It was a terrible, horrible, no good Tuesday.
There are no bad Tuesdays in Tuscany…but the Italians are definitely in another crisis and it spilled over into global markets.
My pal Peter Cardasis summed it up perfectly today in a text as we discussed – ‘Italy – great food, great wine, great cars, bad banks!
Italy stock prices are now back to 1996 levels (the S&P is up 320 percent)…
Here is what has happened to Italian bonds since I touched down in Italy Sunday morning:
That will teach them for losing the Lindzon luggage for two days. In all seriousness, lending money to Italy at .5 percent last week or even the 2.5 percent today has been a bad idea and a trainwreck waiting to happen. Now it’s hapening.
As bad as it looks for Italy and European banks, and yes it looks bad (charts coming up below), young Stefan – who sips avocado juice all day while running Stocktwits content – put things in perspective:
List of things people will stop doing because of the Italian political crisis:
• paying for Amazon prime
• paying for Netflix
• eating green gold avocados
• YOLO trading Bitcoin to the moon
• talking about the "rise of artificial intelligence"
— BTFD Coach Brad Scheplick (@scheplick) May 29, 2018
Now to the banks.
European banks have been telegraphing some problems for a while. Take a look:
You can see how little the US markets have cared about Deutsche Bank since the end of the crisis in 2009:
Here is how the European banks have stacked up against good old US Bonds the last 10 years:
Goldman Sachs is licking their chops with respect to the carnage in Europe and the volatility in global markets, but it does not show up in their stock price which is being hammered today.
Another massive transfer of wealth is happening.
I will end today with this great quote from Aldous Huxley (thanks Tim O’Brien):
‘Facts do not cease to exist because they are being ignored‘.
PS – Rachel and I were chatting about my big Europe and Middle East backpacking trip back when I was 20 with my best buddy Rob. I have no idea where all the pictures went so I pinged Rob who pulled some old ones together which made Rachel laugh. You can have a laugh too…
Also published on Medium.