The year 2014 was supposed to be the year of global rates increases and continued over performance of developed over emerging equities markets.
Actually, the exact opposite happened in 2014, as anticipated in our research.
Interest rates did not rise (Are you so sure that interest rates will rise in 2014?) and even sharply fell further, mainly [...]
Equities’ performances have been sharply contrasted since the beginning of July: while the Euro Stoxx is down by more than 7%, the Shanghai Composite Index has gained almost 8%.
From a short-term perspective, this may look like a divergence of equities’ performances. However, when zooming out a bit, we realize that this looks more like a [...]
The recent events on the US high yield debt market are the occasion to show Riskelia’s bubble indicator at work. This indicator is a price-based indicator of herding, rating the regularity of the price signal over different time frames ranging from 3 to 24 months. A high indicator reflects the presence of overcrowded leveraged positions [...]
In a recent interview, Jeff Gundlach, the founder of the giant bond investment manager Double Line, encouraged us to look at the chart of the Shanghai Composite: “it keeps putting in lower highs but, in the last 18 months, it’s also putting in higher lows. So it’s forming a pennant formation. It will be interesting [...]
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 [...]
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 [...]
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 [...]
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 [...]
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 [...]
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 [...]