The Kubler-Ross Model of the 5 Stages of Grief apply to the post-crisis recovery. Denial, Anger, Bargaining, Depression..Acceptance. It appears we have finally moved toward acceptance.

The WSj and BBG have picked up on the dramatic regulatory changes shaping the new financial network plumbing. The prevailing sound bite is "collateral shortage." This is a prime example of what we call "sounds good macro".  Ultimately, the system will adjust to the needed capital/collateral capacity to fulfill its economic role. The concept of shortage is a calibration to the credit super cycle apex of the old money system.

The Fed's recent apprehension of excessive RRF usage is another example of moving toward acceptance. PDs are pulling away from repo funding operations at a steady pace. Yellen's late night "dovish" comments align with the limited demand for credit and the collateral adjustment to its creation. If this is all there is, there's something to be said for Denial.

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