05Dec2016 Pre-Market Commentary: US Stock Future Indexes To Open Higher, DOW To Hit New Record, Crude Prices At 16 Month High, US Dollar Softens, Investors Ignore Italy’s Political Shakeup

Here is the current market situation from CNN Money

European markets are broadly higher today with shares in Germany leading the region. The DAX is up 1.21% while France’s CAC 40 is up 0.75% and London’s FTSE 100 is up 0.08%.

Euro jumps as investors bet on Italian political limbo, not turmoil

LONDON (Reuters) – European stocks and the euro rose on Monday, battling back as investors bet that Prime Minister Matteo Renzi’s resignation after voters rejected his constitutional reforms would not trigger a snap election in Italy.

Oil tops $55 for first time in 16 months as OPEC deal fuels buying

LONDON (Reuters) – Brent crude oil prices rose above $55 a barrel on Monday, trading at a fresh 16-month high, on rising prospects of a tightening market after OPEC members agreed on a landmark deal to cut production last week.

Aixtron could revive takeover despite U.S. block: analysts

BEIJING/FRANKFURT (Reuters) – The sale of Aixtron to Chinese investors could go ahead under new terms if the German semiconductor equipment maker sells its Silicon Valley division to get around U.S. objections, analysts said Monday.

Trump advisors aim to privatize oil-rich Indian reservations

WASHINGTON (Reuters) – Native American reservations cover just 2 percent of the United States, but they may contain about a fifth of the nation’s oil and gas, along with vast coal reserves.

Rescue of Italian bank Monte Paschi in danger after Renzi’s defeat

MILAN (Reuters) – A 5 billion euro ($5.33 billion) rescue plan for Italian bank Monte dei Paschi di Siena hung by a thread on Monday after Prime Minister Matteo Renzi’s defeat in a referendum tipped the country into political turmoil.

Coca-Cola opens new $100 million plant in Cambodia

PHNOM PENH (Reuters) – Coca-Cola Co opened a new $100 million facility in Cambodian capital Phnom Penh on Monday to expand its production capacity in the Southeast Asian nation.

Chesapeake to sell Haynesville asset for $450 million

(Reuters) – U.S. natural gas producer Chesapeake Energy Corp said it would sell a part of its acreage in the Haynesville Shale area for $450 million to a private company.

Italian instability is not start of euro zone crisis: Eurogroup head

BRUSSELS (Reuters) – Political instability in Italy makes life more difficult for Italy and the whole euro zone, but is not the start of new euro zone crisis, the chairman of euro zone finance ministers Jeroen Dijsselbloem said on Monday.

RBS to pay investors $1 billion in bid to avoid fundraising trial

LONDON (Reuters) – Royal Bank of Scotland has agreed to pay 800 million pounds ($1 billion) over allegations it misled shareholders during a fundraising at the height of the financial crisis.

“Investors Are Dangerously Unprepared” – Axel Weber, Former Bundesbank Head Warns Of Coming Rate Hikes By ECB

Submitted by Michael Shedlock via MishTalk.com,

Axel Weber, former head of Germany’s central bank says the ECB is going to halt QE soon and hike rates by September.

Weber warns Markets Unprepared for Central Bank Shifts.

Investors are dangerously unprepared for a sharp rise in eurozone bond yields when US interest rates march higher and European quantitative easing ends, Axel Weber, chairman of UBS and the former head of the Bundesbank, has warned.

The jump in US rates could spark big jolts in the markets as the long spell of aggressive monetary easing across the globe has left many investors off-guard over a swing in the global rate cycle, he added.

“I don’t think we will have increasing divergence among the major central banks in the world for much longer,” Mr Weber said, predicting that Europe would follow the US with a rate rise by next September at the latest. “I think the ECB is closer to slowing its current quantitative easing programme than many in the market expect.”

Until now, the eurozone has not seen a similar swing in rates as short-term rates have stayed low — or even negative in some markets — while the ECB has been engaged in aggressive QE, including extensive bond purchases.

But Mr Weber predicted that …

What Happens Next In Italy: Here Is Goldman’s Take

While the market overcame its initial scare following yesterday’s counter-establishment Italian referendum vote, and European stocks proceeded to not only make up all losses, but soar in the overnight session by the most since Trump’s presidential victory, what happens next in Italy is largely unknown. What follows are Goldman’s snap thoughts on the Italian next steps.

First, a quick recap of what has happened in yesterday’s referendum in which many more Italians than expected turned up to reject the proposed reforms, leading PM Renzi to announce his resignation later today. The odds of a general election have risen from one-in-five to one-in four, according to Goldman. Despite yesterday’s outcome, Renzi remains the most popular politician on the centre-left. More importantly, the outcome of the vote lowers the chances of a market-driven solution for the ailing Italian banks, and in turn increases the likelihood of a State-led restructuring Goldman notes.

Here are the details:

In a national confirmative referendum held yesterday, Italian voters rejected a Constitutional reform bill sponsored by the coalition government of Mr Renzi and passed by Parliament in April. The referendum was called because the bill had failed to receive the quorum of 2/3 of MPs in its final reading.

The outcome of the referendum was in line with opinion polls in the run-up to the vote. These had been suggesting that the ‘Vote No’ side would win by some distance. Two elements are new, however (all numbers based on quasi-final vote count):

At 59.1%, the percentage of voters rejecting the reform bill was 5 percentage points higher than projected by opinion polls going into the referendum (55%). This outcome represents a much starker victory for the ‘Vote No’ camp than generally envisaged. Goldman assumed that the odds favoured a ‘Vote No’ win only marginally (55%), and that the gap between the two sides would be …

Potential “Systemic Crisis In Eurozone” After Italy Votes No, Renzi Resigns

Italy Votes No, Renzi Resigns – Potential “Systemic Crisis In Eurozone”

Italy’s Prime Minister Matteo Renzi has said he will officially resign Monday, after voters apparently rejected his proposals for constitutional reform. What should investors keep an eye out for after his defeat?

Although the referendum on Sunday was officially on Renzi’s plan for legislative overhaul, it was widely seen in Italy as a vote of confidence in the prime minister and his government. In voting “no” — projections suggest 59% of those in the ballot made that choice — the Italians have set the stage for an early election and perhaps given local populist parties the chance to deliver a Brexit- or Trump-style shake-up.

But if the political uncertainty lasts, the fallout from the vote could have an effect not only within Italy — on its already embattled banks, for instance — but also beyond the borders of the boot-shaped country.

Italy Vote Puts Bonds to the Test

Italy’s rejection of constitutional reform and the resignation of Prime Minister Matteo Renzi are far from being a Brexit-style shock. Markets got this one right. But even more political uncertainty is the result. Italian bonds remain in the crosshairs.

Don’t Hold Your Breath on Fannie Mae and Freddie Mac

Comments by Steven Mnuchin have excited holders of Fannie Mae and Freddie Mac shares, but the two companies’ fates are far from decided.

Automotive Tech Flying Off the Lot

Panasonic’s potential deal for leading automotive headlight maker ZKW Group is the latest in a growing frenzy for putting high tech in cars.

Market Extra: The other loser in Italy’s vote — its big banks

The heat has been turned up on Italian banks after the resounding “no” referendum vote Sunday, which has stoked fears the big lenders will struggle to raise the capital they need to stay afloat.

Currencies: Euro bounces off 21-month low as investors move past Italy’s ‘no’ vote

After falling to a 21-month low late Sunday, the euro was recovering early Monday as investors appear to move past the initial shock of a “no” vote in the Italian constitutional referendum and the resignation of Italy’s prime minister.

The Wall Street Journal: Samsung, Hyundai chiefs to be questioned as political scandal roils South Korea

Lawmakers will quiz country’s top business leaders over ties to government officials.