No Oscar for Italy

Focus: ETFs

Uncertainty is the market’s worst enemy, but politicians around the world don’t seem to understand this fundamental issue, as MoneyShow’s Tom Aspray surveys the current landscape and recommends steps tor protect your portfolio as we head into a choppier period.

Where the Oscars are awarded each year for the best in film, the Razzies are awarded for the worst. Since the financial crisis, it seems as though the world governments have been vying for who is the most incompetent as they try to win next year’s political Razzie.

The US was clearly a leader early in the financial crisis with the House vote in September 2008 against the rescue plan, oblivious to the impact on the global markets. The Dow then dropped 777 points and by the end of the week the House passed a similar measure but the damage was already done. Over the past four years competition has been fierce with many Euro countries vying with the US for the top spot.

The three-way split after Italy’s election, with no clear ruling party, should put them in the lead for next year’s award. This is not reassuring to the many Euro banks with huge holdings of Italian bonds. The global markets started tanking Monday afternoon and the selling has continued overnight. Though I am confident our politicians will be up to the challenge from the Italians given the looming fiscal deadlines investors are unlikely to be throwing any parties.

The market’s surprising strength last Friday suggested that stocks could again challenge the recent highs but that required higher prices on Monday. Instead stocks were hammered Monday and the market internals were extremely weak.