A hierarchy of speculative bubbles in risky assets

Posted on 28. Jan, 2013 by Jean Jacques Ohana in Weekly Focus

We can define risky assets as the ones which are positively related to equities. In this respect, the correlation table over the last 5 years shows that, besides equities, the short dollar and short yen sides are clearly in the risky assets side, together with commodities, the Hedge Funds HFRX, emerging debts and high yield [...]

The euro zone is losing the currency war

Posted on 21. Jan, 2013 by Jean Jacques Ohana in Weekly Focus

Since the improvement in the risk appetite, investment flows have driven the euro higher vs. every major currency (figures 2 and 3). As showed in figure 1, the insatiable quest for yield has driven investors’ appetite for the euro as a carry trade currency. As a matter of fact, the average 2 years Euro MTS [...]

The Japanese reflation experience should be a model for the euro zone

Posted on 14. Jan, 2013 by Jean Jacques Ohana in Weekly Focus

Japanese Prime Minister Shinzo Abe is not an economic thinker. He is rather nationalist, populist and aggressive towards China. Meanwhile, his unique ability to ignore the conventional austerian wisdom deserves to be highlighted.

Japan carries out a unique experiment within the G10 countries, by combining both monetary and fiscal stimulus. After urging the Bank of Japan [...]

In 2013, we will rather be the fox than the hedgehog

Posted on 07. Jan, 2013 by Jean Jacques Ohana in Weekly Focus

One of our resolutions for 2013 is to avoid making bold predictions on what stocks, bonds, commodities or exchange rates will look like this year.

We take this resolution for two reasons.

The first has to do with the lack of scientific grounding on which to base one-year-forward market predictions. Based on the data provided by Shiller [...]