Come this Sunday, December 4th, a major referendum on constitutional reform is taking place in Italy. Some are calling it the precursor to an “Italexit” from the Euro. Is this a vote that determines whether or not Italy stays in the Eurozone? No – at least not yet – but the table may be set for that eventual outcome if the referendum goes in a certain direction.
Take a look at the chart below. With the largest Italian banks in an extremely fragile state and the failure of private capital restructuring of these banks, we are currently witnessing the highest probability yet that Italy will leave the Eurozone within 1 year. In fact, Italy is even more likely to leave the Euro at this point than Greece (how long ago “Grexit” seems now, right?).
(Source: Gavekal Research)
The Bottom Line:
We know what you’re wondering: “If Italy ultimately leaves the European Union, what’s it going to mean for financial markets worldwide? Should I be concerned? What’s going to happen to my investments?”
The answer: Just as we’ve stated in the immediate aftermath of Brexit, economies that need to adjust via a lower currency value cannot since they’re tied to the Euro. We saw Greece threaten to leave the Euro. We’ll surely see the same with Italy. Spain? Portugal? We may be having the same conversation soon about those countries too. And yet, even if we see a painful breakup of the Euro currency region, it may be essential. Market prices can swing wildly in the wake of a single event, but a lasting effect from that single event is very rare.
Real Answers Aren’t Across The Ocean. They’re Around The Corner.
Talk To FFP.
Don’t just watch the news and wonder. Pick up the phone, call 630.780.1534 and take charge of your financial planning alongside the true independents who always put your best interests #1. Not a broker. The fiduciaries at Fiduciary Financial Partners can help you sort out the meaning of global events like the Italian referendum and evaluate it in the context of your investment portfolio.
So bring your financial statements and all your concerns to FFP.
Then get ready to Confidently Embrace Your Financial Future!
John Eberle, CFA® is a Financial Advisor & Chief Investment Officer at Fiduciary Financial Partners. For nearly 20 years in the investment management industry, John has helped high net worth individuals plan a future that they and their families can embrace with confidence.
Fiduciary Financial Partners, LLC is a Registered Investment Adviser. This blog is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fiduciary Financial Partners, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fiduciary Financial Partners, LLC unless a client service agreement is in place.