Something very special is happening in 2015 - the return of logic
Something very special is happening in 2015 - the return of logic. For the first time since the beginning of QE3 in the US, correlations appear to be reverting to historical levels. Defense plays are actually playing the role of defense rather than offense, and risk-on/risk-off behaviorally seems to have returned. Treasuries rally hard when stocks are volatile and fall, they then fall when stocks rise. However, when Treasuries fall on those strong up days for stocks, they do not do so particularly violently, suggesting that finally Treasuries are serving as a proper hedge. Our risk triggers have kept us in that part of the investable landscape in our alternative inflation rotation strategy which in three weeks has far surpassed most buy and hold averages across multiple asset classes. The magnitude of being correctly positioned in such a juncture can far swell the frequency of being defensive through false positives.