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Italian Bonds, Stocks Crash In Furious Reversal As Political Drama Explodes

Yesterday, in the aftermath of the latest Italian political drama, in which president Mattarella openly mocked democracy, and under pressure from Europe vetoed the choice of the euroskeptic economy minister, Paolo Savona, we warned that this outcome was even worse for markets than the one which most had dreaded, namely Mattarella folding and greenlighting the 82-year-old professor for reasons we laid out article from Sunday.

Algos still don’t understand that appointment of Savona was “best” worst case scenario https://www.zerohedge.com/news/2018-05-27/toxic-coup-narrative-why-italys-political-crisis-may-be-set-explode 

“A Toxic Coup Narrative”: Why Italy’s Political Crisis May Be Set To Explode

“The most worrying points are: toxic “coup” narrative developing; in the next days, if the crisis worsens, calls for a show of force will grow louder. Plus, Savona’s appointment means Lega is dead…

zerohedge.com


What happened next was a full court press by so-called experts and momentum reversal algos to spin yesterday’s outcome as good news, and sure enough in early trading the EUR bounced sharply, rising above 1.17, Bunds slumped, and Italian bonds and stocks gapped higher at the open.

… And then all hell broke loose when, just as we predicted, Mattarella’s decision simply reinforced the League’s hard line position, when shortly after the open League leader Matteo Salvini reiterated his support for Savona, and in a Facebook video said that “either EU rules will change or it makes no sense for Italy to remain in the European Union.” Worse, dragging Italy to the verge of the constitutional crisis we warned about yesterday, Salvini turned the nation against the Brussels-lackey president and said that Mattarella “chose EU rules over Italians’ vote” which “is an issue for democracy.”

And the punchline: the League would still seek to form a government with people rejected by Sergio Mattarella.

…click on the above link to read the rest of the article…

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