The annual CTA Expo took place at the CME Group in NY. It was a day full of presentations. The industry's line, of course, is that the stock market has become a joke. At best, stock trading and investing have been commoditized. There was a lot of outright self-promotion by the energy and metal interests, and much less so by the bond and currency funds.

It sounded quite symbolic to my ear, as this is what I am thinking going into next trading week. The earlier April's riot in precious metals was just the opening salvo. Similar to oil market, metals alternate strong down and up weeks of late. But I see the overall bias decidedly contractionary. And this is just the financial industry's prelude to going all into the US Dollar. The Euro-currency is the largest, most liquid market - and it will be the last to go. The metal market is much narrower, and it had to be vacated first. The energy markets are wider, and will submit only grudgingly. Finally, the Euro-currency is a Titanic that appears un-sinkable - until it hits the iceberg, and only so many life boats will be available.

It was very refreshing to hear how many funds (even pension funds) have become tactical players in European Periphery sovereign debt. Heck, if you manage to only hold (that kind of long-maturity paper) overnight — then you benefit from its relatively high yield, on day-to-day basis! In fact, so many money funds have devoted themselves to this tactical idea, that current yields and coupons no longer objectively reflect the high default risk. On day-to-day basis, risk premiums have became partially arbitraged away. The longer term (a lot of them institutional, but less agile) investors are thus subjected to complacency reflection. They do not receive adequate premium for risk, which, if anything, has only become greater in distorted market.

There was another interesting thought that came forth: world's strongest Central Banks have one by one announced that they will never raise rates again! So you can't be short any core bond in the foreseeable future. The lifetime's easiest trade has been announced, which is the only trade that one will ever need to perform: you continue to stay Long bonds until the very day that you instantly reverse to Short. That's it, lights out.





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