. None of the information in this report or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities.

2 So what s the catalyst for higher prices given robust supply? At right we show data from the Climate Prediction Center at the National Oceanographic and Atmospheric Administration (NOAA). NOAA models are showing an extremely high chance of El Nino occurring in the coming months. Red bars indicate the chance of an El Nino occurrence, while historical probabilities of El Nino are denoted by the red lines. Were El Nino to persist and intensify, it could have a material impact on crop yields and therefore commodity prices around the world, not just in North America. Furthermore, on a technical basis, the PowerShares DB Agriculture ETF (DBA) is in the midst of a basing process after coming very close to all-time lows over the past three months. To play this opportunity, consider DBA October 16th expiry calls at a strike of $23 for a cost of $.6. The calls break even at $23.6 (2.7% above current prices) and have a large delta (4) to the underlying. We like these limited downside options as a way to gain exposure to a very large trend that we believe technicals, climate, and positioning are setting up to support in coming months. In defiance of any apparent logic, US stocks flew to their best gain in over a month today with the S&P 5 up 1.2% on constant buying through the day. Late morning headlines that Germany would be conceding a longer-term deal to Greece sent equi- Economic Data: US Today, Int'l Overnight, US Tomorrow ties into overdrive as volatility collapsed. We aren t afraid of gains in equities, but the oversold bounce in Europe (discussed in this morning s commentary) and the Greek headlines don t strike us as sustainable drivers of a rally...for now, anyways. Treasuries bearsteepened with the ten year off 4.5 bps to close less than 2.5 bps from 2.5%. Meanwhile the Bloomberg USD index collapsed, down 75 bps as USDJPY came down 1.4% and commodity currencies exploded higher thanks to solid performances from the energy complex. Overnight, lots of data ahead of a big US Retail Sales report tomorrow El Nino Extremely Likely in Coming Months DBA: Last 12 Months /14 7/14 8/14 9/14 11/14 12/14 1/15 3/15 4/15 5/15 Time Release Period Estimate Reading Last 7: MBA Mortgage Apps Apr % -7.6% 1:3 Crude Inventories (bbls, 's) 5-Jun : 1yr Reopening ($21bn) 2.461%, slightly through 14: Budget Statement (bn) May -$97 -$82.4 -$13 17: RBNZ Policy Decision n/a 3.5% 3.25% 3.5% 19:5 Japan Int'l Investing Flows n/a : Australia Employment (') May +15.k k 21: Australia Unemployment May 6.2% % n/a China M2 Money Supply YoY* May +1.4% % 1:3 China Retail Sales YoY May +1.1% % 1:3 China Indust. Prod. YoY May +6.% % 2:45 France CPI YoY May +.3% % 8:3 Retail Sales MoM May +1.2% -- +.% 8:3 Retail Sales Ex Auto May +.8% % 8:3 Retail Sales Ex Auto & Gas May +.5% % 8:3 Retail Sales Control Group May +.5% +.% 8:3 Import Price Index YoY May -1.% % 8:3 Initial Claims 3-May 275k k 8:3 Continuing Claims 6-Jun 219k k 8:3 BBG Cons. Confidence 7-Jun *Note: Inconistent schedule, may not come out until later this week. The Closer 6/1/15 Page 2 of 5

3 Closing Charts & Tweets Popular Tweets on Twitter Nothing but positive comments from analysts on Lululemon, but stock down 3.5%. $LULU - 9:55 Now if there was only a way to get rid of the Apple Watch app that has been forced on to every iphone... $AAPL $MSFT - 1:19 Ambarella ($AMBA) parabolic, setting up for a big down day one of these days - 1:28 Netflix ($NFLX) soaring once again today. Nice $4 gain for us in our Model Stock Portfolio - 1:57 $TLT downtrend emerges. - 11:27 2,11 2,18 2,16 2,14 2,12 2,1 2,98 2,96 2,94 2,92 2, Oil Future: Last 15 Trading Days 5/2 5/22 5/27 5/29 6/2 6/4 6/8 6/1 US Dollar Index: Last 15 Trading Days 94. 5/21 5/25 5/27 5/29 6/2 6/4 6/8 6/ The Tale of The Tape: S&P 5 Intraday (Buy & Sell Programs Highlighted) S&P 5 Buy Program Sell Program S&P 5 Intraday: Last 15 Trading Days 275 5/2 5/22 5/27 5/29 6/2 6/4 6/8 6/1 Buy Programs stepping in on Germany/Greece headlines Gold Front Month Future: Last 15 Trading Days Long Bond Future Intraday: Last 15 Trading Days /2 5/22 5/27 5/29 6/2 6/4 6/8 6/ /2 5/22 5/27 5/29 6/2 6/4 6/8 6/1 Nasdaq Composite: Last 15 Trading Days 497 5/2 5/22 5/27 5/29 6/2 6/4 6/8 6/1 S&P 15 Biggest Movers Price (%) Volume vs Historical Avg (%) Most Up Most Down Most Up Most Down HCC FRAN HCC MCRL LQDT 9.86 ZQK MANH PLL PES 8.32 ACI -6. FRAN ROSE CAS 8.18 HRB NWE KATE TTI 8.7 DWA OXM CRM ROCK 8.2 PERY LTM TWC AREX 7.69 SM -3.8 NEM 54.5 NLSN TG 6.84 FF -3.6 GPOR CVC ALXN 6.82 NEM LMOS CCE BCEI 6.49 IO -2.9 ATO 42.3 DISCK QNST 6.34 RRC CBK LL APOG 5.99 REGN NFLX RAX SGY 5.31 URBN ZQK ALTR KOP 5.1 PVA SNH FIS AFAM 4.98 MCF JCI AVP Key ETFs (1 Day % Change) Ticker Name Change Last 6 Mos SPY S&P IJH S&P IJR S&P DIA Dow QQQ Nasdaq 1.37 IWB Russell IWM Russell XLF Financials 1.42 XLB Materials 1.4 XLE Energy 1.23 XLI Industrials.99 XLY Cons. Cyclical 1.3 XLP Cons. Staples.98 XLV Health Care 1.23 IYZ Telecom 1.24 XLK Technology 1.56 XLU Utilities.5 GDX Gold Miners.96 XME Metals & Mining.9 XRT Retail.92 XHB Homebuilders 1.57 IYR US Real Estate.71 KRE Regional Banks 1.45 IWD Russell 1 Value 1.16 IWF Russell 1 Growth 1.2 VXX VIX -4.1 AGG Total Bond Mkt -.25 TLT 2+ Yr Treasuries -.88 MUB Muni. Bonds.3 LQD Invest. Gr. Bonds -.27 JNK High Yield Bonds. BKLN Senior Loan. GLD Gold.85 SLV Silver.2 USO Oil 2.13 UNG Natural Gas 2.4 VT Total World 1.62 CWI World Ex-US 1.79 VEA Developed Mkts 2.8 EEM Emerging Mkts 1.46 EZU Eurozone 2.77 DXJ Japan JPY Hdg'd -.27 EWZ Brazil 1.39 FXI China -.94 EWT Taiwan 2.67 EWH Hong Kong -.39 EWW Mexico.85 The Closer 6/1/15 Page 3 of 5

4 Bespoke Market Timing Model: 6/1/15 Bearish Neutral Bullish Current Level Average S&P 5 Performance (%) Sentiment Indicator Direction vs Historical One Week Two Weeks One Month CBOE Call Volume 1.7 ## NYSE Up vs Total Volume (%) 45.7 ## Nasdaq Up vs Total Volume (%) 49. ## Index vs Equity PC Ratio.2 ## VIX 5-Day ROC (%) -8.9 ## VIX 1-Day ROC (%) -.4 ## Investors Intelligence Bullish (%) 47.4 ## Investors Intelligence Bearish (%) 16.5 ## Inv Intell. Bull Bear Spread 3.9 ## AAII Bullish (%) 27.3 ## AAII Bearish (%) 24.6 ## AAII Bull Bear Spread 2.7 ## Overall Sentiment ## Technical S&P 5 1-Day Avg. Spread (%).2 ## S&P 5 5-Day Avg. Spread (%).2 ## S&P 5 2-Day Avg. Spread (%) 2.9 ## S&P 5 Monthly ROC (%).3 ## S&P 5 Weekly ROC (%) -.4 ## S&P 5 Quarterly ROC 1 (%) 1.9 ## Group 1-Day A/D Line -32. ## Group 5-Day A/D Line 13. ## S&P 5 1-Day A/D Line ## S&P 5 5-Day A/D Line -32. ## NYSE TRIN Index 1. ## Overall Technical ## Fundamental/Monetary Corporate Spreads (1-Day ROC) 4. ## Corporate Spreads (5-Day ROC) 1. ## High Yield Spreads (1-Day ROC) 18. ## High Yield Spreads (5-Day ROC) -7. ## S&P 5 P/S Ratio 1.8 ## S&P 5 P/E Ratio 18.6 ## S&P 5 P/B Ratio 3.1 ## Yield Curve (5-Day ROC). ## Yield Curve (1-Day ROC) 34.5 ## Overall Fundamental ## Bottom Line ## Average S&P 5 Performance (All Days) The Closer 6/1/15 Page 4 of 5

5 Current Level Average S&P 5 Performance (%) Sentiment Indicator Direction vs Historical One Week Two Weeks One Month CBOE Call Volume Overall Sentiment Bottom Line Average S&P 5 Performance (All Days) The Bespoke Market Timing Model is a compilation of some widely (and not so widely) followed market indicators. While most investors have one or two indicators they rely on, we all recognize that no indicator by itself is correct all of the time. With this in mind, we set out to create a series of indicators from multiple disciplines in order to see what the 'crowd' of indicators are telling us. Just as no individual is bigger than the market, we contend that no single indicator is more accurate at forecasting the market than the sum of them all. What follows below is an explanation of the various fields in our report. Indicator: Current level of the given indicator. In this example, CBOE call volume is 1.7 times CBOE put volume. Direction: Change in the indicator (positive or negative) over the last week. In this example, calls relative to puts have increased during the last week. vs Historical: This field measures the distance in standard deviations that the indicator is currently at versus its average over the last five years. In the above example, the volume of calls relative to puts is.6 standard deviations above its historical average. Indicator: Current level of the given indicator. In this example, CBOE call volume is 1.7 times CBOE put volume. Average S&P 5 Performance: This field displays the average performance of the S&P 5 following previously occasions when the indicator was at similar levels to the present. Values highlighted in green indicate the two indicators for that group which are predicting the biggest gains, while indicators highlighted in red highlight the indicators which are signaling the most negative returns going forward. Overall Scores: Averages all the indicators for a given category. In the example above, overall sentiment is.3 standard deviations from its long-term average. At similar levels in the past, the S&P 5 has gone up an average of.14% over the next week,.16% over the next two weeks, and.28% over the next month. Bottom Line: This line shows the average of all the indicators in the study. In the example above, the aggregate level of all the indicators is currently.3 standard deviations above the historical average, and based on prior experiences, the S&P 5 has gone up an average of.12% in the next week,.21% in the next two weeks, and.27% in the next month. Values highlighted in red indicate returns that underperform the S&P 5 over the entire period covered (regardless of the indicator level), while green highlights indicate that they outperformed the overall average S&P 5 performance. Average S&P 5 Performance (All Days): This line measures the average historical performance of the S&P 5 over all periods for one week, two week, and one month time frames. These levels are then compared to the average level the indicators are predicting.in the next two weeks, and.27% in the next month. Values highlighted in red indicate returns that underperform the S&P 5 over the entire period covered (regardless of the indicator level), while green highlights indicate that they outperformed the overall average S&P 5 performance. Average S&P 5 Performance (All Days): This line measures the average historical performance of the S&P 5 over all periods for one week, two week, and one month time frames. These levels are then compared to the average level the indicators are predicting. The Closer 6/1/15 Page 5 of 5