Risk comes back in force

Posted on 27. Jan, 2014 by Jean Jacques Ohana in Weekly Focus

The contagion of emerging markets woes to other developed markets has changed the course of the financial system. The equities’ slide is not only the effect of the unexpected contraction of the Chinese PMI data. It also reflects the forced unwindings of overcrowded speculative equity positions. Riskelia’s bubble score indeed exceeds 70% on several US [...]

Are you so sure that interest rates will rise in 2014?

Posted on 20. Jan, 2014 by Jean Jacques Ohana in Weekly Focus

Judging from the trends on sovereign bonds, the Radar is increasingly constructive on bonds (figure 1) beyond corporate bonds where we have maintained a positive view since mid-2013. Besides Italy and Japan, Canadian and French bonds are flipping to positive trends while the dynamic of US and UK sovereign debts is improving.

The situation in Canada [...]

The risk of France is not the one you think

Posted on 13. Jan, 2014 by Jean Jacques Ohana in Weekly Focus

Once again, the discussion regarding a plausible attack on the French debt comes back to the surface. The same thing had already happened in July 2013, when Fitch downgraded the French debt. These warnings had proved wrong, exactly as we had predicted.

Investors willing to short France put forward a number of (politically-charged) arguments to support [...]

Easing of euro zone debt spreads, convergence of correlations

Posted on 06. Jan, 2014 by Jean Jacques Ohana in Weekly Focus

A slow convergence process of euro zone sovereign interest rates has started since the ECB considered the launch of the OMT program. The OMT is not a quantitative easing program, it’s a promise from the ECB to intervene as lender of last resort should a country ask for the help of the European Stability Mechanism [...]