Ad Hoc Commentary – Monti bottom, New York Whale beware

The bond vigilantes had been relentlessly attacking Italy in the past few weeks. As we noted before, Italy is not Portugal and thus they need to act. Portugal can go from 3% to 10% and back to 3% because it is strong. Italy, once it pass the point of no return, all is lost.

Italy can either redenominate, pursue debt mutualisation, sell off state assets, or do an Italian PSI job. An Italian job looks likely, but more likelier to be preceded by the selling of the family gold. We had the Brown bottom of 1999 when the British sold off the family gold.

In the next two months, we risk a full Monti bottom as the Italians sell off the family gold. Gold bugs beware, especially if you are a whale.

Good luck in the markets.