The euro zone infernal machinery: a story of collective suicide

Posted on 29. Nov, 2011 by Riskelia in Weekly Focus

In the unfolding euro zone tragedy, all protagonists involuntarily feed an infernal machinery as the inefficient euro zone institutions are driving it to a certain death. Here are the players of the tragedy with their motives:

The ECB is ‘independent’. It fights against inflation and it has extended its mandate, providing liquidity to the financial system. [...]

Does the oil complex get bullish?

Posted on 23. Nov, 2011 by Riskelia in Weekly Focus

One of the main differences between the present state of financial markets and the 2008 situation is the supportive oil supply / demand outlook. In 2008, the global commodities one year curve sharply shifted to record contango whereas it is hardly positive today. The commodities curve reflects the inventory level. Whereas a trend towards backwardation [...]

Not yet the time for re-risking

Posted on 15. Nov, 2011 by Riskelia in Weekly Focus

For sure, the trends of some cyclical assets have notably improved over the recent weeks. This improvement is noticeable at the US sectors levels (Nasdaq 100, Utilities, Consumer Staples and Health Care) in Figure 1 and in the oil complex (Brent, products and even WTI) in Figure 2. The dynamics of the oil curves [...]

The bullish dollar theme is still present

Posted on 09. Nov, 2011 by Riskelia in Weekly Focus

During the last weeks, the dollar seesawed between sharp positive phases reflective of defiance towards risky assets and sharp negative phases associated to a more optimist stance over the resolution of the financial crisis. Yet, the nervous switch between risk/risk off mode has not altered the long term dollar positive trend as showed in figures [...]

While risky assets cheer the new accord, the eye of the storm remains intact

Posted on 04. Nov, 2011 by Riskelia in Weekly Focus

The last weeks have seen an improvement in cyclical assets trends. Better long term dynamics went with a broad based relief in liquidity conditions as perceived by quoted risk premiums on equities, corporate credit and banks funding. As showed in figure 1, the liquidity has eased to 0.8: a fall under 0.5 would entail a [...]