PPP update

Just a quick update for the Purchasing Power Portfolio.  We are at 1/2 neutral allocation for 6 of our asset classes.  Tomorrow at the open, we will sell 5 additional asset classes to 1/2 neutral, so that 11 of 16 asset classes will be underweighted due to weakness.  Just as we have seen broad strength in the global asset rebound, we are currently seeing broad weakness.  Correlations seem to remain near 1.

In other news, we are adding an asset class to further diversify our “cash section.”

Currently, our 25% cash section comprises 15% in U.S Government inflation-protected bonds and 10% in an actively-managed government currency mutual fund, MERKX.  Effective tomorrow, October 29, we will reduce the US Government inflation-protected bonds to 10% and add a 5% position of WIP, an international government inflation-protected bond ETF. Information about the ETF can be found here:  https://www.spdrs.com/library-content/public/ETF-WIP_20090930_133848.pdf.


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