As if there wasn't enough non-stop chaos out of the UK as the fate of Brexit and Theresa May is being decided on Twitter, between flashing red Bloomberg headlines, and media speculation and rumors, moments ago Italy decided to remind everyone just how unstable its own political situation is, when Claudio Borghi, chief economic advisor to Italy's de facto leader Salvini, said that the EU has used "made-up numbers" in judging Italy's budget (the EU has effectively accused Italy of doing the same), and then asked if the EU would have the "courage" to sanction Italy.

As a reminder, the last time a populist European played chicken with the EU, the ECB promptly caused Greek banks to be shuttered indefinitely and Varoufakis' political career was promptly over. Maybe this time it will be different.

But what really spooked markets, and caught traders' attention, was the following headline from Reuters:

• BORGHI, CHIEF ECONOMIC ADVISOR TO SALVINI: IF THE LEAGUE GETS A MAJORITY IN THE NEXT ELECTIONS ITALY WILL EXIT THE EUROZONE

In kneejerk reaction, yields on 10Y BTPs spiked to session highs, hitting 3.54%...

... and sending "lo spread" between German and Italian bonds to 315bps, creeping ever closer to the 400bps red line beyond which the Italian bank runs will likely begin.

Amid this chaos out of Italy, Europe's Stoxx 600 Index has fallen 1%, hitting its lowest intraday level since Oct. 31, dragged not only by the sell-off in U.K. stocks due to Brexit risks, but fresh concerns about "Italeave" as Europe suddenly finds itself defending its integrity on two fronts.