Italian voters on Sunday rejected constitutional changes backed by the government, prompting Prime Minister Matteo Renzi to announce his resignation and handing populists a victory in the heartland of Europe.
Despite this seemingly disastrous news for the future of the euro, global markets moved higher. The euro is slightly stronger on Monday, with global stocks rallying and US Treasuries selling off.
The news of the third-largest EU country beginning the process of exiting has investors shrugging off the idea that Italy’s vote could imperil the European Union and the euro, unlike Brexit.
I see this for what it is: A massive Central Bank intervention across the globe to stabilize economic collapse since most of the Italian banking firms are teetering with shares across the sector falling 46% this year. Monte Paschi’s shares are down 86% for 2016.
There is no way for this market reaction to have any other invisible hand working behind the scenes. All the tell-tale signs of massive intervention are there.
Stock futures were off 2% an hour before trading and in the manner of 20 minutes prior to the open turned positive and soared 1.5% into the open.
Here in the US the President’s Plunge Protection Team almost always intervenes in the futures market when needing to step in a provide support.
The futures allow them to make large stakes without a huge expenditure and leaves very little fingerprints to their actions.
This appears to be the MO of Monday’s fix on a much broad and coordinated effort across Europe, Asia and the US.
Let’s see if it has legs as European markets close midday here and the US goes into its close?