MATERIAL EVIDENCE

OCTOBER 13TH Research Strategies Solutions

Sean Corrigan Chief Investment Strategist

Diapason Commodities Management Ltd

MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH
Money, Macro & Markets
Almost exactly 25 years ago, Mitsubishi Estate
proudly announced its purchase of 51% of the land-
mark NY property, the Rockefeller Center in a deal
which was both the culmination of contemporary
Japanese hubris and the trigger for a good deal of
collective psychosis in an America which feared it
was being eclipsed by its former foes.
The deal could hardly have been more sweetly
timed, coming within less than two months and
barely 7% of the all time bubble high in the Japanese
stock market and thus at the very zenith of that
nation's property bubble and its zaitech financial en-
gineering. The Topix had risen for nothing short of a
quarter of a century, soaring by a factor of 34 in yen
and by a multiple of almost 90 when that currency's
secular appreciation was taken into account. The
next 25 years would not be quite so friendly, starting
as they did - with a 2 year slump in which the
index saw half its gains wiped out before it suffered
a long series of gradually declining undulations to-
wards a post-LEH nadir some 75% below that loftiest
of peaks.
So today, when the relatively obscure but exquisitely
'connected' Angbang (for the buck?) Insurance an-
nounced it would be buying the no less iconic Wal-
dorf Astoria for a whopping $1.95 billion, it was hard
to avoid a frisson of foreboding.
No less than did Japan, China's attempts to manage
its currency against that of the global hegemon led to
an inappropriate mix of policies. No less than Japan,
a domestic credit bubble spilt over to provoke excess
Please refer to the risk and legal disclaimer at the end of the document.
around the globe, making temporary heroes of was 'entering deep water' in the argot.
the foreigners with fat cheque books and happy
men out of those who sold them at top dollar Then we had CASS subtly lowering its forecast
whatever it was they desired. for this year by one percentage point to 7.3% and
reducing that for next to 7% dead an act which
Nor do the parallels stop there. Arguably the best we should not so much ridicule for its spurious
performing index since the 3QE episode began in arithmetical exactitude as recognise for the exer-
late 2012, the Growth Enterprise Board stocks of cise in expectations management which it so ob-
China's rocket-fuelled 25% Chinext began their viously represents.
run only after suffering a slump of some 25%.
Similarly, before embarking on its final upward More importantly, Li Keqiang himself tried to
bound, the Topix also shed 25% of its value in the move away from the fetish of 7.5, arguing that we
Crash of 87. Superimposing the two, we find that foreigners had 'misunderstood' its import: if
the Astoria purchase coincides neatly in time things came in a little higher or a little lower, no-
with the Rockefeller centre acquisition. If past is one would care as long as jobs were being created
in any way prologue, the New Year could be a and incomes continued to rise (as, naturally, they
rocky one for all the new found Dama equity were at present)
bulls in today's China.
Beating the drum of microeconomic precision
Meanwhile, on their return from the Golden strikes rather than that of macroeconomic carpet-
Week holiday, various members of the Chinese bombing, he again declared his faith in the
regime have been keen to resume the theme of 'unleashing' of the power of the market and tried
the 'New Normal'. to draw a semantic distinction between policies of
indiscriminate stimulus and of those intended to
PBoC chief economist Ma Jun indulged in a spot stimulate specific sectors of the economy in order
of 'forward guidance' by ruling out large-scale to 'target key areas and weak links, to provide support
stimulus 'for the foreseeable future', saying that for small and micro enterprises, agriculture, and the
henceforth such a response will not be called for service industry.'
every time the economy slows down.
No change of course is yet being signalled nor,
For his part, NDRC Deputy Secretary-General one supposes, is one likely to emerge from the
Wang Yiming told his audience in what was de- upcoming Fourth Plenum to be held in two
scribed as a 'keynote' speech that far from being a weeks time a convocation which traditionally is
matter for 'pessimism', the ongoing deceleration concerned with the implementation of the poli-
was, to the contrary, a positive sign that the re- cies decided at the all-important Third Plenum in
form process was beginning to take hold, that it the previous autumn.
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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

New Normal

Source: Bloomberg
Source: Bloomberg

New Normal

Source: Bloomberg
TOPIX

Source: Bloomberg

Uneasy parallels

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH
Meanwhile, Europe staggers on its merry way, alter-
nating between false dawn and repeated disillusion.
As it doesand for all his pontificating about the
need for structural reform - Mario Draghi just can-
not bring himself to step back from the limelight and
mind his own knitting, as they say.
Before heading off to that joint consortium of clueless
collectivists the IMF and World Bank general meet-
ing, he could not forego the opportunity to do a little
shameless grandstanding at the Brookings Institute.
There he contrived to conjure up the aura of fruitful
Transatlanticism by dropping the names of the twin
Titans of the worlds longest and deepest recession
and the patron saints of all subsequent perverse pro-
longation of economic woe - Keynes and Roosevelt.
Yet despite the slick rhetorical opening this involved,
the best Our Hero could offer was a promise of yet
more intervention along the same old lines, vaunting
that for him, the risks of doing to little exceed the risks of
doing too much. He even saw fit to brag that while the
combination of policies which would finally pull the
continent out of its self-inflicted travails was
complex, it was not complicated since here comes
the punchline some six, nearly seven, years in to the
debt-and-dirigisme disaster we brought down upon
ourselves by following the advice of such as our ora-
tor - each of the steps involved is well understood.
Arf! Arf! Its the way Oi tell em though one won-
ders whether the thousands of struggling European
entrepreneurs and the millions of long-term unem-
ployed whom they find it unviable to engage would
find much to laugh at in this ludicrous display of
intellectual conceit.
Please refer to the risk and legal disclaimer at the end of the document.
And what extra, pray, will Snr. Draghi strive to our noble technocrat can hardly be accused of
deliver? Why, lower real incomes all round, of being dangerously innovative. After all, modern
course - sorry, no: it will stand accountable to the demand management has degenerated into
European people for delivering price stability, which nothing more than a game of seeing whose turn it
today means lifting inflation from its excessively low is to ruin their balance sheets next. If businesses
level [sic]. cant or wont, surely households can be tempted;
if not, then it is the turn of the state; if the Spanish
All those of you who are constrained in your in- can no longer hold their end up, it must be time
comes and who are struggling to pay your way in for the Germans to take a turn at the Chuck
the world; all those of you who are earning noth- Prince Charleston. If all else fails, then the central
ing on your savings and so are gradually suc- bank will do whatever it takes to fill the gap and
cumbing to the temptation to take on too much thereby to sully the solvency of one and all by
risk with what you have set aside; all those of you risking at best a confusion of capital pricing sig-
who face the unremitting, tax-grabbing hostility nals and at worst a complete debasement of their
of governments who pretend to be acting in your common money.
interest but who are simply trying to keep their
sprawling, electorally-indispensable coteries of Accordingly, Mr. Draghi was very much preach-
party hacks, placemen, pen-pushers, and pettifog- ing to the choir when he popped into 1900 Penn-
gers in the manner to which they have become sylvania Ave to speak to Lawyer Lagarde and her
accustomed, you will no doubt be much reas- minions over the weekend (wheres Dick the
sured by these assertions of our avuncular Mr. Butcher when you metaphorically need him?).
Dragons. One French journalist reported that he was seen
to be unusually effusive in buttonholing people
Nor could the ECB chief resist an entirely disin- on the fringes of the formal sessions to try to sell
genuous appeal to yet more mindless pyramid his three-pronged approach of yet easier money,
building. After offering some weasel words about more particular fiscalism, and the sheer effront-
how budgetary discipline ought, at all costs, to be ery of it a properly EUSA (or EUSSR) political
maintained he then completely vitiated this de- monolith within which to enact the two more ag-
mand by arguing that where the relevant author- gressively.
ity found itself with a little fiscal space i.e.,
where it had not already exhausted the patience With the Catalans openly defying Madrid's inter-
of its creditors it should not hesitate to use it. dict on their expression of national will; with AfD
No prizes for guessing at whom this injunction is rapidly establishing itself as a feature of the Ger-
aimed. man electoral landscape; with Veneto calling for
secession; with Beppe Grillo striving for and
In all this and for all his inexhaustible self-regard, likely to get - a million signatures on a motion for
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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

Source: Bloomberg
Source: Bloomberg

We know exactly what to do!

We know exactly what to do!

Source: Bloomberg
Trouble of a different stripe

Source: Bloomberg

We know exactly what to do!

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

an Italian exit from the Euro; with UKIP pushing Fhrerbalkon posturing of the Olympic Games and and by banning the use of disposable cups and
the established parties into unabashed platform play World Cup soccer every summer, being sure plates in the fast food business. Vive les Gastros! A
plagiarism one side of the Channel and with Marine to build anew instantly redundant and ruinously bas les MacDos!
le Pen eating Hollande's hapless crew for breakfast expensive facilities for each iteration of hop, skip,
on the other, this is a proposal hardly likely to take The Ekonomista may have waxed lyrical about how
and jump and mass pig-bladder chasing so that
wings. Yet Mario cannot resist for if the last vestige successive exercise in Panis et Circenses could exert
Valls headed the most reformist government France
of sovereignty is not extinguished across the Twi- has seen for many years (that is supposed to be a
the maximum effect. How could recovery fail to
light Zone, he cannot strut and fret upon the world be assured? challenge, right?), but his boss over in the lyse
stage and signify more than sound and fury, poor was apparently less than impressed with the volte
dear, and then that insufferable Herr Weidmann As for the idea reform, just take the case of M. face this ostensibly comprised. Le Figaro was
can continue to oppose him! Valls, the new socialist broom brought in to sweep happy to run a piece proclaiming Tension between
a little dust from the dingy corridors of the Hol- Hollande and Valls on the pace of reform, with the
As for La Tricoteuse, knitting furiously beside Citi- lande government. On a whirlwind tour of other President variously being described as being
zen Pikketys rasoir national while she awaits the European capitals, he assured Frau Merkel that he equivocal or just downright angry about some
next tumbrel load of evil capitalists to be delivered would indeed soon do something concrete before of the Wunderkinds kite-flying. Given that the staff
by Brother Blanchard, what she wants what else? vowing to David Cameron that having lived be- turnover in the Hollande cabinet would put a So-
is more accommodative monetary policy, more yond our means for forty years, he and the viet punishment battalion at Stalingrad to shame,
growth-friendly fiscal measures, and Maynard be French were eager to make up for lost time. No we will believe in the Boy Manuels programme
praised! increased investment in infrastructure. more 75% top tax rate come January and an inten- when we actually see it enacted.
tion to open the shops on Sundays were the proofs
Of course, the construction of the latter shovel positive that he brandished on that occasion. No, Not that France doesnt need a little invigoration,
ready hodge-podge of roads-to-nowhere, of unpeo- France was not sclerotic, hopeless, and downbeat industrial production in August, for example, was
pled provincial playhouses, and of half-filled, as the John Lewis boss had scathingly described it back at four year lows, 15% off the peak and at
Hadid houses for hackneyed art school earlier in the week. levels first seen way back in 1989 and Les Bleus
'installations would rapidly exhaust the remaining didnt even get to contest the latter stages of the
fiscal space if it were not for the fact that they Sadly, one such big 'reform' idea rapidly gathering Mondial by way of an excuse for malingering on
could all too easily be combined with Marios solu- support is hardly likely to mobilise an influx of the shop floor that month.
tion-in-search-of-a-problem wheeze of buying oo- private capital, viz., that of nationalizing the coun-
dles of assignat-backed-securities. This is, it has to try's toll roads. Another is to shut down a third of What about Italy? There, IP was also anaemic to
be said, exactly the sort of paper which could be the nation's nuclear reactors in the next 10 years the point that the average for the past six months
issued complete with specious state guarantee while reducing hydrocarbon use to 30% of the now lies below the trough of the Crash meaning
attached to finance an expensive, but entirely sub- total, cutting electricity consumption along the we have to go all the way back to 1987 to root out
marginal, PPP programme of public works and so way by a half and greenhouse gas production by a lower reading. Also, it is worth keeping on eye
massage up the GDP numbers for a quarter or two. 75. Aside from burning copious amounts of fairy on the fact that, despite no renewed evidence of
dust, the country will achieve this 'transformation' tightness on the capital markets - where spreads
Perhaps we should halve the interval between the partly by outlawing the biblical evil of plastic bags to Bunds in the 140s remain close to three-year

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

Source: Bloomberg
Source: Bloomberg

Source: Bloomberg

All march to the same beat

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

lows and where outright yields have never been Which finally brings us to Germany, sputtering at
Moms, all too few of these denizens of the desk-
lower - Italys T2 balance has bounced back up by last as its neighbours to the West, its new, NATO-
top seem able to conceive of the fact that the 300
50% - or by a considerable 67bln - in the past two determined foes to the East, and its capital goods
million brave little soldiers around whom they
months, reversing from a 33-month low to an 8- customers half a world away each suffer their
fluster might actually work out how to tie their
month high while total bad debt climbs inexorably, own burst of turbulence. own shoelaces and perform their own ablutions,
reaching a new high of 174 billion, more than 20% even if interest rates were to move a percent or
higher than a year ago and up 340% from late 2008. For example, unadjusted exports reckoned in two higher over the next few quarters or
USD collapsed in the space of just over four Heaven forfend! if the dollars real effective ex-
In the Netherlands, too, industrial sales have fallen weeks from a mark which was close to 3 year change rate were to advance much beyond its
sharply to the very bottom of last four years range highs (indeed, to the pre-Crash peak) to their present vantage close to the median of the entire
(at least when measured in USD), where they now lie worst in 20 months a fall which also means they four-decade floating rate era.
one-sixth below the springs 3-yr peak. are back to late 2006 levels. The 18.4% monthly
swoon was a 2.2 sigma event and the worst ex- For such nervous ninnies, there will truly never
Things were if anything worse still in Finland where perienced at least since the Wall came down. be any data strong enough for them to summon
IP is on life support some 20% below its peak, back Even measured in a shrinking euro, the magni- up the courage to act - or rather, to refrain from
below the immediate post-Crash lows at levels last tude of the air pocket has only been matched acting and hence to allow the prices of things
seen as long ago as 2002. Output is now fully one twice since Reunification - once in the midst of goods, services, short-order cooks and software
third below where a projection of 1970-2008s secular the Asian Contagion and once when the ReUni engineers, as well as of CDOs and cyclical count-
trend of 3.5% p.a. growth should have reached by boom rolled over into the Maastricht bust. ers to find their own level and so perform their
now. Of some concern is that fact that this industrial true economic function.
torpor has not been matched by any reluctance to Likewise, industrial production lurched from
continue to contract debt obligations. Bank loans to near the top to nigh on the bottom of its recent Sometimes one is driven to wondering how it
the private sector have risen more in Finland in the band suffering the worst monthly reversal since ever was that the United States of America could
past six years than anywhere else in the Zone. With the GFC with capital goods hard hit to touch 15- have been transformed from a vast, underpopu-
an increment of 25% in that period, the country pro- month low/early 2007 levels and auto sales lated, unwheeled, unhorsed, Rousseauan wilder-
vides a marked contrast with Germanys essentially evaporating by no less than 25%.ds leading and ness into the mightiest and most advanced indus-
unchanged total much less with hairshirt Spains Auto -25% trial nation known to mankind without the tender
28% reduction. It has also grown twice as much pro- ministrations of a Bill Dudley, a Charlie Evans, or
portionately as in the next fastest pairing of Austria Much more of this and Jens will be begging Mario an Ed Quince (!) to smooth the way for its hapless
and France where the gain has been of the order of to buy some Daimler paper! denizens.
12%. S&P, by the way obviously agree - they just
stripped the country of its all too rare AAA rating. As ever, the one market where there seem to be Then again, most of the hard yards in that march
few dramas at present is that in the States of progress were made in the 421 years between
Good job the Nomenklatura are not relying on top- though you would never think it to listen to the Columbus landfall and the passage of the act
ranked sovereigns to underwrite their support stimulus-junkie, 1937 bogey-ridden Doves on the which founded the Federal Reserve. One might
scheme fantasies any longer FOMC. Like a cluster of over-protective Soccer even argue that too much of that territory has

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

been relinquished once more during the last 25 years None of this is good enough for the likes of Chi- Commodity Corner
of runaway FRB intrusiveness. Do you suppose it cago Fed president Charles Evans, yet another
ever occurs to any of the inhabitants of the Marriner loose money man who worries that '...we're at a As for that same oil price, the markets have be-
S Eccles building - that Minas Morgul of macroeco- point where we need to get inflation up...' come fascinated by its ongoing and largely un-
nomics - to run their precious econometrics on the heralded decline.
coincidence of episodes of rapid central bank balance If by that faltering of 'inflation' the likes of Evans
sheet expansion and of widespread economic etiola- really mean the beneficent fall in the cost of living We market actors do love our Just So stories to be
tion or between acts of sustained central government we income-constrained monkeys are currently confirmed by the price action so that we can all
intervention and sudden industrial infarction? getting to enjoy now that the leveraged Herd is nod sagely at each other when we recycle the tale
not being so amply gavaged by the CB Gutenber- between ourselves in our written commentaries
Though not without a tally of underachievers, busi- gomanes, there is one graph at which a glance and two-minute TV slots. This becomes all the
ness sales Stateside ended the summer running should quickly tell them to cease their hand- more compelling when the trajectory has gone
pretty much on trend at around 4.5-5% a year and wringing and to rejoice in our common good for- decidedly counter to our previous shared mythol-
payroll costs are seemingly keeping pace, implying tune instead. ogy and when cognitive dissonance gives way -
that labour is both getting its fair share and that it is via mass embarrassment - to outright paradigm
not out of kilter and so threatening first the possibil- This consists of two elements: the first a plot of shift.
ity of (operational) profit and, next, its own trend's either of the wings (i.e., the 5-year or the 10-year
longevity. BEIs themselves) of the forward break-even rate The fewer dissenters there were who did not buy
to which they have all become so pseudo- into the earlier consensus, the greater the ease
All this, it should be noted, has come about while the scientifically attached despite the obvious flaw with which any half-way convincing piece of post
Federal deficit has shrunk by two-thirds, or $1 tril- that it has been largely vitiated as a signal by the hoc reasoning will tend to be adopted by the sell-
lion a year. So much for the 'fiscal cliff'. For once, do- noise arising from both the fact of and the mar- side analytical base. In the face of a perverse
mestic banks seem not to have been too unbridled in ket's second-guessing of the future possibilities of market trend what is never to be underesti-
fuelling the flames on the real side even if they may those same central bankers' actions. The second mated is the flimsiness of any case made by
have been typically too complicit in stoking up the component is a superposition of that first squig- means of what we like to flatter ourselves are
fires of financial speculation. As much as 35% of the gle with one displaying the price of crude oil. the fundamentals'. In fact, if the contrariness
$900 billion in new assets they added this year long persists - as is clearly the case with today's
wound up as cash (most of it parked idly at the Fed). Given that the two are almost indistinguishable oil prices - one should always expect the
Against this, a mere $250 billion in extra productive to the naked eye, what Friend Evans seems to 'fundamentals' themselves to be neatly mas-
lending took place, broken down into $150 in C&I imply is that the road to economic nirvana can saged to reflect the new reality. Rationalizers
loans two-thirds of that dedicated to inventory fi- only be travelled if his fellow Americans are tend to rule the roost, not rationalists.
nance and $100 in CRE lending. By contrast, the forced to pay more for the privilege when they fill
banks have made $220 billion in UST and Agency up at the gas stations they find along the way. In pure market terms, then, the worry is that the
purchases and extended $105 billion in the 'other' specs are still very long while the monstrous regi-
loans category which includes margin lending and ment of pundits is now scrambling to produce
other forms of asset speculation. 180-degree reversed justifications for why prices

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

Source: Bloomberg

One of many in real

danger
Benign Deflation

Source: Bloomberg

Wobbling

Source: Bloomberg

Another top in
Source: Bloomberg place?

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

can continue ever lower. Moreover, no-one likes to duction as depletion of current wells caught up the objective trend. What is perhaps more to the
get caught going into year-end book-closing (still with lessened drilling schedules. On similar point for our present purpose is that the market is
October for some funds) with a big fat slug of over- grounds, Seth Klarmans crew at Citibank have willing to entertain such thoughts precisely be-
exposure to losers, especially when as we are con- made a few waves in the media by pushing a cause it wants to believe that oil could trade a
stantly being reminded wherever we go these days sunk-cost argument to reckon the cut-off in the good deal lower yet.
the vast preponderance of active managers have un- near term is where ongoing operational cash flow
derperformed the index trackers this year . dries up, way down at perhaps half the present Even if one were to doubt that the price down
price. there might be long sustainable, could crude
Justifications have converged largely around the ac- therefore fall another $10/bbl beyond the 2012
tivities of the Saudis, though that is where the narra- Beyond this, there are those who see the murkier lows at which we presently and very precariously
tive rapidly becomes frayed into different strands of forces of geopolitics at play though, once again, rest and so retrace a full 50% of the post-GFC re-
hypothesis and supposition. Certainly, they spooked one can discern several completing plot lines on flation rally? Could the move extend another $10
the horses by cutting OSPs to Asian customers the storyboards of this particular Hollywood beyond that into the middle of the congestion
within days of the revelation that they were helping thriller. Is Saudi acting alone in the attempt to pattern laid down in the four years either side of
OPEC supply more than at any time in the past 12-15 weaken its internecine enemies in Iran while also 2008s blow-off and 2009s implosion?
months. Whispers have also surfaced of their agents pressuring the Russians into withdrawing their
trying to lock competing crudes out of the European support for Tehrans allies in Damascus? Is Saudi It would not be wise to become suckered into the
refinery market and of unattributed briefings in New working with the US despite the obvious pain tyros game of projecting ever lower ahead of a
York in which the acceptance of lower prices has being caused there (if not, necessarily to dyed-in- falling quotation, but it is also hard to rule out
been made clear. the-wool supporters of the Democratic admini- either of these objectives until we either get
stration or its Green fellow travellers) to the meaningful declaration of producer cutbacks or
At its least conspiratorial, the above has led some to exact same end? Is it, rather, a straight translation an end to the run of bad economic news emanat-
see it simply as the Kingdoms economic attempt to of the Neocons Cold War II with America exert- ing from all too many corners of the globe.
price out the investment capacity of its main (mostly ing a little Full Spectrum Dominance at the ex-
US onshore) competitors in a manner roughly analo- pense of Vladimir Putins coterie of resource bar-
A similar mass disillusion has been stalking PMs,
gous to the 1986 drive to discipline the likes of ons? If that latter, then might one also see the
too , with retail chucking in the towel and, more
Venezuela. White House repeal, or at least relax, the restric-
generally, commodity funds blowing up or re-
tion on US crude exports - thereby offering some
porting big losses once again. Gold having hit the
For what its worth, our friends at Tudor Holt pricing offset to the locals? $1180s and bounced for the third time of asking,
Pickering reckon that and here we paraphrase it seems we are a long enough way down to
loosely - with so many shale oil companies boasting Who can say, though there are ample hints and spook the pilot fish and so drive some restorative
negative free cash flow, a drop to the region of $75/ sufficient unguarded comments to be read to sup- short covering. The Fed-inspired hiatus in the
bbl will slow the US reinvestment rate appreciably, port each of these scenarios for example, the dollars rise, the reawakening of risk in the tradi-
perhaps even close off external sources of capital comments of Rosneft VP Mikhail Leontyev to the tional indicators such as VIX and junk spreads
completely, but that this would take perhaps another effect that the Saudis are being manipulated into typically good for the relative price of gold versus
18 months or so to make itself felt in a drop in pro- lowering prices in a way which does not reflect industrial commodities as well as signs of a

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

Source: Bloomberg

Breakdown Precarious

Source: Bloomberg

Will it hold?

Source: Bloomberg

One Way bets

come unstuck

Source: Bloomberg

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

breakdown in the 3QE ascent of several key equity

indices, a spike in correlations, in put-call ratios, and
in the count of new lows versus new highs on the
NYSE have all joined in helping the rotation higher.

The jury remains out here while we hover at the very

lower end of value in the past 18 months post-
collapse range, but with the market still not short
either on the evidence of the COT or according to the
lease rate, it is hard not to harbour the suspicion that
Jaws himself will soon be heading for the depths
once more.

Sean Corrigan

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

US Stocks v Bonds Source: Bloomberg

Reversal Time?
Are we there, yet?

Source: Bloomberg

As rich as they
get?
Source: Bloomberg

As rich as they
get?
Source: Bloomberg

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MATERIAL EVIDENCE BY SEAN CORRIGAN
OCTOBER 13TH

DISCLAIMER

General Disclosure
This document or the information contained in does not constitute, an offer, or a solicitation, or a recommendation to purchase or sell any investment instruments, to effect any transactions, or to conclude any
legal act of any kind whatsoever. The information contained in this document is issued for information only. An offer can be made only by the approved offering memorandum. The investments described
herein are not publicly distributed. This document is confidential and submitted to selected recipients only. It may not be reproduced nor passed to non-qualifying persons or to a non professional audience. For
distribution purposes in the USA, this document is only intended for persons who can be defined as Major Institutional Investors under U.S. regulations. Any U.S. person receiving this report and wishing to
effect a transaction in any security discussed herein, must do so through a U.S. registered broker dealer. The investment described herein carries substantial risks and potential investors should have the requi-
site knowledge and experience to assess the characteristics and risks associated therewith. Accordingly, they are deemed to understand and accept the terms, conditions and risks associated therewith and are
deemed to act for their own account, to have made their own independent decision and to declare that such transaction is appropriate or proper for them, based upon their own judgment and upon advice from
such advisers as they have deemed necessary and which they are urged to consult. Diapason Commodities Management S.A. (Diapason) disclaims all liability to any party for all expenses, lost profits or
indirect, punitive, special or consequential damages or losses, which may be incurred as a result of the information being inaccurate or incomplete in any way, and for any reason. Diapason, its directors, offi-
cers and employees may have or have had interests or long or short positions in financial products discussed herein, and may at any time make purchases and/or sales as principal or agent.

This document is issued by Diapason and may be distributed by both entities Diapason or Diapason Commodities Management UK LLP (Diapason UK). Diapason is regulated by the Swiss Financial Market
Supervisory Authority and Diapason UK is authorised and regulated by the Financial Conduct Authority. Certain statements in this presentation constitute forward-looking statements. These statements
contain the words anticipate, believe, intend, estimate, expect and words of similar meaning. Such forward-looking statements are subject to known and unknown risks, uncertainties and assump-
tions that may cause actual results to differ materially from the ones expressed or implied by such forward-looking statements. These risks, uncertainties and assumptions include, among other factors, chang-
ing business or other market conditions and the prospects for growth. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Consequently,
any prediction of gains is to be considered with an equally prominent risk of loss. Moreover, past performance or results does not necessarily guarantee future performance or results. As a result, you are cau-
tioned not to place undue reliance on such forward-looking statements. These forward-looking statements speak only as at the date of this presentation. Diapason expressly disclaims any obligation or under-
taking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Diapasons expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based. The information and opinions contained in this document are provided as at the date of the presentation and are subject to change without notice.

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All rights reserved. DIAPASON COMMODITIES INDEX DCI, DIAPASON COMMODITIES MANAGEMENT and DIAPASON are trademarks and service marks of Diapason. Diapason has all pro-
prietary rights with respect to the DCI. In no way does Diapason make any representation or warranty, express or implied, to the holders of the investment described herein any member of the public regard-
ing the advisability of investing therein or in commodities generally or in futures particularly, or as to results to be obtained from the use of the DCI. Diapason disclaims any liability to any party for any inac-
curacy in the data on which the DCI is based, for any errors, omissions, or interruptions in the calculation and/or dissemination of the DCI, or for the manner in which it is applied in connection with the
issue and offering of a financial product. Diapason makes no warranty, express or implied, as to results to be obtained by investors from the use of the DCI, any data included therein or linked therewith.
Diapason does not make any express or implied warranties and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to the DCI and any data included
therein. Without limiting any of the foregoing, in no event shall Diapason have any liability for any lost profits or indirect, punitive, special or consequential damages or losses, even if notified of the possibility
thereof.

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Copyright Diapason Commodities Management SA 2014

Any disclosure, copy, reproduction by any means, distribution or other action in reliance on the contents of this document without the prior written consent of Diapason is strictly prohibited and could lead to
legal action.
Last updated January 9th, 2014 Compliance approved on October 13th, 2014

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DCM LLP is authorised and regulated by the Financial Conduct Authority

DCM SA is authorised and regulated by the Swiss Financial Market Supervisory Authority 15