Fundamentals are still so good that we cannot help wondering if the only worry today is that investors do not seem to be worried. The global recovery is still on track and even seems to be marginally intensifying.
Last time we talked about Italy was December last year after the Italian Referendum result saw the rejection of a constitutional law that was meant to reform the composition and powers of the Parliament. Following the victory of the “no” vote, Renzi resigned from his role of Prime Minister and Paolo Gentiloni was selected as his replacement.
The mood was positive in Washington DC last week, where the Annual Meetings of the Boards of Governors of the World Bank and the International Monetary Fund took place. With the backdrop of a broad-based upswing in global growth coupled with low inflation, the environment for risky assets remains strong.
Japanese Prime Minister Shinzo Abe’s Liberal Democratic Party (LDP) and its coalition partners scored a convincing win that will maintain alarge majority in both houses of parliament. This should extend the lifespan of “Abenomics,” including the Bank of Japan’s (BoJ) mega stimulus.
Catalan President Carles Puigdemont made a speech yesterday in which he almost declared independence, saying he had the “mandate for Catalonia to become an independent state in the form of a republic”, but withdrew it almost immediately, saying he was willing to put the referendum results on hold in order to try to have a dialogue with the Spanish government. In other words, it looks as if he is willing to negotiate but is keeping the option of unilaterally declaring independence open as a possible tool to put pressure on the Spanish government to negotiate and/or to use if the negotiations do not go according to his plan.