As recently as two months ago – when December rate hike odds were at or below 50% – the monthly payrolls report was watched closely for hints about the Fed’s next move. However, now that December rate hike odds are effectively 100% (CME Fed has seen a modest drop to 92.7% in recent days), what the BLS will announce today carries far less significance, and if anything attention will be mostly paid on the internals, like wage growth for clues on the Fed’s pace of hiking into 2017, and labor market participation to see how Trump may react as he talks down what is otherwise expected to be a +180K print.

Manufacturing payrolls also will matter politically. Trump had whipped up support among Rust Belt voters as he threatened to tear up trade agreements and bring jobs back from overseas. The Bloomberg survey predicts factories cut 3,000 workers in November, after slashing 9,000 the previous month. Also politically relevant will be the almost 6 million employees were in part-time jobs but wanted full-time work. Those workers, known as working part-time for economic reasons, have been little changed this year and remains above its pre-recession level. The president-elevt will also watch the participation rate, which indicates the share of working-age people who are employed or looking for work. It fell in October and is near the lowest level since 1978.

So while it will not be as market moving, algos will still have a strong kneejerk reaction to any outlier numbers, especially since coming into today’s print Wall Street itself is quite confused, with a consensus print of 180K, however derived from an especially a wide range from 140K to 250K. The other components of the report include the unemployment rate (consensus is for no change at 4.9%) and average hourly earnings (expected to rise +0.2% mom). One additional possible surprise is the impact of Hurrican Matthew, which according to JPM subtracted 30-40K jobs from the October print, and which may boost November payrolls by a similar amount.

Below are the November payrolls consensus estimates:

• Nonfarm Payrolls Exp. 180K; Prev. 161K, Oct. 191K
• Unemployment Rate Exp. 4.90%; Prev. 4.90%, Oct. 5.00%
• Average Hourly Earnings Exp. 0.20%; Prev. 0.40%, Oct. 0.30%

Here are the expectations, broken down by bank:

• Goldman: 200K
• SEB: 200K
• UOB 200k
• Consensus: 180k
• Barclays: 175K
• Credit Agricole: 175K
• UniCredit: 175K
• BofAML: 170k
• UBS: 165K
• SocGen: 165k
• Nomura: 160k
• Deutsche: 150K

As a reminder, last month’s Non-farm payrolls saw an increase by 161k and an upward revision to the September number to 191k, both figures being within the Fed’s bracket for growth. The data was followed by the FOMC, stating that most Fed officials see a hike as appropriate ‘relatively soon’ and a few of the voting members were worried that if the Fed let the jobless rate decline too low they may need to raise rates more steeply.

Via the WSJ, here are the 5 main things to look for in today’s report:

1. So far this year, employers have added an average of 181,000 jobs per month. But the performance has been inconsistent—with a low of 24,000 in May and a peak of 271,000 in June. A reading close to the 180,000 consensus would signal steady hiring and more progress toward the Fed’s goal of full employment.
2. Average hourly earnings for private-sector workers advanced 2.8% from a year earlier in October, the strongest pace of growth since the recession. Such gains outpace inflation and give households more money to spend, which should help broader economic growth. They are also a sign workers are able to demand better pay as the labor market gets tighter.
3. The headline unemployment rate has moved close to prerecession levels this year, suggesting that Americans who want a job are able to find one. But a broader measure, which includes people stuck in part-time work and people who have stopped looking, remains elevated, an indication there’s still slack in the labor market.
4. One of the most worrisome developments in recent years is a drop in the labor-force participation rate. Its decline is partly because baby boomers are retiring. But the rate for prime-age workers, 25 to 54, also has fallen, matching a three-decade low late in 2015. The rate has since been creeping up amid steady job creation and rising wages, though it remains depressed. Another tick up would show that an improving labor market is drawing more Americans off the sidelines.
5. Remember Hurricane Matthew? “We believe the hurricane likely depressed the October payroll count by about 30,000 to 40,000 and think that a return to less disruptive weather could boost November payrolls by a similar amount,” J.P. Morgan Chase economist Daniel Silver said in a research note. That would be a notable distortion and could help polish November’s headline number.

Some further thoughts on today’s report from RanSquawk:

CME Fed watch are pricing in a 93.5% chance for a hike and even with an ‘anomalous figure’ the likelihood of this affecting December’s decision from the FOMC is very slim. Many analysts are now stating that it is possible for any NFP figures to once again focus on the immediate economic conditions to the report, as opposed to any impact on the longer-term monetary element. However, this report may be an indication to the rate path for 2017, with many analysts stating that 2017 could be a hawkish year, with the exceptions of 2016 coming apparent in 2017.

As the Fed reiterated, and logic suggests, data continues to dictate the state of play and November saw sustained growth (161k). Inflation is a key indicator for the US economy and this month saw Y/Y CPI above the 2.00% target once again. As November’s data has shown no shock in the US economy and growth is still evident — regardless of the political position, it is fair to say that with the Fed all but guaranteed to hike in December.

Market Reaction

As ever with the NFP release, the headline is likely to garner much of the initial focus with algorithms and fast money moves jumping on any large discrepancies. If there is an overwhelmingly strong report, the USD will strengthen across the board however, as the dollar index continues to ramp many analysts consider the dollar upside to be limited and the possible move to lookout for is a poor report, negatively affecting the USD.

With focus no longer on the Fed and rates; equity markets may once again find themselves with some volatility and a miss in expectations could cause some selling pressure following the record levels seen over the past weeks in US equity markets, with a level of note in the S&P 500 to be the 2213.10 high. In terms of other technical levels, there is an internal downtrend line which originates on 23/08/16 to the next lower high on the 07/09/16 and support likely at 2158.20.

Gold could also see volatility with price action likely to mirror treasury markets with overwhelming beats on expectations across the board set to setoff some selling pressure across flight to safety asset classes; with the 10-year T-note Dec’16 future showing clean air on the downside and if any volume is seen on the downside, traction could cause heavy pressure bolstered by light holiday volumes. Gold also paints a bearish picture with the precious metal falling since Trump’s victory, with key support being the 1170.92 low. On the upside, there are notable levels of resistance at previous support levels. The first comes at the consolidation high of 1196 and then the psychological level of 1200.

* * *

Finally, as reported last night, this is what the bank that continues to run everything, Goldman Sachs, expects:

A series of stronger than expected data in recent days pushed Goldman Sachs to up their payrolls growth expectation to 200k (above the 180k expectations), but they note that while the unemployment rate is likely to drop (to 4.8%), average hourly earnings may disappoint. Of course, they add, any non-narrative-confirming misses on the data can likely be explained away by “weather effects and residual seasonality.”

As Goldman details, we forecast that nonfarm payroll growth increased to 200k in November, after an increase of 161k in October. We have revised up our forecast from 180k previously reflecting stronger data this week. Labor market indicators were stronger on balance last month, including improvements in reported job availability, the ADP report, and the employment components of service-sector surveys. In addition, we see a likely boost from positive weather effects and possible residual seasonality.

Arguing for a stronger report:

Job availability. The Conference Board labor differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get—rose to +5.2, reversing a small decline in October. This measure has risen by about ten points over the last year.

 

Service sector surveys. The employment components of service sector surveys mostly improved in November. The Richmond Fed (+7pt to +13), Dallas Fed (+6.5pt to +9.2), and New York Fed (+2.2pt to +10.9, after our seasonal adjustment) measures of service sector employment all strengthened. The Philly Fed non-manufacturing employment index edged down (-0.7pt to +15.6) but remains at levels consistent with expansion. Service sector employment increased 142k in October and has increased 161k on average over the last six months.

 

ADP. The payroll processing firm ADP reported a 216k gain in private payroll employment in November, up from a downwardly revised 119k increase in October. While this is a significant beat, the new methodology ADP introduced last month creates some additional uncertainty around the translation of this upside ADP surprise into the outlook for tomorrow’s nonfarm payroll report.

 

Some rebound from Hurricane-related weakness. In October, employment in the three sectors that we find are most sensitive to weather-related swings – retail, construction, and leisure and hospitality – increased by 20k, which is a smaller gain than the 6-month (33k) and 12-month (73k) average changes through September. Among East Coast states, employment in these sectors declined by a total of 16k in October, relative to an average monthly increase of 15k over the prior six months (Exhibit 1). Some of the biggest declines were in Florida and South Carolina, the states most impacted by Hurricane Matthew.

 

Seasonals. Since the recession, November payroll growth has surprised consensus expectations roughly 2/3 of the time, with an average surprise of +27k.

 

Exhibit 1: Some Potential Upside from East Coast States Impacted by Hurricane-related Weakness

Source: Department of Labor, Goldman Sachs Global Investment Research

Neutral Factors:

Temporary election-related hiring. Election-related hiring typically shows up to some degree in the government and marketing research and opinion polling categories in the non-seasonally adjusted payroll data. However, the BLS makes a special adjustment to these changes to remove the effects of the election and in prior election years those categories did not spike on a seasonally adjusted basis in November. Therefore, it is unlikely we will see any direct election effect in the seasonally adjusted series.

 

Jobless claims: Initial claims for unemployment insurance benefits moved slightly higher, with the four-week moving average edging up to 253k in the November survey week. Initial claims were affected by technical factors including temporary auto plant shutdowns and weather-related effects from Hurricane Matthew, but we do not detect a significant change in the underlying trend which continues to show low layoff activity in the economy.

 

Job cuts: Announced layoffs reported by Challenger, Gray & Christmas after our seasonal adjustment increased by 4k to 32k in November, but remain close to cycle-lows.

Arguing for a weaker report:

Online job ads. The Conference Board’s Help Wanted Online (HWOL) report reversed last month’s gains, and stands 15% lower than levels last year. However, we put limited weight on this indicator at the moment in light of research by Fed economists that argued that the HWOL ad count has been depressed by higher prices for online job ads.

 

Manufacturing sector surveys. The employment components of manufacturing surveys were mixed in November. The ISM manufacturing (-0.6pt to 52.3), Chicago PMI, Empire State (-6.2pt to -10.9), and Kansas City Fed (-6pt to +1) employment indexes all declined, while the Dallas Fed (+4.3pt to +4.5), Richmond Fed (+2pt to +5), and Philly Fed (+1.4pt to -2.4) measures edged up. Manufacturing employment declined by 9k in the October report, and has declined by 7k on average over the last six months.

We expect the unemployment rate to edge down to 4.8% in the November report from an unrounded 4.876% in October. Last month, the household survey showed a 43k decline in employment but the unemployment rate edged down to 4.9% due to a decline in labor force participation. The broader U6 unemployment rate dropped to a new post-crisis low of 9.5% as the number of involuntary part-time and marginally attached workers both declined.

We expect average hourly earnings to increase 0.1% month-over-month, or 2.7% from a year ago, after rising to a new cycle high of 2.8% year-on-year in October. A modest retracement of last month’s gains and negative calendar effects are likely to contribute to a softer number. Our wage tracker, which captures the broader trend in wage growth across four major indicators, stands at 2.6% year-over-year as of Q3.

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Hold your real assets outside of the banking system in one of many private international facilities  –>    http://ift.tt/2cyFwvQ;

 

 

 

 

Indian ‘Gold Ban’ a Portent of Major Events?

Written by Jeff Nielson (CLICK HERE FOR ORIGINAL)

 

 

The price of gold (and silver) is presently falling. This was previously predicted as far back as the middle of February. Precious metals prices will almost certainly continue to fall, soon accompanied by a general crash in our markets and economies. The need (for the banking crime syndicate) to depress precious metals markets is to create the illusion that these metals are not safe havens, when panicked people are looking for somewhere to place the remnants of their wealth.

 

However, in order to create a veneer of legitimacy in these serially rigged markets, it’s necessary to fabricate a pretext for the decline in precious metals prices. This is coming from the mouths of the same talking-heads who only a few months earlier were crowing about “a new and very long bull market” for gold. It is in this light that we can view the latest propaganda nonsense from the Corporate media: the “India gold ban”.

 

Regular readers have already seen this theater previously. Three years ago; India’s previous government began radically curbing gold imports, culminating in a near-total ban in gold imports to the world’s greatest gold-lovers, and second-largest population. As was explained at the time, the ban on gold was for no reason in terms of economic fundamentals.

 

What was actually happening at that time is that the One Bank was blackmailing that government to do something about the extremely strong gold demand, and larger-than-normal gold imports which were
flowing into India. So the Big Banks did what these convicted currency-manipulators do every time they want to punish any particular nation, they manipulated India’s currency – lower. These convicted currency-manipulators continued pushing the rupee lower and lower until the gold ban was initiated by India’s government. At that point, the downward plunge in the rupee instantly and magically disappeared.

 

The ban didn’t work. It didn’t work (from the perspective of the One Bank) for several reasons. The ban on official gold imports simply inspired Indians to reopen centuries-old gold smuggling routes. Those smuggling routes had only been previously closed, voluntarily, after India’s government liberalized its gold market when it abolished the Gold Control Act in 1990.

 

The 2013 gold ban also failed because the moderate restriction of inflows of gold into India motived the Indian people to buy much larger quantities of silver, shattering previous import records for that metal. Finally, in banning the official importing of gold – and provoking gold smuggling – this meant that a blackmarket for gold arose in India, the automatic partner of any large-scale smuggling.

 

What accompanies blackmarkets? A blackmarket price for gold: a real-world price for gold where there would be no direct means for the banking crime syndicate to manipulate that price. It was for all these reasons that the One Bank relented on its previous blackmailing of India’s government, and allowed that nation to resume normal importing of gold.

 

Flash ahead to 2016; and some things are now different. There is a new regime in India, an extremely corrupt government which does not require blackmailing by the One Bank because the bankers already own this regime. This was previously demonstrated when this puppet government announced its “gold deposit scheme” (scam). It was such a laughably transparent attempt to steal the gold from the Indian people that it failed miserably.

 

While the corrupt Modi regime has denied it has plans to block imports, this denial comes despite weeks of persistent rumors that the government intends to “impose curbs” on India’s gold market. Based on these fears, premiums to buy gold in India jumped to a two-year high.

 

Again, as before, there is no reason for this attack on India’s gold imports. The official propaganda is that (ironically) this suppression of the gold market is aimed at reducing the amount of “black money” circulating in India’s economy. This propaganda is nonsensical for two reasons. First, we live in a world where the Big Banks are allowed to launder $trillions in dirty money for the drug cartels, and for supposed “terrorist entities”.

 

The banking crime syndicate is never punished for this serial money-laundering, despite the U.S.’s supposed “War on Terror” and “War on Drugs”. Yet here we have India’s (corrupt) government announcing increasingly draconian measures aimed at alleged money-laundering activities which only amount to $millions each year.

 

The second absurdity here was already noted. Any serious restriction of legitimate gold imports into India will instantly and automatically result in systemic gold-smuggling. That gold-smuggling will result in the blackmarket which inevitably accompanies smuggling. You can’t reduce the amount of “black money” in India’s economy by creating a blackmarket.

 

The final absurdity here is the increasingly hysterical hype emanating from the mainstream media in the West, to accompany this new (and doomed to fail) attack on India’s gold market:

 

Potential gold-import ban by India could be biggest bombshell since Nixon

This propaganda is both laughable and nonsensical. It’s nonsensical to suggest that ta (potential) second ban on India’s gold imports would be the “biggest bombshell” in the gold market in nearly half a century, when we already saw a ban on India’s gold imports three years ago – and the first ban failed. It’s laughable for the same reason: we already know that (at worst) this will be nothing more than a small-and-temporary deterrent to overall gold demand.

 

The fact that the mainstream media in the West have jumped all over the rumors coming from India is further proof that the propaganda machine is back to full-manipulation mode, and all talk of the Fake Rally has been abandoned. If these two-faced mouthpieces were even neutral toward the gold market, we could not possibly be seeing such bearishly one-sided and inaccurate propaganda about events in India.

 

While this current push in India will have no long-term effect on the gold market, the potential for a short-term disruption of imports into that nation is acknowledged. In this respect the timing of the latest announcement from the One Bank’s puppets in India is interesting.

 

What will happen when the One Bank crashes our markets and economies, and slams precious metals prices even lower to accompany this? Demand for gold and silver will explode higher throughout the Rest of the World, with populations which have not been brainwashed into forgetting the eternal wealth-protection provided by gold and silver. In this respect, the rumored attack by the Modi regime on India’s gold market can be seen as a closely-choreographed, preemptive move.

 

We know the general crash in our markets and economies is coming, but we don’t know when. Now we have an apparent move aimed at manipulating gold market demand in the world’s largest gold market which can/will only have a short-term impact on precious metals markets. This appears to be a strong indicator that the Next Crash is coming very soon.

 

Regular readers will recall that this Crash was originally pegged to occur in the middle of this year, pre-U.S. election, to follow the pattern of crashes in previous bubble-and-crash cycles. With the Next Crash now about to occur immediately after a new puppet regime has been elected/appointed in the United States, this suggests
that an exogenous “cause” for this Crash will be fabricated by the banking crime syndicate. This will be done in order to prevent their new puppets from being fingered as the scapegoats for this Crash.

 

As has been previously suggested, the most likely exogenous event to be manufactured as camouflage for a Crash is, as always, a new war, or perhaps some “terrorist” false-flag event. We are left with the following, implied chain of events. India’s government is apparently in the process of creating a temporary bottleneck in Indian gold demand. This implies that the Next Crash is nigh. In turn, this implies that the Next War is just around the corner.

 

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

 

Indian ‘Gold Ban’ a Portent of Major Events?

Written by Jeff Nielson (CLICK HERE FOR ORIGINAL)

via http://ift.tt/2gPxG1b Sprott Money

via http://ift.tt/2gHo7AW williambanzai7

Did Jeff Gundlach do it again? Shortly after the DoubleLine manager told Reuters yesterday afternoon that the Trump rally is ending, that “stocks have peaked” and that it is “too late to buy the Trump trade”, US stocks tumbled to their sessions lows, and have continued to slide overnight, with S&P futures down 0.3%, alongside sliding Asian and European markets; oil and the dollar are also down with the only asset class catching a slight bid are 10Y bonds, whose yields are lower at 2.43% after reaching an 18 month high of 2.492% overnight ahead of today’s nonfarm payrolls report. The dollar was on course for its first weekly decline in four weeks as investors trimmed bets following recent gains.

However, the big risk event is not the job report, but Sunday’s Italian referendum, which has cast a blanket of concerns over Europe, and especially its banks, and has prompted financial markets to end the week the way they started, “overshadowed by caution as stocks fall with commodities, the yen advances and a selloff in Treasuries abates” in the words of Bloomberg.

“There is a great deal of trepidation among investors ahead of the
vote,” said Ken Odeluga, a market analyst at brokerage firm City Index
in London. “Even though we got a bounce yesterday after the OPEC
agreement, there is still a huge amount of interest on the bearish side
and shorts in place. It’s the focus for Europe, and we are going to see
more selling out of equities if we get a negative outcome. There is
certainly room for more volatility.”

Recent strong economic data from the U.S., including upbeat manufacturing activity and construction spending, have bolstered the view that the Fed will tighten monetary policy faster than expected to keep inflationary pressures in check. U.S. employers probably hired 179K workers in November, up from October, making it almost certain that the Federal Reserve will raise interest rates later this month. However, recent jitters that the ECB may announce a tapering of its own QE program next Thursday has become a bigger source of worry for markets than the Fed’s second rate hike in over a decade.

Today’s payroll number therefore comes at a very interesting time. The market consensus is for a 180k print which follows a 161k gain in October. The range though between economists is anywhere from 140k to 250k. Our US economists are at the lower end of the market and are forecasting a 150k reading which is below the 181k YTD and consistent with their view of a slower pace of economic activity in the current quarter. As always keep an eye on the other components of the report including the unemployment rate (consensus is for no change at 4.9%) and average hourly earnings (expected to rise +0.2% mom). The report is out at 8.30am.

The Stoxx Europe 600 Index extended its first weekly decline in a month and S&P 500 Index futures signaled further losses in U.S. equities as investors shift focus to a report on American payrolls. Oil led raw materials lower after climbing above $51 a barrel, Japan’s currency gained against all of its 16 major peers and gold rebounded from a 10-month low. While Treasuries edged higher, yields on 10-year notes are still near the highest since July 2015.

“Few investors want to have a strong position either way,” said Mohit Kumar, head of rates strategy at Credit Agricole SA’s corporate and investment-banking unit in London. “Less risk is a good strategy.”

Global stocks are headed for their first weekly decline since Donald Trump’s election victory last month as investors turn more wary about the outlook for higher U.S. rates and potential for rising political risks in Europe. The rally in commodities following Trump’s victory and an OPEC deal this week to cut output has boosted inflation expectations and bets the Federal Reserve will hasten increases. Volatility in European stocks and its single currency has climbed ahead of Italy’s weekend referendum and Austria’s presidential vote.

European shares fell more than 1 percent, led by industrial and financial stocks. They have gained the most since Donald Trump won the U.S. presidential election last month. The Stoxx Europe 600 Index extended its first weekly decline in a month and S&P 500 Index futures signaled further losses in U.S. equities as investors shift focus to a report on American payrolls. Oil led raw materials lower after climbing above $51 a barrel, Japan’s currency gained against all of its 16 major peers and gold rebounded from a 10-month low. While Treasuries edged higher, yields on 10-year notes are still near the highest since July 2015.

The gap between Italian and German bond yields, which shot to a 2 1/2-year high of 188 basis points (bps) last week, fell to 167 bps on Friday. “I suspect on Monday it will be very difficult to have a definitive opinion on what could be the future government in Italy and the appetite for further reform,” said Franck Dixmier, global head of fixed income at AllianzGI, adding that the fund was ‘short’ Italian bonds.

In commodity markets, oil prices eased from the 16-month high they reached after the Organization of Petroleum Exporting Countries agreed to cut output for the first time since 2008. Russia also agreed to reduce production for the first time in 15 years. Brent crude futures eased 0.26 percent to $53.80 a barrel.

Bulletin Headline Summary From RanSquawk

• As many look ahead to today’s nonfarm payroll report from the US, the European session has kicked off with equities firmly in the red
• This morning saw flow back into the JPY, which has gained across the board — notably the EUR this morning after rejecting 122.00 key resistance
• As well as US NFP report, Today’s highlights include Canadian Jobs figures, as well as comments from Fed’s Brainard and Tarullo

Market Snapshot

• S&P 500 futures down 0.3% to 2186
• Stoxx 600 down 1.1% to 337
• FTSE 100 down 0.9% to 6692
• DAX down 1% to 10426
• German 10Yr yield down 3bps to 0.34%
• Italian 10Yr yield down 6bps to 1.99%
• Spanish 10Yr yield down 4bps to 1.57%
• S&P GSCI Index down 0.3% to 383.5
• MSCI Asia Pacific down 0.5% to 136
• Nikkei 225 down 0.5% to 18426
• Hang Seng down 1.4% to 22565
• Shanghai Composite down 0.9% to 3244
• S&P/ASX 200 down 1% to 5444
• US 10-yr yield down 1bp to 2.43%
• Dollar Index down 0.14% to 100.9
• WTI Crude futures down 0.4% to $50.86
• Brent Futures down 0.6% to $53.59
• Gold spot up 0.3% to $1,175
• Silver spot up 0.2% to $16.54

Top Headline News

• Starbucks’ Schultz to Hand CEO Role to Lieutenant Kevin Johnson: 33-year veteran of tech industry starts in April
• Exelon Gets $235 Million-a-Year Nuclear Lifeline in Illinois: Legislation secures payments for power from nuclear reactors
• Goldman’s Gary Cohn Said to Meet With Trump’s Team This Weekend: A cabinet appointment is said to be unlikely as talks continue, some advisers are concerned about too many Goldman picks
• Trump Says He’ll Appoint Mattis as Sec. of Defense; Trump Supports Completion of Dakota Access Pipeline: Reuters
• Workday Falls After CEO Warns of Big Deal Delays on Uncertainty: CEO cites Brexit, elections among concerns of customers
• Viacom’s Bakish Said to Be Interested in Buying Vice Stake: NYP
• Apollo, FXI Said to Make Bid for Innocor: New York Post

Looking at Asian markets, stocks traded lower across the board following the mostly negative lead from US where tech names underperformed, with participants also tentative ahead of today’s key NFP. ASX 200 (-1.0%) and Nikkei 225 (-0.7%) declined from the open as investors booked profits, with the latter further weighed by JPY strength as USD/JPY pulled back below 114.00. In China, Hang Seng (-1.3%) and Shanghai Comp (-0.9%) conformed to the subdued tone amid higher money market rates in which despite the overnight SHIBOR snapping 16 consecutive daily increases, 14-day to 1-year term rates continued to rise and the 3-month HIBOR gained to its highest since May 2009. Finally, 10yr JGBs traded were supported amid the risk averse sentiment in the region, while the BoJ’s buying operations for a total JPY 1.23tr1 in maturities ranging from 1yr-10yr also underpinned. PBoC injected CNY 160bIn 7-day reverse repos, CNY 60bIn in 14-day reverse repos, CNY 25bn in 28-day reverse repos for a net weekly injection of CNY 70bIn vs. CNY 40bIn net injection last week.  PBoC set mid-point at 6.8794. South Korean opposition parties agreed to propose motion for the impeachment of President Park, with the vote on motion to be held on December 9th.

Top Asian News

• Singapore Sanctions Ex-Goldman Banker Leissner After Probe: Standard Chartered, Coutts fined combined S$7.6m
• Rural China Banks With $4 Trillion Assets Facing Debt Test: Guiyang Rural sparked concern about risks at smaller lenders
• PBOC Headache Worsens as New $50,000 Conversion Quota Looms: Central bank focus for yuan seen shifting as FX reserves bleed
• Singapore Wealth Fund Prompts GLP to Start Strategic Review: No assurance any transaction will materialize, GLP says
• Crown Prince Becomes First New Thai King in Seven Decades: New monarch inherits control of fortune worth tens of billions

As many look ahead to today’s nonfarm payroll report from the US, the European session has kicked off with equities firmly in the red. European stocks have followed on from their Asian counterparts, with profit taking seen in energy and material names after the recent OPEC inspired upside. Further to this, IT stocks are also among the worst performers today, moving in tandem to the recent downside seen in US IT names, with the NASDAQ vastly underperforming over the past 48 hours. Elsewhere, price action remains relatively tight — fixed income markets have seen Bunds close the opening gap and pare earlier downside, which comes in tandem with the exacerbation of risk off sentiment given the softness seen in stocks. From a European standpoint, many are looking ahead to the Italian referendum on Sunday, with the GE/IT spread tightening so far this morning

Top European News

• Italian Banks Flirt With Disaster Again as Renzi Teeters: Markets have priced in impact of a ‘No’ vote in referendum
• Hollande’s Exit Gives Valls Space to Seek French Presidency: Socialist Valls faces tough fight against Fillon and Le Pen
• Aixtron Tumbles as Obama Said Poised to Block Chinese Takeover: Aixtron rejection would be second China deal stopped by Obama

In currencies, markets have been dominated by risk sentiment this morning, with equity markets coming off better levels on Wall Street in recent sessions and Asia sporting modest losses overnight. All of this has served to pull some flow back into the JPY, which has gained across the board — notably the EUR this morning after rejecting 122.00 key resistance. USD/JPY has also suffered as a result, though buyers still stepping in in anticipation of a strong US jobs report this afternoon, but there may be other areas to express USD strength as stocks could dominate. The Italian referendum this weekend will also prompt some risk pairing to some degree, despite some suggesting the negative impacts may be overstated in the run up. EUR/USD looks the obvious sell given the immediate focus, but as we have seen in the past week or so, there has been stubborn support coming in ahead of 1.0550 on each test lower amid continuous bouts of USD strength. GBP may have softened a little vs the USD, but against the EUR stays strong as the soft Brexit perceptions have been strengthened by EU comments regarding Britain’s access to the single market. Cable looks support into the mid to low 1.2500’s, while sellers in EUR/GBP resolute ahead of .8500. Commodity FX continues to favour the CAD; unsurprising given the OPEC deal this week. Outperformance vs the AUD and NZD in evidence, but all 3 could come unstuck vs both the USD and JPY if equity market losses start to accelerate. AUD a little more buoyant than NZD, courtesy of the better than expected Oct retail sales read. The Turkish Lira crashed to an all time low of 3.5935 after Erdogan called for lower interest rates.

In commodities, it has been a mixed market as base metals have been trading lower in recent sessions, while Oil has risen in the latter part of the week in the aftermath of the OPEC meeting. Gains here are now tailing off a little with risk sentiment souring, and in turn, has seen Gold recoup some ground as emerging market weakness and the upcoming Italian referendum divert some trade into the safe havens. Dampened interest for Copper out of China looks to have been the latest catalyst for USD29 drop in the 3m contract. WTI hit highs around USD51.80, but is a little over a cent
down on these levels this morning. Gold hit USD1160.0 or so, but was up USD20.0 earlier this morning.

Looking at the day ahead, the main focus for markets today will be the November employment report in the US including the nonfarm payrolls number. Also due to be released is the ISM NY print for last month. Away from the data the BoE’s Haldane is scheduled to speak around lunchtime while the Fed’s Brainard and Tarullo are also on the cards for today. Meanwhile, along with obvious focus on the Italy referendum, a reminder also to keep an eye on the results of the Austrian presidential election re-run. Voting ends at 4pm GMT on Sunday with initial projections expected soon after.

US Event Calendar

• 8:30am: Change in Non-farm Payrolls, Nov., est. 180k (prior 161k); Unemployment Rate, Nov., est. 4.9% (prior 4.9%)
• 9:45am: ISM New York, Nov. (prior 49.2)
• 12:30pm: Fed’s Tarullo speaks in Washington
• 1pm: Baker Hughes rig count

DB’s Jim Reid concludes the overnight wtap

Bond markets must feel like my knee at the moment. Attacked from all directions. After a two-day +15.7bps rise in US 10yr yields and a +12.89% rise in WTI Oil over the same period, today’s payroll number therefore comes at a very interesting time. The market consensus is for a 180k print which follows a 161k gain in October. The range though between economists is anywhere from 140k to 250k. Our US economists are at the lower end of the market and are forecasting a 150k reading which is below the 181k YTD and consistent with their view of a slower pace of economic activity in the current quarter. As always keep an eye on the other components of the report including the unemployment rate (consensus is for no change at 4.9%) and average hourly earnings (expected to rise +0.2% mom). The report is out at 1.30pm GMT.

That move in rates yesterday actually saw 10y Treasury yields look at 2.5% at one stage (reaching a high of 2.492% intraday) before then settling into the end of the session to close at 2.448% (and +6.7bps on the day). Still, that’s the highest closing yield since July 2015. 2y Treasury yields were also up a little more than 3bps at 1.149% while 30y yields broke past 3.10% to close up nearly 8bps higher at 3.109%. There were similar moves also in Europe where 10y Bund yields in particular sold off 9.2bps to 0.364%. That was actually the biggest move higher for Bund yields since December 2015. BTP’s outperformed again in relative terms (10y +6.2bps to 2.046%) while EM had a day to forget with hard-currency bond yields in Brazil, Argentina and Columbia +20.1bps, +22.8bps and +11.6bps higher respectively.

A few factors seemed to be in play yesterday contributing to the moves. Clearly the sharp move higher again for Oil continues to challenge markets’ outlook for inflation, while some better than expected manufacturing data in the US also helped at the margin. The ISM manufacturing print rose to 53.2 (vs. 52.5 expected) in November from 51.9 in October with the new orders component also rising, while the final manufacturing PMI was revised up from 53.9 to 54.1 – a level last matched in October last year. A bumper day for corporate issuance across the pond was also said to have been a factor although much of chatter was about another ECB article on Reuters. The article suggested that the ECB will extend bond purchases beyond March but at the same time ‘consider sending a formal signal after its policy meeting next Thursday that the program will eventually end’. The suggestion was that much of the prep staff work has focused on a six-month extension at the continued 80bn purchase rate but that some have indicated that they would favour an extension at lower volumes. The article quoted ‘senior sources’ which raises the usual validity question about such a story. In any case it seemed to have some impact on markets.

Meanwhile in equity land there was a bit of a déjà-vu feeling for US equities in particular where another decent day for energy and financials stocks – reflecting the moves for Oil and rates – was more than offset by weakness across rate sensitive and defensive sectors and to a great extent, the tech sector with the Nasdaq (-1.36%) suffering its worst one-day fall since October 11th with the sector seemingly plagued by continued sector rotation post the US election. In Europe the Stoxx 600 closed -0.33% but the FTSE MIB (+0.99%) rallied for the third successive day, in which time it is up more than 5%. Like the moves for bonds, EM equities also struggled with bourses in Brazil, Mexico and Argentina down -3.88%, -0.95% and -1.97% respectively.

Alongside payrolls, Italy will continue to attract attention with the referendum being held on Sunday. In terms of timing, we’re expecting to get provisional turnout results from 7pm GMT with exit polls then expected around 10pm GMT on Sunday night (although these have proved unreliable in the past) with the first projections by Italian pollsters based on counted votes at around 10.45pm GMT. The final result could come in around 2am on Monday and we’ll have a full wrap up of it in Monday’s EMR.

Ahead of this, our European equity strategists have published a note this morning suggesting that a rebound in the Italian equity market should be largely restricted to financial stocks in case of a “Yes” vote. Although the FTSE MIB is trading at a 15% discount relative to its 10-year average vs. Europe, valuations look substantially less attractive once banks are excluded from the index. The relative P/E of the FTSE MIB ex banks is trading in line with its long-term average vs. Europe ex banks. Several Italian sectors are even trading at a premium vs. their European peers, showing no signs yet of a spillover of banking sector risks.

Over now to a recently forgotten theme – namely Brexit. Remember that? Yesterday Brexit secretary David Davies and Chancellor Hammond suggested that Britain may be prepared to pay into the EU budget for access to the single market. This is the first time such a view has been expressed in official channels. Obviously it’s still fairly early stages and also hypothetical but the UK government is seemingly becoming increasingly pragmatic from the hard line stance that was taken at the Conservative party conference back in October. Whether Europe has any interest in also being pragmatic is a debate for another day but overall the development certainly aided Sterling which climbed +0.68% vs. the Dollar to $1.2591 albeit well off the intraday high of $1.2696.

While we’re on the theme of politics, last night we also heard the slightly surprising announcement that French President Hollande will not run for re-election next year. The Socialist party will now choose its candidate through a two-round primary on the 22ndand 29th of January. The suggestion is that the door is now open for Prime Minister Valls to be in the running, as well as ex-economy minister Montebourg. It’s worth noting that the polls aren’t giving much of a chance for any Socialist candidate qualifying for the second round of the Presidential election and it appears extremely challenging for the centre-left to prevent a Fillon-Le Pen play-off in the second round and final round.

Refreshing our screens now where markets in Asia this morning are largely following the lead from the losses in Europe and on Wall Street yesterday. The Nikkei (-0.47%), Hang Seng (-0.98%), Shanghai Comp (-0.30%), Kospi (-0.75%) and ASX (-0.70%) are all currently in the red, while sovereign bond yields in the antipodeans are 7-8bps higher and a few basis higher in Asia. Oil (-0.30%) has edged a touch lower while US equity index futures are also modestly lower.

A quick wrap up of the remaining data yesterday. In the US the other data out included construction spending which rose a tad less than expected (+0.5% mom vs. +0.6% expected) but did include material upward revisions to prior months. In fact it was enough to see the Atlanta Fed revise up their Q4 GDP forecast to 2.9% from 2.4%. Initial jobless claims were reported as rising 17k last week to 268k while finally total vehicles sales in November fell as expected to an annualized rate of 17.8m from 17.9m.

Meanwhile in Europe the final manufacturing PMI’s for November didn’t throw up any real surprises. There was no change to the Euro area print at 53.7, while a 0.1pt downward revision for Germany to 54.3 was somewhat offset by a 0.2pt increase in France to 51.7. The non-core was where most interest lay though and as expected the data was reasonably strong. Italy rose 1.3pts to 52.2 (vs. 51.3 expected) and Spain rose 1.2pts to 54.5 (vs. 53.7 expected). The UK was a little more disappointing after printing at 53.4 (vs. 54.4 expected), down from 54.2 in the month prior. The final data to mention is the Euro area unemployment rate print which came in at 9.8% and a new post-financial crisis low.

Looking at the day ahead now. It’s a pretty quiet end to the week in Europe today with the sole release being the October PPI print for the Euro area. As mentioned earlier the main focus for markets today will of course be the November employment report in the US including the nonfarm payrolls number. Also due to be released is the ISM NY print for last month. Away from the data the BoE’s Haldane is scheduled to speak around lunchtime while the Fed’s Brainard (at 1.45pm GMT) and Tarullo (at 6pm GMT) are also on the cards for today. Meanwhile, along with obvious focus on the Italy referendum, a reminder also to keep an eye on the results of the Austrian presidential election re-run. Voting ends at 4pm GMT on Sunday with initial projections expected soon after.

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Submitted by Soeren Kern via The Gatestone Institute,

• A German court has ruled that seven Islamists who formed a vigilante patrol to enforce Sharia law on the streets of Wuppertal did not break German law and were simply exercising their right to free speech. The "politically correct" decision, which may be appealed, effectively authorizes the Sharia Police to continue enforcing Islamic law in Wuppertal.
• The self-appointed "Sharia Police" distributed leaflets which established a "Sharia-controlled zone" in Wuppertal. The men urged both Muslim and non-Muslim passersby to attend mosques and to refrain from alcohol, cigarettes, drugs, gambling, music, pornography and prostitution.
• Critics say the cases — especially those in which German law has taken a back seat to Sharia law — reflect a dangerous encroachment of Islamic law into the German legal system.
• In June 2013, a court in Hamm ruled that anyone who contracts marriage according to Islamic law in a Muslim country and later seeks a divorce in Germany must abide by the original terms established by Sharia law. The landmark ruling effectively legalized the Sharia practice of "triple-talaq," obtaining a divorce by reciting the phrase "I divorce you" three times.
• A growing number of Muslims in Germany are consciously bypassing German courts altogether and instead are adjudicating their disputes in informal Sharia courts, which are proliferating across the country.
• "If the rule of law fails to establish its authority and demand respect for itself, then it can immediately declare its bankruptcy." — Franz Solms-Laubach, Bild's parliamentary correspondent.

A German court has ruled that seven Islamists who formed a vigilante patrol to enforce Sharia law on the streets of Wuppertal did not break German law and were simply exercising their right to free speech.

The ruling, which effectively legitimizes Sharia law in Germany, is one of a growing number of instances in which German courts are — wittingly or unwittingly — promoting the establishment of a parallel Islamic legal system in the country.

The self-appointed "Sharia Police" sparked public outrage in September 2014, when they distributed yellow leaflets which established a "Sharia-controlled zone" in the Elberfeld district of Wuppertal. The men urged both Muslim and non-Muslim passersby to attend mosques and to refrain from alcohol, cigarettes, drugs, gambling, music, pornography and prostitution.

A German court has ruled that a group of Islamists who formed a vigilante patrol to enforce Sharia law on the streets of Wuppertal did not break German law and were simply exercising their right to free speech. They were charged under a law that prohibits the wearing of uniforms at public rallies — a law originally designed to ban neo-Nazi groups from parading in public.

The vigilantes are followers of Salafism, a virulently anti-Western ideology that openly seeks to replace democracy in Germany (and elsewhere) with an Islamic government based on Sharia law.

Salafist ideology posits that Sharia law is superior to secular, common law because it emanates from Allah, the only legitimate lawgiver, and thus is legally binding eternally for all of humanity. According to the Salafist worldview, democracy is an effort to elevate the will of humans above the will of Allah, and is therefore a form of idolatry that must be rejected. In other words, Sharia law and democracy are incompatible.

Wuppertal Mayor Peter Jung said he hoped the police would take a hard line against the Islamists: "The intention of these people is to provoke and intimidate and force their ideology upon others. We will not allow this."

Wuppertal Police Chief Birgitta Radermacher said the "pseudo police" represented a threat to the rule of law and that only police appointed and employed by the state have the legitimate right to act as police in Germany. She added:

"The monopoly of power lies exclusively with the State. Behavior that intimidates, threatens or provokes will not be tolerated. These 'Sharia Police' are not legitimate. Call 110 [police] when you meet these people."

Wuppertal's public prosecutor, Wolf-Tilman Baumert, argued that the men, who wore orange vests emblazoned with the words "SHARIAH POLICE," had violated a law that bans wearing uniforms at public rallies. The law, which especially prohibits uniforms that express political views, was originally designed to prevent neo-Nazi groups from parading in public. According to Baumert, the vests were illegal because they had a "deliberate, intimidating and militant" effect.

On November 21, 2016, however, the Wuppertal District Court ruled that the vests technically were not uniforms, and in any event did not pose a threat. The court said that witnesses and passersby could not possibly have felt intimidated by the men, and that prosecuting them would infringe on their freedom of expression. The "politically correct" decision, which may be appealed, effectively authorizes the Sharia Police to continue enforcing Islamic law in Wuppertal.

German Courts and Sharia Law

German courts are increasingly deferring to Islamic law because either the plaintiffs or the defendants are Muslim. Critics say the cases — especially those in which German law has taken a back seat to Sharia law — reflect a dangerous encroachment of Islamic law into the German legal system.

In May 2016, for example, an appeals court in Bamberg recognized the marriage of a 15-year-old Syrian girl to her 21-year-old cousin. The court ruled that the marriage was valid because it was contracted in Syria, where such marriages are allowed according to Sharia law, which does not set any age limit to marriage. The ruling effectively legalized Sharia child marriages in Germany.

The case came about after the couple arrived at a refugee shelter in Aschaffenburg in August 2015. The Youth Welfare Office (Jugendamt) refused to recognize their marriage and separated the girl from her husband. The couple filed a lawsuit and a family court ruled in favor of the Youth Welfare Office, which claimed to be the girl's legal guardian.

The court in Bamberg overturned that ruling. It determined that, according to Sharia law, the marriage is valid because it has already been consummated, and therefore the Youth Welfare Office has no legal authority to separate the couple.

The ruling — which was described as a "crash course in Syrian Islamic marriage law" — ignited a firestorm of criticism. Some accused the court in Bamberg of applying Sharia law over German law to legalize a practice that is banned in Germany.

Critics of the ruling pointed to Article 6 of the Introductory Act to the German Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche, EGBGB), which states:

"A legal standard of another State shall not be applied where its application results in an outcome which is manifestly incompatible with the essential principles of German law. In particular, it is not applicable if the application is incompatible with fundamental rights."

This stipulation is routinely ignored, however, apparently in the interests of political correctness and multiculturalism. Indeed, Sharia law has been encroaching into the German justice system virtually unchecked for nearly two decades. Some examples include:

• In August 2000, a court in Kassel ordered a widow to split her late Moroccan husband's pension with another woman to whom the man was simultaneously married. Although polygamy is illegal in Germany, the judge ruled that the two wives must share the pension, in accordance with Moroccan law.

• In March 2004, a court in Koblenz granted the second wife of an Iraqi living in Germany the right to remain permanently in the country. The court ruled that after five years in a polygamous marriage in Germany, it would be unfair to expect her to return to Iraq.

• In March 2007, a judge in Frankfurt cited the Koran in a divorce case involving a German-Moroccan woman who had been repeatedly beaten by her Moroccan husband. Although police ordered the man to stay away from his estranged wife, he continued to abuse her and at one point threatened to kill her. Judge Christa Datz-Winter refused to grant the divorce. She quoted Sura 4, Verse 34 of the Koran, which justifies "both the husband's right to use corporal punishment against a disobedient wife and the establishment of the husband's superiority over the wife." The judge was eventually removed from the case.

• In December 2008, a court in Düsseldorf ordered a Turkish man to pay a €30,000 ($32,000) dowry to his former daughter-in-law, in accordance with Sharia law.

• In October 2010, a court in Cologne ruled that an Iranian man must pay his ex-wife a dower of €162,000 euros ($171,000), the current equivalent value of 600 gold coins, in accordance with the original Sharia marriage contract.

• In December 2010, a court in Munich ruled that a German widow was entitled to only one-quarter of the estate left by her late husband, who was born in Iran. The court awarded the other three-quarters of the inheritance to the man's relatives in Tehran in accordance with Sharia law.

• In November 2011, a court in Siegburg allowed an Iranian couple to be divorced twice, first by a German judge according to German law, and then by an Iranian cleric according to Sharia law. The director of the Siegburg District Court, Birgit Niepmann, said the Sharia ceremony "was a service of the court."

• In July 2012, a court in Hamm ordered an Iranian man to pay his estranged wife a dower as part of a divorce settlement. The case involved a couple who married according to Sharia law in Iran, migrated to Germany and later separated. As part of the original marriage agreement, the husband promised to pay his wife a dower of 800 gold coins payable upon demand. The court ordered the husband to pay the woman €213,000 ($225,000), the current equivalent value of the coins.

• In June 2013, a court in Hamm ruled that anyone who contracts marriage according to Islamic law in a Muslim country and later seeks a divorce in Germany must abide by the original terms established by Sharia law. The landmark ruling effectively legalized the Sharia practice of "triple-talaq," obtaining a divorce by reciting the phrase "I divorce you" three times.

• In July 2016, a court in Hamm ordered a Lebanese man to pay his estranged wife a dower as part of a divorce settlement. The case involved a couple who married according to Sharia law in Lebanon, migrated to Germany and later separated. As part of the original marriage agreement, the husband promised to pay his wife a dower of $15,000. The German court ordered him to pay her the equivalent amount in euros.

In an interview with Spiegel Online, Islam expert Mathias Rohe said that the existence of parallel legal structures in Germany is an "expression of globalization." He added: "We apply Islamic law just as we do French law."

Sharia Courts in Germany

A growing number of Muslims in Germany are consciously bypassing German courts altogether and instead are adjudicating their disputes in informal Sharia courts, which are proliferating across the country. According to one estimate, some 500 Sharia judges are now regulating civil disputes between Muslims in Germany — a development that points to the establishment of a parallel Islamic justice system in the country.

A major reason for the growth in Sharia courts is that Germany does not recognize polygamy or marriages involving minors.

The German Interior Ministry, responding to a Freedom of Information Act request, recently revealed that 1,475 married children are known to be living in Germany as of July 31, 2016 — including 361 children who are under the age of 14. The true number of child marriages in Germany is believed to be much higher than the official statistics suggest, because many are being concealed.

Polygamy, although illegal under German law, is commonplace among Muslims in all major German cities. In Berlin, for example, it is estimated that fully one-third of the Muslim men living in the Neukölln district of the city have two or more wives.

According to an exposé broadcast by RTL, one of Germany's leading media companies, Muslim men residing in Germany routinely take advantage of the social welfare system by bringing two, three or four women from across the Muslim world to Germany, and then marrying them in the presence of a Muslim cleric. Once in Germany, the women request social welfare benefits, including the cost of a separate home for themselves and for their children, on the claim of being a "single parent with children."

Although the welfare fraud committed by Muslim immigrants is an "open secret" costing German taxpayers millions of euros each year, government agencies are reluctant to take action due to political correctness, according to RTL.

Chancellor Angela Merkel once declared that Muslims must obey the constitution and not Sharia law if they want to live in Germany. More recently, Justice Minister Heiko Maas said:

"No one who comes here has the right to put his cultural values or religious beliefs above our law. Everyone must abide by the law, no matter whether they have grown up here or have only just arrived."

In practice, however, German leaders have tolerated a parallel Islamic justice system, one which allows Muslims to take the law into their own hands, often with tragic consequences.

On November 20, 2016, for example, a 38-year-old German-Kurdish man in Lower Saxony tied one end of a rope to the back of his car and the other end around the neck of his ex-wife. He then dragged the woman through the streets of Hameln. The woman, who survived, remains in critical condition.

The newsmagazine, Focus, reported that the man was a "strictly religious Muslim who married and divorced the woman according to Sharia law." It added: "Under German law, however, the two were not married." Bild reported that the man was married "once under German law and four times under Sharia law."

The crime, which has drawn renewed attention to the problem of Sharia justice in Germany, has alarmed some members of the political and media establishment.

Wolfgang Bosbach, of the ruling Christian Democratic Union (CDU), said: "Even if some people refuse to admit it, a parallel justice system has established itself in Germany. This act shows a clear rejection of our values ??and legal order."

On November 23, Bild, the largest-circulation newspaper in Germany, warned that the country was "capitulating to Islamic law." In a special "Sharia Report" it stated:

"The 2013 coalition agreement between the CDU and the Social Democrats promised: 'We want to strengthen the state's legal monopoly. We will not tolerate illegal parallel justice.' But nothing has happened."

In a commentary, Franz Solms-Laubach, Bild's parliamentary correspondent, wrote:

"Even if we still refuse to believe it: Parts of Germany are ruled by Islamic law! Polygamy, child marriages, Sharia judges — for far too long the German rule of law has not been enforced. Many politicians dreamed of multiculturalism….

 

"This is not a question of folklore or foreign customs and traditions. It is a question of law and order.

 

"If the rule of law fails to establish its authority and demand respect for itself, then it can immediately declare its bankruptcy."

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In just two short minutes MEP Daniel Hannan destroys the competitive virtue-signalling farce that is the Anti-Trump protestor, “this is the first generation that has been brought up not to tolerate opinions that they dislike… and they have been taught that the correct response to someone saying something you find ‘hurtful’ is to try and silence that person…” This is not about Trump, this is about a generation “that has never been told ‘no’ and can’t handle disagreement.”

Take two minutes… NOTE: This is not a safe space…

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Submitted by Nick Giambruno via InternationalMan.com,

It was the one moment that convinced Hitler suicide was better than surrendering.

On the morning of April 29, 1945, the bodies of Italian dictator Benito Mussolini and his mistress were dumped like garbage into Milan’s Piazzale Loreto.

A large mob of Italians quickly gathered. They pelted the former leader’s corpse with vegetables. They spat on it. They urinated on it. Some even emptied their pistols into his lifeless body.

After a few hours, the crowd hung the bodies from a metal girder at a nearby gas station for all to see.

The corpse of Benito Mussolini

I walked through Piazzale Loreto during a recent trip to Italy, which is suffering its worst economic downturn since 1945. And I realized that Italians are angrier now than they’ve been since they hung Il Duce up by his heels.

Italy has had no productive growth since 1999. Real GDP per person is smaller than it was at the turn of the century.

That’s almost two decades of economic stagnation. By any measure, the Italian economy is in a deep depression. And things will probably get much worse.

It’s no surprise Italians are in a revolutionary mood…

The Five Star Movement (M5S) is Italy’s new populist political party. It’s anti-globalist, anti-euro, and vehemently anti-establishment. It doesn’t neatly fall into the left–right political paradigm.

M5S has become the most popular political party in Italy. It blames the country’s chronic lack of growth on the euro currency. A large plurality of Italians agrees.

M5S has promised to hold a vote to leave the euro and reinstate Italy’s old currency, the lira, as soon as it’s in power. That could be very soon.

Given the chance, Italians probably would vote to return to the lira. If that happens, it would awaken a monetary volcano.

The Financial Times recently put it this way:

An Italian exit from the single currency would trigger the total collapse of the eurozone within a very short period.

It would probably lead to the most violent economic shock in history, dwarfing the Lehman Brothers bankruptcy in 2008 and the 1929 Wall Street crash.

If the FT is even partially right, it means a stock market crash of historic proportions could be imminent. It could devastate anyone with a brokerage account.

Here’s how it could all happen…

On December 4, Italian Prime Minister Matteo Renzi’s current pro-EU government is holding a referendum on changing Italy’s constitution.

In effect, a “Yes” vote is a vote of approval for Renzi’s government.

A “No” vote is a chance for the average Italian to give the finger to EU bureaucrats in Brussels.

Given the intense anger Italians feel right now, it’s very likely they’ll do just that.

According to the latest polls, the “No” camp has 54% support and all of the momentum. Even prominent members of Renzi’s own party are defecting to the “No” side.

If the December 4 referendum fails, Renzi has promised to resign. Even if he doesn’t, the loss would politically castrate him. In all likelihood his government would collapse. (Italian governments have a short shelf life. There have been 63 since 1945. That’s almost a rate of a new government each year.)

One way or another, M5S will come to power. It’s just a matter of when. If Renzi’s December 4 referendum fails—and it looks like it will—M5S will likely take over within months.

Once it’s in power, M5S will hold a referendum on leaving the euro and returning to the lira. Italians will likely vote to leave.

Italy is the third-largest member of the Eurozone. If it leaves, it will have the psychological effect of yelling “Fire!” in a crowded theater. Other countries—notably France—will quickly head for the exit and return to their national currencies.

Think of the euro as the economic glue holding the EU together. Without it, economic ties weaken, and the whole EU project unravels.

The EU is the world’s largest economy. If it collapses, it would trigger an unprecedented global stock market crash. That’s how important Italy’s December 4 referendum is. It would be the first domino to fall.

December 4 referendum fails >> M5S comes to power >> Italians vote to leave the euro currency >> European Union collapses

Almost no one else is talking about this. That’s why I just spent several weeks in Italy, taking the pulse of the country.

Italy’s December 4 referendum could make or break your wealth this year. If it fails, the EU, which has the world’s largest economy, will likely fall apart… triggering an epic stock market crash.

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