It Is Time For The Recoupling Arb

The risk-EUR decoupling has hit the same spread to the outside as it did early this week to the inside - i.e. ES was "cheap" compared to EURJPY. The recoupling convergence trade here is once again a nobrainer. Which means that computers will gradually process the correlation and close the spread. We were concerned this could be a trap by someone far smarter few days ago. Turned out that "someone" was not only dumber, but also slower. Selling ES and going long EURJPY is now pretty much risk free. Ridiculous amonts of leverage on top of the trade are sincerely encouraged as a spectaular explosion will immediately render your trade TBTF and will guarantee Discount Window access for life.

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