Will Tweets Trump Renzi resignation?
- The Italians rejected constitutional reform by a sizeable margin with a large turnout. Prime Minister Renzi intends to resign. We think a general election is unlikely, and look for a technocrat government to be formed. Markets do not descend into turmoil with every change in the Italian government - that would be exhausting.
- It would be unwise to take a ruler and draw a straight line from the UK referendum through Trump to a populist wave in Europe. The scale of the Italian government defeat indicates that this was about more than populism, and the established opposition parties had united in opposing the Italian measures.
- Trump temporarily abandoned Twitter to take a telephone call from Taiwan's president – whether conscious or ignorant of the consequences is unclear. China protested. Trump retaliated with tweets drawing on the protectionist rhetoric of his election campaign.
- Trump also tweeted (six times, which rather goes against the spirit of Twitter brevity) about taxes and tariffs on US companies operating outside the US. The protectionist Twitter barrage may turn out to be more important than another Italian government resignation in the longer run.