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

Many of the portfolios that we have seen in the last two years (not managed by Baffin), had an excessive concentration of domestic assets: stocks, bonds, real estate, etc. The tendency to overinvest in local assets is known as “home bias” and it is still a puzzle in the academic world. Assuming that the investors read more

The US government could be shut down this week, if Democrats and Republicans do not agree on a budget for the ongoing fiscal year. This is just the first and simplest political decision on fiscal matters in a series of decisions coming up. Extending the debt ceiling comes next. The real thing is a medium-term 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

Our first reaction to Egypt (to read that post click on ‘Our first reaction’) and the approach thereafter proved to be the right, so far. However, we do think the events in Tunisia and Egypt introduce a new theme that was not there earlier and that merits careful attention. The Middle East is inevitably changing. read more

Fed Chairman Bernanke testifies in Congress today, for the first time in front of a Republican controlled lower house. Despite the news value, this invigorates a debate about the Fed mandate that is relevant in the current world context. The Fed has a dual mandate: price stability and full employment. The European Central Bank (ECB) read more

Last Friday’s events in the Middle East had significant effects in the global markets: the S&P dropped more than 1.5%, while the emerging markets indices fell between 2-3%. In this Sunday afternoon, we want to share with you where we stand before markets open tomorrow. The most relevant question is whether events will trigger a read more

The EU leaders are most likely close to key decisions about the future of the euro. The financial rescue package announced during the Greek episode of the crisis last year was designed to buy time in order to work on solving the fundamental problems. That package was not enough to stop the crisis domino at read more