Italy Referendum Won’t Trigger a Euro Collapse, Greylock Capital
(Bloomberg) -- A “no” vote at Italy’s constitutional referendum on Dec. 4 is unlikely to lead to a collapse of the euro, according to Diego Ferro, co-chief investment officer at Greylock Capital Management.
- “I don’t think a euro collapse is imminent. I think people everywhere are anti-establishment, and they are voting that way,” New York-based Ferro says in interview
- “Even if most countries vote in favor of anti-Europe governments, it would take time for the euro zone to break up, particularly because, once people start to see the consequences, they become less convinced about leaving,” Ferro says
- The $1b firm which invests in undervalued, distressed, and high-yield assets and has a preference for Greece’s bonds within Europe, has no exposure to Italian government bonds heading into the referendum
- “We are staying clear from Italy. It’s too tight for us,” Ferro adds
- The firm sees the euro “destined to hit parity” against USD on the policy monetary divergence between Fed and ECB
- “The Fed being more aggressive than the ECB should help. I don’t see a euro collapse, but the dollar is in a bit of a run”
- The major threat for euro zone comes from the German election as Merkel has been firmly behind the European experiment, and Germany is the one with the implicit economic put on the whole project and the ECB
- “The end would come much quicker if the Germans vote themselves out of the EU. The rest is mostly noise that may take some time to become a real problem,” Ferro says
- NOTE: German Chancellor Merkel announced on Sunday that she will run for a fourth term
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HALISTER1Source: BFW (Bloomberg First Word)
Tickers 0447838D US (Greylock Capital Management LLC/USA)
2539Z GR (European Central Bank)
People Diego Ferro (Greylock Capital Management LLC/USA)
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