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    European politics beyond the UK referendum - BBH

    Research Team at BBH, suggests that many short-term participants better position themselves for the UK to vote to say in the EU, even though many opinion polls show a statistical dead heat.   Key Quotes“The German Constitutional Court dismissed claims that the ECB's Outright Market Transactions does not violate the German Constitution. Italy's run-off for local elections was held over the past weekend.  The 5-Star Movement (MS5) emerged as the second most important political force in Italy, capturing the mayoral posts in Rome and Turin. On one hand, the newly elected MS5 candidates have sufficient time before the next parliament election that must be held by May 2018. On the other hand, a national election could be forced sooner.  The key Italian political event this year may not be these local elections, but the constitutional referendum in October.  As a critical part of the political reforms, Prime Minister Renzi is seeking constitutional changes that will weaken the Senate. Spain goes to the polls this weekend.  Its political landscape is also in transition.  The national election at the end of last year was unable to produce a workable government.  Although the polls suggest very little movement since then, many are hopeful of a different result. Parliament is 350-seats, suggesting it is possible that Unidos Podemos coupled with the Socialists could form a majority government.  Over the past one- and three-month periods, Spanish assets have outperformed Italian assets.  Both countries equities markets have fallen over the past month, while the Dow Jones Stoxx 600 is up a little less than one percent at the same time. It may take a week or two after the Spanish election to see if a government can be formed.  There is much pressure to do so.  If a government can be formed, then the focus will shift to negotiating with the EU about this year's budget overrun and next year's plans.    The leaders of Italy's PD are expected to meet at the end of the week.  However, after the summer, the October referendum may cast a pall over Italian assets and may lead to some under-performance.”

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