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The February note made some good points: It’s been a while since we’ve suffered an event resulting in greater deleveraging; that set of events may have played out. The market can only deleverage so much and as we wrote previously, the New Year represented a very hard reset in terms of redemptions.

Parking: $23/Hour, Deleveraging: $3 Trillion/Year

There is a difference between cash racing for the sidelines — burning value as it flees all asset classes, as in the second half of last year — and cash already on the sidelines, staying parked. The defining characteristic of January, beside the redemptions, was that the market had and has no leadership. In itself, this is not a bad recipe for improvement — absent new global financial catastrophes and regardless of the unintended consequences of recent government interventions.

No portion of the investment industry, institutional or retail, is designed to idle for quarters or years. It’s anathema to fee structures ranging from commission- to carry-based. You are either expanding or you are (not shrinking, but) disappearing. And markets have all of the forward-looking attention span of fruit flies. They “trade the news.”

Let’s Chill-out on the Bailout

Traders are looking for leadership right now; we believe investors will follow. But whether you know it or not, you need to be able to put a forkful of salmon bennie in our mouth without another global financial-services failure (non-discretionary) or a trillion-dollar bailout package to answer it (discretionary). ♦