In a recent report, investment bank Natixis warned that the market might be underestimating the political risks in Italy. Apparently, the 10-year Italian BTP-German Bund spread has been bouncing around the 180-190 basis point range, which seems to suggest that investors aren’t too worried about the situation in Italy. But Natixis isn’t so sure.
“Look guys,” said Natixis analyst Joe Schmoe, “we’re not trying to be alarmist or anything, but have you seen what’s going on over there? These Italians are crazy. They’ve got a new government every week! You can’t trust ’em!”
According to the report, the situation in Italy is so unstable that it’s like trying to predict the outcome of a game of Russian roulette.
“It’s like Italy is playing musical chairs, but instead of chairs, it’s governments,” said Schmoe. “You never know what you’re going to get.”
In response to the report, investors seemed to shrug off the warnings, saying that they were too busy worrying about the latest tweet from President Trump to pay attention to Italy.
“Look, we’ve got bigger fish to fry,” said investor Bob Loblaw. “The world is a crazy place right now. We can’t worry about every little thing.”
Despite the market’s nonchalance, Natixis insists that investors should keep a close eye on Italy.
“They might be a bunch of hotheads, but those Italians know how to make great pasta,” said Schmoe. “And when it comes to politics, they’re not afraid to take risks. You never know what they’re going to do next.”
