Inflation and deflation altogether: how to invest in a quantum economy

Posted on 06. Nov, 2012 by Jean Jacques Ohana in Weekly Focus

From 2010 onwards, the European investor has been facing a lasting financial insecurity. Peripheral Eurozone countries may default on their debt, as illustrated by the Greek debt restructuring. More worryingly, their sovereign debts have turned into risky assets, with a positive correlation to stocks. European banks are still undercapitalized and doubts persist on their solvency. [...]

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 [...]

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. [...]

Liquidity is back… so is gold

Posted on 17. Feb, 2012 by Riskelia in Weekly Focus

Gold has come back to the forefront among the Radar recommendations. The correlation between gold and platinum has increased over time to a correlation approaching 0.8, but interestingly, gold is the commodity which is the least related to S&P 500, even if its correlation to the index has risen back in positive territory in the [...]

How do you spell Quantitative Easing in German? « LTRO »

Posted on 17. Jan, 2012 by Riskelia in Weekly Focus

As the recent S&P’s downgrade puts back the sovereign debt issue on the front stage, the liquidity conditions have significantly improved as shown by three different indicators:

The Radar’s trend is flipping to the positive side on dollar and sterling short term interest rates futures. The reason is not that central banks will further decrease their [...]

A new rift is emerging on the euro sovereign debt

Posted on 11. Oct, 2011 by Riskelia in Weekly Focus

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 [...]

The dollar turns bullish: prepare for a wild move

Posted on 13. Sep, 2011 by Riskelia in Weekly Focus

Riskelia’s indicators have swiftly turned bullish on the dollar. The most striking negative trends are those of the TRY (the oldest one), the Eastern Europe currencies (the youngest one) and some key currencies linked to global growth (MXN, RUB, ZAR).

The summer financial crisis had spared the currencies so far but the recommendations on the dollar [...]

Revisiting the anti-euro crisis portfolio

Posted on 22. Jun, 2011 by Steve Ohana in Weekly Focus

Despite the agreement reached on a “voluntary participation” of private creditors to the Greek debt refinancing, the solvency risk stays intact. Absent a comprehensive debt restructuring, the euro zone debt problem will not find a definitive resolution.
In this context, instability in the euro zone has resurfaced. The wave has started from OECD Sovereign debt and [...]

The euro sovereign political conundrum

Posted on 24. May, 2011 by Steve Ohana in Weekly Focus

We have gathered the main official statements surrounding the issue of Greek debt restructuring since January 2011 (see below).
The following conclusions can be reached:

The euro zone sovereign risk has become a political one. The bailout plan is indeed subject to the triple approval of EU authorities (Commission, ECB, Parliament…), creditor countries (Germany, France essentially) and [...]

How to immunize against the coming euro banks crisis?

Posted on 27. Apr, 2011 by Jean Jacques Ohana in Weekly Focus

The euro sovereign crisis is in fact primarily a banking one (see Figure 1). And due to the banks’ interconnectedness, bank runs have a high propensity to degenerate into global liquidity crises.
Our goal in this Weekly Focus is to construct a Nassim Taleb’s type “antifragile” strategy, which would benefit from the imposition of haircuts to [...]