dlaw

Cost of Higher Commodities

Nice graphic.

Can I borrow it?

More Thoughts on Mohamed El-Erian's 'When Markets Collide'

The problem with Al-Arian's work and, excuse me, but yours is that you make implicit assumptions about liquidity that are invalid.

Liquidity is not constant across asset classes, currencies or eras.

Moreover, while the "reversion trade" mentality usually works in the medium term it fails terribly in the long term. Mr. Al-Arian and his firm are blinkered when it comes to discontinuities.