The key reason why euro's future is uncertain

The need to consider technical aspects of investment options in a currency of an allegedly very uncertain future is a permanent challenge for the euro area portfolio analysis.

In spite of that, the region's political leaders seem oblivious to the widely held view that the common currency is just a flimsy and provisional political structure.

The serious and continuing degradation of the political situation in France is the main reason for my euro pessimism. France has been the country that originated and carried most of the policies and institutions designed to bring a hostile and divided continent back together. France, unfortunately, seems in no position to play that noble role anymore. France is mired in a deep economic and fiscal crisis, and its leader is one of the country's most unpopular acting presidents ever.

Germany wants to save its golden goose

That is apparently what they want to do. During the EU summit in Riga, Latvia, on May 22, 2015, Merkel and Hollande approved a joint document they sent the next day to Juncker with their proposals for a stronger monetary union. The proposed measures are tabled for discussion at the next euro area summit in late June. The two leaders advocate action on economic policies, economic convergence, investments, fiscal and social issues and stronger euro area governance.

Investment thoughts

Germany's economic policies have endangered the monetary union. Further integration – and assorted sovereignty transfers – will be tough to sell to a disillusioned electorate. Any substantive moves to strengthen the euro area institutional framework will most probably have to wait for next French and German elections in May and October 2017. Meanwhile, the ECB will be holding the fort. So far this year, its policies have brought the euro area equity market up 16.2 percent, and its massive bond purchases have helped to erase part of the huge losses.

The euro area economic recovery is quite slow. A bet on some improvement and rising profit shares in the months ahead seems reasonable. And so does the bet that the euro will remain a legal tender in all of its 19 member countries for the foreseeable future.