Weekly Asset Heatmap

Weekly Asset Heatmap: Italy and Hogs

Italian elections cause outsized stir among online audiences, both in Italy and across Europe, while online concern over porcine diseases bring potential implications for the futures market.

prosciutto

Italy: Populist motifs drive Italy signals to yearly high in the days before the Sicilian vote

Days before the November 5 vote in Sicily, our Italian volatility signals rose to their highest levels in more than a year. The drivers of those signals included “Austerity” and the “Italian Welfare State” -- an indication that issues related to the economy and social safety net were salient to voters and observers. Notably, the subject “Anti-austerity movement in Spain” was also a major driver, which suggests that Five-Star's populist, eurosceptic message may have gained traction among voters.
italy

Historically, a rise in the Italian country signal spells trouble for the euro

euro

In recent years, there was a negative correlation between 10-day returns on the EURUSD and spikes in our Italian country signal. The message: the expectation of political turmoil in Italy is bad news for the single currency.

Interest in the upcoming Italian general election is rising -- especially among the Germans

germans-italians

Our signal that gauges online interest in the 2018 Italian general election has been steadily rising since early September. Surprisingly, German-language sources related to the “next Italian general election” have consistently been the major drivers of the signal. This trend reflects Berlin's concern about the implications of the election for EU integration and the currency union. And that this signal is candidate-agnostic suggests perceived risk for the euro from Italy is not just about who is going to contest the election.


Swine: Digital interest in historically disruptive pig disease is going hog wild

The signal has risen fivefold since August, driven upward by cresting interest in porcine reproductive and respiratory syndrome virus (PRRSV), which triggers reproductive failure and respiratory illness in pigs. PRRSV outbreaks are costly and difficult to contain. Attention to digital sources related to PRRSV has been rising in multiple languages, suggesting the virus is generating global attention. Separately, web traffic on market observer National Hog Farmer recently hit its highest level in three years, when a porcine disease outbreak hampered global supply, pushing lean hog futures upward.
swine

--


Current Guidance

As our signals indicated he would, Trump nominated Jerome Powell to chair the Fed. Our "contestation" signal for Powell surged two days before the announcement, mirroring a pattern we observed with past Trump nominations such as Secretary of State Rex Tillerson.

Last week, we wrote that the underlying pattern of digital interest around bitcoin had changed. The signal we use to track overall bitcoin interest has plateaued in recent days. Often in the past, a fall in this signal has preceded a fall in bitcoin prices.

Get free Predata Research and Insights in your email weekly.