iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
18,447 Blog Posts

Political Turmoil Rattles Italian, Spanish Markets — Risk Off Mode Relevant Again

Both Spanish and Italian markets are off by 2% and 1%, respectively, on political turmoil fears. In Spain, the government is corrupt and they got caught. This might lead to new election, which may bring forth a power who hates the EU and the institutionalized cronyism that is implicit with the bloc. In Italy, their new government are stacked with EU skeptics who might opt to leave the euro — all of this is wreaking havoc on confidence, a wholly necessary ingredient to keep the house of cards intact.

Here is the news in the nutshell.

Stocks will eventually recover from this tumult. The bonds in Europe will stabilize — because they always do, and those left holding the bag will be penniless and homeless again. After a decade of seeing these panics come and go, I really can’t take them seriously anymore. It has a boy who cried wolf quality to it, so I’m going to assume this is all transient. Nevertheless, it’s worth reminding readers of how very delicate the EU is and how their debt structure is lopsided in favor of the weakest countries, who, at some point, might opt out of the EU in order to print money.

Across Europe and in America, bonds are rally — classic risk off. All are rallying, with exception to both Portugal, Italy, Greece, and Spain — classic PIGS action. Look at the divergence.

Another ‘red flag’ is the divergence between Spanish and Italian bonds.

And let’s not ignore the spread between Italian and German, right now at 2013 levels.

But are we really scared? Come on.

If anything, the N. Korean summit cancelation is a bigger deal — because it could affect Trump’s negotiation tone with China. This very idea was floated by a fake news artist this morning.

Last night futures were sharply higher — more than 35 NASDAQS; but now we’re looking at a negative open. More panic, more nothing, great.

Pre-market, several retail names are shooting higher on better than expected results.

FL +15%, SCVL +6% and DECK +5% after earnings, NVS +1% after upgrade: ZOES -28%, HIBB -16%, ADSK -5%, SPLK -2%

Lastly, crude is getting poleaxed, off by 2.6%. Perhaps the negative seasonal trends have begun and WTI has finally topped? The dollar is also +0.4% on this very busy Friday.

Oh, and Happy Bday to me. Now I’m going back to bed. Wake me up if my stocks break out.

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8 comments

  1. Lyndon Keltner
    Lyndon Keltner

    Had to short some /ZB at 143’24 since it is as stretched as it could get.

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    • boyaj

      Happy Birthday good sir, I hope you have time to enjoy it with the fam.. as well as that crazy coyote of a pet. Thanks for all the insight and entertainment.

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      • boyaj

        That comment was meant for Fly but if it’s your birthday too Lyndon, then I wish you the same

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  2. granpa

    Happy Birthday Broker A.

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  3. The Maven

    “Unnamed sources within OPEC” feh, buy the fucking dip. Happy Birthday, lovely day, have one on me.

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  4. acehood

    Fly try hemp protein, it’s damn good

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