De-Greenspaning

There is no doubt a new view of risk is being implemented across asset classes and that the credit industry is the main driver. Leverage ratios are being recalculated and hurting any speculative positions with long open interest or holdings created in easier times. Commodity markets will receive the worst of it because ultimately they are small markets and often times liquidation is exacerbated by trading limits. Fed action accompanied by credit industry changes will lead to a deflationary path for most markets. This de-Greenspaning will play well for equities in the long run but make the search for alpha less important than benchmark methodologies.