Last year’s volatility was mostly due to the euro crisis, though there were other shocks (especially oil during the first quarter). The euro crisis is not over, but most likely its potential for contagion has been minimized significantly by the actions of the European Central Bank (ECB), which we had highlighted as the key pillar read more

The euro crisis has been about Italy for some time now. The October 27 announcements had the right main ideas, but lacked detail and were insufficient in magnitude. Because the main ideas had been floated back in the IMF Meetings (Sept. 23-25), markets had recovered somewhat during October, making conceptual announcements insufficient. Given the political read more

European policy makers seem to be headed in the right direction. Magnitude and timing remain uncertain. Today’s talk of a package in the 2 trillion euro area was not confirmed, but it is roughly what the market is expecting. Since before August the key driver in markets has been the euro crisis. Less than a read more

Reality bites. Europe recently admitted a eurozone member could restructure debt. The US government would soon be downgraded. These are realities that took time to sink in. Markets are taking these gradually, though some asset classes react more than others. The key issue here is that so much policy uncertainty in G7 for so long read more

European leaders meet tomorrow, and I am not the only one that believes it is maybe the most important meeting yet. When the crisis was at the periphery, it was easy to postpone, buy time, not a humongous issue, it was just a fiscal problem of small countries. Now that Italy is at risk, the read more

The selloff this week is due to the quick and simultaneous effects of concerns on the 3 main risks on the global economy. For some time now we had identified 3 key risks, and after a quick recovery from May-June’s volatility, those 3 risks came to center stage at once: 1-    Euro crisis, due to read more

After weeks of disorderly discussions among EU members on what to do with Greece, Germany appears to have made its position clear in a letter from its Finance Minister to other EU members. About ten days ago it appeared as if the ECB and other EU members had convinced Germany to back off from its read more

The key themes that have dominated markets since the financial crisis are broadly un-affected, and have been joined by a couple of their own by-products. The sequence of mini-selloffs since the crisis (the multiple EU periphery crises, the oil shock, etc.) have not only been overcome, but gradually lost the potential impact as each one read more

The convergence of shocks over the last 2-3 weeks is nothing short of impressive.  Some of the shocks are: the escalation of events in the Middle East (different but concerning, Libya and Bahrain), the potential juncture for the euro with a sequence of high level meetings while a new bailout is about to be needed read more

Since the Financial Crisis we have highlighted the challenges ahead for G7 countries (fiscal and structural), and the natural result of currency depreciation and rebalancing vis-à-vis the up and coming group of strong currencies. Though the rate of EUR/USD has had sizable swings in the last 12 months, it is not far from where it read more