in 2011 called the law a calamity that increases business uncertainty and undermines growth. Under Atkins, the transition team posted a statement that it will be “working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation." At this point there are no details on what parts of Dodd-Frank are most likely to be repealed, but Republican financial policy leaders appear pro- markets and have flagged free movement of capital via open markets as the best policy for economic growth and risk transparency. There are several dislocations across markets today that we think have a chance of normalizing in the tail-risk event that deregulation results in increased availability of leverage and ability to take more risk. We have discussed these dislocations as resulting in part from the lack of ability of hedge funds and other relative-value traders to access enough balance sheet at a low enough cost to help these trades normalize. The top trades we could see benefitting from the return of leverage would be: ¢ Normalization of swap spreads; balance-sheet intensive Treasuries, both nominal and TIPS, are very cheap versus OIS and Libor swap rates. « Normalization of cross-currency basis swaps, which currently allow USD-based investors the ability to buy very cheap EUR- and JPY-denominated assets via the basis swap. « Normalization of coupon STRIPS versus principal STRIPS as these yield differentials are near their all-time wides, particularly in the 2030-38 maturity bucket. As a tail risk for deregulation, we like buying 30y swap spreads, a credit-risk-free floating-rate US Treasury asset that provides 3m Libor + 56bp annually, which is about 100bp cheap to pre-crisis levels. Swap spreads could also benefit from deregulation that removes cash and Treasury bonds from the leverage ratio requirements, which would provide the ability of the dealer community to more easily absorb Treasury supply in the primary and second