Leveraging the market's new normal

Deleveraging appears to have slammed the door on market growth – moving it from private to public balance sheets, where even there it faces investor and political limits. But in fact, markets are only selectively deleveraging.

About six months ago, I only half in jest told Mohamed El-Erian that my tombstone would read, "Bill Gross, RIP, He didn’t own ‘Treasuries’.” Now, of course, the days are getting longer and as they say in golf, it is better to be above – as opposed to below – the grass. And it is better as well, to be delivering alpha as opposed to delevering in the bond market or global economy. The best way to visualise successful delivering is to recognise that investors are locked up in a financially repressive environment that reduces future returns for all financial assets. Breaking out of that "jail” is what I call the Great Escape, and what I hope to explain here.

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