It appears that Trump rather enjoys tariff drama. With off, then on again, and off again, and then on again China tariff announcements coming out of the White House lately, at some point it will no longer matter what sort of announcement is made, like the guy who cried wolf too many times, he will have done longer lasting damage when nobody listens anymore, assuming the worst case. I don’t agree with the tariff war itself, but Trump is making it much worse with the credibility-destroying drama.
Speaking of drama, Italy looks to be having a big problem in regard to getting a new government. The word is that the president rejected the new 5-Star/League government on the basis that the economy minister chosen is a euro pundit.
Of course, if you listened to the press go on and on over the last few weeks about how bad for business the “far-right populists” are, the impression might have been that this development would have provided market relief. The FTSE:MIB is now dropping like a rock from the top of the Empire State building, and bonds are showing no sights of letting up, however. So this is a rather curious development. Whatever could it mean?
To cynical me, it looks pretty bad in terms of Europe. From where I sit, I’ve heard the talk about the commitment to Europe and the necessity of having politicians in office who are committed to Europe – especially over the last decade – and, as good citizens of Europe, that’s exactly what Italy has had. In the last election, however, the balance of opinion has shifted somewhat and I’ve heard a report that 5-Star and The League garnered a combined 51% of the vote. So when it was apparent that 5-Star and The League would establish a coalition and form a government, government bond yields rose some, but not a lot, and the FTSE:MIB started to climb well past its moving average over the last 12 months. My post about this development is here.
So, over the weekend, the euro-tool of a president decides to be a super hero (actually a usurper) and save everyone in Europe from Italian euro skeptics and pundits, and look at how much worse the prospect of more of the same actually is in the fine mess Italian markets are currently in compared to last week before the bad news hit. It appears to say an awful lot about how good for average people Europe and the Euro might really be without a word being said at all. With it, Italy has very little prospect of growing out of its debt load, and I’m sure there is much more of a future for Italians to aspire to than just government being able to pay its bills.
I think I agree with the outcome of their last election – Deep-six the deep state.