Eq: Dev ex-US


The standoff between Madrid and Catalonia took an unclear turn yesterday. Facing the prospect of immediate arrest if he declared independence for Catalonia, the region’s leader, Carlos Puigdemont, did not declare full independence when speaking to the region’s parliament yesterday. Instead, he stopped one step short, saying he fully supported independence, but wanted to pursue dialogue. Madrid reacted by not arresting him, but simultaneously threatening to suspend Catalonia’s autonomy and demanding clarity on the region’s position after Puigdemont’s vague speech.

FINSUM: This situation is very tenuous, and it is difficult to predict where it might head. That said, the relationship between Spain and Catalonia seems very inflamed, especially on the Spanish side, which seems different than other recent sovereignty debates (e.g. Scotland and the UK).


Investors, get ready for what could be a very ugly situation. In a worrying sign of escalation in the ongoing struggle between Catalonia and Spain, Spain is reportedly preparing a team to arrest the leader of Catalonia. Madrid says that if Carlos Puigdemont declares independence for Catalonia, he will be arrested. He is due to speak tonight at 6pm Spanish time, and depending on the specific wording of his address, Madrid may decide to arrest him or back off. Puigdemont has already commented on the matter, saying it will be better to be in jail than stay Spanish.

FINSUM: This sovereignty debate has gotten very testy and personal. We are worried about Spain, especially given its history of internal strife. The situation seems like it could devolve quickly, and if it does, it may have brutal implications for markets.


Europe seems to have been in the middle of a slow moving fragmentation since at least the Financial Crisis. The plodding fissure accelerated last year when the UK voted to leave the EU, and is once again quickening as Catalonia attempts to secede from Spain. That move may not be the last though, as a new frontier seems to be opening in the rupture of Europe: east vs west. Eastern Europe and western Europe are increasingly at odds over immigration and national sovereignty and it is leading to some bitter rhetoric and legal standoffs that may ultimately push an EU state like Hungary, Czech Republic, or Poland to leave the bloc.

FINSUM: Europe is in the middle of a slow-moving and hard-to-predict crisis, but we thought advisors should have their antennae up over where things might be headed.

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