The stock market continues to vacillate between Brexit and Italian bank uncertainty, and modest relief that the Fed will continue to hold off any interest rate hike until at least late 2016. With Italian Bank stress tests coming and a questionable earnings season about to kick into high gear, we expect uncertainty to be the word over the coming weeks and investors to look for suitable ports amid the storm.

As we gear back up from our break last week, even though the market indices are relatively unchanged, both the global macro and geopolitical landscape have shifted and not for the better. We’ve covered these developments in some detail both in the Monday Morning Kickoff, as well as yesterday’s Tematica Investing. Having said that, we can also say the market continues to slip and slide back and forth based on the news of the day. Earlier this week it was renewed concern over the Brexit fallout and the Italian banks, but yesterday in a move that surprised no one, the Federal Reserve said it would hold off boosting rates until the Brexit impact was “clearer.”

To us that’s Fed speak for the soonest the Fed could move interest rates higher is late 2016, and let’s remember that doesn’t reflect the rather recent development surrounding the Italian banks, which will undergo stress tests in the coming weeks. The results of those stress tests are slated to be published on July 29, right in the middle of June quarter earnings.

Already shares of iShares MSCI Italy Index ETF (EWI) have been battered, falling just over 15 percent in the last month. Pulling the lens back a tad further, EWI shares are down 25 percent year to date. While tempting to go bearish on the Italian banks and in turn EWI shares, the put options are rather thinly traded. We would prefer to not fall victim of any political dealings nor any thin volume trades over the coming weeks — each one on its own can be painful, but together there is a low probability of delivering a favorable trade.

Looking past the Italian bank situation for now, we still have the looming Brexit uncertainty, weakening German economic outlook and the European Central Bank’s Mario Draghi standing to once again attempt to stoke the European economy with his monetary stimulus gun. Mix in the latest economic data for Japan and China that we discussed in this week’s Monday Morning Kickoff and it looks more like the US is once again becoming the better looking house in a bad neighborhood.

Historically when this has happened, we tend to see investors flocking to US equities as well as the US dollar. We continue to be skeptical in general around the upcoming June quarter earnings season, and we’ve seen sharp moves lower in both the British Pound as well as the Euro relative to the dollar. Those currency moves will impede revenue growth in the back half of 2016 for domestic multinational companies specifically and the overall economy in general. Another reason to think the domestic economy will not break out of this 2 percent annual GDP malaise its been trapped in.

Now let’s bring the Italian banks back into the equation

As the talk of bad Italian bank debt grows in the coming weeks, it is going to add to the already pressured Euro and more than likely lead to an even stronger dollar. As we just said, not good for domestic multinational companies, but very likely good for PowerShares DB US Dollar Bullish ETF (UUP) shares. To capitalize on what is likely to be a strengthening dollar in the coming weeks, we are adding the UUP August 2016 $25 calls (UUP160819C00025000) that closed last night at 0.25 to the Tematica Pro Select List. We would buy those UUP calls up to 0.35, and for risk management purposes we would set a protective stop at 0.15.

This growing sense of uncertainty has fueled a rebound in gold prices, which closed last night near $1,370, it’s highest level in two years. As we can see in the chart below, gold prices have climbed nicely in the first five months of 2016 as concern over the slowing global economy and questionable earnings prospects have bubbled up. In the last few weeks, the Brexit uncertainty and now the Italian bank situation have kicked gold prices up even further.

Rising gold prices bode very well for Randgold Resources (GOLD)

For those unfamiliar with Randgold, it is a gold-mining company with assets primarily in West and Central Africa. As gold price have rebounded, so too have earnings expectations for Randgold. Over the last several weeks the consensus EPS expectation for GOLD shares this year has climbed to $2.96 per share from $2.65, while the 2017 expectation now sits at $3.52 per share, up from $3.07. In recent weeks, Bank of America and Goldman Sachs have turned bullish on GOLD shares and we expect them to tout the shares amid uncertainty and the favorable move in gold prices this earnings season.

Given the confluence of uncertainties, we are adding the GOLD August 2016 $130 calls (GOLD160819C00130000) that closed last night at 5.60 to the Tematica Pro Select List. We would not chase the GOLD calls above 6.50, and to manage downside risk we are setting a protective stop loss at 3.75.

Soon after we enter June quarter earnings season with Alcoa’s (AA) quarterly result this coming Monday night, the pick up in reports will help bring into focus how rough overall quarterly earnings will be. As that focus becomes clear, we expect to be adding to the Tematica Pro Select List. In the mean time, we will continue to keep our Buy rating on the insurance positions — ProShares Short Russell 2000 (RWM), ProShares Short Dow30 ETF (DOG) and ProShares Short S&P500 ETF (SH). As signs that uncertainty is waning, we will revisit these positions, but with a highly unusual presidential campaign this year, odds are these positions will be with us through the summer.