Market Morning: Venezuela Sells Gold, Italian Bonds Shaky, Morgan Stanley Bearish, Iran Destabilizing

Venezuela’s Maduro Claims New Magical Golden “Path Towards Socialism”

Gold has been recovering after an intense selloff and may get another bid from this news. Amid crazy hyperinflation of 100,000%, give or take a few thousands of percentage points because what’s the difference really, Venezuela’s socialist visionary President Nicholas Maduro has come up with an idea that might actually do some good, though very, very late, for pensioners who have already lost all of their savings and are struggling to survive. “We have found the formula to advance towards socialism, equality and the development of national productive forces,” Maduro said of the surprise move, which is to sell gold-backed certificates from the country’s mint in a bid to stop the hemorrhaging in purchasing power.

Considering the worthless paper money floating around the country like plastic in the world’s oceans, this might actually alleviate some pain, though how this will “advance towards socialism” is a bit fuzzy. It’s also an open question how long the sale can last, Venezuela being down to 150 tons of gold reserves. Also, sell it for what? Sovereign Bolivars? Petro cryptocurrency? Hard to say.

Related Tickers: (NYSEARCA:GLD) (NYSEARCA:IAU)

SEE: China Casts A Wider Net In The Ongoing Crackdown On Crypto-Related Content

Something Fishy Going On In Italian Debt Markets?

Italy’s 10Y bond yields climbed to new post-Turkish-mayhem highs at 3.21% today and then fell sharply back down to 3.11% on new apparent news in particular. Italy is currently the most open and painful bedsore in the side of the Eurozone and sovereign debt investors may begin to dump more bonds in anticipation of Italy being cut off from European Central Bank support in December, if the ECB indeed follows through with its plan to put a final end to its money printing program, of which Italy has been a top recipient. Today’s volatile trade on the basis of nothing raises the question whether a central bank actor or actors are surreptitiously subsidizing Italian debt in an effort to keep the Eurozone glued together. Unicredit (OTCMKTS:UNCRY), a troubled Italian bank that holds a lot of its profligate government’s sovereign debt, was down on the volatility 2.3% on the day so far. Banca Monte dei Paschi di Siena (OTCMKTS:BMPDY), the world’s oldest bank that also holds these toxic assets, is also down 2% on the Italian stock exchange.

Morgan Stanley Sticks to Bearish Outlook

Chief US equity stategist at Morgan Stanley (NYSE:MS) Michael Wilson is sticking to his bearish outlook on the major US stock indexes, saying that “Over the past two months, the U.S. equity market has moved decidedly more defensive and value is showing more persistent performance versus growth…weak breadth and underperformance in former tech leaders are worrying signs, according to him.“The message? The market seems to be (rightly in our view) worried about growth slowing later this year and next. The causes of the slowdown are obvious — tough comparisons, Fed tightening, cost pressures mounting, and the risk of trade tensions turning more consequential.”

Bear markets only start from bull market highs after all.

Related tickers: (NYSERCA:SPY) (NYSEARCA:QQQ) (NYSEARCA:DIA)

Iran Sanctions Already Successful in Further Radicalizing The Country

US sanctions against Iran are already doing their job of further radicalizing the Islamic republic’s political leadership. Iran’s parliament voted yesterday to reject President Rouhani’s explanations for hyperinflation and economic hardship in the country. This is widely seen to strengthen Iran’s hardline nationalist faction that will likely lash out against the US even further in frustration and bitterness. Iran’s currency the Rial has lost half its value versus the US dollar since 2013. Full sanctions against Iran’s oil exports will be taking effect after the midterm elections in the US, so the situation in Iran is likely to get much worse before it gets better. Who will lead the country when things get really bad? Perhaps it’s best not to think about.

 

 

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