Senior Quant & Macro Strategist Spectre - 2015 “The name ...€¦ · Source: The ECU Group, BOFA ML ... of Junk Bonds and leveraged loans ... However, a rise greater than this,

ASSET ALLOCATION ROADMAPMONTHLY REPORT

Prepared for ECU Research Subscribers – Please Do Not Distribute. Copyright © The ECU Group plc 2015. All Rights Reserved.

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w: research.ecugroup.com

My Thoughts on World MarketsRobin Griffiths

In this issue:

SECTIONS

1 Global Economic and Investment Outlook

2 Multi-Asset Technical Ranking

3 Investment Style Ranking

4 A Word from the Cycles

5 Putting it all together

Monthly ReportAugust 52015

Spectre - “The name is Bond. James Bond”

Multi-Asset Technical Ranking in USD Portfolio

Don’t worry about Greece or China. The real problem is Mr Bond. Very few investments are beating a passive holding of the World Equity Index. These strong ones are all themselves equity markets. Even the best Bond markets have slipped down the ranking order.

The USA has been the best Western market in the top Quintile, but has achieved this by becoming extremely expensive. Long term investors, will prefer to switch into European markets which are much cheaper, with CAPE ratios of 13 instead of 27. They are now performing well.

The other strong markets are India and Japan. China is in the process of correcting a bubble-like rise. Its long term trend is still strong but a better buying chance is expected later in the year.

Contributors:Robin GriffithsChief Technical Strategist

Ron William, cmt, mstaSenior Tactical Strategist

Rashpal Sohan, frmSenior Quant & Macro Strategist

NB: Colours used to highlight key assets. See Section 4 of main document for further explanation.Source: The ECU Group plc, Datastream

StrongestJapan Equities US Equities India Equities EU Equities

World Equities US Short Dur Treasuries - -

StrongUS Long Dur Treasuries China Equities UK Equities US Corporate Bonds

US Short-Med Dur TIPS - - -

NeutralUS Long Dur TIPS US Cash EMD Hard Currency US High Yield

Global Med-Long Dur ILG - - -

WeakGlobal High yield Inverse Global Equity Global Short Dur Govt

BondGlobal Long Dur Govt

BondGlobal Broad Corporate

Bonds - - -

WeakestGlobal Short Dur ILG Agricultural

Commodities EM Equities Gold Bullion

EMD Inflation Linked Industrial Metals Commodity Basket Energy Commodities

Click here for completeRankings in Main Report

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Page 2Prepared for ECU Research Subscribers – Please Do Not Distribute. Copyright © The ECU Group plc 2015. All Rights Reserved.



Executive Summary Problems with Greece will not stop the rest of Europe growing, nor will it end the Global bull trend.

China can look after itself. Its stock market rose so rapidly earlier that a crash type correction was inevitable. It’s economy will still be growing at 4% and the stock market will find a good buying level later in the year. Even though it is grappling with a debt, property, and stock market bubble we do not expect a missing decade, just a partial retrace of this years rise.

The World Equity index is still in a bull market pattern. It is long in the tooth and overdue for a correction but the normal signs of a final top are not yet in place.

To beat this index it is necessary to hold the best of the USA. These tend to be the “Famous Five” of the high tech space like Google. The older blue chips and small to mid cap stocks have already topped out. 60% of the stocks in the NYSE index are below their 200 day moving averages. This reduction in breadth is normal near the end of a bull, but the few may still have a final blow off phase of irrational exuberance.

Driven by superior value and a positive currency effect European markets now start to outperform.

Japan is in prime uptrend and the yen is no longer weak. Hold this market in unhedged form.

India is back in the top quintile, and the Monsoon is working out much better than feared. Any weakness is a buying chance. We wish to be overweight.

The real worry is the Bond market, which is far bigger and more miss priced than equities. Rates will return to the old normal by 2020, but can not do this quickly without causing a crash.

World Index breakdown still trending lower

Source: The ECU Group plc, Bloomberg





MY THOUGHTS ON WORLD MARKETS Spectre − "The name is Bond. James Bond"

Global Economic and Investment Outlook

Investors have had plenty to worry about recently. They especially worried about Greece and China. What they should be worrying about is Mr. Bond, not James but Treasury Bond. By market capitalisation, the Bond market is two times larger than equities (Fig S.1), and has always been regarded as the safest form of investment, and the backbone of most pension funds. Now, however, because of QE it has become the most mispriced of assets, and has caused mispricing in many others. This is not stable or sustainable. If there were to be a rapid return to “Normal” it would have disastrous consequences. We all know that James can get out of death defying trouble with one bound, but that is only fiction. Mr. Treasury Bond has never done this, because he can’t and unfortunately he is for real.

History shows that for long periods of time, developed economies can grow at around 3% without major inflation and stable long term interest rates. The US economy, for example, has had such an experience, over which time US long term government bond yields have been stable at around 4% (Fig S.2), as seen in the chart below.

Source: The ECU Group, Datastream

Figure S.1: The size of the US and Global bond market makes it a systemic risk for investors

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Figure S.2: Over the very long term, US long-term bond yields are stable at 4%

Source: The ECU Group, BIS,Sifma





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BOFA ML Global High Yield IndexIndex Breakdown by Sector Weights

MY THOUGHTS ON WORLD MARKETS

Figure S.4: The High yield market is vulnerable to increasing default rates as the price of oil falls

Source: The ECU Group, BOFA ML

Fracking industry has over $600Bn of Junk Bonds and leveraged loans

Melding this with the current outlook for the US economy, we find that near term rates can be raised by two hikes of 25bps each, and still stay within the 35 year regression channel of falling long-term government bond yields (Fig S.3). However, a rise greater than this, signals an end to that trend, and light the fuse on this most toxic of assets.

In the bond market, one area of particular concern is the High Yield market - comprising bonds issued by companies with less than reputable credit status. It took three decades for this market to reach $1 trillion but only seven to reach $2 trillion recently as investors have been chasing higher yields in a world of Zero Interest Rate policies. Stresses in this market are still relatively contained but the cracks are beginning to form. Recently the default risk of 300 companies in the US high yield energy sector − a sector which has issued 600 billion dollars of junk bonds and leveraged loans, comprising around 14% of the US High Yield market (Fig S.4) − has risen as the price of oil has collapsed. Default rates across the entire market remain below the long term average for now, however the toxic combination of investor nervousness, illiquidity and a rush-for-the- exits may serve as a stark reminder of why these bonds are also called "Junk" in the first place.

Figure S.3: A break of the 35 year interest rate channel will put Mr. Bond in serious peril

Source: The ECU Group, Market Analyst

The Fracking industry has issued $600Bn of Junk Bonds and leveraged loans





Greece is a problem, but not a big enough one to bring the World economy down, or even to stop the rest of Europe growing. The leaders of the region have repeatedly shown that they can kick this can further down the road if they want to. As long as there is a will they can always find a way. The problem has not been solved. All that has happened is that time has been bought. The fiction has been maintained that a loan to Greece is a valuable asset. Pretend and extend is the name of the game. We will lend more money which can be used to pay us back the interest on the last loan, which did not solve the problem anyway. We cannot allow the old loans to be written off as that would then break all European rules for the other member countries, but as long as they are still debts, Greece cannot grow its way out of trouble. The economy continues to slowly sink into depression comparable to the US Great Depression of the late 1920s (Fig S.5). The latest deal is a very bad deal disliked by all parties to it. Vital trust is missing. Neither the government nor the people really wanted this bailout. What they wanted is debt relief and an end to austerity, but instead what they were given is even more debt and more austerity. There is little chance of it being good for either Greece or the European community. However, because there is a deal we can stop worrying about this for a while. What will actually change is the political will within the community. Eventually, debts will have to be forgiven and somebody will have to leave the group, just not yet.


Figure S.5: Greece is experiencing its own version of a depression







China has also appeared to be a problem, but the important thing to remember is that ultimately China can look after itself. It is perfectly fine to call a stock market index that rises by 140% in a year, and the last 100% in six months, a bubble. It is also fine to call the index that then drops 30% in a month a crash. It would be an abuse of the English language to do anything else. However this is still by far the top trending market of the world. Nothing in the west comes anywhere close to it.

When the Chinese market ran up to the high at the time of the Beijing Olympic Games that was a real bubble. It was followed by a huge crash and then a missing eight years, normally a decade, following the normal roadmap for such events. That is emphatically not what we expect to happen this time around. We have had a mini-bubble and crash. The chart shows that the index is now on the mid-trend line that has run for over thirty years. Parts of the market are very cheap, only a few sections are very expensive. We cannot judge this using the same yardsticks that apply to Western markets. The value of the Chinese market in relation to GDP is much smaller than that in the West and considerably lower than during the bubble peak in 2008. The proportion of the public’s assets in the market is also tiny. The really big investors, such as the pension plans, are hardly in the market at all (Fig S.6 #2). We think that they are planning to invest soon, but not just yet, and the market will then resume its uptrend in a more orderly fashion. We are assured of more volatility in the interim though.

We must remember that China had a huge credit bubble, and then a property bubble, and one of the ways of deflating that was to encourage a diversification into the stock market. This did encourage millions of young student level investors to open accounts and punt on borrowed money as if in a casino. This is the froth that was the recent bubble. That has burst and those gamblers have lost their money. Shares have passed out of weak hands, and in due course they will pass into strong hands (Fig S.6 #1)

It is important to realise that the correction phase is not complete yet. We always look for the special shape of a fall, followed by a rally, then the rest of the fall. Actions were put in place to start the rally phase. This phase started and produced a bounce, but is now over, we thus expect the rest of the fall to the true low where the large and long term genuine investors will come in. This will be later in time, but possibly by the end of this year. The uptrend will then resume at a rate that is reasonable for an economy now growing at a much slower rate than has been normal for the past decades, but still very good compared to anything in the Western World. We think this is currently about 4%, rather than the previously accepted official number of 7%. Global investors will continue to find that it will not be possible to beat the World Equity Index without being fully exposed to large Asian markets. This has been true for a long time and will be even more true in the future. The next dip is a major buying opportunity for China, India and Japan.


Figure S.6: Three key reasons why China's Equity Story is different this time around

Source: The ECU Group plc, Bloomberg, Bridgewater Associates





Sou rce : Tho m s on Re uters Da tastream

G4 Economies Leading Economic Indicator& Economic Surprises

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G4 Economic Surprises (Citigroup,12W MA) [1.8]G4 OECD Leading Economic Indicator [-5.558]


Forecasts for the World economy have growth of around 3.1%. This is slightly less than had been the case but still a good number. In this total, no one in the West is achieving this rate. The US and the UK economy are two of the best at around 2.4% to 2.9%. The areas beating the number are all Asian, with China now doing about 4% and India between 5% and 6%.

In the West, global leading economic indicators are languishing as the economic data has lagged expectations. We have throughout the year had bullish expectations only to have them disappoint when the true economic numbers were published (Fig S.7). Hope springs eternal however and we still do expect a small pick up in growth to come. Many of the disappointments can be explained away. For example, although we think it was wrong to be surprised when winter came at its normal time, this last one was a particularly hard winter. Right now, the El Niño is causing chronic drought in California and yet flooding in the corn growing belt. So we accept that seasonal events have worked out in an unforeseeable manner. The US economy does now seem to be in a condition that will enable interest rates to start to move a little higher later this year. The market is pricing in a 60% probability of a 25 basis point hike by December.

When it comes to Europe, we really do see things picking up in spite of the trouble with Greece. These markets are also cheap. They have not been performing as well as the Global Index or as the US, but the value measures make them better from a risk-reward perspective.

Figure S.7: Economic growth in the West is languishing as the economic numbers have not picked up as much as had been expected

Source: The ECU Group plc, Datastream

G4 Economic Growth leading indicators are languishing as the economic data has been weaker than expected





Multi Asset Technical Ranking

Our models show that it is very difficult to beat a passive holding of the World Equity Index. The only assets that are doing so, on a consistent basis, are themselves Equities, and not many of these.

The top markets now are US, as the best of the West, India and Japan.

European markets, are now beating the UK and have risen to the top quintile in our ranking system. They are beating the passive holding of the World index for the first time in years. This movement is being driven by the fact that the broad economy is picking up, in spite of Greece, and the much lower valuation compared to the US equity market remains appealing for long term investors.

China was right at the very top for a long while but has just dropped out as the correction phase is now occurring (Fig S.8 bottom left). It is still strong, up 15% year to date, but comes below the Global Index.

India did this earlier in the year, when the bad monsoon arrived but has already rallied back into the top group (Fig S.8 bottom right)

When in a clear bull market both Cash and Inverse Equities (Short Selling) would be at the bottom of quintile five. However, this is not the case at present. Particularly when ranked in US dollars, investors find that they are no longer being punished by holding some cash (Fig S.8 top right). This indicates that the bull has lost a lot of momentum. This is corroborated by our technical indicators which show that the breadth of activity has reduced. The US Equity market index (S&P 500) is being held up by fewer and fewer stocks, particularly the “Famous Five” like Google and Facebook etc.

By the time Cash and Inverse Equities get to the top quintile we will already be in a bear phase. The present condition therefore indicates that we are not there yet. We are in a very mature bull market, which is still, with a lot of help from Government Central Banks able to climb a wall of many worries. None of the normal signals which we expect from our many indicators show us to be at the final top yet. The risk is that this could reverse suddenly. Maybe it is doing so now. We continue to monitor the situation.

One of the triggers for the next recession could be the 57 trillion US dollars of extra debt now in the World Economy since the financial crisis of 2007. It is difficult to get ones head around a trillion. The human mind finds these numbers had to comprehend. It does not sound that much worse than a billion. However everybody knows how long a second is. Well a million seconds is 12 days. A billion seconds is 32 years. A trillion seconds is 32 thousand years. Not only before the Great Pyramids were built, but before the hominids on the planet were even modern Homosapiens.

Any asset to do with Commodities is in the weakest quintile. It is normal for commodities to be falling as equities rise. If these were to top out, then commodities should make a major low. There is a reliable negative correlation. The confirmation we are getting from this is that the final turning point has not yet been reached in either asset class.







Figure S.8: Plot of technical ranking trends using ECU Multi-Asset Technical Ranking Model

Source: The ECU Group plc, Datastream

Sou rc e: Thom so n Re ute rs Da tastream

Technical Ranking Long Duration Govt BondsRanked using ECU Technical Asset Allocation Model

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? Gaining Technical Momentum (1 = Strongest, 5 = Weakest)

US LONG BOND SLIPPING

Sou rc e: Th om so n Re ute rs Da tastream

Technical Ranking CashRanked using ECU Technical Asset Allocation Model

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CASH IS NEUTRAL IN USD AND GBP PORTFOLIOS

So urce : Th om s on Re uters Da tastream

Technical Ranking Chinese EquitiesRanked using ECU Technical Asset Allocation Model

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CHINA WINDS FROM EXTREMES


Technical Ranking Indian EquitiesRanked using ECU Technical Asset Allocation Model

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INDIA RESUMES UPTREND






Investment Style RankingThis ranking is intended to show what is working, at the global equity market level, and what is being punished in the way of invest-ment styles (equity risk factors) relating to these markets. We observe that:

Just as very few assets are beating the World Index, so we find very few investment styles are working.

The first thing that stands out is that value investing which worked so well, for so long, for Warren Buffet and others is now being punished. Ever since QE started this form of investment management has been punished consistently. There is one notable exception to the above rule. In Japan, value investing is showing tentative signs of beginning to work. This is a market that is performing very well and stock picking should be value orientated.

The factors that are being rewarded every where else show that investors are being very cautious. For example, they want liquidity on their side so large market cap is favoured over small (Fig S.9 right chart). No one wants to be locked in when the bull market is over. They want growth, but low beta (Fig S.9 left chart), also low price to book ratios.

Most important of all the share price must be showing upwards momentum. It should make new highs each year, and short and long term momentum measures must be positive.

The result of this is that value is getting progressively worse overall. It is like a herding process into a few winners, which become loved because they have gone up. Breath of activity gets thinner.

The weakest performing factors appear to be a mirror image of those that are performing the strongest.

We use a factor scorecard to determine which global equity markets are conforming the closest to the strongest and weakest factors. Based on this scorecard, the Strongest Global Equity Markets are Japan (8), Denmark (6), Switzerland (6), United States (5) and China (4). These higher the score, the closer the market in question is conforming to the strongest factors outlined earlier.

The Weakest Global Equity Markets based on this approach are Brazil (11), Russia (10), Greece (7), Australia (6), Canada (6), Norway (6) and Malaysia (6). A higher score indicates that the market is conforming closer to the weakest equity factors.

Source: The ECU Group plc


ECU Factor Performance: High vs Low Beta

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ECU Factor Model: High vs Low Beta Global Equity MarketsFTSE WORLD $ (RHS)

Figure S.9: Risk Factor ranking shows that Low Beta and Large Cap Equity Markets are outperforming

HIGH BETA UNDERPERFORMANCE SUGGESTS INVESTORS REMAIN CONSERVATIVELY POSITIONED

High Beta underperforming Low Beta Equity Markets


ECU Factor Performance: High vs Low Market Cap

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ECU Factor Model: High vs Low Market Cap Global Equity MarketsFTSE WORLD $ (RH Scale)

LARGE CAP PREFERRED OVER SMALL

CAPS OWING TO LIQUIDITY CONCERNS

Largecaps outperforming Smallcaps






Figure S.10: Seasonal cycle favours a peak in late August/Early September

A Word from the Cycles

Our cycle analysis suggests a growing probability for equity markets, most notably the USA, to peak during the end of August/early September this year. This could be part of a euphoric topping pattern, a failed new high, or just an outright sell-off, that would take us into the bearish stage of the larger decennial cycle in 2016-17. Ultimately, the end-of-summer peak is what leads to the well known "Autumn (Q3) Fall-Crash cycle" that traditionally unfolds between September and October. Figure S.10 illustrates the shape of this seasonal move, which is based on the average performance of over 100 years of price data that we have backtested on the Dow Jones Industrial Average. These results tells us the largest price fall can be expected in September, followed by a volatile rise/whipsaw, then another fall in October, which traditionally marks the final capitulation "true low" in the market (Fig S.10 top left chart),. This is in-line with our signature roadmap cycle schema of "a price fall, followed by a rise and the rest of the fall".

During the latest cyclical recovery since 2009, there have been two major peak/drawdown periods in August. The first was on 8th August 2008, which marked one of the final major peaks of the Global Financial Crisis, triggering a drop of -34%. Secondly, was an extended drawdown timing window into early August 2011, with a net fall of -17%, from a week earlier in 22nd July. Historically, one of the most infamous seasonal anniversaries of this kind was the peak of the 25th August 1987.

Finally, it is also worth noting these annual seasonal cycles are not limited to the US, or even the western hemisphere, as is often perceived. Our analysis (Fig S.10 bottom chart), shows that world markets are impacted by this seasonality contagion effect, not least, through the negative psychological feedback.

Source: The ECU Group plc






Putting it all together

We are living in an era when politics overrides economics. It does this repeatedly and to such an extent that prices are not discovered by free market forces. Although we hate conspiracy theories enough evidence has come out, and plenty of enormous fines paid by Banks and market makers, to reveal beyond doubt that market manipulation is rife. Bear markets and even ten percent corrections have been forbidden. They only occur quite suddenly when the authorities temporarily lose control. It is quite possible that control is being lost right now.

The largest and most mispriced assets are Government Bonds. A large proportion of such bonds are now, in inflation adjusted terms, on negative interest rates. It has not happened to this extent before and is not sustainable. The good news is that we can see this era coming to an end naturally, of its own volition by about 2020. It has to be tolerated and survived for the next few years, but then the Old Normal will be back and we will be investing for the growth in the “Brave New World”.

The main reason why we got to the present situation was because there was too little demand in the Global economy. Interest rates were pushed down to almost zero to make it cheaper to borrow and consume. However demographics has been against this trend. The Baby Boomers have all reached the age when they do not want to consume but switch to saving for their pension. We also had a period of very high oil prices forcing the West to consume less and sending a surplus of wealth to the Middle East that was then not spent. There has also been a long period when China was selling more to the West than it bought, again reducing our consumption. After the crash of 2007 many countries have had a policy of austerity, and businesses, seeing a poor environment for profit, have not invested in their own activities, but just bought back outstanding shares.

The good news is that most of these issues are fading away. Demographically there is a new generation called the Millennials. They are too young now to drive the economy, but by 2020 they will start to be the dominant consumers.By 2023 they will be well into their stride. The oil price has crashed and is trending even lower, and the nations who had the earlier oil wealth are spending it on their own infrastructures. The policies of austerity have worked in the UK and some others and will soon not be required. Seeing the next wave of consumption, businesses will start spending again, driven as usual by new inventions and creative destruction. There will come a time again when investors will get a decent return from savings in a bank, and pension plans will again be able to hold Treasuries or Gilts. Mr. Market will then return the price of other assets to their correct level. That will be good for many, but bad for some.

In the meantime, Central banks have to slowly get from where they are today to where they should be in say 2020 when the “Old Normal” is back. Then rates will average the growth of GDP plus inflation. For Western economies, that average might be between 2% and 3% and in the strong Asian economies 4%, with India possibly then doing 10%. Let’s say inflation rises to 2% as by then the secular downtrend in commodities will be over. On this basis, we can expect interest rates to then be fluctuating between 4% and 6%.

Once rates have returned to normal, mortgage rates will be worked off this. Property markets will need to adjust. If this were to occur right now, there would be a crash in many cities globally. However, there is time to get to where we need to be. The policy must be to go slowly. The market is pricing in a high probability that the US will have the first hike of 25 basis point by December. Because of this, there is downside risk in bonds, even though if there were to be a moment of panic for some geopolitical event, then they would still have a degree of safe haven status. In fact, if global equity markets are about to slip down now, then in the short term Treasury Bonds would see a rise in price, and any idea of a rate hike would have to be temporarily put on the back burner.

The UK will follow the US example a little later this year and raise interest rates. Europe will be later still, probably well into next year, if at all. Interest rate differentials therefore mean that there will be a period when the Euro is weaker than Sterling and the Dollar. European markets are cheap. The CAPE is 13x, compared to 27 for the US Equity Market. Growth in the region really does seem to be picking up with or without Greece. The markets are attractive on a value basis and in the short term are now performing well enough to beat a passive holding of the Global index. Europe is in the top quintile for the fist time in ages.





In fact the Dollar will be strong against almost everything and this will suck hot money out of the emerging markets. However, large investors are wanting to increase exposure to India and so this market will hold up relatively well and then go into top performance mode. This, for us, is the big overweight call. Any weakness for the Sensex index back to around 25,000 is a buying chance.

We have not abandoned China, but reason suggests they will need more time to sort out their bubble trouble. We expect to get a much better long term buying chance later this year.

We need to be in Japan. This being one of the few markets where value investing styles still work.

This leaves the US equity market which is beating the World index. However the risk is that it has become very expensive by doing so. The probability of positive returns over the next five to ten years by buying at these levels is very low. The market is being driven by fewer stocks and typically the “Famous Five” lead by Google. There are no signs that it has finally topped out yet. Rather than Greece or China being the problem, we think it is more likely that the market will move up even higher, and then break like a wave on the ocean under its own speed and weight. A final rush up to a late August high is probable. We have just seen a version of this scenario play out in China. This is the normal way for bulls to end. The move will not be rational. We should expect irrational exuberance. Enjoy but beware.






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This research document is formulated by the Global Macro Team of The ECU Group plc, and is intended only for Professional Investors. The opinions, estimates and projections in this report constitute the current judgement of the author as of the date of this report. They do not necessarily reflect the opinions of The ECU Group plc and may be subject to change. The views in this report are based upon information from sources, which the author believes to be reliable at the time of publication and is not to be construed as a representation by The ECU Group plc. Prices and availability of financial instruments also are subject to change. This report is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any investments or financial instruments or to participate in any particular trading strategy in any jurisdiction in which such an offer or solicitation would violate applicable laws or regulations.

The markets or financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their own specific financial situations and investment objectives. If a financial instrument is denominated in a currency other than an investor’s currency, a change in exchange rates may adversely affect the price or value of, or the income derived from, the financial instrument, and such investor effectively assumes currency risk. Furthermore, income from an investment may fluctuate and the price or value of exchange rates and/or financial instruments described in this report, either directly or indirectly, may rise or fall.

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(a) the regulated activity of giving advice; nor

(b) leading or enabling persons to buy, sell, subscribe for or underwrite securities or contractually based investments.

Past performance is not a reliable indicator of future results, and should not therefore form the basis of a decision whether or not to invest in any market or financial instrument mentioned herein.

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Senior Quant & Macro Strategist Spectre - 2015 “The name ...€¦ · Source: The ECU Group, BOFA ML ... of Junk Bonds and leveraged loans ... However, a rise greater than this,