Cozying up to TED!

11/11/08 11:06AM EST
We are going on 6 consecutive weeks of this spread narrowing. This is one of the major reasons why we are deploying our oversized position in US Cash into global equities. See the chart below - this is not that complicated.

When this spread was widening (August to October) we moved to 96% cash. Now it's narrowing, and we have moved to 59% cash. A narrowing TED spread is a measure of counterparty risk – it is not the only factor in our multi-factor global macro model that is signaling to buy stocks, but it is an important one.

Storytelling and narrative fallacies are currently running rampant on the Street. When we look back on this buying opportunity in 3 weeks, this is one of the many macro factors that the revisionist historians will cite. You can 'You Tube' me on that.
KM
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