Riskelia's blog

The euro zone infernal machinery: a story of collective suicide

Posted on 29. nov, 2011 by Riskelia in Weekly Focus | Commentaires fermés

In the unfolding euro zone tragedy, all protagonists involuntarily feed an infernal machinery as the inefficient euro zone institutions are driving it to a certain death. Here are the players of the tragedy with their motives:

The ECB is ‘independent’. It fights against inflation and it has extended its mandate, providing liquidity to the financial system. [...]

Does the oil complex get bullish?

Posted on 23. nov, 2011 by Riskelia in Weekly Focus | Commentaires fermés

One of the main differences between the present state of financial markets and the 2008 situation is the supportive oil supply / demand outlook. In 2008, the global commodities one year curve sharply shifted to record contango whereas it is hardly positive today. The commodities curve reflects the inventory level. Whereas a trend towards backwardation [...]

Not yet the time for re-risking

Posted on 15. nov, 2011 by Riskelia in Weekly Focus | Commentaires fermés

For sure, the trends of some cyclical assets have notably improved over the recent weeks. This improvement is noticeable at the US sectors levels (Nasdaq 100, Utilities, Consumer Staples and Health Care) in Figure 1 and in the oil complex (Brent, products and even WTI) in Figure 2. The dynamics of the oil curves [...]

The bullish dollar theme is still present

Posted on 09. nov, 2011 by Riskelia in Weekly Focus | Commentaires fermés

During the last weeks, the dollar seesawed between sharp positive phases reflective of defiance towards risky assets and sharp negative phases associated to a more optimist stance over the resolution of the financial crisis. Yet, the nervous switch between risk/risk off mode has not altered the long term dollar positive trend as showed in figures [...]

While risky assets cheer the new accord, the eye of the storm remains intact

Posted on 04. nov, 2011 by Riskelia in Weekly Focus | Commentaires fermés

The last weeks have seen an improvement in cyclical assets trends. Better long term dynamics went with a broad based relief in liquidity conditions as perceived by quoted risk premiums on equities, corporate credit and banks funding. As showed in figure 1, the liquidity has eased to 0.8: a fall under 0.5 would entail a [...]

The French debt under attack

Posted on 25. oct, 2011 by Riskelia in Weekly Focus | Commentaires fermés

In the last weeks, we have witnessed a significant deterioration in the French debt status as a safe haven as showed in figure 1. The spread of the French 5 years yield over Germany have widened much more quickly than the Italian one. The spread widening is occurring in a context of global rising yields, [...]

Improvement in oil and US equities but new worries on euro sovereign debt

Posted on 19. oct, 2011 by Riskelia in Weekly Focus | Commentaires fermés

The latest rebound has been strong enough to modify the landscape of cyclical assets. In particular, the oil markets together with the US assets emerged as clear leaders, specifically the Nasdaq and other defensive sectors (Utilities and Consumer Staples). Meanwhile, the euro sovereign debt risk has deteriorated, specifically the French and Italian debts in the [...]

A new rift is emerging on the euro sovereign debt

Posted on 11. oct, 2011 by Riskelia in Weekly Focus | Commentaires fermés

The euro sovereign debts dynamic is one of the keys to the euro crisis. The recent improvement in Ireland and Spain radar’s trends requires specific attention but the Italian solvency issue is now at the epicenter of the debt crisis. This giant weakness will have to be solved to prevent this sword of Damocles from [...]

Are commodities capitulating?

Posted on 04. oct, 2011 by Riskelia in Weekly Focus | Commentaires fermés

The main event of the last two weeks is undoubtedly the shift of commodities trends into negative territory. The precious metals fell sharply two weeks ago whereas the grains tumbled last week. This broad base correction is closely related to the deterioration of the Chinese growth outlook as perceived in the Shanghai equities’ poor performance [...]

The deflationary spiral: are we already in recession?

Posted on 27. sept, 2011 by Riskelia in Weekly Focus | Commentaires fermés

The last doubts we could express about a looming deflation threat are fading away.
First of all, the signals on commodities producers become more clear-cut; the recommendation on Gold Miners abruptly receded, conveying a bleak overall picture on the mining and oil sectors:

More generally, all bets identified by the Radar are deflationary as depicted in figure [...]