Risk off

So the dial has been spun again and January seems to have been a risk off month. Be it from Eurozone sovereign debt fatigue or lack of bad news investors in January have been piling into neglected assets such emerging market equities and bonds.  I guess there may be few strategists who are tearing up their forecasts for 2012 but until we see vast improvements in volumes sentiment will remain fragile.

Volumes falling

With risk off at least for the time being and investors starting to pick stocks again the main casualty seems to ETFs – with trading volumes way down they seem to be losing their appeal. When volatility was high last year, many investors, especially hedge funds were vigorously trading ETFs as a way to quickly increase or reduce exposure to sectors and markets but now that volatility is lower ETF appetite is ebbing.

Big business

As professional traders demand more data and lower latency we are seeing those often drab buildings called data centres come to the fore and turning data into pots of gold for not only data centre providers but also exchanges. For example, NYSE Technologies is looking to increase its revenues by $1 billion of which a large portion will come from their liquidity centres, the new age name for data centres.