A week ago we said that Europe would pay dearly any policy mistake, but we did not think it would be so much so soon… The size of the potential financial package known yesterday exceeds most expectations, which is the reason of its success. In terms of the ‘theory of crisis management’ it is a read more

Markets appear to have already decided the recent package for Greece does not work and is not credible. It is not very rigorous to infer much from a couple of trading days, but the magnitude of the market movement together with the debate on the matter let us infer its failure. The package does not read more

The SEC claim on Goldman Sachs is no longer an aggregate risk to the market. Greece still is. The news last Friday about the SEC claim on Goldman Sachs had an effect on markets across the board. Today we are all more aware of the issues, the grey areas and the most likely scenarios for read more

The fiscal crisis that started in Greece, and drove attention to similar problems in Portugal, Spain and Italy, is way more than a fiscal crisis. This is about the euro as a currency and about the EU as an institutional framework for governing a union, even more so now that there appears to be a read more

Over the last 10 days a sequence of shocks have shaken confidence on the recovery. Those shocks have more of an impact on sentiment than on the fundamentals that comprise our medium-term base-case scenario. But the market impact of those shocks has been significant, which is why a reassessment of that scenario is due. The read more

Last week Dubai World’s announcements generated a major shock. It triggered a new debate about excess liquidity, bubbles and re pricing. In that framework, it would be expected that the emerging markets would suffer the most. We believe that the volatility caused by the Dubai World news will not generate a big spill-over-effect, and most read more

Volatility has increased since last week. Even though we considered reducing risk in our portfolios, we decided not to do so. We do not think it is the right time to take any actions. We believe that the increase in the observed volatility could be explained by three main topics, some appear to be more read more

In the last three days the markets seem to be signaling that something has changed. The non US stock markets that had previously recovered the most are now the biggest underperformers. Commodities are showing the same underperformance. The dollar is slowly recovering. It seems that the market is testing the general consensus that the rest of read more

The Brazilian government decided to increase the tax to capital inflows (with the exception to direct investment). This is a bad policy but is not enough to overturn the country’s attractiveness to international capital inflows. Capital controls increase the cost of foreign investment for the economy and therefore diminishes potential growth. The Brazilian government took read more

Just came back from the IMF Annual Meetings in Istanbul, where I attended meetings with ministers and central bank presidents of more than 12 countries, as well as officials from the IMF and G7 governments. Here are a few concise conclusions from all those meetings, that will certainly take a bit more time to fully read more