The Market Is Not Done Selling

  • The situation on the ground in Italy is deteriorating fast, with growth coming to a complete halt. The debt/GDP ratio will rise further as a result of the expansionary budget.
  • The reason is not only growth deceleration in the eurozone. It’s the rising Italian yield triggering a credit squeeze and capital flight and the end of QE in December looming.
  • The crisis is still just lingering, but it’s difficult to imagine what is going to reverse this situation, and as a result, an evaporation of confidence looms large.
  • A confidence crisis can be triggered at any moment by anything – a bad inflation figure out of the US, a trade escalation, declining world growth, etc.
  • We would advise you to keep a keen eye on the 10-year Italian yield.

Source: The Market Is Not Done Selling | Seeking Alpha