This morning I got an email from David Kotok of Cumberland Advisors. The title was "Libor !" and the gist - embedded in a half-dozen mind numbing analyst papers - was they had gone defensive because of the rising rate and widening spreads between HQLA and sub-HQLA "assets". This topic has been mentioned (cough, cough) several times in the delusional ramblings between me and my imaginary dog , Hooper, here in this blog.
Some background : When the recovery was in its infancy (the one that is "sub-par", "non-existent" or "just CB induced" depending on the pundit) the Obama administration invited a gaggle of us to the Treasury Dept. to meet with the economics team and discuss their plans and offer input. The Sec. of the Treasury, Tim Geithner (you know the guy everyone on TV painted as an idiot - but happened to be one of the brightest minds I've come across) was "officially" not there, (Spoiler Alert: he was there) Along with a few egomaniacs, a couple of interesting guys, a female copper haired consensus retail economist and one jaded small time trader (moi) was a polite and gracious older gentleman named Bob Eisenbies. This is where Bob, former Fed-er, now Chief Economist of Cumberland Advisors and I met and became friends.
Bob and I continued to chat after returning to our home bases and he mentioned our conversations to David who was kind enough to bump me to the head of the line with an invite to his annual fishing/shadow Fed awesomeness nicknamed Camp Kotok. The timing of this gathering is the first weekend in August which usually meant the Employment Report release would find us all jostling for phone/internet service before heading out to fish. If you noticed, there was a post about this year's confab on the back page of section 1 in last week's WSJ. So, my long winded "heads -up" is that a couple weeks after eating, drinking and fishing with some of the more dynamic thinkers, money managers and Fed staffers of the business; Cumberland has gone defensive.