European Economy

Via Citi: Following the Brexit result and surprise election of Donald Trump, could the French elect National Front leader Marine Le Pen – who is running on an explicitly anti-EU platform and has promised an In/out EU referendum – in the upcoming Presidential elections?

As the de-globalisation movement gathers momentum, the basic assumption for all analysts should be that the political centre is dead.

Slowish action overnight with the US closed but one measure hit new wides.

A nice wrap from Chris Weston at IG: As mentioned in previous reports a Le Pen win in the 23 April first round voting seems high given her current polling, but then she is likely to lose badly to the new favourite Macron in the run-off on 7 May.

The USD rebounded firmly last night.

While we’re all fixated on the deglobalisation fireworks of Donald Trump and Pauline Hanson, neither is the most pressing threat.

ISIS has laid claim to the German truck attack: Islamic State has claimed responsibility for the Berlin truck attack that killed 12 people, via its news station, as police released a suspect from custody a day after the deadly crash.

Dovish says Westpac: Ahead of the December ECB Governing Council meeting, market participants had been debating if the existing program would be sustained or tapered, or indeed whether we would have to wait until March 2017 to find out what the ECB had in mind.

As Renzi falls so too do Italy’s banks, from the FT: Monte Paschi and advisers JP Morgan and Mediobanca will meet as early as Monday morning to decide whether to pull a plan to go ahead with a E5bn recapitalisation, according to people informed of the plan, Rachel Sanderson in Milan reports.

Early indications in the Italian referendum are poor for Matteo Renzi: Matteo Renzi seems set to lose a referendum on his flagship constitutional reforms, according to exit polls released on Sunday night, a result that could lead to the Italian prime minister’s resignation.

Another pollster failure and a good one, from the FT: Austria looked to have voted against a far-right nationalist as head of state in a presidential election race which became a test of political populism in Europe after the election of Donald Trump as US president.

From Citi: 1. The referendum is not a make-or-break moment for Italian politics. Although important, near-term risks stemming from the referendum outcome may be overstated. A No vote would maintain the (perhaps not ideal, but wellknown) institutional status quo, although it could lead to government resignations.

The Italian referendum is all but lost, from the Express: ITALY looks likely to be the next fed up European Union (EU) nation to deliver an angry message to Brussels as the last poll before its referendum predicts the populist vote will win.

From the FT: The late Thomas Bernhard, a mordant Austrian author, once likened the mentality of his compatriots to punch cake, a rum-soaked national dessert.

Not much news overnight around the Italian referendum but the de-globalisation revolution is running red hot in France.

The Italexit shock looms, via Reuters (chart from Bloomie): Italian Prime Minister Matteo Renzi’s hopes of winning his referendum on constitutional reform are dwindling fast as previously undecided voters are choosing to oppose his plan, according to pollsters.

Matteo Renzi is having none of it, from The Guardian: The Italian prime minister, Matteo Renzi, has doubled down on a promise to resign if he loses an upcoming referendum, saying the “decrepit system” that would be left in the wake of his defeat would have to be taken care of by someone else.

The de-globalisation revolution intensifies today as Italian PM Matteo Renzi confirms he may resign if he loses his referendum, via Reuters: Italian Prime Minister Matteo Renzi suggested on Monday that he may not stay on if a referendum on constitutional reform that he is championing fails.

For anyone with a sense of history, the de-globalisation revolution is moving at astonishing speed.

From Westpac’s Elliot Clarke A key purpose behind the ECB’s alternative easing programs has been to materially improve credit provision and conditions in the Euro Area economy.

From Hugh Hendry via Valuewalk: We believe we are approaching a dramatic fulcrum point in public opinion in Europe which could deliver another bout of outsized positive returns from a unique Eclectica trade.

Ah, yes, to be too big to fail. Late breaking from Reuters: The German government is pursuing discreet talks with U.S. authorities to help Deutsche Bank (DBKGn.DE) secure a swift settlement over the sale of toxic mortgage bonds, according to sources in Berlin.