Factoring Political Risk Into Your Portfolio

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Aug. 22 (Bloomberg) -- Kevin Gardiner, head of investment strategy at Barclays, talks with Francine Lacqua about factoring political risk in Europe into your investment strategy and which country worries him the most. He speaks on Bloomberg Television's "On The Move."

Back with kevin gardiner , head of investment strategy at barclays.

We talked about the fed, about your favorite plays.

How do you calculate and factor in political risk?

Coalitions in europe, especially southern europe, are fragile.

It is impossible to do it with precision.

You have to be clear about that.

In terms of the political situation in italy, when is it not unstable?

It is difficult to say this episode is necessarily the straw that breaks the camels back.

What we can say is that the euro single currency crisis has not gone away.

It is smoldering in the background.

At any point it could spring back into flame.

When the and if -- and if it does, the important thing to remember is that the ecb is out there, ready and willing and capable to intervene to stabilize markets.

It is not a guarantee, but we think the promise of some support from the ecb will probably be enough to keep markets broadly stable, whatever happens to italian or greek politics.

I am glad i finally have someone telling me to be careful.

Everyone says no, we have the tools, do not worry about the european crisis.

It is still there bubbling in the background, as you say.

Are you more worried about greece needing some kind of haircut and german opposition, or more worried about angela merkel winning the next election and becoming more hard-line?

Greece, for the time being, the markets are familiar with the scale of risk.

The german elections, we are finding it difficult to get exercised about.

We do not think german election -- policy will change terribly.

The reason we feel the euro crisis is smoldering is simply because we have not yet had the fiscal, banking, and economic integration that the zoning needs to see.

Of all the countries out there, the one that has me most worried is france.

This is one big economy that has not managed to liberalize supply-side in the way we all know at some stage it has to do.

Until that happens, we will not be able to completely relax about the euro crisis.

This text has been automatically generated. It may not be 100% accurate.


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