There are three interesting phenomena affecting markets these days, and more often than not the analyzes we see in the media miss important dynamic aspects of those phenomena to the point of reaching conclusions different than ours. The so-called trade war between the US and China is clearly the most prominent of those phenomena. The read more

After more than a year with impressive market performance and low volatility, the last few days have been a real shock to the system. Volatility is back with a vengeance. For medium-term investors like us there are many difficult questions. What caused this change and does it mean something is fundamentally different? Were markets ahead read more

A couple of months ago we stressed that Trump’s Presidency implied fatter tails, which meant that extreme scenarios were more likely than usual, at the expense of the status quo. The two extremes were clearly a negative scenario and a very positive scenario, reducing the probability of the center of the distribution. What has happened read more

This year could continue to show an acceleration of global growth, or it could be the apex of protectionist policies leading into a trade war. True that at any point in time extreme scenarios are possible, but we believe that now the probabilities have shifted from the middle to the sides. That is what probability read more

Market volatility since last August has pushed people to wonder whether this is like 2008, or 1998, or what kind of crisis is this? The last 2 weeks have been brutal. Is this the beginning of something big or similar to August of last year that led to the October recovery? Who ever can claim read more

Brazil’s economy, and its asset prices, suffers from two fundamental problems that generate the symptoms we observe: political crisis, fiscal imbalance, lack of growth and high inflation. These 4 macroeconomic ailments are the manifestation of two underlying fundamental problems, and until the authorities and economic establishment debate and act on those two fundamental problems in read more

It is important to review what Greece was and what it was not. The Greek saga (which is far from over, though momentarily off the picture) is a clear symptom of un-finished business in the Eurozone, a picture of what is unsustainable about the ‘European project’. The Greek saga has also been a distraction from read more

Markets seem to have overcome the volatility experienced earlier in the year, as some key risk factors appear to have been “resolved”. There are the always-present concerns about the global business cycle and its components, and these days the US and Chinese cycles are as important as ever. But the more recent volatility seems to read more

There continues to be two fundamental risks or debates in financial markets: China’s convergence to pseudo-normal growth; and monetary policy normalization. Additionally, there is geopolitical noise, which has re-emerged in the last few weeks, and it matters at high frequency, but it is unlikely to have an effect on the global business cycle. Monetary policy read more

Markets this year, and especially these last few weeks, seem to be saying contradictory things. Major equity markets have shown no clear direction with non-trivial volatility. While on the other hand, debt markets seem to show a bearish global growth bias. There are many reasons for each of the markets to have done what they read more