Beppe Grillo's Five Star Movement On Verge of Being Largest Political Party in Italy; Italy Stock Market Futures Plunge 3.5%

As the vote totals wind down, Beppe Grillo is the symbolic winner in the election. His MoVimento 5 Stelle (MS5 - Five Star Movement) is on the verge of becoming the largest party in Italy by popular vote.

As of 4:00 PM...

The center-left coalition of four political parties has 29.7% of the vote, but Bersani's party, Partito Democratico (Pd), has 25.5% of the vote.

Beppe Grillo has no coalition. His MoVimento 5 Stelle (M5S) party is in a dead tie with 25.5% of the vote.

The center-right coalition of nine political parties received 29.0% of the vote, but Berlusconi's party, Il Popolo della libertà (Pdl), received 21.4% of the vote.

On an Actual Party (Not Coalition Basis)

• Pier Luigi Bersani - Partito Democratico (Pd) - 25.5%
• Beppe Grillo - MoVimento 5 Stelle (M5S) 25.5%
• Silvio Berlusconi - Il Popolo della libertà (Pdl) - 21.4%

Those totals are as of 4:00 Central. I have been watching the totals for a half hour. M5S has been inching up steadily. A half hour ago M5S was down by .5%. Momentum suggests M5S will overtake Partito Democratico (Pd).

Italy MIB Stock Market Futures Plunge

From the Guardian Election Blog



Update As of 4:20 PM

Grillo move into a vote lead for the first time I have been watching. Percentages still locked at 25.5% each.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

Italy Senate "Ungovernable"; No Coalition Possible

La Republica confirms what we long thought highly likely: The Italian Senate is Ungovernable.

A Senate majority takes 158 seats and no party has more than 123 at the moment. The current results look like this:

Senate Seat Projections

• Bersani 104
• Berlusconi 123
• Grillo 57
• Monti 17

There are 315 total seats and the total above is only 301. Although 14 seats remain, not even a Monti-Bersani coalition in addition to those 14 seats would bring Bersani's total to 158.

Curiously, it appears Bersani received a plurality of the Senate popular vote with 32% compared to Berlusconi's 30.2%. Grillo weighs in with 23.9%, and Monti at 9.1%.

If 123-104 in favor of  Berlusconi over Bersani sounds strange, it is not unlike a presidential election in the US where one candidate wins the popular vote and another candidate wins the election based on  state-by-state electoral votes.

Chamber Comparison to US

In Italy, both houses of parliament share duties equally. In the US, financial bills originate in the House, and only the Senate has a say in approval of judges and cabinet-level positions.

"AC" writes ..."Most likely Italy will go back to vote within a couple of months, probably after changing the electoral law."

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

Real Time Italian Election Data and Projections; TV Projections Show Berlusconi Coalition Leading in Italy Senate

Reader Lorenzo sent a link where one can watch Italian Election Results (actual vote totals, not exit poll predictions).

Click on "Camera" to see Chamber results (lower house of parliament).
Click on "Senato" to see Senate results (upper house of parliament).

As of this time, Results look like this

Chamber

• Bersani 34%
• Grillo 27%
• Berlusconi 24%
• Monti 9%

Senate

• Bersani 33%
• Berlusconi 28%
• Grillo 24%
• Monti 9%

Recall that senate races are regional not national. What matters is how the key regions turn out. Berlusconi can easily win the Senate with small wins in key areas while losing by big margins elsewhere. That appears to be what is happening.

Berlusconi Coalition Leading in Italy Senate

Yahoo! Finance reports TV Projections Show Berlusconi Coalition Leading in Italy Senate.

The centre-right coalition led by former prime minister Silvio Berlusconi was leading in the race for the Italian Senate, according to updated projections from television stations after vote counting began on Monday.

Polls from La 7, SkyTG24 and state television RAI put the coalition between Berlusconi's People of Freedom party and the pro-devolution Northern League ahead in the overall national vote count.

The projections from La 7 also put the coalition ahead in the key regions of Lombardy, Sicily and Campania.

Hung Parliament on the Way

The key vote is in the Senate where in spite of losing the popular vote, it appears Berlusconi will win. Recall there is an 8% threshold requirement in the Senate for a candidate to get any seats. Unless Monti hangs on to that 9%, he will be out, making a senate coalition impossible even if Bersani does mange to pull this off.

A hung parliament is likely on the way.

This was a poor showing for Bersani's Center-Left party and a fantastic second place finish for Grillo in the Chamber.

No mainstream media outlets projected the combination of a hung parliament combined with a second-place finish for Grillo, but reader "AC" did just that on my blog.

Comments From "AC"

"AC" just pinged at 11:00AM Central with these thoughts ...

As expected: Initial exit polls forecasts for center-left win were not correct. The first reliable adjusted data based reversed that forecast to a hung parliament projection, with Bersani and Berlusconi close in the Senate, and Grillo at an astonishing 24%.

Grillo's overall totals put him in second place. If this percentage for the Five Start Movement is confirmed, media will label it "unbelievable".

Monti is given below 10% a very poor result. Ingroia (far left) below 4% (also a very poor result).

Regards

AC

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

"Great Rebalancing" Book Review: Two Thumbs Up; Investment Ideas for Unconventional Times

With much pleasure, I highly recommend Michael Pettis' newest book "The Great Rebalancing".

Pettis' book covers global trade issues with a focus on current events in Asia, Europe, the United States, and the commodity producing nations.

Read the book and you will see that much of the "common wisdom" espoused by others on global trade issues is not "wisdom" at all.

For example, in a chapter called "The Exorbitant Burden", Pettis debunks the nearly universal misconception that the United States receives a great benefit from having the world's reserve currency. That chapter alone, is well worth the price of many books.

Want to understand why the Eurozone is doomed as it now exists? Read Pettis' chapter "The Case For Europe".

Other reviews of "The Great Rebalancing" (all favorable) primarily focused on Pettis' predictions. Although I agree with most of his predictions, what's really important are the fundamental driving issues, not the predictions per se.

As far as solutions go, I prefer a return to a gold standard (a topic Pettis discusses while favoring something else). However, his book is primarily devoted to trade fundamentals, not global solutions, so disagreements (or agreements) on solutions are easily overlooked.

Michael Pettis has taught me most of what I know about global trade. I also happen to believe he is the world's foremost expert on China in relation to trade and global macro events.

I give two thumbs up to "The Great Rebalancing".

Investment Ideas for Unconventional Times

Michael Pettis will be a speaker at an economic conference I am hosting on April 5th in Sonoma, California. For details, please see Wine Country Conference.

World-class speakers at the conference include John Hussman, Michael Pettis, Jim Chanos, John Mauldin, Mike "Mish" Shedlock, and Chris Martenson.

Yahoo! Finance Joins the Conference

I'm pleased to announce that Yahoo! Finance is joining the conference as our media partner. The wonderful Lauren Lyster, of Yahoo! Finance's Daily Ticker, will be moderating several of the panels for the day.

This is an experience not to be missed. The access you will have to these speakers and their insights doesn't happen easily. This is the first time many of these speakers have ever appeared together.

The event is made possible in part by a generous $100,000 matching grant by the John P. Hussman Foundation for the benefit of ALS Research.

For my personal experiences with ALS, please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs.

Hope to see you at the conference.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

EU Doesn't Like Its Forecasts, So It Removes Them From Its Site

With thanks to Yogi Berra, making predictions is hard, especially about the future. And with constantly revised forecasts for the EU, the European Commission decides the safe safe thing to do is Eliminate Forecasts for 2015.

Via Google Translate from El Economista ...

This morning you could see the data for 2012, 2103, 2014 and 2015, but now can only see the figures from 2011 to 2014 and there is no trace of the catastrophic 2015 numbers (see the screenshots attached below).

Although there is no official communication in one way or another, hypothetically could be a real blunder produced after being released by mistake, or any type of computer failure, a former forecasts for 2012 under the 2015 column.'s say, that would have mistakenly announced as 2015 forecast estimates released earlier this year to last year.

Forecasts of Discord

Those European Commission forecasts envisage a general improvement in economic scenario for 2014. However, estimates for 2015, this morning hidden behind an interactive graphic , pointed for a few hours, before being erased-a brutal relapse. In fact, Germany would grow 2% in 2014 to only 0.8% in 2015, would UK from 1.9% to 0.3%, France 1.2% and Spain 0.2% from 0.8% to -1.4%.

Sooner or Later

El Economista has some interesting snapshots of the removed estimates. To be completely fair, the original posting may have been a simple mistake.

Regardless, I suggest the EU forecast for 2014 is too optimistic.

Will the EU 2014 estimates be revised lower as well? If not soon, then expect revisions later, with France leading the way lower.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Quadrocopter Pole Acrobatics

Here is an interesting video that came my way via reader "Nino". It's a look at some rather amazing technology that is developing right now, and I suspect very few are aware of it.



Link if video does not play: Quadrocopter Pole Acrobatics

The video shows a quadrocopter capable of dynamically balancing an inverted pendulum (a stick weighted at the bottom), but also flipping the stick to another quadrocopter that determines the optimal position to catch it without losing balance.

Technology marches on whether anyone is aware or not. People do become aware as markets for technology develop.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Italians Head to Voting Booths, Election Ends 9:00AM EST Monday; Surge for Grillo and "The Apathy Factor" Will Doom Bersani Coalition

Voting booths are open in Italy though 3:00PM Monday (9:00AM EST). Exit polls will trickle in soon after but early exit polls could be misleading. If the result is close we may not know for over a day.

The Wall Street Journal offers this Italian Election Guide.

Italian voters can cast ballots Sunday and until 0900 ET  Monday, after which exit polls will provide quick but approximate insight into the probable result of the election.

The center-left coalition led by Democratic Left leader Pier Luigi Bersani was five percentage points ahead of Silvio Berlusconi’s center-right coalition according to the average of polls before a blackout on such surveys kicked in two weeks ago, giving it clear front-runner status.

Exit polls in 2006 and 2008 underestimated votes cast for Mr. Berlusconi, but unless Italy’s 51 million eligible voters shifted dramatically in recent days, Mr. Bersani should  – even with fewer than a third of the ballots cast – win a plurality, meaning his coalition will be awarded a majority of seats in the 630-seat lower legislative chamber.

Shift Has Taken Place

The Journal says "unless Italy’s 51 million eligible voters shifted dramatically in recent days, Mr. Bersani should  win a plurality."

I suggest such a shift has taken place. The open question regards turnout and apathy, not a shift, per se.

Loser's Penalty

In the Chamber (the lower House of parliament) the party with the largest plurality in the national vote gets a majority (54%) of the seats. In the Senate (the upper chamber of parliament) each of  Italy's 17 regions operate independently. The winner of each region gets a majority (55%) of the region's seats.

There are 315 seats in the Senate. Lombardy, Italy's largest region gets 49 seats and the winner will take 27 seats (55%). The other parties will split the remaining 22. Second place may only get 10.

The Journal sums it up this way.

"If Mr. Bersani wins all 17 regions, his coalition will have 178 seats and a commanding upper-house majority. However, if he loses Lombardy, the most populuous region, he will have only 162 seats. If he wins Lombardy but loses Veneto – a near certainty given polling trends – and also loses Sicily – to Mr. Grillo rather than Mr. Berlusconi – the center-left will have 159 Senate seats, a razor-thin majority."

Not So Fast

I am not convinced Bersani wins the Chamber, let alone the Senate. Some 22-25% of Italians were undecided in the election polls before blackout two weeks ago. Since then, I suggest (based on crowd turnout and social media comments) that there has been a surge for Beppe Grillio and Silvio Berlusconi.

The last election polls before the blackout look like this:

• Bersani center-left 34.5%
• Berlusconi center-right 29%
• Beppe Grillo’s Five-Star Movement 19%
• Monti Civic Choice 12%.

Given the number of undecided voters, Bersani can easily drop 3% or more (and I suspect more). If Berlusconi and/or Grillo gets a huge percent of the undecided votes, Bersani can easily drop  to second or even third place.

Senate Coalition Unlikely

Monti is a lost cause and I doubt he gets more than 10%, making a Senate coalition unlikely if not impossible.

I commented on the possibility of a win by Berlusconi or Grillo in Germany Warns Against "Silvio the Savior" (And That May Backfire); Fake Horse Race Odds Get Around Blackouts.

Reader "AC" who is from Italy but now lives in France writes ...

Hi Mish

After a hung parliament, the next most likely outcome may very well be the Five Star Movement (M5S) getting an absolute majority. Rage against the political class is extremely high in Italy, everything that looks "new" is getting votes. Grillo was able to catch the sentiment shift with extremely populist proposals even though his economic program is quite incoherent if not blatantly preposterous.

Grillo support comes from the youngest part of the population.

Undecided voters may not vote at all (in Italy you do not have to register to have right to vote, you are registered by default) or they will probably shift massively to Grillo. The outcome will depend on whether the undecideds stay home.

How Grillo's parliament members will react as newly elected officials is a real unknown. Grillo himself will not be in the Parliament, and his party will be quite young. None of them have much political experience, even not in smaller city councils.

What they will do? How they will react? Nobody knows. That's the most "fascinating" thing of M5S, completely new people of a completely new party managed in a completely new way. Grillo and his candidates never did a single minute of TV interview during the whole campaign. They decided to ignore completely TV (but TV has not completely ignored them). This also is completely new, probably new in the modern world.

I do not think Berlusconi will be able to win this time. He has definitely lost a part of his voters, those that expected from him to keep his past promises.

The hung parliament is the most likely outcome, as I said months ago, and I do not even think that Bersani and Monti together will have majority.

Last but not least: Monti has declared yesterday that Merkel was not comfortable with Bersani as Prime Minister, but Merkel officially denied the minute after. Really a strange declaration from a man like Monti that made of international credibility its main "value proposition".

Regards

AC

The Apathy Factor

I expect a surge of voter enthusiasm for Grillo that will take votes away from Bersani and Berlusconi. Somewhat paradoxically, I also expect a surge in apathy where voters stay home.

The apathy I refer to is not on the Grillo or Berlusconi side, but apathy for Bersani and Monti. Certainly the campaign by Monti is anemic. Thus, unless there is a late surge of energy for Bersani (and I highly doubt there is), Bersani is going to come up short.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com