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Yes, Virginia, some managers will usually beat the marketplace, but we have no reliable way of identifying in advance which managers will be the lucky ones. Meanwhile, those hardworking and happy souls immersed in the fascinating complexities of active investment management might well wonder, Are we and our industry-wide compensation in a global bubble of our very own creation? Does a specter of declining fees haunt our industry’s future? It is believed by me does, particularly for individuals who serve institutional and individual investors and continue to define their mission as beat-the-market performance.

The unwieldy global pool of speculative finance has inflated by Trillions. Meanwhile, the Fed’s serial interventions to smother “Risk Off” has unquestionably cultivated major latent fragilities within the derivatives trading organic. The current policy goal should be for Fed to begin extricating itself from market dominance. It’s absolutely important for the overall economy and marketplaces to start the process of learning to stand on their own.

At this point, such a transition would not go effortlessly. The alternative is deeper structural impairment and more extreme financial and financial fragility. The machine has been devoted a precarious position quite, but it’s time for you to let Capitalism types its way through. The very opposite seems ensured. We’re in the first stage of even more egregious authorities (fiscal and financial) intervention in the economy and markets. The election shall usher in a surge of deficit spending. Meanwhile, the Federal Reserve appears poised to employ a low “neutral rate” as an excuse to cling to ultra-loose monetary policies.

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I am often reminded of misguided late-nineties buck optimism. New Paradigm thinking acquired the marketplaces content to neglect underlying U.S. Current Account Deficits. King money had turned into a Crowded Trade, although nothing in comparison to this cycle’s dollar exuberance. Curiously, the dollar index declined 1.2% this week. This week (yen up 16 100.9% y-t-d).

Despite the eurozone’s serious deficiencies, the euro finished the week above 113 (up 4.3% y-t-d). In general, emerging marketplaces are a mess, yet many EM currencies have rallied highly against the dollar. Integral to the dollar bull case have been expectations outperforming U.S. rates and attractive interest-rate differentials. Yet, king dollar excesses (international and speculative moves) exacerbated Bubble Dynamics, with market and economic vulnerabilities having trapped the Yellen Fed in ultra-loose monetary measures now. Global markets may actually have begun anticipating a weaker dollar. This would certainly help to describe the big turnarounds in commodities and EM. If the Fed is hellbent on spurring inflation (at home and abroad), a weaker dollar could go a long way.

But plan savants be cautious what you want for. In the end, global markets are awash in Crowded Trades betting on dollar strength, disinflationary forces, low bond yields, and market balance – as far as the vision can easily see. There is certainly today no “neutral rate” that may neutralize such a perilous global Bubble.

Three-month Treasury bill rates ended the week at 30 bps. Two-year government yields rose five up to 0.75% (down 30bps y-t-d). Greek 10-year yields dropped 13 is to 7.86% (up 54bps-y-t-d). Japan’s Nikkei 225 equities index dropped 2.2% (down 13.1% y-t-d). Japanese 10-12 months “JGB” yields increased three is to negative 0.09% (down 26bps y-t-d). The German DAX equities index dropped 1.6% (down 1.8%). Spain’s IBEX 35 equities index sank 3.0% (down 11.5%). Italy’s FTSE MIB index was hit 4.0% (down 23.9%). EM equities were blended. 889 million (from Lipper). Freddie Mac 30-year fixed home loan rates dropped two up to 3.43% (down 54bps-y-o-y). 1.627 TN, or 58%, over the past 197 weeks. 884bn, or 7.3%, year over the past.