Judging from what now looks like a steep deceleration in China, the actions taken by politicians in Europe and the US restricting activity, and the signals from the ECB, BoJ, PBoC and the Fed, the world is sliding into recession and is going to face more turmoil before things can calm down. Consequently, the safest assets for investors are high grade bonds and we remain fully invested in such bonds across all our strategies. Our focus is on understanding the dynamics and preparing the strategies for the eventual return to investments in high yield bonds and equities when this again becomes attractive. Our aim is to protect invested capital while markets are excessively volatile and only to engage when the risk return trade-off is again attractive. We will need to re-enter market at some time, We think this would probably again be with a very substantial US overweight. In the negative market over the recent week European equities again proved that the fact that they did not follow US equities up the recent 10-years, did not prevent them from falling as fast or faster in the recent week.
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