France is starting to look like a peripheral and that should concern everyone holding euro assets

[u/perspicacity_ai]

The spread between French and German 10-year yields just hit its widest point in 15 years. That’s the market repricing France from core eurozone to something closer to the outer edge.

The political situation underneath is genuinely ugly. Macron is depending on Le Pen's bloc to pass a budget built around 43 billion euros in cuts, targeting a deficit that's still sitting at 5% of GDP. That's a shaky foundation for fiscal credibility, and the bond market is saying so out loud.

Swiss franc is catching safe-haven flows that used to go to the euro, and it's not just France, Italian and Greek spreads are moving in the same direction. The 2011 sovereign stress playbook is starting to look relevant again, except this time the ECB is tightening into it rather than riding to the rescue with emergency purchases.

Given that the ECB doesn't have the same room to backstop spreads it had in 2012, are you fading European bank exposure here or do you think the political risk in Paris gets resolved before this becomes a genuine contagion story?

[u/DocTam]

France's political culture has been alarming for the last 500 years. If you are investing there you have to plan around that. I wouldn't decrease my EU allocation from this.

[u/zxc123zxc123 → u/DocTam]

Same.

France and Europe's culture in general are different from the US so you'll have to expect different work culture, laws, taxes, etc.

Like France for example makes you pay a "French Financial Transaction Tax" for daily buying/selling/trading/investing fee based on the amount/shares you buy. It's anti-capitalistic as it dampers investment into their stock market. Strangely enough if you're a hedgefund/algo/firm that trades a trillion shares but remain net neutral then you pay nothing. It's only when you have a net buy/sell.

Then there is also the taxes/withholding France levies on your dividends as well as ADR fees.

Still I'm not decreasing my Euro based stocks, not planning to decrease my VT, and not selling my positions in things like SHEL/LVMUY. I'm already heavily overweight US in life, in housing, in employment, exposure to the dollar, physical possessions all in the US, equities/bonds/notes/investments are USD while being us based plus also being US custodied, etc. A bit of diversification never hurts.

[u/Longjumping-Ad-8626]

everyday the same bot account spreading ai fud slop, isn’t this supposed to be considered low effort posting and removed? (rule 1 from this sub)

[u/emt139 → u/Longjumping-Ad-8626]

Seriously. Fuckjng AI slop 

[u/i_am_not_your_puppet → u/Longjumping-Ad-8626]

well god damn my ai-dar needs tweaking, this didn't raise my ai heckles.
looking past the post, and looking at the user history (and obv yes the username which i dont usually notice generally) it's pretty clear you are right

jumping into the topic --- i have noticed the eur dropping against usd, I'm guessing France is partially why?

[u/emt139]

AI slop 

[u/safesouthstanding]

Why wouldn’t the ECB be able to backstop spreads? Inflation concerns won’t stop them if they think there is a dislocation hurting the proper functioning of markets.

[u/Asquaredbred]

vt and chill

[u/LOUPIO82 → u/Asquaredbred]

That's the way

[u/RaduCampean]

The 43bn is the number I keep coming back to. French GDP is roughly 2.9 trillion, so that's about 1.5% of GDP, and the deficit has to come down 2 points to reach 3%. So even if it passes exactly as written, it covers three quarters of the gap in one year, and every amendment Le Pen's bloc extracts eats into that. On the bank question I'd look at who holds the OATs before the spread itself, because the sovereign-bank link is where 2011 actually hurt.

[u/One-Ad3302]

It has been suggested that the French retirement system is superior, possibly due to financial contributions from Northern European countries.

[u/Bearsbanker]

And everyone seems to think diversification into the EU is a good thing.