>>> What to look at this Week End - 2nd & 3nd of July 2016

Weekly Performance
Dow +3.15% S&P +3.22% Nasdaq +3.28% Russell +2.59% Brazil +4.25% Nikkei +4 .89% Hang Seng -0.35% CSI +2.50% Shanghai +2.74% EurStoxx +3.85% FTSE +7.15% CAC +4.07% Dax +2.29% Ibex +6.18% MIB +3.64% SMI +4.36%
Global markets began the week under a dark cloud of uncertainty in the wake of the UK voters' decision to leave the EU. On Monday investors continued to flee from risk assets as ratings agencies cut the UK's sovereign ratings, European banking stocks got pummeled, and the British Pound hit new 30 year lows. Uncertainty persisted about the timing and path forward on separation from the European Union, and the leadership transition in the Conservative Party (and perhaps also the Labour Party) dominated the conversation in London along with the markets' reaction. The S&P traded down through the 200 day moving average for the first time since March and money surged into global bonds markets sending US Treasury yields to levels not seen since 2012. The Brexit vote propelled gold to a new 15-month high above $1,300, and pound sterling remained under pressure. Cooler heads prevailed by the end of the week and stocks reversed higher. For the week the DJIA gained 3.1%, the S&P500 rose 3.2%, and the Nasdaq added 3.3%, while the UK's FTSE-100 surged over 7%, notching its best performing week in nearly five years.

Macro :
- Greece Mulls Exempting ‘New Money’ From Cap Controls: Stournaras
- France’s Macron: Euro Clearing Should Move to Paris Post Brexit

Keep an eye on :
- AAPL US : Apple May Be Able to Buy Tidal for Under $500m: Piper Jaffray
- AGS BB : Ageas Sees 2Q P&L Impact EU5.9m from Relative Performance Note
- AREVA FP : Brazil to Export Enriched Uranium for First Time: Agencia Brasil
- CS FP : Axa’s Buberl Says Any U.K. Economic Slowdown May Affect Unit
- BBRY US : U.S. Senate Tells Staffers It Won’t Issue More BlackBerrys: WSJ
- CSGN VX : Credit Suisse CEO Says Won’t Break Up Bank: SonntagsBlick
- DBK GY : Deutsche Bank CEO Wants to Retain Asset Management Unit: Spiegel, Deutsche Bank's Cryan Backs Organic Growth Returns, Spiegel Says
- ENEL IM : Enel Talks on Metroweb Said Extended to July 20: Reuters
- NXT FP : Euronext CEO Says Brexit Makes Euro Zone, Euronext More Relevant
- FB US : Israel Minister Criticizes Facebook, Calls It ‘Monster’: Reuters
- HOG US : Harley Sale in High $50s-Low $60s Gets Close to 20% IRR: RBC
- IT IM : Italmobiliare sells Italcementi 45% stake to HeidelbergCement; takes 5.3% stake in HeidelbergCement
- KU2 GY : China’s Midea Buys Stake in Germany’s Kuka for $1.3 Billion
- LNKD US : Google, Facebook Said to Have Looked at Buying LinkedIn: Recode
- LSE LN : Consob Sent Letter to LSE on Borsa Italiana After Brexit: Sole
- LHA GY : Lufthansa Appoints Melker Schorling CEO Ulrik Svensson as CFO
- NESN VX : Nestle Quezac Sale Stymied by Dispute With Union, Figaro Reports
- NOVN VX : Novartis to Sell Roche Stake This Year, SonntagsZeitung Says
- PHIA NA : Philips Said in Tentative Talks to Sell Lumileds, Times Reports
- PUB FP : Publicis Groupe and Tencent in Data, Content, Collaboration Pact
- RCS IM : Cairo Communication Raises RCS Bid, Drops Some Conditions
- RCS IM : Cairo Says RCS Can ‘Significantly’ Increase Revenue: La Stampa
- RIO LN : Rio Tinto Chief Commits to London Head Office After Brexit Vote
- ROG VX : Novartis to Sell Roche Stake This Year, SonntagsZeitung Says
- ROG VX : Roche to Cut About 350 IT Jobs Over 1 1/2 Years: Basler Zeitung
- RDSA NA : Shell’s Van Beurden: Can’t Afford Costly Investment: Telegraph
- RDSA NA : Shell CEO Says Company Could Cut More Jobs, Telegraph Reports
- SPLS US : Staples Hires KPMG to Weigh Possible U.K. Unit Sale: Telegraph
- SYNN VX : Syngenta CEO Says Argentina’s Improvements Noticeable: La Nacion
- TEF SM : 02 Customers May Be Able to Buy Shares in Listing: Telegraph
- TKA GY : ThyssenKrupp, Tata Merger May Be Delayed: Handelsblatt
- FP FP : Brexit Not Good News for Macro Environment: Total CEO Pouyanne
- TUI LN : Tui’s Joussen Sees Op Profit Rising 10% Annually: Rheinische P.
- UCG IM : Weimer Says Mustier Excellent UniCredit CEO Choice: Handelsblatt
- VIE FP : Lower Pound Will Marginally Impact Profit: Veolia CEO Frerot
- VOW3 GY : Macri Wants VW, Daimler to Invest $250m in Argentina: La Nacion
- VOW3 GY : VW CEO Mueller Rejects Compensation for European Customers: Welt

Barron's : Volkswagen Pays a Big Toll; Shares Could Rise 20%

Volkswagen Pays a Big Toll; Shares Could Rise 20%

Volkswagen settles part of the legal mess arising from its emissions-test-rigging scandal. The lifting of uncertainty could help its stock.

Late last fall, we cautioned it was too early to take a chance on Volkswagen ’s tattered shares, because the full financial impact of the auto maker’s diesel emissions-test-rigging scandal remained unclear (“Volkswagen’s Troubles Aren’t Over Yet,” Nov. 28, 2015).

Last week, a major part of that toll emerged, and it was enormous, but no worse than some investors had expected. VW reached tentative settlements of up to $14.7 billion with U.S. regulators and consumers, and of $603 million with 44 states, Puerto Rico, and the District of Columbia. In part, the accords will benefit owners of 475,000 four-cylinder VW and Audi diesel-powered models, via vehicle buybacks, direct payments, and repairs. They also will benefit VW’s shares (ticker: VOW.Germany) by lifting the uncertainty that has helped pummel them. Over the next year, they could rise by 20% or more.

Still unknown: How much VW must shell out to cover fines from Uncle Sam and foreign regulators, to handle dealer lawsuits, and to fix 85,000 illegally polluting six-cylinder Volkswagen, Audi, and Porsche diesels sold in America. The company last year reserved $18 billion to deal with its nightmare, but the final tab could surpass that, requiring more reserves. So, the consensus earnings forecast of 16.95 euros a share this year ($18.89), versus last year’s €3.20 loss, is somewhat of a guesstimate.

VW’s Frankfurt-listed stock—the German industrial titan also has American depositary shares, traded under the symbol VLKAY—ended last week around €126, below the €134 it closed at on the day before our story ran and its 52-week high of €216.

Some auto-industry analysts contend that, at the current price, the market is valuing the No. 2 global auto producer after Toyota (TM) as if its core Volkswagen unit is worthless. Arndt Ellinghorst, the head of global automotive research for Evercore ISI, thinks many investors are missing another point: The scandal is so huge that it is forcing VW to become more efficient. “It would be hard to find a company with a more totally out-of-whack cost structure in the global auto industry,” the London-based analyst says.

VW’s cost of materials last year equaled 78.1% of its more than €200 billion in revenue—the highest percentage in over a quarter-century, he says. And research and development came to 7.4%, versus 5.5% in 2010. “They spend more on R&D than General Motors (GM) and Ford Motor (F) together,” Ellinghorst adds, “and there’s not a lot of innovation coming out of it.”

CEO Matthias Müller, who took over when Martin Winterkorn was ousted last year, is shaking up VW, says Ellinghorst, who has a Buy on the stock, with a 12-month price target of €160 (down from €200 before Brexit). The analyst notes that all the members of the Volkswagen brand’s management board have been replaced, and that Mueller has surrounded himself with executives focused on profitability, including Herbert Diess, chief of the Volkswagen brand, who built a reputation as a cost-cutter at BMW before coming to VW, and Karlheinz Blessing, the labor director, “who has experience restructuring steel plants in Germany, so he knows tough business.”

Ellinghorst has criticized Volkswagen’s governance structure, under which the state of Lower Saxony, where VW is based, has often voted for measures that save jobs, rather than strengthen the company. But, he says, the diesel crisis has produced “a real change in attitudes and culture.”

VW under Winterkorn was in relentless growth mode. Now it’s considering shedding non-core assets. It’s likely to sell the power-engineering operation of its MAN truck unit, which could fetch €3 billion to €4 billion. And, he adds, “All options are open for the whole truck business,” which includes VW, Scania, and MAN vehicles. “This has a value of €20 billion to €25 billion. There’s a real chance part of it will be IPO’d or spun off.”

Overall, Ellinghorst adds: “More than €20 billion in annual cost reductions could be achieved. Maybe a third this year, a third next year, and a third the following year.” If VW shows signs of serious cost-cutting, and the global auto market doesn’t collapse, its shares should be around €150 in a year.

(ZH) This Is "Worrisome": The Probability Of A US Recession Surges To 60%, D

This Is "Worrisome": The Probability Of A US Recession Surges To 60%, Deutsche Calculates

Ever since the US manufacturing economy entered a recession over half a year ago as a result of the collapse in capex spending in the energy sector and the soaring layoffs in shale, the strawman used by the economic apologists to "justify" that the broader economy has not followed in such recessionary footsteps, has been the frequent trotting out of the yield curve, which simply because it is still curved upward in nominal terms (if flattening recently to levels not seen since 2007), is presented as "evidence" that the US is still growing.
Just one problem: as Bank of America first explained in February, when one adjusts the curve to account for trillions in unprecedented liquidity support by the Fed which is skewing the message sent by the 2s10s (for example by looking at the 3m5s OIS adjusted curve), the curve is already inverted.
Over the weekend, following the latest collapse in long-term yields to new all time lows, Deutsche Bank looked at what implied recession odds are if one once-again adjust for Fed intervention. What it found, in the words of Deutsche Bank's Dominic Konstam, is "worrisome."
From Deutsche Bank:
Since the UK referendum the US yield curve has flattened to new post-crisis lows. The 3m10y spread is now 115 bps compared to 210 bps at the start of the year, and the 2y10y spread is just 85 bps versus 120 bps on January 1. 

 

This relentless flattening of the curve is worrisome. Given the historical tendency of a very flat or inverted yield curve to precede a US recession, the odds of the next economic downturn are rising. 

 

In our probit model, the probability of a recession within the next 12 months has jumped to 60 percent, the highest it’s been since August 2008. The model adjusts the 3m10y spread by the historically low level of short rates and it suggests that on an adjusted basis the curve has already appeared to be inverted for some time.

 

The yield curve had successfully signaled the last two recessions when the model output rose above 70 percent. If 10y yields rally to 1.00 percent and the 3m rate is unchanged, the implied recession probability from our model will reach that number. At current market levels, the market is just 40 bps from that distinct possibility.
In other words, while the Fed is terrified of killing the recovery by "tightening" financial conditions, all that will take for the next recession to arrive is for the Fed and its central bank peers to ease just that much more to send the long end 40 bps lower, something which as we reported yesterday may happen even sooner than expected, now that pension funds are ready to throw in the towel and start buying 10Y and 30Y Tsys with wreckless (sic) abandon.

(TechCrunch) Five companies considered buying LinkedIn

Five companies considered buying LinkedIn

A new SEC filing posted Friday gives more clarity about what led up to Microsoft acquiring LinkedIn for over $26 billion. And they prove that Microsoft wasn’t the only prospective buyer.

It shows that the talks between LinkedIn CEO Jeff Weiner and Microsoft CEO Satya Nadella began on February 16 of this year, just 12 days after the earnings debacle where LinkedIn shares plummeted.

And then it references, not one, but four other unnamed companies and details LinkedIn’s conversations with them.

It has already been reported that Salesforce made a bid for LinkedIn. The documents reference a Party A, possibly Salesforce, that ultimately made a bid for $200 per share, above the $196 per share in cash that Microsoft paid. However the $200 was a cash and stock deal, whereas the $196 was an all cash deal. (This works out to hundreds of millions of dollars deducted from the acquisition price).

There were also details about the conversations with at least three other companies, who ultimately backed down. It is unclear to what degree these other bidders were serious contenders or if they were just interested in getting a detailed look at LinkedIn’s financial picture and competitive strategies.

The filing also shows that LinkedIn is subject to a $725 million breakup fee if the transaction with Microsoft does not get finalized.

While we do not know for sure who some of the other buyers might have been, we think it’s possible that Alphabet, IBM, Oracle and Facebook could have all engaged in conversations with LinkedIn. (Recode is now reporting that Alphabet and Facebook were in the mix).

Here’s why:

Alphabet: Google wants to manage everything in your life, from email to calendar. They are also aggressively expanding into enterprise, trying to showcase its cloud services as stronger enterprise products. If you slap LinkedIn on top of that, you have a full stack sales operation — from ground up infrastructure, to connectivity and sales tools, to the actual enterprise interface. The big question here is, where would Salesforce fit into that equation if Google wanted to build a full stack customer acquisition and sales tool? LinkedIn may be a professional network, with a growing user base, but it also represents one of the top methods to connect for potential business deals (that also happens to be great for recruiting).

Facebook: It would not be out of the question for Facebook to at least engage in talks, to get a better look at LinkedIn’s business. While Facebook’s social networking is more personal than professional, they’ve been working on Facebook at Work and other professional properties.

Oracle: With LinkedIn, they would have access to a full stack of sales, customer acquisition and talent management solutions. Oracle would get the benefit of having a look into LinkedIn’s massive data trove of how people interface with each other professionally.

IBM: This is one of the few other industry companies that could afford LinkedIn and create synergies with its enterprise technology business. The company is also relatively acquisitive.

We’re digging through the very long filing here to see what other insights we can find.

FT : Temasek takes 5% stake in Tikehau

Temasek takes 5% stake in Tikehau

Temasek, the Singaporean wealth fund, is among those injecting €510m of fresh equity into Tikehau, the French investment boutique, with a mission to buy debt and equities in European companies.
The deal, due to be announced on Monday, will give the French asset manager more than €1.5bn of equity, cementing its ability to pursue a strategy of co-investment alongside the limited partners that put money into its funds.

Antoine Flamarion, co-founder of Tikehau, said acquiring undervalued UK investment trusts was a particular focus, though he said Alliance Trust was not a target. RIT Capital Partners, the investment trust of financier Jacob Rothschild, recently walked away from a potential acquisition of the struggling Scottish trust.
Tikehau, which has €8bn of assets under management, would consider investing up to €500m in a deal but could be joined by co-investors, such as Temasek.
The Singaporean fund is leading the injection of equity into Tikehau, with an investment understood to be in excess of €60m.
France’s FFP, the listed Peugeot family office, also becomes a new shareholder of Tikehau Capital Advisors, as does MACSF, the French insurer that is a longstanding partner.
Each now owns 5.5 per cent of the company.
Many UK investment trusts have performed badly of late, and particularly so over the past fortnight. The economic uncertainty triggered by the referendum on Britain’s EU membership amplified concerns about the outlook for equity and property markets.
Analysts at Stifel, the brokerage, highlighted weaknesses at Independent IT, Electra Private Equity and Aberforth Smaller Companies, all of which have declined in value by more than 10 per cent following the referendum.
Four years ago, Tikehau acquired Salvepar, the French investment trust, from Société Générale, the French bank.
In addition to investment trusts, Tikehau’s sights are set on the acquisition of non-performing loan portfolios, especially in Italy, where the country’s banks are under severe pressure.
Jean-Pierre Mustier, an outgoing partner and shareholder at Tikehau, was unveiled last week as the new chief executive of UniCredit, Italy’s biggest bank. UniCredit owns 1.7 per cent of Tikehau Capital Advisors.
Paris-based Tikehau does not publish full details of its investment record, but since its foundation in 2004 it has generated returns in its private debt, real estate and minority private equity funds of between 10 and 15 per cent, Mr Flamarion said.

FT : Slide in shares of asset managers sparks job fears

Slide in shares of asset managers sparks job fears

Fears are growing over redundancies across the asset management industry as shares of some of the world’s largest listed investment groups tumbled in the wake of Britain’s vote to leave the EU.
Henderson and Jupiter, the UK-listed fund companies, have been among the hardest hit as their shares have dropped 21 per cent and 18 per cent respectively since the referendum on Britain’s EU membership on June 23.

Daniel Garrod, an analyst with Barclays, said UK fund managers faced a “triple whammy” from reduced investor inflows, cuts in performance fees and reductions in their assets under management.
Several US-listed asset managers have also been affected, including Invesco and Legg Mason, which have seen their share prices fall 13.7 per cent and 9.5 per cent respectively.
“Overall it’s a tough time for asset managers — there will be lay-offs across the industry. You will see it more in listed [companies] as their profits are much more visible,” said Charles Heenan, investment director at Kennox Asset Management, a boutique fund house in Edinburgh.
A partner at a large non-listed asset manager added: “We are not immune to outflows, but [this won’t] have a direct impact on our workforce. A private company doesn’t have to explain to anybody why profits are up or down. [For] listed groups, history suggests it will be different for them.”
Amundi, Europe’s largest listed fund company, and Schroders, the second largest, have also suffered significant share price falls of 12.5 per cent and 13 per cent respectively.
US-listed groups T Rowe Price and Franklin Templeton and UK-listed Ashmore and Aberdeen have coped better.
A senior executive at a large US-listed asset manager said: “The relative share price fall has depended on each company’s exposure to the EU or the UK. Those with large European businesses, or which are very UK-dependent, have been hit more.”
The executive added: “If your business was a bit narrow and you’ve had challenging flows because of [the rise of] passive investments, and you are primarily a UK-focused business, that’s a worry. If Brexit tips the world into a global recession, that will [be a worry] for everybody.”
Justin Bates, an analyst at Liberum, the brokerage, said the companies that faced the biggest problems were Jupiter, Henderson and Schroders.

“All three of them have taken a beating, but particularly Henderson and Jupiter,” he said.
Five banks, including JPMorgan and Goldman Sachs, cut their share price targets for Schroders last week. Jupiter was downgraded by both Barclays and Exane BNP Paribas, while Henderson was downgraded by five banks.
Mr Bates said Jupiter was particularly vulnerable because most of the money it drew from investors last year came from continental European clients, although the company does not have a large physical presence in Europe.

Reuters - Facebook defends position on content standards after Israeli censure

Facebook defends position on content standards after Israeli censure

Facebook is doing its share to remove abusive content from the social network, it said on Sunday in an apparent rejection of Israeli allegations that it was uncooperative in stemming messages that might spur Palestinian violence.

Beset by a 10-month-old surge in Palestinian street attacks, Israel says that Facebook has been used to perpetuate such bloodshed and Prime Minister Benjamin Netanyahu's rightist government is drafting legislation to enable it to order social media sites to remove postings deemed threatening.

Ramping up the pressure, Public Security Minister Gilad Erdan on Saturday accused Facebook of "sabotaging" Israeli police efforts by not cooperating with inquiries about potential suspects in the occupied West Bank and by "set(ting) a very high bar for removing inciteful content and posts".

Facebook did not respond directly to Erdan's criticism, but said in a statement that it conferred closely with Israel.

"We work regularly with safety organizations and policymakers around the world, including Israel, to ensure that people know how to make safe use of Facebook. There is no room for content that promotes violence, direct threats, terrorist or hate speeches on our platform," the statement said.

It appeared to place an onus on Israeli authorities, as with any other users, to flag offensive content to Facebook monitors.

"We have a set of community standards designed to help people understand what's allowed on Facebook, and we call on people to use our report if they find content they believe violates these rules, so that we can examine each case and take quick action," the statement said.

Erdan, who urged Israelis to "flood" Facebook founder Mark Zuckerberg with demands for a policy change, expanded on the Netanyahu government's complaint in remarks published on Sunday.

Of 74 "especially inciting and extremist posts" Israel had brought to Facebook's attention, 24 were removed, Erdan told the Yedioth Ahronoth daily, adding that jurisdiction was an issue.

"The big problem is in Judea and Samaria, because Facebook does no‎t recognize Israeli control there and is no‎t prepared to turn over information,” Erdan said, using a biblical term for the West Bank, which Israel captured in the 1967 war and where the Palestinians, with international support, seek statehood.

Justice Minister Ayelet Shaked called on social media companies to curb pre-emptively content deemed by Israel to be a security threat.

"We want the companies not to approve and to themselves remove posts by terrorist groups and incitement to terrorism without us having to flag each individual post, in just the same manner, for example, that they today do not allow posts and pages with child pornography," she told Israel's Army Radio.

Citing sources familiar with the technology, Reuters reported last month that Facebook and other Internet companies have begun using automation to remove Islamic State videos and other extremist content from their sites.

>>> Barrons weekend summary: positive on large US financials, select EU names ov

Barrons weekend summary: positive on large US financials, select EU names oversold on Brexit, LUV, THS 

Cover story: In the upcoming elections, Democrats seem well-positioned to reclaim the Senate from the GOP, and a net gain of just four seats would give them the 50 necessary to take control, assuming a Democratic vice president is there as a tie-breaker; Regardless of who takes the White House, individual tax rates arent likely to go up, and legislative gridlock should ease. 

Tech Trader: In a tech market dominated by giants such as AMZN and FB, smaller companies that arent likely to grow will increasingly consolidate or sell themselves, as seen by prominent deals such as MSFTs acquisition of LNKD and GCIs bid for RLOC. 

Trader: Near-term, the market will look for any potential Europe-derived fallout in U.S. corporate earnings, according to David Donabedian of Atlantic Trust; Positive on AXLL, CVT, LNKD, QLIK, RDEN, VA: Companies are being acquired in all-cash deals, but their stock prices are significantly below the offer prices, offering investors an attractive annualized yield; Positive on UTHR: Shares of biotech are down 40% over the past year, but the company has a strong balance sheet and is improving of some of its treatments; now could be a good entry point for investors. 

Profile: Scott Davis, manager, Columbia Dividend Income fund, looks for A-rated-or-better balance sheets, consistent cash flow from operations, and yield (top 10 holdings: MSFT, XOM, JNJ, JPM, MRK, HD, PM, CMCSA, VZ, PFE). 

Interview: Harry Nimmo, manager, Standard Life Investments UK Smaller Companies fund, one of Britains top-performing small-cap funds (picks: Fevertree Drinks, First Derivatives, Fuchs Petrolub, Hota Industrial Manufacturing, Jungheinrich, Rational, Rightmove, Ted Baker, Voltronic Power Technology). 

Features: 1) Positive on GS, C, JPM, BAC, MS: Despite a rally in the financial services sector, shares of large firms are down an average of 20% so far this year, making banks and asset managers one of the best values in the market; 2) Positive on Ryanair, GSK, SAP, Abertis Infraestructuras, Rexel, ARMH, Persimmon, Howden Joinery: Companies are among those in Europe that took a hit following the Brexit vote, but investors have overreacted, making these particular shares a bargain; 3) Positive on LUV: Carrier operates almost exclusively in the U.S., and though it faces challenges because of higher oil prices and slackening demand, it has little exposure to the U.K. and Europe and the share price could rise by 35%; 4) Positive on Safran: French aerospace and defense contractor is likely to benefit from the airline industrys long-term outlook, which looks bright as a growing middle class embraces air travel. Small Caps: A look at the best- and worst-performing stocks from this column during the past 12 months (Best: CFX, PETN, MTW, MPW, TOWN, RAVN, CIR, ENR, DRII, FELE; Worst: PAH, ESL, PICO, DSW, HMHC, JLL, FLWS, PB, CUB, VSI). 

Follow-Up: Positive on Volkswagen: If the troubled automaker shows signs of serious cost-cutting and the global auto market doesnt collapse, shares could rise by about €150 in a year; Positive on THS: Companys $2.7B purchase of CAGs Ralcorp business made it the leader in private-label food, while doubling its sales and boosting earnings powerand shares could rise by 17%. 

European Trader: Rob Bartenstein of Kestra Private Wealth Services says that in the wake of the Brexit vote, internationally diversified British companies are likely to do well in the coming months, and that continued downward pressure on the British pound will be a short-term boon for some U.K. companies. 

Asian Trader: A stronger dollar, propelled by Brexit, is putting downward pressure on the yuan, says John Woods of CS, and the fall will likely become a subject of debate this summer, which wont be good for stocks. 

Emerging Markets: Not even Brexit could keep the emerging markets down this year; the best-performing emerging markets in the first half include Peru, Brazil, and Colombia; the worst-performing include Greece, Poland, China, and Egypt. 

Commodities: Gasoline prices look set to trade in a sideways range over the summer, but there are profits to be made for investors willing to play the options market, which will require them to take significant risk selling rather than buying them. 

Streetwise: Columnist Ben Levisohn says Britain might never invoke Article 50 of the Treaty of Lisbon and leave the European Union, while the EU might undertake structural changes that lead to improvements; As long as policy makers prevent the current political crisis from becoming a financial one, theres no reason for a repeat of previous instances when the U.S. Economic Policy Uncertainty Index surged to peak levels.