Europe

Too many observers mistakenly focus on the net positions in the futures market. Drilling down from the net to the gross positioning is very revealing. The gross euro longs have risen in four of the past five weeks. And there is another…

At some point, the ECB will likely be called into action. And they will give Italy an ultimatum on the fiscal front, just as they did with Greece.

Fiscal policy space is limited first and foremost because of the threat of default. So governments are forced to act pro-cyclically.

As a member of the euro area, Italy has no monetary sovereignty. The only thing keeping its debt yields low is the implicit backstop of the ECB. But because of the political turmoil, this backstop is now in question. And Italy could default…

Policy divergence is the driver of market vulnerabilities. The longer the US stands alone in tightening policy, the greater the stress on the financial system.

Since Emmanuel Macron’s election as French president in May 2017, hope has lingered that a mythical friendship between France and Germany will help complete the gaps in the euro area architecture. As this column discusses, however, history…

We should expect the Fed's tightening to continue. But a lot of the recent incoming data has been soft. And while this may just be a blip, I expect the curve to flatten further by mid-year.

With Europe, when the economy turns down, that’s when the acrimony will be greatest. And that’s when I would worry about really bad outcomes.

Normally, we think of trade as a story of spendthrift nations 'living beyond their means' and saver nations being productive. In this view, savers are virtuous and spenders are sinful. And the easiest way to see who the saints and sinners…

The UK says it will leave customs union on in a year's time. But the border issue between Northern Ireland and the Republic of Ireland remains unsolved. And while the Irish border is a particularly vexing issue, there are other near-term…