Credit markets are easing

In signs that the dramatic government intervention is finally taking hold, there is an increasing number of reports that say that conditions in the credit markets are improving.

They see a narrowing of spreads and hence a rebirth of the market.

Not so long ago the spread between bid and ask was so large (200bips for large banking institutions) there was no market.

Bottom line, this is good. We can narrow the spread. The beast has been slowed down if temporarily, to the tune of 3T.

In it is that order of magnitude, and that is the good news. Remember the US economy alone packs a healthy 14T run-rate. A 5% tax increase would take 4 years to reimburse such a debt.

In that optic I am long US of A. Bring it on, you fat 5T big baby, bring it on!

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