As we feared in June, Brexit has spawned a clutch of ugly portmanteaus. The failure of the Italian referendum will see the back of the pro European Renzi. While Itaxit is not yet fully on the cards, support for the nationalist Five Star Movement is getting within shouting distance of the Democratic Party. The chart below details the depth of discontent in Italy with the euro, which is growing to worrying proportions.


JPM Guide to the Markets Sept 2016

Even through a thick veil of French arrogance, President Hollande has recognised the futility in attempting re-election with a popularity rating of a mere 4%. This at least opens the door to the Socialists to find a decent candidate to stand. The pollsters currently tip the conservatives to win in May but Marine Le Pen too has a firm base of support. If Le Pen does prevail, unlikely but not impossible according to the polls, expect to hear a great deal about Frexit through 2017.

Outside of the larger EU nations, populist parties are also gaining momentum. We should especially keep an eye on the Dutch polls which take place in March. Even Eirexit is now being openly talked about as Ireland considers a future where its largest trading partner sits outside its trading block. Such matters were unthinkable 12 months ago, where will we be in 12 months time? What happens if the economy takes a turn for the worst? There are plenty of struggling banks in Europe which could cause a collapse in confidence. Meanwhile in Greece, the population is becoming ever more despondent as it wakes up to a life of indenture to German bankers, which could easily last for an entire generation. European political risks are escalating in a disturbing manner.