Three reasons supporting a strong euro

Posted on 12. Aug, 2013 by Jean Jacques Ohana in Weekly Focus

Even though the dollar has been strong vs. emerging currencies and commodity currencies, the euro, since the beginning of the year, has recently been even stronger than the dollar (figure 1). The consensual “bear euro” view has failed to materialize. This prediction, which is based on the premise that the euro depreciation would be the [...]

2013 vs. 2006 or 2008: an air of déjà vu?

Posted on 24. Jun, 2013 by Jean Jacques Ohana in Weekly Focus

While the bonds’ selloff polarizes investors’ attention, some major forces point to a deflationary outlook in other asset classes:

As showed in figure 1, the US 5 year breakeven inflation rate dived to 1.67%, well below the Fed’s objective of 2%. As Bernanke eventually clarified the Fed’s monetary policy, there is nothing to expect from the [...]

Higher real rates sow the seeds of their own destruction

Posted on 10. Jun, 2013 by Jean Jacques Ohana in Weekly Focus

Deflationary signs are accumulating, casting a shadow on the sustainability of the current interest rate rally.

First, the breakeven inflation rate has plummeted, with the 5 year forward breakeven rate approaching the trigger of the three most recent Fed interventions (Figure 1).

Second, the bond deleveraging has spread to emerging bonds, which have suffered from the rally [...]

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 [...]

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. [...]

Playing the euro devaluation

Posted on 27. Dec, 2011 by Riskelia in Weekly Focus

The bullish dollar theme is undeniably linked to the “risk off” mode. As illustrated by figures 1 to 3, the explanatory factors of the G10 Currencies vs. USD theme comprise always equities factors, commodities themes, worldwide inflation bonds and short term interest rates differentials. Among the different parities vs. the dollar, the AUD is most [...]

The French debt under attack

Posted on 25. Oct, 2011 by Riskelia in Weekly Focus

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, [...]

The deflationary spiral: are we already in recession?

Posted on 27. Sep, 2011 by Riskelia in Weekly Focus

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 [...]

The dollar demise and the equities drop: how long can it last?

Posted on 07. Jun, 2011 by Jean Jacques Ohana in Weekly Focus

During the last days, we have seen the emergence of a surprising pattern combining equities sell off and fall of the dollar against the euro, the Swiss franc and most emerging currencies.

Figure 1 shows the risky assets and the USD network of correlations. It shows indeed that many currencies (against dollar) have evolved independently of [...]