The rebirth of Japan: hold Japanese stocks

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

The most important achievement of Abenomics thus far is probably the turnaround of public debt dynamics.

This has not been achieved by austerity (the path taken by the Eurozone, with little success so far) but by increasing the gap between nominal growth and interest rates. Namely, the fiscal and monetary stimuli have raised real growth and [...]

Three received ideas about Government bonds: why they are not dead for the next decade

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

An argument which is often heard is that:
“Bonds are dead for the long run. The price of bonds has been supported by a long run decrease in interest rates which started in the 1990’s and lasted until the aftermath of the big financial crisis, i.e. 2012. As the lasting recovery enables the OECD countries to [...]

Why the risk of debt ceiling crisis is not null

Posted on 13. Oct, 2013 by Jean Jacques Ohana in Weekly Focus

October 13, 2013

 
On Oct 17, all the means will have been exhausted to avoid a default on US government’s payments.

There are two types of payments that may be cut: interests on treasury bills, spendings on programs like Social Security, Medicare, Medicaid, which account for the majority of federal spendings other than defense and interests.

The consensus [...]

Broad based decrease in correlation: is the financial crisis over?

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

Global correlations have decreased in every type of asset. The correlations have decreased within equities and commodities as illustrated by figures 1 and 2. The decline of correlation is all the more remarkable on commodities as it reached the level which prevailed before the financial crisis.

The decrease of correlation in every type of asset has [...]