The risk budget this month is unchanged. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60 versus the benchmark of 60/40. The BofA ML US High Yield Master II OAS did widen on the month but still remains below the 7.5% level I identified last month as a trigger point for a further reduction in risk assets. The sell-off in stocks at the beginning of the year, interestingly, has not been accompanied by a significant change in credit spreads. It appears that stocks are merely playing catch up to spreads that started moving wider months ago. Despite the sell-off, it is noteworthy that stocks are still above their August lows. They are approaching those levels rapidly though and even if they bounce there, I believe we will eventually breach those lows.