Corn Prices Respond to EPA Re-assessment of Ethanol Mandate; Hedging & Diversifying; Shifting Perceptions; The Big Gobbled by The Bigger

MWF (Wednesday) Briefing:

• Shift in corn prices.  September corn is in a retreat this morning to break below the $6-a-bushel level. That's nearly a $1 tumble from its peak.  Much might be related to pressure for EPA officials to re-evaluate the ethanol policy after a request to reduce the mandate.Also, the World Bank have working papers (the Guardian originally said they were secret, which isn't true according to the World Bank) reporting that ethanol demand added 75% to the cost of food.

• "At what point does a diversifier become a hedge? Asset allocation has been driven of late by the desire to access a wide range of alternative asset classes.  University endowments like Harvard and Yale have become the gold standard in investment management.  (See this post byMebane Faber at World Beta on the subject.)  The entire drive for broad diversification is an attempt to access a diverse set of risk premia in addition to generating active alpha."  Abnormal Returns

• The financial crisis continues to create victims. Not only people but also some of our most cherished ideas risk falling by the wayside. Take the hugely influential idea that financial markets are efficient. Its proponents told us that when financial markets were left free, they would work miracles. FT

• The disappearing Genentech. One of the most important companies of the past 30 years could lose its identity inside Roche. That's not altogether a bad thing. Forbes