Monday, December 5, 2016


Over Here, the jobs number came in bang on at 178,000 and every one went back to bed.  The Donald is a Rock Star; it's great fun to watch the NY Times, MSNBC and CNN go slowly, collectively insane and everybody is buying equities and selling bonds and getting rich while doing it.  So far so good.  Even what was supposed to be the greatest foreign policy flap in history, the taking of a phone call from the President of Taiwan (OMG!!!!) fizzled.  The guy is either really lucky or a hell of a lot better than anyone expected.  Then again, he isn't in the job yet.  Then there's Over There...

The Union dodged one bullet this weekend but took another one in about the eight-ring.  Austria rejected a far right challenge but Italy soundly rejected PM Renzi, who promptly resigned, and with him it is thought the continuing concept of Italy remaining in the Union under Brussels.  That remains to be seen but in the effort to form a new government things are going to get very messy indeed with predictions already emerging that Beppy Grillo and the Five Star movement just might pull it off and be in the driver's seat in the formation of a new coalition.  How long it will take is another issue, the time line not only affecting the much-needed resolution of the Italian banking situation (nothing can be done without a government on an EU level) and the soon-to-come election in France which could be affected by either a government in place or NO government depending upon the trending politics in the latter situation.  The Italians could very well drag this thing out through the French elections looking for emotional and political support--for either or any party!  If the more populist Monsieur Filon comes out a clear winner, that is one thing, but if Mdm. Le Pen attracts enough support to become a force with whom one must reckon...well, that's a very different situation indeed.  The certainty is that France will be governed far more to the right than under the past years with Frankie Holland in will Italy.  Just how far right is the question.  The survival of the Euro is no better than 50/50 at this point and of course we must keep in mind that in the Fall it's Angie's turn.  Would she sacrifice the Euro in order to salvage what would remain of the Union and herself?  There's too much space between now and then to answer that but we should keep in mind that the Union came before the Euro and that there is a growing body of opinion that holds the view that it  (the Euro) wasn't a very good idea in the first place.

With all this going on, the markets were surprisingly quiet with the Euro holding firm after an early trading dip and that is a good thing.  Of course the Italian result was widely expected but a positive none-the-less.  Another good thing is that all of Europe has about 10 days left in the working year so if the lid stays on for that period we are looking at mid-January as the start of the Great Political Dance.  I think the Italian banking system can stay above water for that long but what I'd like to talk about tomorrow is the problem all of this causes for the ECB and Sr. Draghi.  The Grinch showed up early for him this year.

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