Riskelia's blog

Riskelia’s Radar as of 28 June 2010

Posted on 29. juin, 2010 by Jean Jacques Ohana in Weekly Focus | Commentaires fermés

Trends remain slightly negative on risky asset classes, the weakest links are markets related to Chinese growth: Shanghai Composite, Oil and Base Metals. Several sovereign bonds, such as Spanish and Greek debts, remain in a clear downtrend, a worrying sign for the monetary and political stability of the Eurozone as a whole.

Financial bubbles are present on French and German debts, which served as safe heavens in the recent ‘flight to quality’ episode. A bubble indicator over 70% foreshadows a possible sharp reversal. Meanwhile the Radar recommends long positions on US and UK bonds which are in a clear uptrend without signs of price exaggeration.

Risk Aversion indicators highlight persistent signs of vulnerabilities within the financial system. The weaknesses are focused on G10 Sovereign Debt and the Euro Banking system. As the interconnection network demonstrates, the slightest fragility can spread to the whole system through strong relationships between the liquidity outlook across different asset classes. The positive global Risk Aversion announces more frequent and serious financial disruptions. Hence, we recommend prudent risk taking in a context of global financial uncertainty.

Trends and Bubbles Radar

The greatest financial bubbles

Risk aversion Radar

Tags: Banking System, Base Metals, Chinese Growth, Debts, Disruptions, Eurozone, Exaggeration, Financial Bubbles, Financial Uncertainty, Fragility, Global Risk, Interconnection Network, Liquidity, Political Stability, Risk Aversion, Sovereign Bonds, Sovereign Debt, Uptrend, Vulnerabilities