Political divergence, rates convergence

Posted on 29. Apr, 2013 by Jean Jacques Ohana in Weekly Focus

As the disagreements between France and Germany are exposed (at last) to the public, the race of Eurozone rates to the bottom seems unstoppable (figure 1).

The rates move conveys two signals, one being positive, the other one negative:

The good news is that the spreads between German and peripheral debts have shrunk, showing a decline of [...]

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 [...]

The victory of bondholders over shareholders

Posted on 07. May, 2012 by Steve Ohana in Weekly Focus

The Friday price action, where the S&P lost more than 1.5% while the high-yield bonds progressed, is a good illustration of a long-term trend that settled in the past 10 years: the undisputed victory of bondholders over shareholders.

Compared to standard risk on assets, risky bonds (high-yield, investment grade bonds, inflation-linked securities, emerging bonds) have the [...]

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, [...]

A Chinese metallic thorn in the bulls’ side

Posted on 27. Mar, 2012 by Riskelia in Weekly Focus

The successive central banks interventions have improved the overall liquidity in the financial system. The banks’ funding is ample in the US and close to normal in Europe. The fluidity of transactions is reflected in the implied volatilities of equities, oil and carry trades (figure 1). A positive liquidity environment (characterized by a negative risk [...]

Are emerging markets re-emerging?

Posted on 09. Feb, 2012 by Riskelia in Weekly Focus

As global liquidity has consistently improved since the start of the year 2012, the emerging markets recovery is overwhelming. As showed in figure 1, the leader is emerging bonds which exhibited a positive trend during the whole 2011 financial crisis. This leader has been caught up by emerging equities and more recently by emerging currencies.

As [...]

Is dollar more precious than gold?

Posted on 20. Dec, 2011 by Riskelia in Weekly Focus

For the first time since the August 2008 deleveraging, the gold trend has gone below 10%. The recommendation is still in positive territory but it is about to go negative as showed in figure 1. Even more worrying, we come from a situation where the bubble was nearing 80%, reflecting extreme herding behavior and high [...]

A journey into the gold constellation: how to play the gold theme and what does it mean today?

Posted on 06. Sep, 2011 by Riskelia in Weekly Focus

Although the gold was hit by a severe 8% correction from its peak, the weekly loss barely reached 1.3%, a mild scenario given the previous 25% run up over 7 consecutive weekly rises.
The bubble on gold is still above 70%, reflective of a herding positioning. The gold mania is exacerbated by its safe haven status [...]

Inflation vs. deflation: the puzzle goes on

Posted on 06. Jul, 2011 by Jean Jacques Ohana in Weekly Focus

Riskelia’s map of financial markets is an innovative visualization tool that provides an instantaneous snapshot of salient market trends and their interconnections.
In a first stage, the assets with high absolute recommendation (score) are selected. High score assets are then grouped by clusters to form salient market themes. The cross-theme relations are finally represented by means [...]