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The headlines read; the parliament is convening in order to
orchestrate a vote of confidence, or topotentially vote on new
austerity measures, or to potentially dissolve parliament and
create a newunity government (an unelected coalition)..but this
isnt Greece this is Italy, largest debtor bymeasurement of
government bonds there is and this debacle comes only a week or two
afterGreeces. Its relatively straight forward to understand why the
media en masse in Italy have
been burying the reality from their public, Silvio Berlusconi
owns or financially influences mostof it, but now the misdirection
and blatant mistruths the Italian parliament have used versus
theirpopulace to suppress the truth has gone viral theres nothing
he (or his ministers) can do tocontain the reality, Italy is
broke.
The figures are truly staggering, whilst Italy is technically
not insolvent moving forward it cant
possibly survive the mountain of debt its buried under 1.6
trillion in government borrowing.It cant possibly raise the 20
billion per month or re-cycle its old debt or borrow another
200billion fresh debt in 2012 to simply stand still still. The
Chamber of Deputies will vote at 3:30p.m. in Rome on a routine
report that will reveal whether Berlusconi retains a majority in
the630-seat house. Its the first such test since three party
members defected to join the opposition
and six others publicly called on the premier to quit.
Berlusconi will probably face a confidencevote that will decide his
fate. That last hour of European trading could see fireworks.
European banks are in the news this morning and the news is not
positive. As a portent fortrouble to come French bank Societe
Generale has this morning revealed figures showing thebanks profit
has fallen by 31% due to a write down with regards to Greek
sovereign debt andtrading revenue, the write down figure ( in
relation to Greece specifically) is not published butits a fraction
of the total liabilities Soc Gen has its head in the guillotine for
ifGreece and Italydefault.
UniCredit SpA, Italys biggest bank, will decide this week
whether to proceed with its seven
billion-euro ($10 billion) equity rights issue sale as Prime
Minister Silvio Berlusconi fights toremain in power and the
countrys debt crisis worsens. UniCredit is preparing to embark on
thebiggest Italian stock sale in more than two years to comply with
regulators deadline to bolster
capital by June. Failure could force the lender to seek
government aid. UniCredit, has lost abouthalf of its value this
year. The bank has a market value of about 15.3 billion euros and
trades at61 percent less than its tangible book value. UniCredit
has the biggest capital shortfall amongItalys lenders, a gap of 7.4
billion euros, the European Banking Authority said last
month.Lenders that fail to raise capital from private investors by
the June deadline will be forced to asknational government for
money.
Lloyds Banking Group Plc has said it may miss financial targets
as the bank reported a 21percent decline in pretax profit. Pretax
profit fell to 644 million pounds ($1.03 billion) from 820million
pounds for the second quarter, the lender said in a statement
today. The median estimatewas 754 million pounds, according to a
survey of six analysts conducted by Bloomberg.
The euro weakened a third day and Treasuries climbed before
Italian Prime Minister SilvioBerlusconi faces the budget vote. U.S.
stock-index futures fell, while European shares reboundedfrom a
two-day drop. The euro slid 0.3 percent against the dollar at 8:04
a.m. in London, whilethe Swiss franc depreciated against most of
its 16 major peers. Treasury 10-year yields declined
7/29/2019 Italy--s Genie Is Out Of The Bottle
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four basis points. Standard & Poors 500 futures dipped 0.6
percent. The Stoxx Europe 600
Index added 0.2 percent, while Japans Nikkei 225 Stock Average
sank 1.3 percent afterOlympus Corp. admitted that it hid losses
from investments.
Market snapshot at 8.40 am GMT (UK time)
In Asian Pacific markets the Nikkei closed down 1.27%, the Hang
Seng closed flat and the CSIclosed down 0.31%, the ASX 200 closed
up 0.48% and the SET is up 1.08%. European boursesare mainly
positive this morning; the STOXX is up 1.03%, the UK FTSE is up
0.74%, the CACis up 0.8% and the DAX is up 0.99%. The MIB is up
1.13%. The SPX equity index future iscurrently down 0.3% and spot
gold is down by $6.70 an ounce.
CurrenciesThe dollar and yen advanced as Asian stocks dropped
for a second day, increasing demand forsafer haven assets. The
franc reached its lowest level in almost three weeks against the
euro onspeculation the Swiss National Bank will once again weaken
its currency to support growth.Australias dollar fell for a third
day against the yen after data showed the nations trade surplus
narrowed more than economists forecast. The euro lost 0.3
percent to $1.3736 at 8:03 a.m.London time. It was 0.2 percent
weaker at 107.27 yen. The dollar was little changed at 78.04yen.
The franc fell 0.2 percent to 1.2429 per euro after falling 1.7
percent yesterday amidspeculation the SNB will adjust its cap of
1.20 francs per euro set on Sept. 6. It earlier touched1.2457, the
weakest level since Oct. 19. The Swiss currency dropped 0.3 percent
to 90.35centimes per dollar.
Economic data releases that could affect market sentiment in the
afternoon sessions
15:00 UKNIESR GDP Estimate October
An expanding GDP indicates a growing economy, which is generally
beneficial for the financialmarkets. Growth that is too rapid will
promote inflationary worries, however, that may influencethe MPC to
raise interest rates.
FXCC Blog
http://blog.fxcc.com/italys-genie-is-out-of-the-bottle/http://blog.fxcc.com/italys-genie-is-out-of-the-bottle/http://blog.fxcc.com/italys-genie-is-out-of-the-bottle/
