InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

A Massive String of Double and Triple-Digit Winners

A Massive String of Double and Triple-Digit WinnersThe cash keeps pouring in for Profit Catalyst Alert readers. In the past few weeks, they’ve seen gains of 31%… 135%… and even 250%. More incredibly, those profits came on the heels of another string of winners sporting gains of 56%… 100% (twice!)… and 110%. We’re letting a limited number of additional people get access to these trades. Go here for the details.

 

 

Mama Mia! Italy’s Woes Tank Global Markets

By John Persinos on May 29, 2018

Tuesday marked a stock market sell-off, Italian style. The Borsa Italiana plunged amid political turmoil in Italy, sending the euro to its lowest levels of the year. Global equity markets across the U.S., Europe and Asia plummeted as well.

Wall Street traders returned today from the three-day weekend to confront a host of worsening geopolitical worries. Investors are getting agita not from tin-pot dictatorships but from democratic allies in the developed world.

The 24/7 news cycle has been feeding you a steady diet of headline risk. At the top of the menu today: Italy. The country may boast an inimitable sense of style, but right now it’s an economic basket case. Strife in this sun-splashed Mediterranean country weighed heavily on stocks everywhere.

Italy is the third-largest national economy in the euro zone and the eighth-largest in the world. The country is the second-largest manufacturer in Europe behind Germany.

Italy also happens to be on the verge of collapse. The rest of the European Union could follow. The big winner in this debacle? Russian President Vladimir Putin, who has been doing his best to foment discord in the west. The authoritarian Putin, an ex-KGB colonel, must be smiling today. Western Europe is estranged from America and seems to be unraveling.

Italy’s political gridlock has put the country onto the path of a new “snap” national election. Since Italy became a republic in 1946, the country has voted into power 66 governments. It’s about to get its 67th.

Let that sink in: 67 governments in only 72 years. It begs the question: can Italians govern themselves?

This time around, Italian voters are likely to install far-right firebrands who would say ciao to the euro zone. Coming on the heels of Britain’s exit from the EU (aka “Brexit”), the advent of “Italexit” would be a disaster for the post-World War II  economic order.

The chaos in Italy today was triggered when the Five Star and League political parties jettisoned their attempts to form a ruling coalition with President Sergio Mattarella. Five Star and League are anti-establishment; Mattarella is what they derisively refer to as “globalist.” The government faces an almost certain parliamentary vote of no confidence.

Italy is plagued by severe unemployment and huge debt. If the populists get into power, they’ll probably make good on their threat of walking away from the country’s massive debt.

Italy is infamous for red tape, private- and public-sector corruption, low worker productivity, and sclerotic bureaucracies that make life hell for ordinary citizens. Bribery is a way of life.

Illegal immigration has been a flashpoint, too. It shouldn’t come as a surprise that angry populist parties are on the verge of taking over Italy, with a possible domino effect throughout Europe.

Spain is beset by political troubles of its own. The country’s Prime Minister Mariano Rajoy is scheduled to face a vote of confidence in his leadership on Friday, amid a corruption scandal involving influence-peddling.

Trading punches…

Italy’s disintegration and Spain’s turmoil come on top of the escalating trade war between the U.S. and China.

The Trump administration announced Tuesday that it will continue pursuing protectionist tariffs against China, throwing cold water on hopes that trade tensions would ease.

Washington stated today that it will release a list of $50 billion worth of Chinese goods that will be subject to a 25% tariff. The administration also vowed to pursue legal action against China at the World Trade Organization, for alleged trade rule violations.

The threat of military war, not just trade war, looms large as well. Investors remain aghast at the continuing exchange of personal insults between President Trump and North Korean leader Kim Jong-Un. Trump last week canceled his planned summit with Kim.

America’s neighbors aren’t being spared. Trump is twisting the arms of Mexico and Canada during current re-negotiations over the North America Free Trade Agreement (NAFTA). Corporate leaders fear that the unraveling of NAFTA would cause supply chain disruptions and dampen global growth.

Trump also is ramping up pressure on longtime ally Japan. Trump has withdrawn America from the multinational Trans-Pacific Partnership, a trade pact supported by Japan’s Prime Minister Shinzō Abe. What’s more, the White House last week launched a national security investigation into auto imports that could lead to new U.S. tariffs. Motor vehicles comprise about 30% of Japanese exports to the U.S.

To quote my favorite blues singer, Mose Allison: “You know, this world’s just one big trouble spot.”

I’ve repeatedly warned you that headline risk is the biggest enemy right now to your portfolio. As the unfolding crisis in Italy shows, this risk typically comes from unexpected places.

Tuesday Market Wrap

  • DJIA: -1.58% or -391.64 points to close at 24,361.45
  • S&P 500: -1.16% or -31.47 points to close at 2,689.86
  • Nasdaq: -0.50% or -37.26 points to close at 7,396.59

 Tuesday’s Big Gainers 

China-based marketing company offers special dividend award.

Wealth management provider posts strong earnings.

Express courier set to receive $1.38 billion investment from Alibaba Group Holding (NYSE: BABA).

Tuesday’s Big Decliners

Telecom equipment maker caught in trade war between U.S. and China.

Biotech announces departure of CFO.

Analysts turn bearish on in vitro diagnostics firm.

Letters to the Editor

“Can investors count on global growth to provide a tailwind for stocks?” — Richard G.

Not this year. In its most recent World Economic Outlook, the International Monetary Fund (IMF) warned about the “jarring” contradiction between growth momentum and a “similarly broad-based conflict over trade.” The IMF predicted that global economic growth would slow this year, in large part due to the emergence of protectionism.

Questions about headline risks? I’m here to help: mailbag@investingdaily.com

John Persinos is managing editor of Personal Finance and Radical Wealth Alliance, as well as chief investment strategist of Breakthrough Tech Profits.

 


You might also enjoy…

 

R.I.P Bull Market—Here’s How To Protect Your Wealth

I hope you’ve enjoyed the phenomenal bull market of the past eight years…

Because it’s about to come to a screeching halt.

The Federal Reserve’s nearly decade-long spending spree has finally come to an end.

With no other options left at their disposal, the Fed has no other choice than to raise interest rates to keep inflation in check.

And that leaves you with two options…

Do nothing and suffer the agony of watching the profits you’ve accumulated over the years evaporate right before your eyes…

Or reposition your portfolio and invest in companies which prosper as inflation rises and interest rates soar.

I think the choice is clear. And I’ll show you the best new positions you can take if you click here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.