The Macro View (Dec 8, 2008)

The time has reached a intermediate swing inflection point in extremes reflected in global bond yields, bottoming domestic equity markets (S&P 500), bottoming crude oil, and an intermediate toppy dollar. The Treasury, after propping up 10/30 yr Treasury bond prices, thus lowering mortgage rates, has seen its nadir. Asset allocation sentiment is beginning to strongly shift to equities from overbought Treasuries (in the long end) in seeking better returns. Secondly, the White House administration today announced further support toward setting the economic recovery in motion. Also a continued progressive shift of investor sentiment has moved from event -based catastrophe market reaction to forward thinking allocation as reflected as "bad news" being ignored by equity markets and stronger commitment from institutional investors as evidence by a strengthening equity market.

Crude oil has begun to develop bottoming characteristics along with grains and some metals pushed by the intermediate emerging decline of the dollar. The strong run up in the dollar as temporarily reached its nadir and looks to retreat in the next 1-3 months into 2009 1st Qtr.