>>> Meet the Competitors in Italy's Referendum

Italy is finally holding its referendum on constitutional reforms. Prime Minister Matteo Renzi's proposals would reduce the powers and size of the Senate, granting the Chamber of Deputies more authority and transferring prerogatives from regional administrations to the central government in Rome. The changes would, in theory, sever the link between political instability and financial fragility in Italy. Instead, because Renzi has promised to step down if the Italian people vote against the reforms, opposition parties such as the Five Star Movement and the Northern League — and even some members of Renzi's center-left Democratic Party — have cast the referendum as a chance to force the prime minister and his government to resign.
Even if voters reject the reforms and Renzi resigns, early elections for a new government are not a given. Italian President Sergio Mattarella could ask Parliament to form a new government and appoint a prime minister, probably with the goal of introducing political and economic reforms. The Five Star Movement has said it would not support a caretaker government, but the Democratic Party and its junior coalition partner still control enough seats in Parliament to appoint a new prime minister, provided that they stay united.
Moreover, opinion polls show that the Five Star Movement's popularity is close to that of the Democratic Party, giving it incentive to avoid early elections that could unseat it. In a potential runoff election between the Democratic Party and the Five Star Movement, all opposition parties could side with the protest party to propel it to victory. This prospect might impel the government to change the rules while it still can. Lorenzo Guerini, the deputy secretary of the Democratic Party, has said that in case of a defeat in the referendum, the party would try to modify the country's electoral laws so that new elections could be held in summer 2017.
Whether or not the referendum fails and subsequent early elections are held, the possibility that the Five Star Movement will eventually triumph at the national level cannot be discounted, because more and more Italians have grown weary of traditional political parties. Decades of mismanagement and corruption have led to voter mistrust in the establishment parties' ability to turn around Italy's tepid economic growth and persistently high unemployment. Still, a government led by the Five Star Movement would face many of the same constraints as its predecessors.

>>> Meet the Competitors in Italy's Referendum

Meet the Competitors in Italy's Referendum
Italy is finally holding its referendum on constitutional reforms. Prime Minister Matteo Renzi's proposals would reduce the powers and size of the Senate, granting the Chamber of Deputies more authority and transferring prerogatives from regional administrations to the central government in Rome. The changes would, in theory, sever the link between political instability and financial fragility in Italy. Instead, because Renzi has promised to step down if the Italian people vote against the reforms, opposition parties such as the Five Star Movement and the Northern League — and even some members of Renzi's center-left Democratic Party — have cast the referendum as a chance to force the prime minister and his government to resign.
Even if voters reject the reforms and Renzi resigns, early elections for a new government are not a given. Italian President Sergio Mattarella could ask Parliament to form a new government and appoint a prime minister, probably with the goal of introducing political and economic reforms. The Five Star Movement has said it would not support a caretaker government, but the Democratic Party and its junior coalition partner still control enough seats in Parliament to appoint a new prime minister, provided that they stay united.
Moreover, opinion polls show that the Five Star Movement's popularity is close to that of the Democratic Party, giving it incentive to avoid early elections that could unseat it. In a potential runoff election between the Democratic Party and the Five Star Movement, all opposition parties could side with the protest party to propel it to victory. This prospect might impel the government to change the rules while it still can. Lorenzo Guerini, the deputy secretary of the Democratic Party, has said that in case of a defeat in the referendum, the party would try to modify the country's electoral laws so that new elections could be held in summer 2017.
Whether or not the referendum fails and subsequent early elections are held, the possibility that the Five Star Movement will eventually triumph at the national level cannot be discounted, because more and more Italians have grown weary of traditional political parties. Decades of mismanagement and corruption have led to voter mistrust in the establishment parties' ability to turn around Italy's tepid economic growth and persistently high unemployment. Still, a government led by the Five Star Movement would face many of the same constraints as its predecessors.

FT : UniCredit eyes deal with Amundi to ease investor worries

UniCredit eyes deal with Amundi to ease investor worries
Italy’s largest bank hopes deal will settle market jitters over political instability

UniCredit is set to agree the sale of asset manager Pioneer to France’s Amundi for more than €3bn, boosting its capital as Italy’s largest bank moves to differentiate itself from distressed Tuscan rival Monte dei Paschi di Siena.

The likely deal with Amundi, which sees off rival bids from Poste Italiane and Ameriprise, comes ahead of Milan-based UniCredit unveiling a turnround plan under new chief executive Jean-Pierre Mustier on December 13.
The plan is expected to involve Mr Mustier announcing a capital increase of €13bn alongside asset sales — including the disposals of Pioneer and its Polish business Pekao— people with knowledge of the matter said.
UniCredit is also planning to spin off a €50bn portfolio of gross non-performing loans and to sell a tranche to one or several anchor investors. Fortress, Cerberus and Pimco are among the bidders, said three people briefed on the matter.
The move by Italy’s only globally significant bank comes as it seeks to strengthen a fully loaded common equity tier one ratio of 10.8 per cent — at the lower end of European peers — on its own terms rather than have a course of action imposed on it by the regulator.
Mr Mustier’s plan also seeks to put clear water between UniCredit and Monte Paschi, Italy’s third-largest bank by assets and the worst loser to emerge from European stress tests of the sector in July.
The European Central Bank supervisor has set a deadline of the end of the year for Monte Paschi to raise €5bn of capital and sell off €28bn of gross non-performing loans. UniCredit has more time to complete its planned recapitalisation.
Weighing on capital plans at both banks is the outcome of Italy’s referendum on constitutional reform, which is due to be announced late on Sunday. Reformist prime minister Matteo Renzi has said he will quit if he loses, which analysts fear could unleash political and market instability.
Davide Serra, founder and chief executive of Algebris Investments, an investor in bank bonds and shares, said pricing of UniCredit’s equity raising will depend on the outcome of the referendum.
“With Yes it will be higher, with No it will be lower, but it will still go through. There will be a period of volatility but it is not a nightmare,” Mr Serra said.
The success of Monte Paschi’s capital increase is considered more closely tied to the referendum outcome, say bankers. The lender, which is 4 per cent owned by Italy’s Treasury, announced on Friday it had raised at least €1bn from a debt-for-equity swap.
Bankers in a consortium led by JPMorgan and Mediobanca are due to decide by the end of Tuesday whether to go ahead with an equity issue to raise the rest of the €5bn depending on market conditions, say two people familiar with the plan.
If the Yes vote wins, bankers have said that anchor investors including Qatar are expected to buy €1bn to €2bn of Monte Paschi’s new equity.
Lorenzo Codogno, a former economist in Italy’s Treasury, said in a note on Sunday that should Mr Renzi step down and there be a prolonged political crisis, financial markets will start to “get jittery again”.
“Probably the capital increase of Monte Paschi will be postponed or outright cancelled and other operations [at UniCredit and some smaller banks] will be stalled” in that scenario, he said.

FT : Markets unprepared for central bank shifts, warns Axel Weber

Markets unprepared for central bank shifts, warns Axel Weber
Jump in US rates and end of eurozone QE will hurt investors, says UBS chairman

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.”


The comments by Mr Weber are likely to be closely watched in the markets, not least because he led the German central bank between 2004 and 2011 and served on the governing council of the ECB.

In recent weeks, benchmark 10-year Treasury yields have risen sharply on expectations that Donald Trump’s new government will launch policies to boost US growth as well as the strong likelihood that the Federal Reserve will raise short-term interest rates this month.

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ECB treads carefully to avoid taper tantrum
Strong economic case to slow asset purchases is undermined by political uncertainty
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 the ECB would end its bond purchases sooner than many investors had assumed, sending the eurozone yield curve higher. “A large part of the market is uni-directionally positioned and it is positioned in a direction where you will have to take off some of those positions over the course of 2017,” he said.

Mr Weber also voiced support for Mr Trump’s plans to move away from only monetary stimulus toward more structural measures and fiscal stimulus, such as large-scale infrastructure projects. He aired concern that US companies with international operations could be negatively affected by the president-elect’s plans to alter trade agreements.

He warned that political uncertainty would be a key factor driving financial markets in 2017, and suggested that financial institutions would need to adopt a strategy of maximum “optionality” to prepare for multiple outcomes in the looming votes in the European region, and the Brexit negotiations.

UBS recently announced it would create a hub for its wealth management operations in Frankfurt, Germany, which could prove important if a so-called hard Brexit materialised.

“Markets know how to price and discount market risk,” he said. “Markets are much less good at pricing political uncertainty . . . Our broad presence in continental Europe gives us optionality in case we need to move employees from London to onshore locations. Optionality is going to be the name of the game.”

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FT : Saudi Arabia discussed oil output cut with traders ahead of Opec

Saudi Arabia discussed oil output cut with traders ahead of Opec
Kingdom sought views on likely market reaction should deal fail

Saudi Arabia convened private talks with the world’s largest oil traders in Vienna before Opec’s crunch meeting on whether to cut oil output, seeking views about the likely market reaction should they fail to clinch a deal, it has emerged.

Mark Couling, head of crude oil at Vitol, the world’s biggest independent oil trading company, was invited to Vienna by the Saudi delegation, according to people with knowledge of the talks.

Pierre Andurand, who runs the $1.5bn Andurand Capital fund, one of the world’s biggest oil hedge funds, was also invited, alongside at least one trader from Russian independent oil company, Lukoil.

The meetings between Saudi Arabia and the traders came just a day before Opec’s official talks in Vienna last week, which saw the cartel reduce production by more than 1m barrels a day in an attempt to end a two-year price rout that has hit oil producers’ economies — the first such supply deal since 2008.

While Saudi Arabia routinely gives private briefings to energy analysts in the days leading up to an Opec meeting, it is rarer, but not untoward, for the kingdom to call together the traders responsible for shipping millions of barrels of oil or trading thousands of futures and options contracts.

Saudi delegates have previously done so on occasion when they were looking to get a better feel for the market, said one person who has been attending Opec meetings for more than a decade.

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More than 2 years of sub-$50 oil hit the economy and threatened diversification plans
The talks highlight the deep concern within the Saudi camp right to the last minute, despite months of shuttle diplomacy between Opec members, with the world’s top oil exporter worried about further price falls if they failed to secure a cut.

Brent, the international oil benchmark, did fall 4 per cent on Tuesday as the market bet that a deal was slipping beyond Opec’s reach. Prices then rocketed more than 15 per cent between Wednesday and Friday after Opec members reached an output reduction deal.

Mr Couling and Mr Andurand attended a meeting with the Saudi delegation on Tuesday morning, before the kingdom’s oil minister Khalid al Falih arrived in Vienna, people familiar with the meeting said. A trader from Litasco, Lukoil’s trading arm, also attended, they said.

Lukoil did not respond to a request for comment. Vitol and Andurand declined to comment.

Mr Andurand declined to comment on the meetings, but said in an earlier interview that he had been betting on rising prices since January and had not changed his position.

At the meetings, the Saudi delegation expressed caution about the likely outcome of the Opec gathering, warning that a deal to reduce output to try and bolster the price was still in doubt, according to sources familiar with the conversations.

Gulf delegates had earlier given similar warnings, with many saying a deal could be imperilled by lingering tensions between Saudi Arabia, Iran and Iraq.

Saudi oil officials sought to play down the talks, with one delegate said it was “not unusual” for them to talk to participants in the oil market.

“These discussions are a part of ongoing consultations we have with analysts, producer companies and traders particularly around Opec meetings and throughout the year,” the Saudi delegate said.

L'echo.be : Autriche : Extreme droite donnée perdante

L'ex­trême droite don­née per­dante de la pré­si­den­tielle au­tri­chienne

Le can­di­dat in­dé­pen­dant Alexan­der Van der Bel­len, ex-di­ri­geant éco­lo­giste, rem­porte l'élec­tion pré­si­den­tielle en Au­triche avec 53,6% des voix, selon les pro­jec­tions af­fi­nées de la te­le­vi­sion pu­blique ÖRF. Le can­di­dat du FPÖ (ex­trême droite) Nor­bert Hofer, ob­tien­drait 46,4%.

Les Au­tri­chiens se ren­daient aux urnes di­manche pour un scru­tin âpre­ment dis­puté, qui pour­rait voir pour la pre­mière fois un can­di­dat d'ex­trême droite ac­cé­der à la pré­si­dence d'un Etat de l'Union eu­ro­péenne.

Les bu­reaux de vote ont fermé leurs portes à 17h.

Et selon les pre­mières es­ti­ma­tions, le can­di­dat du parti d'ex­trême droite (FPÖ) No­bert Hofer est net­te­ment de­vancé par son ad­ver­saire éco­lo­giste li­bé­ral Alexan­der Van der Bel­len au se­cond tour de la pré­si­den­tielle au­tri­chienne, selon les pro­jec­tions de la té­lé­vi­sion pu­blique au­tri­chienne.

M. Van der Bel­len, 72 ans est cré­dité de 53,6% des voix contre 46,4% à son ad­ver­saire de 45 ans, selon ces pro­jec­tions in­té­grant les votes par cor­res­pon­dance que ne se­ront dé­comp­tés que lundi.

En mai, lors d'une pre­mière élec­tion qui avait été an­nu­lée à la de­mande du FPÖ en rai­son de vices de pro­cé­dure, le vote pos­tal avait re­pré­senté pas moins de 16,7% des suf­frages ex­pri­més et avait mas­si­ve­ment bé­né­fi­cié à M. Van der Bel­len, qui l'avait em­porté sur le fil avec un peu moins de 31.000 voix d'avance.