It’s Italy’s turn to run for the exit

Italians will go to the polls on Sunday in the first step of determining the future of the country as part of the European Union.

Like Brexit, the Italians seem to be favoring leaving the EU over the lack of economic growth over the last 20 years partly due to the strength of the euro.

Italian Prime Minister Matteo Renzi is holding a referendum to change Italy’s constitution. A “Yes” vote essentially means Italians wish to stay in the EU, while a “No” vote can lead to the exit. The latest polls say the “No” votes have a 54% likelihood of passing.

Since Italy is the third-largest member of the EU, an exit-vote win will certainly have dire results in the market as global investors need to act as if the EU may dissolve over the next year as a result.

Certainly the cratering Italian banking system will be further impaired should the “No” vote carry the day. Monte Paschi bank in Seina will have a much harder time selling its bond offering which in needs to do in order to remain open.

Come Monday morning, the US futures markets will tell you very clearly how the vote went.

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