Baryclays Says France and Italy Europe’s Weak Links

France and Italy were named and shamed as in need of “significant” reform by a senior Barclays analyst on Thursday, despite having largely escaped market scrutiny.
“I think there are two weak links in Europe, at different points of that weakness. I think France and Italy both need to see significant structural reform,” Jim McCormick, head of asset allocation research, told CNBC.

He added that markets had failed to pressure the two countries into making necessary improvements. “These are very large countries—they are much bigger than Greece, Portugal and Spain—so there is still a big problem out there that you need structural reform in two very large economies in the euro zone.”

The French economy was worth around 2.06 trillion euros ($2.81 trillion) in 2013, or around one-fifth of the overall euro zone economy of 9.60 trillion euros.

Italy’s economy stood at 1.56 trillion euros, constituting 16 percent of the euro zone economy.

Following the publication of Barclays’ quarterly global outlook report, McCormick advised investors to shift towards a more defensive portfolio, since fixed income and equity returns were likely to be weaker in the second half of the year.

In particular, he flagged that Barclays had exited its long-standing overweight in European peripheral bonds and re-entered an underweight on euro foreign exchange allocation.

via CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza