Hello everyone,The data points on U.S. macro certainly aren’t helping these days. At least from what I understand, corporate investment has tightened quite considerably. The negative cycle of weakening investment translates into slower job growth, and weakening money velocity. Source: Morgan StanleyIn other words, there’s not enough liquidity in credit markets to drive inflation, GDP growth and employment growth. At the end of the day, banks aren’t getting aggressive here. Any excess capital gets returned in the form of dividends and share buybacks. Post 2009 Wall Street: extreme conservatism, less investment and over-dependency on central bank policy. Prior to 2009 Wall Street: banks were handing out loans left and right utilizing complex derivatives, credit default swaps, and loose underwriting standards due to asset securitization. In other words, we went from one end of the spectrum to the next. Under regulation to over regulation, can’t we just maintain the status quo and rely on markets to make capital allocation decisions? With the Fed relied upon to capitalize markets with easy money and centralized risk monitoring, I can’t say we’re operating in a “better” regulatory environment. In fact, the m0 currency supply is contracting due to the massive deleveraging of bank balance sheets. Money multiplier doesn't work very well when asset utilization is so low, and everyone is afraid of worst case "stress" scenarios. I honestly believe the Dodd Frank bill, and more specifically the Collin Amendment within the reform act is a total disaster. I don't think the government is a better risk manager than the firms who employ capital on behalf of investors. But, that's just me, maybe I'm not dumb enough to jump on every new econ theory that gets publicized by left wing outfits or something. Whoops, did I say something offensive? I think we need to revisit the potential of stagflation in this environment, as U.S. banks are starting to act like their Japanese counterparts. Basically, the relevant case scenario isn’t whether the U.S. enters into another recession, as monetary contraction isn’t so substantial that we should anticipate a massive drop-off. There won’t be another “whoops look out below,” the entire financial system will completely “implode.”But at the same time, can we honestly anticipate another wave of economic expansion similar to the 1960s or the 1990s? Not really, I mean the markets can’t operate with efficiency if there's a switch board with enough impact to keep us within a 0% to 2% growth rate environment. In other words, we’re not entering into another wave of great economic expansion, or a major recession, but more likely a period of economic moderation as it pings from -2% to 2% growth based on interest rate sensitivity, and helicopter Yellen. I mean, if things get any worse, the Fed will bust out the same bag of tricks the BOJ and ECB are employing to combat deflation and recession. It’s just that the U.S. is pretty good at exporting deflation as they take the matter of deflation more seriously than other central banks. It's just a matter of stuffing trillions of dollars into the system, and if things still aren’t working we just add a couple trillion more dollars. I mean, at some point we’ve got to ask: Does the Fed itself provide market efficiency or is there some hidden cost to all of this activity? Now, I’m not talking some hyper-inflation/deflationary scenario, or Zimbabwe or Argentina comparisons. I mean seriously, does the Fed itself dictate market outcomes, or is it reacting to market outcomes? And if the market is dictated by the Fed itself, isn’t that in of itself a flawed system, because market efficiencies tend to rely on disaggregation rather than concentration of financial decision making? We’re living in a completely different environment from the post-World War 2/Cold War era. The same observations that could be historically applied don’t apply anymore. The rules have shifted so considerably; we might as well wonder if the theories on economics need to be rewritten. With mounting uncertainty, I believe investors should start allocating to high-conviction short positions in laggard companies. I’ll keep adding to the list of ideas. But Work Day, 3D Systems, Groupon, etc. would be a good start. I also believe Cavium is at risk of losing considerable share in its mobile base station business to Intel. So, I’ll throw that in there as well, so you have some more ideas.The continuous deceleration leaves us wondering if the Fed can react quickly enough. Maybe the Fed is wrong, and if they’re wrong and cannot react in time, we face the possibility of another recession. So, start working on re-positioning your portfolio to look more like a hedge fund (basically, bust out the Paul Tudor Jones playbook, and if you don’t know who he is, I suggest your start reading about his strategies from the 1950s), and try to be more conservative by adding fixed income and cash positions as well. Avoid commodities, as they’re unpredictable. If the guys at Morgan Stanley and Goldman Sachs can get whipsawed by commodities, I seriously doubt you have an edge either. I don't know, maybe I just don't like gold? It's certainly a bad idea to own commodities in a "deflationary" scenario? Just maybe, anyone want to argue about this?Don't forget to keep your chin up. You can make money on the way up and on the way down too, you know. That being the case, buy and hold is likely a broken strategy for now, and while I can acknowledge that timing markets is not easy. There's always an element of timing when maximizing returns. You can also rely on portfolio allocation to minimize tail risk as we get closer and closer to the onset of a full-blown recession (could take a couple years). The data doesn’t completely confirm a recession, but with all the professionals moving to record cash positions, the Paul Tudor Jones strategy is probably your best bet, the rest is... junk at best. There’s a reason why hedge fund managers beat mutual funds and ETFs over the long run, ye know? And it's not about buying stocks through cycles, there are times where shorting stocks could be just as beneficial. And you can count on Jim Cramer to be as useless as he was back in 2007 through 2009, so try to ignore the stupid punditry too. Best of luck,Cho