Call it a gut feel but I think that today’s italian referendum vote may be the key to Cycle turns across a number of assets. Martin Armstrong has long written about his Economic Confidence Model and how 2015/16 would be the peak in confidence for governments globally.
The UK Brexit vote this summer and the election of Trump have shown us that Nationalism and/or Populism is on the rise globally and that people are expressing anger at traditional leaders and politicians (i.e. anger at the status quo).
Renzi, the current Prime Minister, has said he will resign if the vote fails. So a “Yes” vote would signal voter confidence in the standing government and its leaders. As this is not the trend we have been seeing globally, my expectations are that the Italian’s will “No” later today. If that happens, Italian Banks could take a big hit and I would expect Gold and US Treasuries to bounce hard and global stock markets could sell off, at least initially.
From a Cycles standpoint, I view this event as being similar to Brexit in terms of Cycle timing versus the election of Trump. With Trump, Stocks were already bouncing out of an IC Low and Gold’s short term Trading Cycle was topping.
Here are several links on today’s vote that you may find interesting:
Added: The real impact of the no vote is on the Italian Banks which are some of the most under capitalized in Europe. The yes vote was needed to continue the state sponsored bailout efforts of these banks. The no vote puts a halt to the bailouts but the market may need to absorb the systemic risk this has exposed.