Deflation Update

To follow up on our long held view that deflation based on the long delayed cyclical deleveraging process (QE2 and QE3 as delayers) is the biggest risk that we face, here is a link to a Bloomberg article on deflation yesterday:

http://www.bloomberg.com/news/2014-04-09/central-banks-see-what-they-want-in-ignoring-deflation.html

As to today’s market indicators, a few are showing increasing tendency to clarify a developing market decline coming out of the topping formation. ┬áT-Bonds are close to the 135-3 upside close breakout, the S&P is close to the first sell signal with a close under 1799, and US markets on a relative basis have been declining since March 20 versus other world indexes, in fact relative levels are below the late November early December 2013 levels.

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