In our preview of the Italian elections on Friday we said that, barring some unexpected shock, the most likely outcome is a hung parliament, where no one party or coalition has a majority to form a government. If this happens, Italian President Sergio Mattarella, will call on parties to form a broader coalition of pre-election adversaries. This could include the ruling centre-left Democratic Party and Silvio Berlusconi’s Forza Italia.
Moments ago an exit poll by Italy’s RAI shows the populist 5-Star Movement leading the Italian election but not with a strong enough lead to govern alone. Meanwhile, the exit poll by the Piepoli polling agency had the 5-Star Movement with between 29.5 percent and 32.5 percent of Sunday’s vote.
The Democratic Party was the next largest party, with between 20 percent and 23 percent of the vote, according to the poll.
Former Premier Silvio Berlusconi’s Forza Italia and the anti-immigrant League each were polling at between 12.5 percent and 15.5 percent. They were running as part of a three party center-right coalition, which is likely set to come in first place.
In other words, as expected, it does appear that a hung parliament is the most likely outcome, with the Berlusconi Coalition of Forza Italia, the Northern League, BI and other smaller parties in the lead with roughly 35% of the vote.
- Berlusconi Bloc gets 33.0-36.0% in Italy Lower House and 33.5%-36.50% in the Senate
- Five Star gets 29.5-32.5% in Italy Lower House and 29.0%-32.0% in the Senate
- Center-Left gets 25-28% in the Senate
As a reminder, a hung parliament would bringing with it weeks if not months of political negotiations and more of the same.
And so, with the election outcome as most had expected, the kneejerk move in the EURUSD has been predictably muted.
Still, as Bloomberg and Pantheon economics warn, investors should remain cautious at least until the final Italian results are confirmed, and quite probably for after as well, as exit polls have proved to be very unreliable in the country’s previous elections and a tight verdict may leave several different outcomes possible. Here is Pantheon on the “sensitive topic” of polling error in Italy:
There are exit polls, and then there are Italian exit polls. We advise everyone to take these initial results with a big heap of salt. These polls have tended to be unreliable in the past.
Oh well, if the outcome is the opposite of what everyone had predicted, they can just blame Russian trolls for meddling in the election (if not affecting the final outcome).
via Zero Hedge http://ift.tt/2thDsTd Tyler Durden