Having asked questions they don’t offer us a clear road map but illustrate several alternative paths. Their own probable path is left more open at present. This is good in my own view. Lets not be too prescriptive here. Lets see how this unfolds with cyclicals and defensive stocks, bonds and commodities. We are in unprecedented monetary territory. Is it any surprise that asset markets are not displaying clear historical precedents here.

Macro wise we continue to see the themes unfolding as we have seen for several years. Namely, monetary growth in a negative real interest rate environment therefore supporting the search for a store of value theme across all defensive type stocks.  The real economy outside of these asset price rises continues to struggle so cyclical themes struggle although nominal price rises for their products and margin growth sustains as high yield bonds see perpetual yield compression. Therefore commodities continues to struggle as real demand declines.

To add to the Swiss teams comments. The key pillars of the US housing index and finance index sectors continue their breakouts. Today the US high yield made yet another new high confirming the S&P, Dow, etc, breakouts as commodities continue to struggle with the key commodity currency the AUD breaking through her supports vs the US$ surely a crucial materials signal of weak real demand.

The bullion weakness has continued just as the physical bullion issues persist and physical premiums widen further. On price weakness i am personally laddering a large option call position for my book into the asset class with time expiry stepping along the timeline of the next 18 months or so. This strategy accepts that short term the asset class is difficult to call but that short term moves aside the fundamentals remain firmly in place therefore on any technical signs of low historic volatility and or large swings downward in price I will continue to accumulate option call positions.

Without more delay here this week’s fascinating report:

Wklytech-14-05-13

Also attached here below is the latest WF fundamental economic report illustrating weak real demand in the economy. Of course weak demand doesn’t matter in terms of asset price rises just so long as central banks continue to expand money supply. Currencies are simply being debased not demand increased hence real demand continues to flat line (real inflation adjusted) whilst asset prices soar upward. We can see these issues unfolding clearly before us in the various asset market prices.

ImportPrices_05142013

All the best

Rich

It was becoming clear last week that the bear case had weakened. US markets have indeed made new record highs and market breadth has improved which the Swiss team are now acknowledging. Issues like the Russell2000 joining, as well as the semi conductors, extensions of breakouts in some of the key sectors as well as the high yield index, etc, have sustained this bull rally onward and lent much strength to her. Other issues the Swiss now pick up inc the new 52 week high breakout and the advances decliners breakout (Which turned bullish in the last few weeks).

The Swiss team are nonetheless sticking to their near term pull back scenario for US indexes. There seem to be three key planks to their near term call.

i) Vix divergence

ii) Divergence forming in the NYSE 50-Day Arms index

iii) Sentiment – (They sight this but i haven’t seen the evidence for this as AAII is certainly far from contrarian levels.

I’m out of time to comment on these issues now but lets pick these issues up in the forum pages. Other markets are commented on inc the Nikkie  as well as pro cyclical rotation, etc.

Without more delay here the report:

Wklytech-07-05-13

All the best

Rich

As a summary they are sticking to their call that this remains distributive. A key plank of their argument is that until we get a rotation into cyclicals and away from defensives the theme remains distribution. This is a classic analysis and is historically correct. Cyclicals wise the semi conductor index has broken out and the wider tech indexes, like the nas100, has also broken out. The Dow transports have bounced but not broken out. Housing and finance did both score a breakout again but its weak thus far with little through as yet. The defensives of health care and consumer staples remain over bought.  The key cyclicals of energy, materials and industrials have bounced but remain weak.

The team have been in stretch mode for the last few months in making their near term correction call. So this week i want to make a few observations of my own in an attempt to cross examine the ‘distribution’ call. I partly make these observations as in my view, its touch and go here now as to whether this remains distribution or is in fact the start of yet another wave higher. We should acknowledge here that the market internals have improved for the bulls recently. We should at least record these as market facts here and i say this as someone who until a week or so ago had hedged a portion of my own book for protection.

The bull case would importantly sight the cyclical sox breakout, nas100 breakout as well as the high yield bond rebound confirming the compression in yield across all asset classes.

Here a chart of the S&P500 with the US high yield debt index.

Back at the end of March the historic positive correlation between the two had broken down adding much weight to the bear case. This weight has since evaporated with the high yield index scoring a higher high confirming the S&P500′s own higher high. The two are back in unison and we need to recognize this and understand what this tells us, in terms of the hunt for yield, across the capital markets. It would be wrong as well to ignore the european debt markets. Piigs debt has seen significant yield compression. The Italian and Spanish debt yields are seeing positive capital inflows with new high highs for their debt, lower yields. This is significant and would usually imply a tail wind for yielding equities and euro finance.

As a general comment, we must all be honest with ourselves on these various indicators. We are playing probabilities here, that is all. Models come and go as human and policy actions drive capital towards and away from asset classes. We must listen to market indicators and events and no try and force our reading of events to fit our models. This is the classic technical error. I’m not accusing anyone of this mistake here as the evidence is still unclear but we must constantly question our own practice to ensure we do not fall fowl of this error.

And trying to piece these various debt market instruments together within some sort of marco cycle model. What might these shreds of evidence be telling us?

In my view it maybe is an indication that, with central bank’s so aggressively maintaining negative interest rates as well as their new money creation programs that these actions are having consequences on capital holders. Capital holders fearful of expropriation are leaving cash as a store of value. Capital holders are seeking any positive returns, at any risk, and so driving down yields across all asset classes. We must remember that substantial ‘EM” reserves have been accumulated over the last 15 year as a consequence of the west’s consumer boom. The holders of these reserves are now fearful they are to be expropriated. These are unprecedented monetary times. Historic patterns of sector rotations might see significant stretch before they mean revert would be a reasonable comment to make.  Do the material & industrial cyclicals have to score higher highs to allow these indexes to march higher given this search for yield? With yield compression and monetary action so wide spread i’m not sure as the team are in this respect. Especially given the higher high that the high yield index has made in recent weeks.

On the bullion side the team remain bullish as a medium and longer term comment. In my view this market wide theme of expropriation avoidance and a search for a store of value plays perfectly into the bullion asset class. My book remains unchanged other than i have accumulated a large line of option calls on the bullion and her miners. Lower prices have lead to a surge in physical demand. This is telling in my view and is part of the same issue as the high yield index scoring a higher high.

In summary, the line is wafer thin between the bull and bear camps now. Weakness has reduced, in the last 8 sessions or so.

Without more delay here the report at this critical moment in asset markets.

WklyTech-30-04-13

The very best to all

Rich

We have growth with the US GDP coming in at 2.5% today for Q1, below consensus but in a world awash with slow, or negative – Europe,  growth a positive reading is something at least. German pmi came in weak again and the UK managed to score a positive gdp number which was a relief to all those holding UK assets long the GBP. (No matter hedonic and substitution changes to the inflation calculations probably grossly over  states all of these “growth” nos).

Yields across all asset classes have continued to fall with high yield junk bonds this week reaching record prices and therefore low 2008 yield levels. Even Spain’s sovereign ten year notes are now below 2008 levels whilst her debt and unemployment levels are twice as high as they were in 2008. US stock indexes continue to push ahead with much market breadth and internals improving this week. This equity bull run has legs to run further, apparently. With yield compression across all asset classes at feverish levels is it any wonder. The theme of “cash is trash” continues care of the developed world’s central banks. Its noteworthy to see how the emerging world’s surplus reserves are now also in the hunt for yield and protection from currency debasement.

Care of Bloomberg here:

http://www.bloomberg.com/news/2013-04-24/central-banks-load-up-on-equities-as-low-rates-kill-bond-yields.html

Quite simply the amount of paper money created from the credit expansions of the last few decades as well as recent qe programs means the world is awash with money. There is a glut of paper and not enough physical assets. The search for yield and protection continues therefore in a world of negative interest rates.

The ongoing bullion physical issues remain with this week the US mint suspending all physical shipments, Comex stocks sinking again and JPM’s own store being halved to the lowest levels since store records began. The bullion story has a long way to run it seems. Asian demand has been immense in the last two weeks now. The disconnect between the US paper markets and the physical market has never been greater. How the issue is eventually resolved is anyone’s guess but a large physical seller needs to be found. My guess the IMF will soon step forward as custodian of the piigs (and other’s) gold.

Here the WF macro pdf.

WeeklyEconomicFinancialCommentary_04262013

Have a great weekend all and onwards we march

Rich

In summary, they are long and medium term bearish on the asset class. They sight rising interest rates, low inflation and an improving US fiscal picture to cap any short term bounces in the bullion. Near term they are more bullish but only a bounce. They have, apparently, closed their proprietary short positions though why they would flag so clearly their own positions is for anyone to guess. (GS derives the bulk of her profits from prop trading).

Here their take on the bullion market:

Bullion-Market-Update-April13

And to counter weight this generally bearish take on the bullion here Hinde Capital’s most recent report.

HINDECAP-April13

And here the Open interest issue which i’ve picked up on in the forum area. Its one thing to short sell an instrument. Its quite another to book the profit successfully. Open interest (as of last Tuesday) remains at an extremely elevated level and it is predominately a short position. More sellers need to be found and given the comex and world wide lack of physical supplies, quickly.

pmcftc_weekly

The combined options and futures OI is at extremes whilst the long position is at extreme lows. This is usually bullish. Note the non commercial long position remains extremely depressed in the paper markets. When sentiment is at its weakest (especially in the non commercials) is usually an indication of an immediate price reversal. In this market however it is systemically useful to the commercials to keep prices low so the bounce may be more shallow than in other commodity markets due to this issue.

Here the legendy Jim Sinclair on the Comex physical issues:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/24_Sinclair_-_Full-Blown_Panic_As_People_Ask_Where_Is_The_Gold.html

And here Capsyn’s prior coverage of the story of the Hunt Brothers.

http://www.capitalsynthesis.com/the-hunt-brothers-remembered-regulatory-lessons/

Onwards we march

Rich

Short term issues remain as were. On the short term, we have a bounce  which is an opportunity for adding to hedges. Euro indexes have having been more over sold have enjoyed a higher bounce than the US sectors, thus far.

Of particular note the sx7p or euro banks have enjoyed a large bounce in the last few days and are at a reasonable hedging level again if you are either long euro banks or a trader looking for an decent profit loss entry point on the chart. (EXV1) is the Ishares IBIS listed etf.

Commodities are discussed and their mean reversion from a may tactical bottom is sighted. Bullion is also highlighted  inc a mention of manipulation in the market. The Swiss team prefer to ref the US$ strength and equity strength as the explanation for now though the fact they, in addition to the FT and other market commentators, discuss the issue is note worthy in itself. They again stick to their secular bull intact though raise the

On the longer time frame, the market cyclical issues are also discussed which is of great interest.

We have some confusion in the cyclical road map here. Much commodity weakness indicating deflation, which should be bad for equities just as equity indexes remain close to record highs. Is the equity market indicating the perfect begin inflationary conditions in step with zero interest rates, renewed consumer spending? In other words a new secular bull market for equities? In my view, we are in uncharted monetary waters which would explain the sector correlation confusions and therefore cyclical confusions. The market will find its north eventually as it always has done in the past. Timing is, as always, the issue here. Policy makers can alter laws and debase their currencies to hold up values but there are always consequences for such actions and these will show themselves in prices, eventually. When they do clarity will be found in the various asset markets. As policy makers interferences are becoming more pronounced prices increasingly adjust in shock, mean reversion, moves. These shocks make trend trading particularly complicated. Trends run until they snap back in one lighting fast reversion to the real conditions in the economy. If markets were allowed to run their course in stead of being smoothed by central bank and policy maker “jaw boning” we would avoid these “heart in mouth” reversion to reality moments.  As it seems there is little to no chance of policy makers stepping back we had better get used to trading in these circumstances.

Report here

Wktech-23-04-13

All the best

Rich

US index Sp500 false breakout. Rus2000 failure and looking very weak. Sub sector weakness with no new higher highs in all the major indexes. Simply a few issues created the false breakout. Euro indexes and inter market sectors bounced but a very weak bounce which fails to convince or confirm any sustainable strength. Commodity weakness and generally deflationary theme coming through. The bullion market surprising weakness but nothing yet has invalidated that a near term bottom is very close and that the bullion bull market is intact.

I’d only like to add instrument selection now with such volatility in key bullion markets is key. Option calls are a more expensive tool than futures but in extreme volatility where clinical entries are impossible i would encourage all to explore the instrument. All you can lose is your premium with such instruments. 80% of the time you will be wrong but the gearing is so high and  (especially in volatile huge secular bull markets) the upside is so great that the instrument, at present, is an ideal tool to use. Options are useful (and most profitable) in highly volatile markets after a period of distribution. These are exactly the circumstances we have in the bullion markets right now which. Any questions on these instruments come back in the forum pages. Here is also not the place to go into the detail of the open interest issues on the bullion nor the comex physical supply issues but the issues are real, large and potentially game changing.

Ill leave the immediate technical detail to the report but happy to discuss option and OI, order book and physical bullion issues on the forum.

Wklytech-16-04-13

I also include the German team’s more limited (though nonetheless useful) tech report on the Bullion

BullionWeeklyTechnicals-12042013

Also on the macro front, an excellent report slightly surprisingly from WF. I say this as usually they are guilty, in my view, of coloring their reports towards a pro US centric view of the world. But on this occasion, in discussing the longer term horizon, they are unusually open about the issues facing the US and developed world economies. The report attempts to seek historical precedents for where we find ourselves and explores the keynesian counter cyclical strategy. It concludes we have moved well beyond the keynesian model, as we also concluded several years ago.  We have an all together more virulent strain of neo keynesianism. The report makes pretty bleak reading. Don’t sell your gold folks.

Here the WF report: Fiscal Policy Model 04152013

And finally. An investment area of mine and many on this website i believe, in the last few years, has been Singapore and her currency. I therefore include the quarterly macro update from WF on the Singapore economy.

Singapore GDP_Q1-2013 _ 04152013

Instruments and detail on the forum as usual.

All the best and onwards we march.

Rich

They pick up on many of the same issues we have been seeing and commenting on in the forum, for some time. Continued inter market weakness, low volume, market breadth issues. They also pick up on the vix divergence on the recent breakout high and also the over bought weekly indicators which are at extremes.

Some specifics.

SOX (SMH) failure. She’s at a key support today. On yesterday’s latest breakout they neatly pick up on the exact same comments we have in the forum pages ie health care and staples leading in the charge in the US indexes which is hardly a bullish indicator. They also belatedly pick up on the smaller & medium cap issue weakness in the russel2000 index that we have been noting for some time in the forum section.

They note the HGX false breakout. Let me repeat here, “from failed moves come fast moves’. Its a fascinating index to be short specific issues the housing index as many have moved to a price point beyond their 2006 2007 high water marks yet housing volumes are very light by comparison to prior boom conditions. (As we have commented, it appears participants may have got way ahead of her self on housing related issues. And where housing leads the consumer tends to follow ie consumer discretionary will follow).

Correlation and inverse correlation instruments. The USDJPY has recorded a trend break, which again we have picked up and this is dangerous for the nik225, etc. Em indexes small bounces but the highs of their rallies where recorded back in feb, in the main. The AUDUSD has continually failed to breakout and the commodities remain weak with copper, a key cyclical instrument showing great weakness.

There are so many independent pieces of evidence here. Its a strong case that we are within days of near term market top. Unlike the team my own work does not produce such a clear indication as whether this is the top for the year or whether it is a near term top only ie with one move large bounce to follow later into q2. On an extended fall in the indexes i will be on the look out for clear evidence across the usual tech indicators for a base in price in the key sectors like finance, housing, tech and the industrials as well correlating international instruments. On a high degree of confidence take the entry and then see if she runs. Its as simple or complicated as this for me. We have had a bull market in equities for the last 4 years or more. The failure of this bull shouldn’t occur in one move over night. This seems entirely logical to me especially as we have late reversal of fund flows who will be looking for entries to belatedly enter this equity market.

Lastly the team remain bullish the bullion even should the prior low be found at 1555. I’m sitting tight on my bullion. The commercial shorts are at ten year extreme positions. Should a short squeeze occur it could be a significant market event.

Here the report:  http://www.capitalsynthesis.com/wp-content/uploads/2013/reports/UBSTAWeekly03-04.html

Apologies to non flash users. The report is in a flash format this week.

Also here the German tech view of the bullion market from Tuesday. There is nothing new here. We all know these levels clearly as does the entire market. Nonetheless its always interesting to here their views if only it re-confirms that many in the market are using the same levels.

Report here: BullionWeeklyTechnicals02042013

And a new report here which is the Swiss team’s run through on the major fx pairs. I’ve been tracking for a while and its a good report so it might become a regular. Usually at the start and end of the trading week their comments extend a further than the day view which is the useful bit in my view hence i post up here yesterday’s report as the start of the European trading week.

Report here: fx-02-03-13

The devil is in the detail as always. So lets continue this on the forum pages.

I encourage everyone who reads these reports, of which i can see are over 300 unique visitors a day, join us on the forum pages to share practice and knowledge. Its to all our advantage to do this.

All the best

Rich

Tracking through them the long J-reit trade has been + beta trade in the wider Japanese equity bull run. The trick here to achieve a double + beta was the fx side of things. Its one thing to get the sector correct its another to get the fx correct ie either long or borrow and its another then to get the stock selection within the sector correct. Allow me to enjoy some success on this trade as a tick in all three boxes occurred over the quarter though i did let the US$s go a little to early in hindsight.  Soros apparently 1bn us$ this quarter alone from a very similar trade. Its my understanding he bagged the alpha, of course, by being long some specific Japanese industrial stocks with borrowed Jpy. This was the highest paying trade in the market in Q1 2013. My hat off to Soros who regularly seems to bag such trades. The other greats in the business must be slightly envious of freedom of movement. Ie Einhorn and many of the greats are hamstrung by the focus of their various funds. Soros and his family are trading their own capital now across the world’s markets so can opportunistically take these macro trades. Anyway well played Soros and his team.

Of course i could get all philosophical here on this Easter Friday,  for a moment i will. We should note finance is a zero sum game. Japanese pensioners and savers have transferred their wealth to speculators this quarter due to their government’s jpy debasement strategy. Their purchasing power will be debased by Kuroda and his team at the BOJ.  I make no judgement here on Soros, or myself for that matter. I could quote Austrian school economists as to why such speculator actions are actually functional as actually such trades thwart government expropriations. Ie if all Japanese pensioners had taken the same trade the government could not have debased in the way they had. Speculator’s actions are market enhancing and free markets are what protects liberty. It does not destroy it, contrary to what the central planning, Neo Keynesian, progressive doctrine tell us.  Enough of the philosophy.

On the macro and micro economic news front everything has been consistent with the weak ‘recovery’ story. Understatement of inflation continues so theoretical growth occurs. Real incomes keep falling, although disposable incomes is apparently rising given debt servicing costs have been pushed down so aggressively by the Fed’s debt monetization programs. Debt servicing costs for the US consumer to income is at an all time record low.

(Although its also worth noting that the US 15 and 30yr mortgage rates are refusing to fall further and now rising, in spite of Ben buying as many as he can each month. Has the tailwind turned and is now becoming head wind on disposable income?).

World trade economic indicators keep bouncing around a neutral position indicating continued weakness.  World pmi indicators remain very subdued/weak. We got the US enforced budget cuts. 2013 cuts amount to 85bn which is the same amount as Ben prints off every month note. Therefore the effect on ‘growth’ is limited and the markets understood this. More meaningfully in terms of fiat monetary confidence, an important issue for holders of gold we got savings confiscations inside the developed world and also very harsh capital controls. The euro has taken a small hit and bullion hasn’t moved on the news and is down over 5% in the quarter. Sometimes markets don’t appear rational and this is one of the those moments. Optimism that Ben and the neo keynesians have discovered alchemy and so re-capitalize the system via money printing is at a high at present. Economic data for now seems benign lets say. Here the WF economic roundup for the last week. They have a positive bias towards the data they review but its nonetheless a useful report here:

WeeklyEconomicCommentary_29032013

Also in the quarter private investors have started coming back to the market as seen in the Lipper fund flow data, note, at the closing of  tired wave 5 move off the back of a 4yr 250% rally in equity indexes. The US consumer’s balance sheet wealth due to housing and stocks as been enhanced sufficiently that they are consuming again and running down savings (5yr low of 2.2% in Feb) to enable their consumption of consumer goods once more. (Although increasingly the US consumer is needing to use the reduced savings and debt servicing tail winds to purchase food and gas, note).

Such things as private investor confidence, record low savings, huge government deficits and large consumer debt to gdp ratios are usually timed with market tops. I would certainly not chase this market here and now but many private investors are it seems chased out of savings by negative interest rates created artificially by their governments.

Below a useful selection of euro sector indexes. Professional markets like the ones we have today dominated as they are by large institutional players demands that we look for the “wood in the trees”.  There are times when price momentum trading works and other times, such as these, where it is simply not enough as the professional conceal their capital moves by order book manipulation. We have to look inside the market at the intra or inter market to understand what is occurring. Here price analysis of the sectors can be useful as can market breadth ie how narrow or wide the market move is. The wider the more meaningful and the narrower the less likely it is to sustain.

In a fiat market, capital light, perpetual money supply growth system finance is all important as is housing and consumer consumption. So these sectors must be watched and the breadth within these sectors must also be tracked. (Of course the flip side of perpetual money supply growth systems is usually inflation and currency debasement. You cannot create more capital via debasement of your currency. Its a zero sum game in which all you achieve is the transference of wealth from one group to another).

Here a chart i’ve used more recently and referred to on the forum pages of this website. Its the Euro Health Care sector index which is almost entirely pharm cos. The sector has been one of the performers during this epic 4 year bull market. But as we can see one of the largest pharmas in the euro area has significantly under performed. This is unusual as the co in question, GSK is large. She obtains a quarter of her revenues (this sector growing rapidly) from emerging markets. She has some world leading consumer staple brands. Her R&D budget for new drugs is one of the largest in the world. She pays a large divi and enjoys good divi cover. She has increased divi payments for as long as i can remember above the rate of inflation. Her pipeline for the rest of 2013 and early 2014 is significant if successful. Of course if the pipeline uniformly fails her under performance will continue but this current breakdown in the correlation demonstrates much pessimism is priced in to the stock.

GSK is far from a ‘screaming’ buy especially as we are over bought on equities at present but on dips i would certainly be seeing to add. If GSK was a smaller pharma player of course the under performance could extend. Private investors always love to try and buy – beta, ‘fallen angel’ stocks which is usually a receipt for disaster as their capital sits in stocks that the insiders ignore waiting for the bounce that never comes. But GSK is not a smaller player. She is a huge player in the industry. If her sector under performance sustains, the management and all the R&D spend will have been in vain. This can occur especially in fast moving industries. E.g. Nokia in her fast growing consumer technology sector for one.  But its a reasonable trade to take as regards GSK as usually the correlation will, at least, revert or close the gap considerably to the mean unless something is seriously wrong in the co. The technical chart above. For disclosure i hold and added some more a few weeks ago.

Lastly above here the Euro telcos. FTE stands out, in my mind as a useful addition. Again not a screaming buy due to euro government interference issues but in a world of negative interest rates and great yield compression and optimism i find a lot of pessimism is priced into FTE and euro telcos. Assuming we don’t have a new k-wave spring at all and this is a false dawn then high yield consumer staple infrastructure type stocks are actually not a bad place to park some capital so long as they are as beaten up as many in this sector are.  I picked up FTE and the euro telco index off the lows a month or so ago.

Its been a reasonable Q1 but an under performance of my book to the trade weighted US index performance. We have seen a strong US$, strong US indexes, with new all time, nominal, highs. Inflation adjusted it all looks so different of course. Against this positive back drop we have seen weak  commodities, bullion and emerging markets. The combination has lead to me struggling to keep pace with the trade weighted US indexes as I spread my capital across world markets and instruments with a bias to the ‘inflationary’ scenario.

This bull market is in her wave 5 according to UBS which is associated with a narrowing of the rise in asset prices and sectors and stocks. This is text book so far so i’m relaxed on the ‘struggle’. I do hold some shorts on the US consumer as the sector and charts of specific issues are very extended. I’d mention the US maul owner reit Simon property here. Bring up her chart. Also SPF on the US index, the home builder. I am expecting Ben to be successful in creating another short lived housing bubble in the US but the market has likely got ahead of herself as can often occur. Tactical shorts. The US savings is back to historic lows and mortgage interest rates and high yield instruments are indicating higher rates not lower and their inverse correlation to equities is again non confirming at present. Indications of, at least, a pull back in this group soon. I remain light of shorts in general as per the comments re a lack of price indication that this narrow bull market wave 5 is done. As we comment week on week here there are more and more non confirmations of this wave 5. I’ll leave you with the complete breakdown, the first time in this entire 4yr rally, of the US high yield bond chart and the S&P500.

The two are positively correlated but recently have become inversely correlated. This is not a timing sell signal in itself but it is a clear indication that yields have compressed as far as they can go and the trend seems to have reversed. The US mortgage market, in spite of Ben’s aggressive and endless monetization of debt is showing the same characteristics, which is meaningful. I await clear price signals before getting aggressively short this market. We have dividend season in front of us for now so unlikely to get a market collapse here, for the moment.

I’m out of time for now so enjoy the holidays whatever you are up to. And see you bright and early next week.

All the best

Rich