Editor's Note: Below is a brief snippet from Hedgeye research. If you're interested in learning more about our investing research products click here.

Mamma Mia! (Italy Is Still Italy)  - Italian bank cartoon

Italian equities (FTSE MIB) continue to make a series of lower-highs alongside economic data in the beleaguered nation.

Specifically, the MAY Industrial Orders print (-150 basis points to 4.9% year-over-year) was generally confirming of our #Quad3 forecast for the country in 2Q18E.

While that figure was somewhat offset by the +100bps acceleration to 5.0% YoY in backward-looking Industrial Sales, we think the forward-looking nature of the former indicator is more indicative of the broader trend in pan-Eurozone survey data.

All told, we reiterate our bearish bias on Italian equities and Eurozone equities at large – namely the banks, which have crashed -22.4% from their 1/29 YTD high.

*  *  *  *  *

ACTIVE MACRO THEMES

Below is one of our macro team's current macro themes:

  • Global #Divergences (introduced 1/4/18): In contrast to relying on financial media soundbites, idea dinners or surveys, our views on the global economy are instructed by sophisticated predictive tracking algorithms – which we run for every investable economy in the world. While investor consensus remains committed to the “globally synchronized recovery” narrative heading into 2018, our models are signaling quite the opposite and that outcome should perpetuate a number of meaningful pivots in asset allocation terms throughout the investment management landscape.

Mamma Mia! (Italy Is Still Italy)  - the macro show