SPY Below $127.50 – Stay Short. Bad News From Europe and DC Likely.


Last week, the market recovered on news that Italy and Greece would appoint new Prime Ministers. In both cases, the old Prime Ministers promised to step down if certain actions were taken. A leadership change won’t change the situation. Greece and Italy have massive structural issues. Without entitlement reform, bailouts and austerity won’t plug the hole. Each year they slip further and further into debt and that will only accelerate as their economies contract. Next year, Italy has €220 billion in debt that is maturing. It has to roll that over at sky-high interest rates. Additionally, they will run a €30 …

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