The Weekly Update

Media coverage of Euro 2016 and Brexit has somewhat eclipsed the Italian local elections results which were held last Sunday. These look to be yet another example of populist politics gaining ground in a push back against incumbent regimes and the European austerity mantra. As we have said before, creating the euro currency union between creditors and debtors without a European Treasury, unified fiscal policy and fully functioning redistribution mechanisms is problematic. Under the current system, the adjustment process to reduce imbalances has taken the route of austerity which has hit the debtor nations hardest in terms of weak growth and deflationary pressures, exacerbated by the lack of debt write-offs. Greece, Portugal and Spain have already experienced a good deal of political upheaval and the signs are that Italy could be heading this way too.

Even in Italy, no-one is going to focus much on Italian local elections now that Euro 2016 is underway. Unusually, Italy are not amongst the favourites with their odds of winning currently at 16-1, with England only at 8-1. The bookies favourite is France, who won their opening match against Romania. Around 2.5 million football fans are expected to travel to France to soak up the continent’s biggest sporting event’s atmosphere. AirBnB have said it is preparing to welcome around 250k visitors alone, with fans from around the world including roughly 37k Americans and around 10k Aussies. These fans bring with them significant spending power to the host nation; benefits of this competition will be felt right across the country as matches will be hosted across 10 different stadia/cities; the whole country should at least profit from the influx of visitors. This will be a much needed boost for France, whose central bank announced last week that the 2016 second quarter growth shows GDP cooling to 0.2%, having risen 0.5% in Q1’16.

If we use Stratton Street’s Net Foreign Asset Model (NFA) as an indication of how each of the 24 teams will perform, we come up with a surprising winner (in footballing terms anyway). If we select winners according to the higher ‘NFA’ star ratings, Switzerland would be the resounding winner having played Belgium in the final; the bookies put the odds of Switzerland winning at 50/1. These teams would have met Germany (bookie’s 2nd favourite at 4/1) and Sweden (100/1) in the semis, having beaten the likes of Russia, Austria, Italy (which became a republic 70 years ago last week) and France (3/1) in the quarter-finals. The bottom of the table would be taken up by Iceland (last place), Portugal and new entry, Albania (which is the bookies least favourite at 300/1!).

So far the creditor nations are performing well with Germany, France and Switzerland all recording wins and Russia picking up a point against England (unfortunately!). Of the seven games played so far, none of the creditor nations have lost, although for that record to be maintained we need Belgium to beat Italy and Sweden to beat Ireland in the games later on today.

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.