Why is the euro starting to trend lower?

Posted on 22. Jul, 2014 by Jean Jacques Ohana in Weekly Focus | 0 comments

We have anticipated the euro’s strength for more than a year against the consensus.
The main forces behind the euro’s strength are still at work:

Current account in the Eurozone is still progressing due to uncooperative and simultaneous policies of competitiveness. The Eurozone current account is nearing 3% of GDP, implying recurrent repatriation of foreign currencies by [...]

Are we reaching a turning point of the supply/demand cycle of base metals?

Posted on 08. Jul, 2014 by Jean Jacques Ohana in Weekly Focus | Comments Off

Since 2014, we have stated a disconnection between base metals. Copper and aluminum used to lag behind zinc and nickel. Zinc and nickel rose because of supply constraints. Closures of zinc mines and the Indonesia export ban of unprocessed nickel implied the rise of zinc and nickel.
Now that aluminum and copper have started to follow [...]

Are precious metals getting more precious?

Posted on 02. Jul, 2014 by Jean Jacques Ohana in Weekly Focus | Comments Off

The dynamic of the gold’s constellation has considerably improved over last weeks. The trend indicators of gold, silver, palladium, platinum and gold miners are represented in figure 1. All of these markets have at least a correlation of 50% to gold and many of them have actually led gold in the rally.
Following geopolitical tensions with [...]

Do not forget to hold Japanese stocks!

Posted on 24. Jun, 2014 by Jean Jacques Ohana in Weekly Focus | Comments Off

As showed in figure 1, Japanese equities are coming back to the forefront with a remarkable positive dynamic. Since the beginning of 2014, the USD/JPY used to offer better perspectives than Japanese equities. This trend has however reversed since May 2014 so that Japanese equities now present better risk/reward than the short position on the [...]

Why UK 10 years yields may stay low in the face of the BOE rate increase

Posted on 17. Jun, 2014 by Jean Jacques Ohana in Weekly Focus | Comments Off

When Bank of England Governor Mike Carney hinted that the first interest rates rise could come sooner than expected, UK 2 years rates rose 15 bps whereas UK 10 years rates barely moved.

The flattening of the yield curve (showed in figure 1) characterizes a cycle of monetary tightening. When Central Banks tighten monetary policy, short [...]

Easing of financial conditions on emerging assets

Posted on 10. Jun, 2014 by Jean Jacques Ohana in Weekly Focus | Comments Off

We mentioned in April 2014 the strengthening of our indicators on emerging assets. The recovery was first spotted in Asia where Indian and Taiwanese stocks showed impressive positive dynamics at the beginning the year.

As showed in figure 1, emerging bonds in dollar are clearly leading the way up and MSCI emerging equities are following. Emerging [...]

Increase in equities + decrease in yields: what is behind this joint dynamics?

Posted on 03. Jun, 2014 by Jean Jacques Ohana in Weekly Focus | Comments Off

Since the start of the year, interest rates drifted lower including in core sovereign debts (US, UK, Japan, Germany) while global equities rose. As a matter of fact, the US 10 years rates dropped around 50 bps, the German 10 years Bund rate tumbled 60 bps whereas the MSCI World index increased by 3.3% before [...]

The euro is not ready for a sell

Posted on 27. May, 2014 by Jean Jacques Ohana in Weekly Focus | Comments Off

The EUR/USD was undoubtedly hit in the aftermath of Draghi’s pledge to react to low inflation and low growth conditions in the Eurozone, dropping from around 1.40 down to 1.3650.

As a matter of fact, Riskelia’ s trend indicator (figure 1) which had been hovering around a significant 60% value since 2013, fell in slight positive [...]

Time to fear the bubble on EU risky debts

Posted on 20. May, 2014 by Jean Jacques Ohana in Weekly Focus | Comments Off

May 20, 2014

We had recommended long positions on EU sovereign debts on several key occasions since April 2013. Their trends have increasingly grown mature and our bubble indicators have significantly expanded since the start of 2014 onwards. All the most significant investment bubbles are now concentrated in the euro zone, either in peripheral or high [...]

Top successes of the Radar in 2014

Posted on 13. May, 2014 by Christophe Lerolle in Weekly Focus | Comments Off

What did we say in late 2013 and early 2014?
What happened so far?

On Nov 2013, we said that Italy and Spain rates would converge to the Eurozone core
Italy and Spain 10 years rates fell more than 100 bps to 2.90%, a record low

On Jan 2014, we questioned the consensual scenario of rising rates
US T Bonds [...]