Politics-driven markets

Posted on 30. Sep, 2013 by Jean Jacques Ohana in Weekly Focus

Politics have been the main driver of the markets over the recent months.

The first concern has been the announcement of Ben Bernanke in May 2013, pointing to a possible tapering of asset purchases by the end of the year. This has provoked a violent increase of OECD rates and aggravated emerging countries’ woes, which had [...]

A cornered ECB

Posted on 23. Sep, 2013 by Jean Jacques Ohana in Weekly Focus

Since the successive announcements of the OMT by the ECB and the QE3 by the Federal Reserve, the trend of the EUR/USD (presented in figure 1) has permanently drifted higher despite the broad based strength of the dollar (see figure 3). By deciding not to taper its program of asset purchases, the Fed unwillingly trapped [...]

Why Japanese markets are still worth the while

Posted on 16. Sep, 2013 by Jean Jacques Ohana in Weekly Focus

We had warned that a speculative bubble was building on the short yen and long Nikkei bets since March 2013. As showed in figure 1, the bubble has landed and is now back to more neutral level. Therefore, the threat of a brutal reversal is less acute as investors’ expectations are less consensual.

The short yen [...]

Oil crisis brewing: mind the right tail!

Posted on 09. Sep, 2013 by Jean Jacques Ohana in Weekly Focus

At last, the trend in oil reversed back to positive levels (figure 1). Contrary to the last incursions of oil on the positive side since 2012, this move in the 1st nearby contract comes with a strong inversion in the curve shape as reflected in figure 2. The inversion dynamic of the WTI and Brent [...]

Low correlation and poor diversification: how is it possible?

Posted on 02. Sep, 2013 by Jean Jacques Ohana in Weekly Focus

As showed by Riskelia’s financial market integration (figure 1), the interdependence of financial markets has significantly receded. Therefore, the whole markets moves are less correlated and less driven by the so-called “risk on / risk off” factor (combining positive positions on risky assets and negative exposure on bonds). Riskelia’s financial market integration is very similar [...]