“L’Italia è il paese più bello del mondo, su questo non ci piove!” That common Italian phrase is translated as “Italy is the most beautiful country in the world, there’s no doubt about it!”
While Italy may be a beautiful travel destination, to investors around the world this week Italian government debt is NOT a beautiful destination for their dollars. A populist backlash and troubles securing a new government have put a negative spotlight on Italian sovereign debt and caused a “flight to quality” in the US markets this week. As a result, stock prices plunged the day after Memorial Day and bonds soared.
Over the next week it will become clearer if our US economy & equity markets are stronger than the Italian debt is spoiled. Our Current Market Outlook remains “Uptrend Under Pressure” with a “yellow” light and under a first stage sell-signal. Certain tried & true technical indicators we utilize continue to flash warning signals suggesting that caution is still in order. While we remain on guard concerning the various threats to the market currently, we are also hopeful for positive resolutions to many of them. As experienced investors, we have well defined risk management disciplines in place for our clients, because we know conditions can turn negative very quickly.
If all goes well in the days immediately ahead, the market may just say back to Italy…“Chiodo scaccia chiodo!” (Translated– “You’ll get over it.”)
“Ciao” & Have a Triumphant day! ®