What a busy weekend.
Turkey almost had a coup but it’s already over and you can see that spike down on the end of Friday’s chart that shows you the entire hour that the markets cared about a military coup in one of our NATO allies.  Â
I’ve already spent more time discussing it than the market has spent caring and I’m not even going to bother mentioning our own Government using the coup in Turkey to slip in GDP revisions under the radar that were revised down from 2.6% in 2016 to 1.9%.  Hey, what’s a 26% downgrade between friends?  Next year is forecast at 2.5% (down 0.1%) and we have 2018 and 2019 to look forward to, at 2.2% growth.
Of course, what really matters is earnings, I guess – but they are sucking too and 90 S&P 500 companies (18%) will report this week and Reuters is projecting a 4.7% decline in earnings from last year but don’t worry, last quarter was down 5% from last year and we’re at record highs 3 months later! Â
As I noted on Wednesday (“Record High Rally Based on BS Stock Buyback Binge“), the radically decreased stock base is papering over all those negative proifts and making everything look fine(ish) so we can all keep fiddling while Rome burns – and don’t even get me started on what a mess Italy still is…
18% ($360Bn) of Italy’s bank loans are in technical default.  France is the next “problem” country with 5% vs 1.5% in the UK, Germany and most normal countries.  While the Government in Rome and the ECB have kicked this can down the road over and over again, do not kid yourself – Italy is the next Greece.
In two weeks, the European Banking Authority will publish their semi-annual report which will highlight the banks’ weak capital positions at the same time as Global Banks are reporting their weak earnings – I wonder if investors will be able to connect the dots? We flipped short on the Banking Sector last week with FAS. Â
