Positions

A recent Bloomberg story reminded me that it has been months since I discussed the markets with a view to position taking. Sorry.

So... It seems obvious that high quality corporate credit (ex Financials) is a good place to be, especially with the decline of the Libor/govy spread. I tend to view medium durations, around 5 to 7 years, as attractive at the moment not least because they will profit from eventual curve flattening when things (finally, possibly after some years) get better. Fund short term if you can and you have a very high risk tolerance and _great_ liquidity risk management.

I'm not convinced equity markets offer anything at the moment. My gut is to be short, but there is a huge weight of money waiting to get into equity - goodness only knows why - and you could get crushed on a relief rally. So stay away.

In the ABS space, collateral is key. If you can do loan level analysis, then there are some serious bargains to be had, particularly at the top of the securitisation waterfall. The discriminating buyer, especially the discriminating buyer who uses the TALF, should make money.

In FX, I am still inclined towards short USD, despite the flight to quality risk. FX vol seems expensive: consider selling short dated vol.

That was your stupidly infrequent global macro update. Cheques behind the usual stone in Bishopsgate.