Connecting Dots: Italian Elections - Stocks and Bond Markets - Bloat
They're there, I think: dots connecting Italian elections and stock and bond markets. Our last two posts hinted at this. Now, mulling over over what they said, the connections emerge. It's got to do with "bloat."
Stock and bond markets, both in arguably the final stages of powerful bull markets, have fattened up enough to cause some to hear the rustling of a bear. Our latest price declines in stocks and rising yields in bonds hinted at this. For bonds, the case appears clearer: the bull market that began around 1980 is over; the bear has begun. Look for bond prices to fall now, as yields rise - maybe not right away, but over time. For stocks, it's not as clear exactly where the bear might be. The recent declines may simply be a long-needed correction in a ridiculously long period of steady rises. Both markets, though, do look bloated, don't you think?
Regarding the Italian elections, the bloat has to do with all those immigrants that have stuffed themselves into the Italian boot in recent years. The number you read hovers around 600,000, about 1% of the total population. Now, 1% doesn't sound like all that much. But you must consider that these folks are not spread evenly throughout the country. And their numbers have accelerated for the reasons the video to which we recently linked, makes clear. Where they're concentrated, there's a kind of bloat.
Add this to the low birth rate of Italians - one that will cause the overall numbers of "native" Italians to begin to decline. Add to this that most of these immigrants come from a culture that, depending on the individuals, contains an underlying, sometimes explicit, threat to the culture and religion of the native Italian people. Add to this the fact that the acceleration has not slowed and that there appears to be no plan to stem the tide. Finally, add to this the tenuous state of the Italian economy, never particularly robust in recent years. Immigrants put a strain on the budget since the state typically offers various aid. (In the U.S., that includes a fairly robust selection of social welfare benefits. I don't know what the deal is in Italy.) Who pays for all this?
Of course, all that serves as background to the recent incident where one of these immigrants murdered a local girl and chopped up her body, leaving it in bags on the side of the road. That allegedly spurred an attack on random immigrants in the town. The report of the incident by the U.S. media was couched in terms that screamed "racist" and "anti-immigrant." But I don't think that captures what's behind such violence. It's a more complex picture. And complexity isn't something the media here deals with particularly well.
I think we might sense a pressed, stuffed feeling on the part of Italians at this point. Being the - at this point unwilling - recipient of immigrants who may be difficult if not impossible to integrate into the culture and society has to appear as both a blot and a form of bloat, don't you think. In any case, the Italian boot certainly does seem to be stretched
So, given all this, it seems the powers that be continue to pursue policies the distort our markets and our social fabric. In the case of financial markets, easy money has been stuffed into financial assets causing bloated values that far outweigh the underlying fundamentals. In the case of our society, we're witnessing in some places (like Italy, and, dare we say it?) the stuffing of people in places where people are forced to not only accept, but support strangers some of whose intentions are unknown and questionable. Thus the social fabric becomes stretched like the waistband of an overweight guy gobbling steak, french fries, and a pint of Haagan Das. Talk about bloated!
At least that's how it strikes me when I think about it.
Meanwhile, those of us in the Northeast are being stuffed with snow, thanks to yet another Nor'easter, third in a series that's now extended into the first full day of spring. If you're starting to feel bloated with Nor'easters baring snow, this one's likely the culprit.
Stock and bond markets, both in arguably the final stages of powerful bull markets, have fattened up enough to cause some to hear the rustling of a bear. Our latest price declines in stocks and rising yields in bonds hinted at this. For bonds, the case appears clearer: the bull market that began around 1980 is over; the bear has begun. Look for bond prices to fall now, as yields rise - maybe not right away, but over time. For stocks, it's not as clear exactly where the bear might be. The recent declines may simply be a long-needed correction in a ridiculously long period of steady rises. Both markets, though, do look bloated, don't you think?
Regarding the Italian elections, the bloat has to do with all those immigrants that have stuffed themselves into the Italian boot in recent years. The number you read hovers around 600,000, about 1% of the total population. Now, 1% doesn't sound like all that much. But you must consider that these folks are not spread evenly throughout the country. And their numbers have accelerated for the reasons the video to which we recently linked, makes clear. Where they're concentrated, there's a kind of bloat.
Add this to the low birth rate of Italians - one that will cause the overall numbers of "native" Italians to begin to decline. Add to this that most of these immigrants come from a culture that, depending on the individuals, contains an underlying, sometimes explicit, threat to the culture and religion of the native Italian people. Add to this the fact that the acceleration has not slowed and that there appears to be no plan to stem the tide. Finally, add to this the tenuous state of the Italian economy, never particularly robust in recent years. Immigrants put a strain on the budget since the state typically offers various aid. (In the U.S., that includes a fairly robust selection of social welfare benefits. I don't know what the deal is in Italy.) Who pays for all this?
Of course, all that serves as background to the recent incident where one of these immigrants murdered a local girl and chopped up her body, leaving it in bags on the side of the road. That allegedly spurred an attack on random immigrants in the town. The report of the incident by the U.S. media was couched in terms that screamed "racist" and "anti-immigrant." But I don't think that captures what's behind such violence. It's a more complex picture. And complexity isn't something the media here deals with particularly well.
I think we might sense a pressed, stuffed feeling on the part of Italians at this point. Being the - at this point unwilling - recipient of immigrants who may be difficult if not impossible to integrate into the culture and society has to appear as both a blot and a form of bloat, don't you think. In any case, the Italian boot certainly does seem to be stretched
So, given all this, it seems the powers that be continue to pursue policies the distort our markets and our social fabric. In the case of financial markets, easy money has been stuffed into financial assets causing bloated values that far outweigh the underlying fundamentals. In the case of our society, we're witnessing in some places (like Italy, and, dare we say it?) the stuffing of people in places where people are forced to not only accept, but support strangers some of whose intentions are unknown and questionable. Thus the social fabric becomes stretched like the waistband of an overweight guy gobbling steak, french fries, and a pint of Haagan Das. Talk about bloated!
At least that's how it strikes me when I think about it.
Meanwhile, those of us in the Northeast are being stuffed with snow, thanks to yet another Nor'easter, third in a series that's now extended into the first full day of spring. If you're starting to feel bloated with Nor'easters baring snow, this one's likely the culprit.
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