Emerging Markets Worth a Look!

Posted on 12. May, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

May 12, 2017, Jean-Jacques Ohana and Dr. Christian Witt (both YCAP Asset Management)

Over the last year, emerging market equities have outperformed stocks in the developed world by a wide margin (see Figure 1). Developed market equities outside the US, many of which mired in political risks, have done particularly bad. With such political risks now [...]

Mind the Economic Fundamentals

Posted on 04. May, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

May 4, 2017, Jean-Jacques Ohana and Dr. Christian Witt (both YCAP Asset Management)

The “Trump trade” may still be the investment theme of the hour (in developed markets). But current economic fundamentals suggest this is likely to change soon. For one thing, European economies continue their increasingly vigorous recovery, while the US economy seems to slow [...]

Election Disaster Averted. What’s Next?

Posted on 27. Apr, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

April 27, 2017, Jean-Jacques Ohana and Dr. Christian Witt (both YCAP Asset Management)

Emmanuel Macron and Marine Le Pen qualified for the second round of presidential elections in France over the weekend and will face each other in a run-off on May 7, 2017. Markets have welcomed the outcome with an impressive rally across European equities, [...]

The Long Shadow of French Elections

Posted on 13. Apr, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

April 13, 2017, Jean-Jacques Ohana and Dr. Christian Witt (both YCAP Asset Management)

Over the last couple of weeks, markets have been clueless. Some ups, some downs. But nothing dramatic; not even a correction that is worth the name. In our view, this is due to formidable tail risks––most notably an accidental, disorderly breakup of the [...]

European Political Risk Underestimated?

Posted on 30. Mar, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

March 30, 2017, Jean-Jacques Ohana, CFA and Dr. Christian Witt (both YCAP Asset Management)

A series of recently published articles made us reconsider the chances of Marine Le Pen winning the upcoming French presidential election. In these articles, the author convincingly argues that (1) election outcomes are tremendously sensitive to voter turnout, and (2) deeply held [...]

What Drives the Emerging Currency Rally?

Posted on 23. Mar, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

March 23, 2017, Jean-Jacques Ohana, CFA and Dr. Christian Witt (both YCAP Asset Management)

Against all odds––most notably fears of protectionism––emerging currencies (against the USD) were among the biggest winners at the start of 2017 (see Figure 1). What a change of fortune! No other currency illustrates this trend reversal better than the Mexican Peso (MXN). [...]

Up or Down? That is the Euro/Dollar Question

Posted on 13. Mar, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

March 13, 2017, Dr. Christian Witt (YCAP Asset Management)

Some months ago, markets seemed convinced the USD would continue to appreciate against the EUR. The dollar’s parity with the common currency appeared to be just a moment away. Against all such speculations, the EUR held steady above a key technical resistance level (see Figure 1) and [...]

Little to Lose, Much to Gain!

Posted on 22. Feb, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

February 22, 2017, by Jean-Jacques Ohana, CFA and Dr. Christian Witt (YCAP Asset Management)

Gold is frequently mentioned as the number one asset for hedging political risks. Given the highly elevated global political risks today––by one measure the highest in two decades (see Figure 1)––it seems about time to revisit this hypothesis taking into account historical [...]

Financial and Political Uncertainty in Perspective

Posted on 16. Feb, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

February 16, 2017, by Dr. Christian Witt (YCAP Asset Management)

The world seems to be flooded with political uncertainty. From Brexit worries to Trump (Goldman’s worries, Weird Conduct, Reichstag Moment), the rise of populism in Europe (Bershidsky, Walesa) or the upcoming Chinese Communist Party’s National Congress. Yet, financial markets do not seem to bother. How so?

To [...]

Italy in Peril?

Posted on 02. Feb, 2017 by Jean Jacques Ohana in Weekly Focus | Comments Off

February 2, 2017, by Dr. Christian Witt (YCAP Asset Management)

Dear reader,

As you may have certainly noted, Italy has been very much in our focus recently (European Reflation, Italian referendum, Europe: Running Out of Time?). This is neither to annoy nor to bore you, but an expression of our growing concerns about the diverging economic forces [...]