First there was Brexit, then Donald Trump, what’s next?
Will the next shock come from Italy?
Italians will vote Sunday in a crucial referendum that could - in one nightmare scenario - force the prime minister's resignation, spark a banking crisis and ultimately push Italy out of the eurozone.
Such a scenario would require a line of political dominoes to fall in just the right way.
But investors are increasingly concerned. The yield on 10-year Italian government bonds has spiked in recent weeks above 2%. The yield on German debt is just 0.3%.
The surge in borrowing costs, combined with punishment doled out to Italian banking stocks, suggest that investors now view the country as the eurozone's biggest risk, and the latest in a long line of threats to the region's stability.
Italians are being asked to vote on a sweeping series of constitutional reforms championed by Prime Minister Matteo Renzi. He says the changes are vital to end political deadlock and revive Italy's economy, and has pledged to resign if voters reject them.
The immediate risk comes from the country's troubled banks, which are stuck with about €360 billion ($383 billion) in non-performing loans, roughly a third of the eurozone total. The sector is already in distress, but the prospect of a political crisis, market turmoil and recession would make matters worse.
Italian politics would be plunged into disarray by a "no" vote on the constitutional reforms. The chief beneficiaries would likely be populist parties that have capitalized on anger over an economy that's been stuck in neutral for the past decade.
Here's where the politics gets really tricky to predict: If Renzi follows through on his pledge to resign, it is possible - but not a foregone conclusion - that early elections could be triggered.
Italy has several eurosceptic opposition parties, including the Five-Star Movement (on the left) and the Northern League (on the right). It does not, however, have a viable centrist alternative to the current government.
