France

We test three channels of contagion from the Brexit shock: political, banking system, and economic.

If the U.K. ultimately exits the EU, it will be a major break in the 70 years of European integration. Multipolarity will be reinforced, increasing global geopolitical risk. We expect global risk assets to start taking cues from Europe, not the Fed and China. However, risks of N-Exit - that other EU member states follow suit - may be overstated.

Highlight Even alarmists like us have been surprised by the referendum outcome; The referendum is a major break in the 70 years of European integration; It will reinforce multipolarity and increase global geopolitical risk; The U.K., however, is an outlier in terms of Euroskepticism; No…

The latest conclusions from the sector-based (right) way to pick stock markets. Plus some important conclusions for credit markets.

The model has downgraded France to underweight due to deteriorating liquidity and technical conditions. U.S. weight is boosted by 4 points at the expenses of European countries.

No significant change was made except that the weight of France was increased to 7% from 1.7%, largely driven by improvement in relative liquidity conditions. It's mainly financed by a reduction in the U.S. weight which remains the largest overweight in the model.