European Sentiment Dampened On Resurgent Berlusconi

Tyler Durden's picture

The major overnight theme, as has been the case lately, has been primarily related to the wild ongoing swings in various currencies, with the JPY dominating, after the USDJPY briefly touched 94 in overnight trading on more talk, if no actual action as usual, by various BOJ officials. Of note was the bank's Sato who said the BOJ wants focus on "channel" in which monetary policy can indirectly affect FX, JPY appreciation being corrected This ongoing FX rout in turn is pushing the Nikkei higher once more, if only in nominal terms, but keeping it largely unchanged in FX-adjusted ones. Another rout was seen earlier in Australia, where the AUD plunged following a big miss in local retail sales, confirming the retail sales weakness seen previously in the US and Europe. The issue of currency wars was dominant in Europe too, when the ECB's Liikanen said the central bank has no exchange rate target, need to give banks time to focus on core task of lending. This happened as France president Hollande calls for the eurozone to manage its exchange rate, and as French finance minister repeats calls that the EUR has gone up far too much, too fast.

Macroeconomic news-wise, it was a quiet day, with German factory orders rising 0.8% sequentially on 0.7% expected. The implosion in domestic factory orders continued, with the boost driven by foreign orders coming from the Eurozone, as non-eurozone orders again declined, indicating that the stronger EUR continues to impact the Eurozone core adversely. Furthermore, factory orders declined -1.8% Y/Y, on expectations of a -1.2% drop. It appears everyone in the entire world now seems to have problems with accurate seasonal adjustments.

But perhaps the biggest news of the night was the resurgence of Silvio Berlusconi, who managed to close the lead to the Democratic Party leader Bersani, embroiled in the fallout from the Monte Paschi scandal, to just 3.7 points, or within the 4 point margin of error, before the February 25th elections. According to a SkyTG24 poll, support for Bersani’s bloc dropped 0.2 point to 33.1% from yesterday while support for Berlusconi’s bloc rose 0.1 point to 29.4%. This is certainly the most catalytically destabilizing event on the horizon for Italy, and Europe, as should Silvio win the Italian elections, an outcome unthinkable as recently as a month ago, all bets about Europe's technocratic/Goldman-forced "recovery" in which only the banks are recovering, if not the people, are off.

A quick market summary as US traders come to work:


  • Spanish 10Y yield down 3bps to 5.35%
  • Italian 10Y yield up 1bp to 4.46%
  • U.K. 10Y yield down 1bp to 2.11%
  • German 10Y yield down 1bps to 1.64%
  • Bund future up 0.15% to 142.41
  • BTP future up 0.03% to 111.48
  • EUR/USD down 0.3% to $1.3542
  • Dollar Index up 0.26% to 79.69
  • Sterling spot up 0.11% to $1.5677
  • 1Y euro cross currency basis swap down 1bp to -19bps
  • Stoxx 600 up 0.03% to 285.65

And some more thoughts on what to expect in daily trading from Socgen:

Trading is expected to be in a transitional phase today. After an increase in risk aversion at the start of the week stemming from political uncertainty in Spain and Italy, investors on both sides of the Atlantic are not expected to find any new catalysts which would trigger strong market trends today.

Investors will probably be readying themselves for a particularly busy today tomorrow, with the ECB and BoE both meeting, and a Spanish auction.

In the meanwhile, the EUR/USD should stay beneath its lowest point from last week at 1.3712. On the other hand, the EUR should continue to outperform the JPY. The durable weakness in the JPY looks to be confirmed: the BoJ's governor asked to move up the date of his departure from 8 April to 19 March (at the same time as two other BoJ members are leaving). The EUR/JPY and USD/JPY should thus remain in demand for a while. FI-wise, the 10Y euro swap rates should continue to consolidate below 1.95%. Watch out, though, for 10Y bono yields in the lead up to the auction: they have tightened 28bp since the beginning of the week.

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blindfaith's picture

wax on...wax off. wax on, wax off....



redpill's picture

My anaconda don't want none unless you bunga bunga hon!

philipat's picture

Yeahhhh, more Bunga Bunga.....

firstdivision's picture

It's too bad that Berlusconi is still swinging from Merkel's balls, else he really could fuck the EU for them fucking him over. 

Ghordius's picture

sadly it's a bit more complicated than that. what brought down the Berlusconi government was more like a strike of his allies in parliament with "loss of confidence" and a new multipartisan alliance willing to build what they call a "technical" government under a PM selected by the President

Berlusconi's platform is a bit marred by very strange fiscal proposals he himself is bringing up and frankly he does not look as if he is fighting for a big victory - the very fact that his own coalition of parties differ strongly from some of his key political point is debilitating, for him

but what is really interesting is that many on the left - including the prez of the senate - are still very, very angry at the role of Deutsche Bank in the sell off of the Italian bonds

ah, the German-Italian love-hate affair has deep, deep roots that go back to the year 800

you can say what you want, multiparty electoral systems are more transparent - sadly they make politics also much more complicated for those who don't follow the debates, particularly during elections

GetZeeGold's picture



I luvs me a good soap opera. Sure there's a lot of yelling....but nothing really ever happens.

Ghordius's picture

perhaps you haven't seen the fistfights that some of our european parliament's chambers sometimes witness

huffpo has a video of one in Italy, here, between two groups part of the Berlusconi alliance, so we are talking about something between member of the ruling majority at that time

GetZeeGold's picture



You can tell that crap is staged.....I prefer Professional Wrestling.

firstdivision's picture

I'd wager that the defection of his allies can root the catalyst out of Germany.

Silverhog's picture

Never thought I would be looking forward to a Italian election.

Ghordius's picture

have a look at the opinion polls, then. Berlusconi's group seems to have double the backing of Monti, but further on the left the socialists seem to be the nr. 1, for the moment


I'd bet Italy will have another technical government with a new PM chosen by the President and supported by the left, the center (Monti) and the right (Berlusconi)

apberusdisvet's picture

The actual Mafia did a better job of running Italy than the financial one.

LongSoupLine's picture

What does any of this have to do with Bernanke sticking his giant liquid fiat dick up the ass of the middle class again today?

Fuck you Italy, EU and all Goldman central banks. Assholes.

Ghordius's picture

lol - and what exactly could the ECB (not the EU) and Italy do to ease your Bernanke pain? send a drone against him? lower further rates as Tyler expects?

this funny expectation that europeans are willing to go down in flames to make an irrelevant point vs. an issue that has it's roots in US politics is a bit naive, imho

under which laws does Goldman operate? where is it based? who is the polity that could stop the Squid?

for sure not europeans, we have to play the game, we have very little leeway in the shaping of it's rules

LongSoupLine's picture

I think you presume to believe I find them "separate". Central banking is a small club globally, and we're not fucking invited. It's by the banks, for the banks and of the banks. Period.

My fuck you's are rooted in the context of The Creature from Jekyll Island reference. That should answer all your Goldman questions...

paint it red call it hell's picture

"should Silvio win the Italian elections, an outcome unthinkable as recently as a month ago, all bets about Europe's technocratic/Goldman-forced "recovery" in which only the banks are recovering, if not the people, are off."

I certainly would not hang a hat on that assumption. Its a given Berlusconi is a Prince of Bunga, Bunga, based on how world norms are being violated, the Goldmanites could well have invented it.

LMAO's picture

"Investors will probably be readying ...."


100pcDredge's picture

*meanwhile in Italy*


Peter Pan's picture

The old Ronald Regan joke comes to mind.

How can you tell who the Polish guy is at a cock fight?

He's the one who brings a duck.

How can you tell who the Italian guy is at a the cock fight?

He's the one who bets on the duck.

How can you tell the Mafia is running the cockfight?

That's when the duck wins.


I am sure the Italians will figure it out in good time without the Germans help.

bigbwana's picture

China has millions of families, inculding children, being used as slave labour. They are forced to work 12 hour days, seven days a week, 365 days year! Beaten when they fall asleep. Producing cheap goods for the world, This is matchless cruelty. Boycot China. Tell your friends. China must be boycotted until she treats her people with humanity.   

Non Passaran's picture

If you cared you'd buy MORE and EXPENSIVE products from China so that kids don't have to work and so that there is more demand for products for which "slave" labor isn't suitable.
But what you wrote is BS and a lie anyway, so bugger off.

_ConanTheLibertarian_'s picture

If Berlusconi wins and brings down the Ponzi, I'm willing to suck well he will be my hero. Go Silvio go!

Uskatex's picture

I don't know if Berlusconi is really catching up in the elections (and for sure he will not win them, at most he will be able to condition the new government). What I know is that yesterday Grillo (the comedian running the 5 star Movement, M5*) come to my city, Cagliari, and was able to muster 30-40,000 people, perhaps more, a number unseen for several decades in politics here. 

Italian mainstream media never write about this. Moreover, MPs that will be elected in M5* party will be bound to continuously get advice on how to vote through Web polls open to M5* members. This is what EU and the establishment are really scared of. For them, Grillo is the problem, not Berlusconi - and he is the true hope of Italy!

Grillo will not win the elections, but he will send many people to Italian Parliaments, who will be able to expose everything that happens there.

tango's picture

Considering the past preferences of the Italian voter (debt, cronyism and winking) why will these new MPs do any better?  I am sure that if they asked the constituents, "Should we raise taxes on rich people?" or "shouldn't we be patriotic andbuy Italian bonds?" or "should folks having a hard time be given more aid?" the overwhelming response would be "YES".  How does that help anything?

Uskatex's picture

Well, the answer of the "people" to your questions would be "yes" in every country, probably. 

In Italy our main problem is the enormous waste of resources due to the present political caste. For instance, in France one Km. of high speed railway costs 9 million Euros, in Italy it will cost 50+ millions. Another example: to save money they want to shrink the "medical guard" service, that guarantees to all (Italians, immigrants and tourists) a free doctor assistance during the nights (8 pm-8am) and the week-ends. In a region like Sardinia this service costs about 10 million euros a year, and is really appreciated. On the other hand, Sardinian sanitary service has more than 1000 "medical managers" that cost more than 100 milion euros a year, most of whom have useless jobs. But they are nominated by politicians, and cannot be touched! Taxation to sustain this waste is enormous. Everyone who earns more than 30-40000 euros is taxed about 60-65% on the earnings above that, and with the rest he will buy thing further paying VAT and other taxes... Now in Italy taxes are higher than in Sweden!

These PMs will not rule, but will be able to shake the political equilibria.

Grand Supercycle's picture

Wile E. Coyote...

Get Ready Bears,

Wile E. Coyote overdue sell off awaits as SPX daily & weekly charts continue their protracted topping process from current
extreme levels.

Bahamas's picture

Italy had to rush to hand out 4 billion euros to Banca Monte dei Paschi to re-capitalise it "pronto" Monti took the scene and the blame as the vampire that suck Italian contributors that amount by re imposing the property tax on the first house, that Berlusconi had previously eliminated. Therefore, this could just be a charade, in the sense that Berlusconi didn't want to take the blame tor extracting 4 billions out of citizen's pokets and hand it out to bankrupt leftist Italian bank MPS.