It’s no longer Italy; it’s Spain as well. France is getting close. There’s two ways to go about this massive problem. Print Euros, or do a fiscal union.
The other is a global double-dip.
On the bright side, recent China data is better than expected and is supportive for a soft-landing. To have a chance at a soft-landing, it’s imperative that Europe doesn’t blow up.
If global leaders are able to skirt a global recession (ie save Europe and no hard landing in China), then we would break through the highs of the cyclical bull. However the next problem will be stagflation and a possible end to the Treasury bull market.