Eq: Dev ex-US

(Madrid)

This is Europe week for financial markets. Italy is currently engulfed in a political, and increasingly markets, crisis. Now the panic and political gloom is spreading to Spain. The country’s Prime Minister, Mariano Rajoy, is set to face a no confidence vote and the outcome is very uncertain. Accordingly, Spain’s sovereign yields have been rising alongside Italy’s. The no confidence vote will be held on Friday and comes following a ruling of corruption against the center-right party of which Rajoy is leader.


FINSUM: Southern Europe is back in the news this week after a six-year hiatus. We don’t think anything major will be caused by Spain, but the Italian situation is very dicey.

(Rome)

We do not cover too much European news. This is mostly because our readers don’t pay much attention when we do. However, we thought the crisis going on in Italy warranted special attention. Stocks are plummeting and bond yields soaring on the back of a political uproar over the future of leadership. In particular, two big parties (i.e. the Five Star Movement and the League) who are leading in the polls both propose lavish tax cuts and spending increases which look on the surface to possibly lead Italy to a default, which has bond investors and the European establishment worried.


FINSUM: We feel for Italy, we really do. We think the country has really been crippled by the Euro and now there is no easy way out. We expect positions will moderate, but this could cause some volatility.

(Stockholm)

For the first time in half a century, Sweden is seriously prepping its country for the possibility of war. Growing national anxiety over the threat of Russia has led the government to send out 4.7m information pamphlets to all households informing them of what to do in the event of war. “All of society needs to be prepared for conflict, not just the military. We haven’t been using words such as total defence or high alert for 25-30 years or more. So the knowledge among citizens is very low”, says the government. The country is also considering whether it should join NATO.


FINSUM: The Baltics and Scandinavia are particularly exposed to possible Russian military aggression, so it makes sense they are nervous.

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