The consequences of the looming Chinese hard landing

Posted on 29. Jun, 2012 by Riskelia in Weekly Focus

As we have already warned several months ago, Chinese equities are under increased pressure and base metals with them. As showed in figures 1 and 2, all the equities connected to the Chinese growth are going through a negative trend which conveys a bleak picture on Chinese growth. The lackluster outlook of the Chinese economy [...]

Catch the yield if you can

Posted on 19. Jun, 2012 by Riskelia in Weekly Focus

juin 18, 2012

A map of global financial asset classes shows that fixed income assets are paving the whole territory, from safe havens to risky assets. As shown in figure 2, the interest rates part of bonds significantly hedges the credit part: the variation of 5 years yield is correlated at -0.65 to the variation of [...]

Commodities are (again) the eye of the storm

Posted on 13. Jun, 2012 by Riskelia in Weekly Focus

Will the Spanish banks’ rescue package resolve the current market woes? This is not sure, as the Eurozone crisis is not any more the unique focus of investors’ attention and market indicators increasingly point to a gloomy outlook in the US and in emerging countries.

Riskelia has developed a synthetic indicator based on commodities’ forward curves [...]

Is gold turning back into a safe haven?

Posted on 05. Jun, 2012 by Riskelia in Weekly Focus

Last Friday’s price action may mark an important shift in the behavior of gold: while the S&P tumbled 2.5%, the yellow metal soared 3.7%, in a way reminiscent of the Aug 2011 behavior.

From figures 1 to 4, we deduce that there are two distinct modes in the relation of gold to equities:

Full-fledged liquidity crisis: gold [...]

A financial crisis without safe haven?

Posted on 25. May, 2012 by Riskelia in Weekly Focus

As showed by Riskelia’s heat map (figure 1), the contagion has spread to almost every link of the financial system. This worrying signal is confirmed by the inversion of the VIX curve which has preceded every major financial crisis since 2007 (figure 2). The performance of global equities indices in high risk aversion territory has [...]

The last bastions of resistance to the comeback of the crisis

Posted on 15. May, 2012 by Riskelia in Weekly Focus

From Greece to France, the last political events in the Eurozone have done nothing to alleviate the stress in the European banking system. The signals from our Heat Map are more and more worrying, with growing woes on European banks’ funding and progressive contamination of the US banks, sovereign and corporate debts. Nevertheless, the global [...]

A sunny spell in Asian assets

Posted on 03. May, 2012 by Riskelia in Weekly Focus

Riskelia’s trends have improved on Asian currencies and Chinese equities. As showed in figure 1, several Asian equity indices remained steady despite acute pressure on the funding of euro zone banks and renewed tensions on Spanish debt issues. The Korean KOSPI and the Singapore Strait Times are clear leaders on the upside. Even Chinese equities, [...]

Finding the trends in the shadows: the muddle through attractor

Posted on 24. Apr, 2012 by Riskelia in Weekly Focus

We have highlighted several times the noisy state of the financial system which prevents investors from discerning genuine investment themes from capricious moves derived from the “risk on / risk off” alternator.

As showed by figure 1, the average of Riskelia’s trend indicator over the last year enables to spot structural positive and negative investment trends. [...]

Is it time to bury the trends?

Posted on 12. Apr, 2012 by Riskelia in Weekly Focus

The main take-away from the start of the year is that very few assets experienced a sustained trend. Only 33% among the 125 assets scanned by our Radar have been winning bets, a poor performance which characterizes a very rangy environment deprived of significant macro themes. However, the quarterly performance from the successful bets largely [...]

The Spanish decoupling story: new paradigm or new fairy tale?

Posted on 04. Apr, 2012 by Riskelia in Weekly Focus

Last week, we evoked the Chinese thorn in the bulls’ side. Today, we focus our attention to the second major dark spot in the financial landscape, namely the new bout of fever in Spain. One of the most puzzling evolutions of the recent weeks has been indeed the disconnection of Spain from other Eurozone core [...]