Quick Glance at Obama's Budget Plan

The Good:

• Initiate a Cap-and-Trade system where the government will sell a certain number of "carbon credits" to companies, and these companies can then proceed to buy and sell the credits on an open market as needed. "Clean" companies will likely have excess credits that they can turn around and sell to the more "polluted" companies, rewarding the clean and penalizing the dirty. If all goes according to plan, Cap-and-Trade has the potential to create jobs, lower emissions and put an annual $80 billion in the government's pocket. I've always been fascinated with this system and I look forward to watching it progress.

Through his stimulus, and now his most recent budget plan, Obama is planning to throw a lot of money at alternative energy. Alternative energy ETFs have gotten battered this past year, but for good reason. Many of them consist of small, debt-laden firms in need of constant financing. In order to negate market timing, I am thinking about staggering into an alternative energy ETF every six months until I have built up a small position that I am comfortable with. I am choosing an ETF because when dealing with small-cap, highly leveraged, growth companies, it pays to be diversified. The fund I am currently looking at is the PowerShares Cleantech (PZD). Please drop a comment if you know of an "alternative" way to capture some of this inevitable growth!

The Bad:

• The top two marginal tax brackets will pay an additional 5% on capital gains. I know taxation is a controversial subject, but taxing capital gains is a part of our tax structure that really irks me. The American public works hard, pays their taxes and then gets penalized for assuming all of the risk associated with investing in the companies of tomorrow. I'm not saying that the capital gains tax should be abolished, but I certainly don't think it needs to be raised, especially over the next couple of years when we'll already be struggling to attract investment.

The Ugly:

• Capital gains, or "carry interest", on private equity, hedge fund and venture capital returns will be taxed as ordinary income instead of capital gains (a significant increase). It's ironic because the Treasury wants private investors to get involved in the purchasing of these toxic assets, yet instead of providing some sort of incentive, they proceed to increase taxes, making it even more difficult for these funds to find a reason to put their capital at risk. The U.S. is no longer a country centered around manufacturing. We rely on innovation and the free flow of capital to maintain our domestic growth. If we choose to hike taxes on the providers of this capital, we must be prepared for the economic consequences.

The Bottom Line:
There's much more to this plan than I have summarized here, but these are a few of the points that I found particularly important for the average investor. Even though Obama's proposed budget is quite ambitious, our current deficit is growing exponentially, requiring a ruthless approach. I like his attitude...I just hope this plan doesn't come riddled with too many negative side-effects (like some of those shady drug commercials).

Part 3: Investment Ideas

Welcome to the final installment of my investment outlook. I began by giving a brief presentation on where I believe the U.S. economy currently stands and followed up with a comparison between Japan in the 90's and the U.S. today (courtesy of The Economist). Now that I have made an educated hypothesis as to where I believe the economy is headed, I can now proceed to do what I enjoy most...allocate my funds accordingly! I have found that after building a robust forecast, common sense is all that is needed to select big, Everest-like trends. Here's how it will work: I will give you general investment ideas that I am currently looking at (remember, these are just my opinions, so feel free to discuss via comments) and will attempt to keep them as simple as possible, playing off of macro themes that I feel will be present in the future. I won't give specific allocations due to the millions of different risk and return profiles, but rather provide you with an idea of where I'm putting money to work. It is also important to note that these are investments, not trades. Trades will come and go on a daily/weekly basis, but most of the investment ideas listed below will simply be adjusted as time goes on. My list of investment ideas is just about as volatile as the markets, so I will constantly be updating the list to account for adjustments.

U.S. Equities:
Given the fragile state of the U.S. consumer, I am still steering clear of domestic equities. Until consumers are back on their feet (which might not be for awhile), try to avoid any consumer dependent industries. The stocks I am looking at possess these qualities:

• Strong balance sheets - lots of cash, little/no debt, reliable credit line if needed
  
• Healthcare, Consumer Staples and Utilities all posted positive Q4 numbers relative to 2007 - these sectors might be a good place to start (see chart below)
  
• Dividends - Dividend income accounted for almost 70% of U.S. Equity returns since 1900, according to a recent Credit Suisse study (see list below for companies that have actually raised their dividend this year - this is exactly what I like to see)
• Certain infrastructure plays - infrastructure will likely be the means for job creation, so the government will focus future capital in this direction

Remember, just because stocks have fallen so much doesn't mean they're cheap. Back in 1975 and 1980 we bottomed out with P/E's around 7, we are currently sitting around 13x earnings (assuming $60/share on the S&P this year). However, interest rates and inflation are also at nil, so we could see a bottom closer to 10 or 11 times earnings this time around. As companies continue to slash dividends, the valuation picture grows uglier (take the present value of future dividend payments).

Source: Bespoke Investment Group

Source: Bloomberg

Investment Grade Corporate Debt:
This is a relatively safe way to play an interesting dislocation in the credit markets. The average investment grade security is yielding 7.15% compared to a yield of 3.5% on the 30-year treasury (I find it hard to believe that there are still people out there willing to loan the U.S. government money for 30 years). The average spread between investment grade corporates and the 30-year t-bond over the past 40 years has been around 100 basis points (1%). With a current spread of 350 basis points (3.5%), any reversion to the mean would provide a handsome capital gain. Given my grim outlook on the economy, default rates will continue to climb, so that is why I'm sticking with quality. High yield debt yielding close to 18% is attractive, but not nearly as safe. Many companies will go bankrupt over the next year or two, so I'd prefer to stick with well-established, investment grade companies. I will look to play this discrepancy through the iShares Investment Grade Corporate Bond ETF, LQD. It is yielding almost 2x the S&P with half the volatility (Standard Deviations: 9.88% on LQD vs. 21.75% on SPY). Higher income with lower volatility...Gotta love it.

China:
When it comes to emerging markets, China looks to be the first country that will eventually recover from this global slowdown. As Jim Rogers states, "Just as Britain was the country of the 19th century, the U.S. the country of the 20th century, China will emerge the country of the 21st century." I couldn't agree more. The Chinese have tasted capitalism and they're hungry for more. This minor blip in growth serves as a great long term buying opportunity for patient investors. One way to gain diversified exposure to China is through the FTSE/Xinhua 25 Index ETF, FXI. Even though a few companies in this index are partially state-owned, the growth of China will still be reflected in the returns generated by the index. I'm hoping that eventually capitalism will overtake socialism, and these companies will be given the opportunity to prosper in the free market. For a more developed play on China take a look at the MSCI Hong Kong Index ETF, EWH. For the fundamental reasons why I'm bullish on China please view China: Down, but Not Out.

Gold:
I, along with many other investors, always like to have a little gold in my portfolio to help hedge against a "worst case scenario" outcome. Many professional investors are happiest when their gold positions are declining in value because that usually means the rest of their portfolio is doing well. Gold serves as a great tool for diversification. Recently, gold has been on a tear gaining 10% over the past month, but over the past few days it has made a considerable pull-back. This might be nearing a good buying opportunity. For more thoughts on gold, and the Gold ETF, GLD, please see my earlier post Golden Opportunity?

Agriculture:
Demand for almost every commodity has fallen through the floor, but I have made some room in my portfolio for a small chunk of agriculture. Here's why:

• The world population will continue to eat (This is a clock that compares productive land growth to world population growth...scary)
  
• With credit tighter than ever, farmers are unable to get loans to purchase equipment and fertilize/expand their crops
• Just as homeowners are overextended on home loans, farmers have become overextended on land loans
• Looking into the future, as climate change intensifies, crop cycles will be much less predictable

I have chosen the PowerShares Agriculture Index ETF, DBA, to capitalize on these broad long-term trends.

Cash:
I continue to keep a significant amount of my powder dry given my forecast of continued economic weakness due primarily to deleveraging. Prices on many of the assets I have mentioned above may, and probably will, fall further. Because of the fragile state of the global economy, I will wade back in slowly. I will begin by taking small positions where I see value/opportunity and build on these positions over the coming months as long as the fundamental picture remains intact.

Stay tuned for adjustments because "flexibility" will likely be the name of the game for investing in 2009.

Part 2: Historical Comparison

The Economist recently published an article contrasting our current economic crisis to that of the Japanese banking crisis. In an attempt to learn from history, I will highlight the main points of this article and transform these points into pieces of my investment strategy.

Japanese Banking Crisis:
People often tell me that the Japanese banking crisis isn't comparable to today's predicament because of the Japanese government's excessive stalling before taking necessary action to curb the problem. Yes, they were late to the game...by about 5 innings, but it's actually their differences rather than their similarities that make this case study so interesting. Unfortunately, our dilemma may prove harder to fix. Japan's underlying problem was rooted in the over-borrowing of firms, and as a result Japanese firms spent years carrying out a massive balance sheet clean up. This deleveraging process alone would have taken an even tougher toll on the Japanese economy had it not been for a rebound in Japanese household consumption, mainly due to huge amounts of government stimulus. This partial offsetting in aggregate demand came at a huge expense to the Japanese government, with public debt now standing at north of 170% of GDP. However, thriving exports timely aided the government's efforts.

U.S. Credit Crisis:
We are in the midst of a household credit crisis. Our firms (excluding our banks) entered this crisis relatively well positioned in terms of cash. On the other hand, as seen from my last post, our households entered this crisis heavily indebted. Unfortunately, household balance sheets tend to be more difficult to repair than corporate balance sheets. People, especially babyboomers, will be forced to drastically increase their savings. As a result, U.S. equity markets will likely have a tough time gaining traction on the upside due to continued selling into rallies. As of October, the average American doesn't trust the stock market. The psychological healing process will take time. With firms dependent on the consumer, firms will likely delay major investments until the consumer has recovered. This slow-down in investment coupled with a major slow-down in consumption results in a nasty outcome. With the U.S. running a massive trade deficit, it's unlikely that we'll be able to weather the storm by huddling behind a mountain of exports (like Japan). The government has just issued its first dose of stimulus and it probably won't be its last. As money flows into the pocket of the consumer, the consumer will proceed to do two things: Pay down debt and save. Remember, we have lost 20% of our wealth over the past six months...an increase in savings is inevitable. Due to the anatomy of a household versus a corporation, government spending won't be nearly as effective. We have to hope that most of this spending will be focused on infrastructure, helping create jobs. The sooner that unemployment starts declining, the more likely aggregate demand will begin shifting out. The government is taking an interesting approach to this crisis. Instead of helping the average American deleverage, they're attempting to artificially drop borrowing costs in order spur the consumer into an even more indebted state. It will be quite interesting to see how this all plays out. Next post I will cover my investment ideas given this current economic outlook, so stay tuned!

Sources: The Economist
CIA Factbook

Part 1: Economic Outlook

Welcome to the first part of my 2009 investment outlook (3-parts). I use this as a basic road map for implementing my investment strategy and have found that allocating funds is much more effective after having outlined a general outlook for the economy. Having just watched Man vs. Wild, I relate this to Bear's attempt to reach an elevated location (often a tree top or mountain peak) in order to become better acquainted with his surroundings. It often helps to remove yourself from the everyday "noise" (CNBC, etc.) and look at the big picture. With that said, my mantra for my 2009 investment outlook is "nobody knows". I have no idea what the next few days will bring let alone the next few years, but in order to allocate my funds efficiently I must form an educated hypothesis. Each month I reevaluate my current strategy and make any necessary adjustments. I apologize ahead of time for the lengthy posts...take your time and enjoy!

I will begin the outlook with a list of economic indicators that I keep an eye on. These following factors provide me with an "EKG-like" reading for the health of the U.S. economy.

• Unemployment Rate/Jobless Claims
• Savings Rate
• Household Borrowing Rates (Mortgage, credit card, auto loan)
• Corporate Borrowing Rates (Credit spreads, commercial paper issuance)
• Equity Market Indicators (VIX, earnings)
• Housing (Home sales, housing starts, building permits)
• Retail Sales
• Consumer Confidence
• Futures (Copper, oil, etc.)
• Baltic Dry Index (Global economy)

The Quick and Dirty:
As you can imagine, most of these indicators are pointing towards a tough road ahead. Unemployment is on the rise, the savings rate is increasing after having touched negative territory (more on that to come) and household borrowing rates are still elevated (especially credit card rates). Corporate borrowing rates have declined since November, but have recently started to climb again on the back of renewed financial worries. Equity volatility has come down since hitting record highs this past fall, but earnings have proven horrendous (see chart below). However, there are some bright spots in certain sectors that need to be monitored. The housing picture is still deteriorating due to a glut of supply and lack of buyers. There aren't too many individuals who are willing to purchase a house without a secure job and there aren't a whole lot of banks willing to lend to a jobless individual either. Retail sales made a small rebound in January, likely due to massive discounts/sales. With the average American taking a 20% haircut on their new worth, consumer confidence is hitting all-time lows. Fortunately, commodities have stabilized and the Baltic Dry Index (which tracks the price of shipping raw materials by sea) has skyrocketed since the beginning of the year. With hopes that the Chinese stimulus is beginning to work, shipping costs have increased considerably (usually a positive sign for the global economy). Having (very briefly) summarized the current state of the U.S. economy, I'll now begin looking forward.

Source: Bespoke Investment Group

Looking Forward:

Deleveraging will likely be the theme for the next few years with growth slowing considerably as consumers and companies repair their balance sheets. The U.S. consumer has accumulated a massive amount of debt over the past 18 years with household debt now representing over 130% of disposable income, up from 100% in 2000 and 80-90% in the early 90's. Unfortunately, households didn't take the hint from the last shallow recession of 2001. As you can see from the debt servicing chart below, households continued to borrow right through the last recession (mainly due to a quick recovery in home prices), ignoring the normal recessionary deleveraging process. Having not had a good bout of deleveraging since the early 90's, we will now be forced pay a steep price. As you can see from the Debt/GDP comparison below, the spread between debt and GDP will likely revert back to its normal differentiation. If this was just another shallow recession I wouldn't be nearly as worried, but since the centerpiece of this recession is credit, I'm extremely apprehensive. During previous deep recessions, individual net worth's dropped by about 5%; We are now looking at a 20% decline. Household debt has averaged about 30% of total household assets for the past five years (mind you that this was already an extremely indebted state). With total asset values having fallen by 20% and current debt loads that have actually increased, we will need to write-down approximately $3 trillion just to get back to our five-year average of 30%. With consumer credit tighter than ever and half of the 55% of U.S. homeowners with a mortgage having no equity or negative equity in their homes, the American consumer will be forced to deleverage. With consumption making up approximately two-thirds of GDP, this will likely stall economic growth for the foreseeable future. Just remember, the consumer, unlike the government, cannot run the printing presses. The savings rate has already started to increase and will likely reach double-digits before leveling off around the post-war average of 8%. Fortunately, this is a completely natural process and will result in a healthier, more sustainable economy in the long run. Just cross your fingers and pray that the government doesn't get in the way. Thanks for reading the first installment of my 2009 investment outlook and don't forget that these are all just educated conjectures on my part, so any comments/critiques are welcome.

Source: Household Debt (Fed Flow of Funds Report), GDP (BEA)

Santelli for President...

Retesting November Lows

As we retest these November lows, it helps to compare the conditions in which these lows were made. Back in November the TED spread was off the charts, credit spreads were pricing in a depression-like default scenario, the VIX (CBOE Volatility Index) was soaring and sell-side volume was scary. Fast-forward three months and now we have much healthier spreads, the VIX is still elevated, but nowhere near its November levels (see chart below) and volume is comparatively measly. Commodity prices have also stabilized, helping sop up some of the excess uncertainty. This current test of the November low doesn't seem to carry the authority needed to make another significant move lower. However, much of this will depend on the solvency of the major financial institutions. One slip = fresh lows

S&P put protection on the decline...

Updated Loss Projections

CreditSights research firm estimates that the six largest domestic banks could be looking at losses in the ballpark of $524 billion over the next two years. The breakdown is as follows:

• Wells Fargo, $119 billion
• Bank of America, $99 billion
• JP Morgan, $124 billion
• Citi, $101 billion
• GS, $47 billion
• MS, $34 billion

The combined market cap of these six companies currently stands at $243 billion, about half of the projected losses. These are the figures that Geithner is looking at, and this is exactly why there is so much uncertainty surrounding his newest plan. Unfortunately, private investors have not come to the rescue (see stock prices). As of right now, if these losses continue on their path to fruition, a large-scale restructuring seems inevitable. Equity would potentially be wiped out and debt could quickly be converted into stock. Fortunately, as investors we're not required to solve the problem, we simply need to adjust our portfolios accordingly. Personally, I am remaining underweight U.S. equities and continue to look to preserve capital rather than expose myself to undue risk (more to come in investment outlook later this week). Remember, these figures are only estimates, but this possible outcome should not be excluded from your risk models.

I only included the following chart because I thought it vaguely resembled Pacman...

Alt-A: The Next Wave of Write-downs

"Alt-A" Mortgages: Better than subprime, but nowhere near prime. These mortgages, much like their subprime relatives, were riddled with shady fine print. These loans will likely enter the limelight as soon as people begin to recognize the velocity at which these loans are "souring" (see chart below). A recent article in the Economist brought these mortgages back to my attention after I first read about them in the Wall Street Journal a couple of months back. Moody's recently quadrupled its loss projections for this portion of the MBS market which triggered a massive sell-off. David Watts of CreditSights research firm estimates that losses could reach $150 billion, while Goldman Sachs sees potential losses amounting to $600 billion. Just to give you an idea, this is potentially half of the total losses (over $1 trillion) that have already been written down by domestic banks. If that's not bad enough, try factoring in the deteriorating economy. As unemployment rises, so will delinquencies. Write-downs will follow shortly there after. I understand that this is a grim post, but by this weekend I hope to have a full investment outlook posted (probably in pieces), so we can see exactly where the profitable opportunities are hiding. Below I have included a chart from the Economist that shows this exponential increase in delinquencies.

A Glimmer of Hope

Recently I've been following a minor rally in the front-month contract of copper which helps alleviate some of my pain in this recent maelstrom of negative news. Copper serves as a great indicator of economic health because of its many global applications ranging from plumbing and radiators to wiring and electronics. Not to mention every automobile produced around the world contains about 50 pounds of copper. However, before we break out the champagne we should analyze some possible reasons for this rally. I personally credit a majority of the recent appreciation to speculation that Chinese demand might perk up in the coming months (mainly due to government stimulus). Chinese copper consumption accounts for over 25% of world demand, but that still leaves three quarters of the market unexplained...Futures are usually the first to be influenced by any sort of infrastructure spending, so it's likely that the market is also beginning to price in the magnitude of the recent U.S. stimulus package. These are just a couple of thoughts, so feel free to suggest any additions. It's to early to tell if this is an omen of better things to come, but it's definitely worth keeping an eye on.

Trading Range: S&P 500

Today's turnaround in the market helped reinforce the forming of a significant trading range between 800 and 880 on the S&P 500. The index slipped down to around 810 and proceeded to quickly recover once the mortgage subsidy report was released. As you can see on the second chart below, the S&P briefly broke below the 800 mark back in October, but since then has held strong, treading water above 800. Any considerable breakout on either end should be noted and taken advantage of. Looking at the second chart again, it seems like we're continuing to make lower highs (as indicated by the trend line) underscoring the lack of positive economic data as of late. However, with so much cash on the sidelines (see treasury yields), any encouraging data could spark a massive breakout to the upside. On the other hand, if unemployment accelerates faster than expected, and the idea of bank "nationalization" starts to become a realization, the 800 mark will be shattered. In any case, this is a range that needs to be monitored if you have any exposure to U.S. equities.

Chart 1:

Chart 2:

Wall Street Vs. Main Street

After listening to today's House committee questioning of the Big 8 CEO's, I grew more apprehensive about the current financial situation. The basis of the discussion was quite simple; the representatives want the banks to increase lending in order to make efficient use of tax-payer money, and the banks attempted to convince these representatives, and their constituents, that they were in fact lending. This was to be expected. My fears surfaced when I began to look at the big picture. Main street is coercing the banks to lend, but the banks are unable to make sensible loans given the current economic environment. From the banks' point of view its simple: If we don't believe that this borrower can service the loan, we won't make the loan. This is prudent business that should be commended. Unfortunately, it was the lack of this prudent business that got us into this mess. Because this crisis has now consumed the greater American economy, the banks are facing two massive headwinds. One, they are still unable to value the assets on their books and two, as unemployment rises so does the default risk on standard consumer loans. Until these two factors are under control, banks will continue to be cautious...and who can blame them? Below I have included a synopsis from the FRB Senior Loan Officer Opinion Survey for January. This serves as a great source for current lending conditions.

"In the January survey, the net fractions of respondents that reported having tightened their lending policies on all major loan categories over the previous three months stayed very elevated. Relative to the October survey, these net fractions generally edged down slightly or remained unchanged. Respondents indicated that demand for loans from both businesses and households continued to weaken, on balance, over the survey period."

Only the Bare Essentials...

Courtesy of Econompicdata. They have a knack for lightening the mood in even the toughest of times.

Interesting Trade

As I was reading a recent BCA Research report, an interesting trade caught my eye. The trade involves going long the Nasdaq (QQQQ) and short the Dow (DOG). As you can imagine, this trade has done quite well over the past couple of weeks, and it should continue as long as uncertainty remains in the financial sector. By going long the Nasdaq, you are essentially going long "non-financials," and by going short the Dow, you are shorting financials, or companies that are heavily tied to the financials. I am forecasting more pain for the banks, and maybe even nationalization of a select few. As for the Nasdaq, I see the smaller companies eventually leading us out of this downturn (if history repeats itself). Because this trade acts as a spread, the directional risk is hedged out. It protects you against any massive market moves, but has the potential to create a nice, low-volatility credit to your portfolio. Not to mention, if you're one of those tech bulls, this is a real safe way to play it!

Talent Drain

Obama's 500k salary cap could prove to have some interesting consequences. Traders, bankers and managers won't be thrilled when they see their next paycheck and many of them will likely flock to companies without the cap. Now the banks will be forced to deal with retention as well as recapitalization. So far, I'm unsure what to make of this announcement, so any comments are welcome. We'll just have to wait and see how it plays out.

China: A Technical Observation

Here's a quick technical observation on the FTSE/Xinhua China 25 Index (FXI). As you can see, we're consistently making higher lows. I'm unsure whether this patter will hold up, but it's certainly a bullish indicator for the near term.

China: Down, but Not Out

As many of you know, when it comes to long term investments, I'm a big fan of China. In late 2007, China equity valuations were getting frothy and it was only a matter of time until there was a correction. I never imagined that the correction would be quite this big. At its peak in 2007, the MSCI China Index was trading at 32x earnings and 5.3x book. Today the Index is trading around 10x earnings and 1.6x book. I am hesitant to call China an outright "Buy," but if the earnings multiple gets down to 7 or 8 and the book multiple approaches 1, I'll likely begin adding to my position. As you can see, China is trading at quite a discount to the U.S. equity market (currently demanding a forward P/E of 14). Below I have identified some of the pros and cons to an investment in China.

Pros:

• Population of 1.3 Billion with a burgeoning Middle Class
• Household debt amounts to only 13% of GDP (compared to 100% in the U.S.)
• More conservative banking system, less exposure to toxic assets
• Public Debt is around 18% of GDP (compared to over 60%, and growing, in the U.S.). This allows China to use aggressive fiscal policy in order to stimulate demand.
• Lower commodity prices = Increased purchasing power
  
• Export weakness isn't as a big of a factor as many believe - value-added from domestic exports accounts for only about 18% of GDP (meaning China shouldn't be too reliant on a Western recovery)
  
• Government is spurring consumption through rebates on durable goods (12-13% rebates)
  
• Government has decreased the corporate tax rate from 35% to 25%
• Strong retail sales (up 13.8% YoY over the Lunar New Year Holiday)
  

Cons:

• Accelerating urban unemployment (currently at around 4.3%, but if it reaches around 8%, officials say social unrest could take place)
• Unreliability of Chinese economic data
• If Chinese consumers continue to increase savings, domestic demand will continue to weaken
  
• Nationalized corporations (good in a bad economy, bad in a good economy)

Bottom Line:
Most of China's growth is being stunted by a decline in domestic spending, but given China's pristine public balance sheet, they have the means to implement the necessary stimulus to get the country back on track. The economy is likely to get worse before it gets better (due to rising unemployment), but the stimulus should help kick-start the economy in the second half of '09. If China can become more self-sufficient by spurring internal demand, this global recession may prove to be a blessing in disguise. An economy fueled by internal demand is a powerful force to be reckoned with. Definitely something to keep an eye on.

Stimulus Plan: Tax Cuts vs. Spending

As you can see from this chart, the banks aren't the only ones deleveraging. This drop-off in durable goods expenditures likely translates into an increased marginal propensity to save. In the current environment, if you give the consumer a tax-cut, they're more inclined to save a hefty chunk of it (especially after seeing their net worth evaporate). It looks like government spending might be the more powerful tool, as long as the money is allocated efficiently. Nobody knows how the $800+ billion will be spent, but we do know that it WILL be spent, so being short long-dated treasuries is becoming ever more attractive.