Do commodities represent an asset class?

Posted on 28. Feb, 2010 by Steve Ohana in Weekly Focus

Commodities imposed themselves in the investment arena in 2004, when emerging countries and specifically China started deeply changing commodities’ long run fundamentals.
An annual consumption growth of more than 6% on many depletable commodities (energy and base metals markets) fostered a major bull run on commodities. The fundamentals are indeed preoccupying: China alone will consume 9 [...]

How did Greece manipulate its debt accounts?

Posted on 22. Feb, 2010 by Jean Jacques Ohana in Weekly Focus

It has recently been revealed that Greece gamed the European Commission rule by maintaining artificially its Debt to GDP ratio below 60% for several years. In 2001, when Greece joined the single currency zone, it issued more than 10 Billions USD debt denominated in dollar and yen. It contracted a cross currency swap with Goldman [...]

Why commodity prices rise together with inventories?

Posted on 18. Feb, 2010 by Jean Jacques Ohana in Weekly Focus

In traditional commodity cycles, commodities prices tend to rise when inventories decrease and conversely drop when inventories increase. This mechanism is highly intuitive since when inventories are rising (resp. declining), we can infer that the supply is large (resp. low) in face of demand, which translates into a downward (resp. upward) pressure on prices.
The traditional [...]

Deciphering carry trades

Posted on 12. Feb, 2010 by Jean Jacques Ohana in Weekly Focus

Carry trades have been made popular in the past decade due to the stellar performance registered in this type of strategy. Basically, it consists in borrowing in low yield currencies and investing in high yield currencies, in order to exploit interest rates differentials between currencies.
What is more striking is the diverse business interest in this [...]

Banks seism and financial crisis

Posted on 05. Feb, 2010 by Jean Jacques Ohana in Weekly Focus

Is the financial crisis over? This question has been raised many times, but this is an issue which cannot be solved objectively since we can make as good a case arguing that that the crisis is behind us or on the contrary highlighting the new sources of concern in the financial system.
Riskelia proposes an objective [...]

Commodities network and investors’ behavior

Posted on 02. Feb, 2010 by Jean Jacques Ohana in Weekly Focus

Riskelia has analyzed the commodities network since 2000. The graph is based on the correlations between the diverse components of the commodities asset classes representing base metals, precious metals, agricultural and energy markets and the dollar.
When a correlation in a pair of variables stands between 0.25 and 0.5, the two variables are linked by a [...]