The euro sovereign political conundrum

Posted on 24. May, 2011 by Steve Ohana in Weekly Focus

We have gathered the main official statements surrounding the issue of Greek debt restructuring since January 2011 (see below).
The following conclusions can be reached:

The euro zone sovereign risk has become a political one. The bailout plan is indeed subject to the triple approval of EU authorities (Commission, ECB, Parliament…), creditor countries (Germany, France essentially) and [...]

The renewed increase in financial integration: what to do?

Posted on 17. May, 2011 by Jean Jacques Ohana in Weekly Focus

The last two weeks have shown an increase in the financial integration (or global correlation) among cyclical assets (namely equities, corporate credit, commodities currencies, emerging currencies, energy and base metals).
Technically, the financial integration is the explanatory power of the first factor in the Principal Component Analysis of the global variance. This increase reveals a rise [...]

Will the sell-off spiral be short-lived?

Posted on 10. May, 2011 by Jean Jacques Ohana in Weekly Focus

We emphasized last week the risk of a sharp deleveraging in the commodities complex, noticing the offhand proliferation of overheated bubbles (8 in the complex). A massive joint move such as the one observed over the past week was hence to be expected, though the timing of the fall was not predictable. Notwithstanding these recent [...]

The commodities financial cards stack

Posted on 10. May, 2011 by Jean Jacques Ohana in Weekly Focus

We have witnessed this week unprecedented moves on the commodities complex: the silver has endured its worst weekly tumble ever, i.e. -28% and the crude oil collapsed 15% in the context of broad base dollar rally.
While various reasons have been advanced to explain this move, as the increase in the silver margin call or the [...]

What could stop the dollar demise?

Posted on 03. May, 2011 by Jean Jacques Ohana in Weekly Focus

For several months, the dollar has been falling against every other currency (see Table 1). The move has started in the summer 2010 when the Fed announced the second round of Quantitative Easing (QE II). The rise in cyclical assets which has been observed since then is mainly a monetary phenomenon: global growth has been [...]