Thursday, December 8, 2016

Friday December 9 2016 Housing and Economic stories


Vancouver Housing Market Freezes Up, Sales Crash, Prices Sag, For-Sale Signs Proliferate - (www.wolfstreet.com) The numbers about the inglorious end of the totally insane house price bubble in Vancouver are bad enough. But the photos of “For Sale” signs along entire city blocks speak louder than the numbers ever could – in fact, they make us doubt the numbers. The Real Estate Board of Greater Vancouver (REBGV) today reported that in November, residential home sales in Greater Vancouver plunged 37.2% year-over-year to just 2,214 homes. By category of home:
  • Sales of detached homes down 52.2%.
  • Sales of attached homes down 40.9%.
  • Sales of condos down 22.7%.

ECB Buys Record Amount of Debt as QE Frontloaded Before Holidays - (www.bloomberg.com) The European Central Bank bought a record monthly amount of assets under its quantitative-easing program in November in an attempt to frontload purchases before market liquidity may dry up during the holiday season. The ECB bought a total of 85.4 billion euros ($91.6 billion) of debt last month even as the pace of purchases of government bonds, which represent the bulk of the program, dropped to 70.1 billion euros from 73 billion euro in October, ECB data published on Monday showed. An increase in monthly buying of covered bonds, asset-backed securities and corporate debt helped to make up for the difference.

Poll: Trump's Carrier deal is wildly popular - (www.politico.com) Donald Trump’s first major action as president-elect — the deal he and Vice President-elect Mike Pence struck last week with Carrier Corp. — is earning high marks from American voters, a new Politico/Morning Consult poll shows. Voters surveyed overwhelmingly view Trump’s negotiations with Carrier — which resulted in about 1,000 manufacturing jobs at the heating, ventilation and air conditioning company remaining in Indiana rather than moving to Mexico — as an appropriate use of presidential prerogative. And a majority of voters say the Carrier deal gives them a more favorable view of Trump, though his overall favorability ratings were virtually unchanged from mid-November.

Monte dei Paschi readied for state bailout after Renzi defeat - (www.ft.com) Bankers are running out of private-sector solutions for Monte dei Paschi di Siena and have told the Italian lender to prepare for a state bailout this weekend after prime minister Matteo Renzi was felled by a referendum defeat. While financial markets responded relatively calmly to the referendum result, people briefed on the situation said the political upheaval made it “more difficult” to secure a €1bn investment from Qatar on which Monte dei Paschi’s €5bn capital-raising plan hinges. Senior bankers fear that a failure to shore up the bank, which was the worst loser of this summer’s European bank healthcheck, could damage already jittery investor confidence about Italy’s overall banking sector, which is hobbled by €360bn of bad loans and weak profitability.

Monte dei Paschi subordinated debt drops as swap seen at risk - (www.reuters.com) The yield on a Sept. 2020 subordinated bond by Monte dei Paschi targeted by a debt-to-equity conversion offer launched by the Italian bank rose on Monday as traders said the swap's take-up was seen as insufficient to ensure its success. Monte dei Paschi said on Friday preliminary data showed take-up for the offer had topped 1 billion euros. A large take-up would ease Monte dei Paschi's task of raising 5 billion euros ($5.3 billion) in capital this year to remain in business. Political turmoil in Italy following the outcome of Sunday's constitutional referendum further complicates the bank's efforts.



Wednesday, December 7, 2016

Thursday December 8 2016 Housing and Economic stories


Italians Vote “No,” Renzi to Resign, Banking Crisis Now Looking for Taxpayers - (www.wolfstreet.com) A constitutional-reform referendum on tweaking the way a country governs itself, of the type Italy held today, would normally not be a big deal for banks in that country, and particularly not for banks in other countries, and it wouldn’t have much impact on currencies and credit markets. But these are not normal times for Italy, which is in the middle of a vicious banking crisis, and they’re not normal times for the EU either, which has been grappling with a banking crisis of its own, even as it has begun to splinter, after the Brexit vote. And it still wouldn’t be such a huge deal if Prime Minister Matteo Renzi hadn’t pledged he’d resign in case of a “no” vote.

Greece needs reforms, not debt relief: Germany's Schaeuble - (www.reuters.com) Structural reforms rather than debt relief will help Greece to achieve sustainable growth and stay in the euro zone because rates and repayment are putting hardly any burden on its budget, Gerany's finance minister was quoted as saying on Sunday. Euro zone finance ministers will meet in Brussels on Monday to discuss short-term measures to lighten Greece's debt burden and to assess Athens' progress in reforms required within its third bailout programme. Asked in an interview by Bild am Sonntag newspaper whether it might be time to tell German voters that a debt cut for Greece was inevitable, Finance Minister Wolfgang Schaeuble said: "That would not help Greece." "Athens must finally implement the needed reforms. If Greece wants to stay in the euro, there is no way around it - in fact completely regardless of the debt level," Schaeuble said.

Amid global anti-establishment anger, Italy may be next in line for upheaval - (www.washingtonpost.com) Amid a global wave of anti-establishment anger, Italy may be the next in line for upheaval after a Sunday referendum that could topple Prime Minister Matteo Renzi and cast the nation into political crisis. With Britain quitting the European Union and President-elect Donald Trump headed to the White House, Italy’s anti-immigrant Five Star Movement, led by a caustic comedian-turned-politician, is poised to capitalize on voter anger over a stagnant economy and a surge in migration from North Africa. If Italians reject constitutional reforms championed by Renzi, he has vowed to resign, opening the door to a gust of financial uncertainty that could set off an Italian banking crisis. A defeat for Renzi would also embolden populists across Europe, where elections in France and Germany next year threaten to deliver Euroskeptics as leaders of the bulwarks of European unity.

Deutsche Bank CEO Warns Employees "Europe Is Endangered" After Italy Vote - (www.zerohedge.com) At around the time ECB Governing Council member Ewald Nowotny said that Italy may have to spend taxpayer funds to bail out insolvent banks, warning that "the difference between Italy and other states such as Germany and Austria is that, until now, in Italy there has not been any significant state aid or state takeovers of banks," and that "it therefore cannot be ruled out that it will be necessary for the state to take stakes (in banks) in some way," Deutsche Bank CEO John Cryan sent a letter to employees in which he warned that following the Italian referendum, the economic environment "is a harbinger of renewed turbulence that could spill over from the political arena to the economy – with Europe particular endangered."  He also said Deutsche Bank still needed to finish negotiations with the U.S. Department of Justice, which has demanded $14 billion to settle claims the bank missold mortgage-backed securities. Cryan said he could not give details on how talks were progressing.

US corporate bonds: The weight of debt - (www.ft.com) There was no shortage of buyers when Microsoft sold $20bn in bonds this summer to fund its acquisition of LinkedIn. After years of low interest rates — and with rates in some countries heading into negative territory — debt issued by US companies such as Microsoft looked very attractive compared with the meagre returns offered by government bonds. But after Donald Trump’s pledge to push for an aggressive fiscal stimulus of the US economy, these blockbuster corporate debt sales suddenly look like hallmarks of a very different market environment. As investors and markets try to anticipate what a Trump presidency will mean, one early conclusion is that a dose of fiscal shock treatment will result in much higher interest rates and accelerating inflation.



Tuesday, December 6, 2016

Wednesday December 7 2016 Housing and Economic stories


Americans Not In The Labor Force Soar To Record 95.1 Million: Jump By 446,000 In One Month - (www.zerohedge.com)  So much for that much anticipated rebound in the participation rate. After it had managed to post a modest increase in the early part of the year, hitting the highest level in one year in March at 63%, the disenchantment with working has returned, and the labor force participation rate had flatlined for the next few month, ultimately dropping in November to 62.7%, just shy of its 35 year low of 62.4% hit last October. This can be seen in the surge of Americans who are no longer in the labor force, who spiked by 446,000 in November, hitting an all-time high of 95.1 million.

As Auto Lending Rises, So Do Delinquencies - (www.cnbc.com) Regulators are airing "significant concern" about the millions of Americans who are falling behind on their car loans, even as auto lending continues to boom at a near record pace. On Wednesday, the Federal Reserve Bank of New York noted increasing distress among auto borrowers with shaky credit, as subprime delinquencies rose in the third quarter. In the third quarter, 2 percent of subprime auto loan balances became at least 90 days delinquent, up from 1.6 percent in the third quarter of 2014.

Since 2014 The US Has Added 571,000 Waiters And Bartenders And Lost 34,000 Manufacturing Workers - (www.zerohedge.com) As another month passes, the great schism inside the American labor force get wider. We are referring to the unprecedented divergence between the total number of high-paying manufacturing jobs, and minimum-wage food service and drinking places jobs, also known as waiters and bartenders. In October, according to the BLS, while the number of people employed by "food services and drinking places" rose by another 18,900, the US workforce lost another 4,000 manufacturing workers. This is the fourth consecutive month of declining manufacturing workers, and the 7th decline in the past 10 months.

Government Bond & Mortgage “Meltdown” Crushes NIRP - (www.wolfstreet.com) The situation in government bonds – variously labeled with “bloodbath,” “rout,” “carnage” “meltdown,” or similar propitious terms – continued on Thursday. Already in November – so not counting the “carnage” today – the Bloomberg Barclays Global Aggregate Total Return Index lost 4% or $1.7 trillion, according to Bloomberg, “the deepest slump since the gauge’s inception in 1990. ”While global stocks rallied in November, the gains – $635 billion – were outright puny compared to the $1.7 trillion wiped out in the much larger bond markets. On Thursday it got worse. It started in Europe where government bonds got crushed after speculation surfaced that the ECB might not keep buying bonds until hell freezes over, that in fact it might begin tapering its QE program as soon as next year. The markets were aghast.

 Global Bonds Suffer Worst Monthly Meltdown as $1.7 Trillion Lost - (www.bloomberg.com) The Bloomberg Barclays Global Aggregate Total Return Index lost 4 percent in November, the deepest slump since the gauge’s inception in 1990. Treasuries extended declines Thursday along with European bonds on speculation that the European Central Bank will consider sending a signal that stimulus will eventually end. The reflation trade has been driving markets since Donald Trump’s election victory due to his promises of tax cuts and $1 trillion in infrastructure spending. Calling an end to the three-decade bond bull market is no longer looking like a fool’s errand: the Federal Reserve is expected to raise interest rates again -- and do so more often than once a year, inflationary expectations are climbing and there are hints global central banks may buy less sovereign debt going forward. 


Treasuries Drop Before Jobs Data as Oil Gains; Dollar Declines - (www.bloomberg.com)
Dollar Slips Before Jobs Data as Oil Trades Near $50; Bonds Drop - (www.bloomberg.com)
Oil Trades Near $50 After OPEC Deal as Focus Moves to Execution - (www.bloomberg.com)
Asian Stocks Rise Most in Three Weeks on Oil Deal as Bonds Drop - (www.bloomberg.com)

Traders Are Betting that Volatility Is About to Spread - (www.bloomberg.com)
Markets swing violently against Italy without clear idea of outcome - (www.reuters.com)
Bonds Vulnerable Whether the News From Europe Is Good or Bad - (www.bloomberg.com)

Monday, December 5, 2016

Tuesday December 6 2016 Housing and Economic stories


Some 6 million Americans are delinquent with auto loans and it's going to get worse – (www.marketwatch.com) The number of subprime auto loans sinking into delinquency hit their highest level since 2010 in the third quarter, with roughly 6 million individuals at least 90 days late on their car-loan payments. It's behavior much like that seen in the months heading into the 2007-2009 recession, according to data from Federal Reserve Bank of New York researchers. ... Credit officials have stressed that the contagion risk to the financial system from poor auto loans isn't like the risk posed when subprime mortgage lending pushed the U.S. into the Great Recession. That's in large part because repossessed cars are easier to resell than bank-owned homes. Cars can't sink whole neighborhoods with foreclosure blight.

Crunch Time for “Zombie Bank… on Brink of Collapse” - (www.wolfstreet.com) Things have gotten so serious at Spain’s sixth biggest bank, Banco Popular, that The Wall Street Journal just christened it “Spain’s most Italian bank.” It wasn’t meant as a compliment. These days the bank’s second biggest block of shareholders are short-sellers. They include some of the biggest hedge funds on the planet, from UK-based Oxford Asset Management, which holds a short position of 0.53% of the banks’ total shares, and Marshall Wace (2.23%) to Connecticut-based behemoth AQR Capital Management (2.92%). As of Nov 25, short-sellers held 8.6% of the bank’s capital. It was enough to attract the unwelcome attention of Spain’s market regulator, CNMV, which has so far refused to ban shorting of the stock but has launched an investigation into whether a group of insiders led by Mexican billionaire Antonio Del Valle is using underhand tactics to cheapen the stock in preparation for a takeover bid.

Indiana Gives $7 Million in Tax Breaks to Keep Carrier Jobs - (www.wsj.com) Indiana officials agreed to give United Technologies Corp. $7 million worth of tax breaks over 10 years to encourage the company’s Carrier Corp. unit to keep about 1,000 jobs in the state, according to people familiar with the matter, a deal struck after intense criticism of Carrier by President-elect Donald Trump on the campaign trail. The heating and air conditioning company will invest about $16 million to keep its operations in the state, including a furnace plant in Indianapolis that it had previously planned to close and shift the work to Mexico, the people said. Mr. Trump and Vice President-elect Mike Pence were expected to speak about the deal in Indiana on Thursday.

U.S. municipal bond yields up sharply - (www.reuters.com)  Benchmark U.S. municipal bond prices fell on Wednesday, lifting yields as much as 10 basis points, following an announcement by OPEC to limit crude production. Yields on AAA-rated muni bonds in the 2036-2046 maturity rose 8-10 basis points, according to a preliminary scale read from Municipal Market Data (MMD), a unit of Thomson Reuters. OPEC agreed on Wednesday to the first oil output cuts since 2008 after Saudi Arabia accepted "a big hit" on its production and dropped its demand on arch-rival Iran to slash output, sending oil prices soaring more than 10 percent. Greg Saulnier, muni research analyst at MMD, said the oil deal triggered a Treasuries selloff, which weakened municipals.

Italy’s populist party wants to renegotiate euro membership - (www.cnbc.com) As political uncertainty looms in Italy, the populist Five Star Movement said it would renegotiate the country's membership of the euro if it came into power. Luigi Di Maio, a member of the Five Star Movement, wants to "re-discuss the EU and euro parameters" to address poverty and investment issues in Italy. If such negotiations failed, Italy would have a referendum on a new kind of relationship with the euro area. "If (the EU) won't listen to us, we will propose a referendum on the euro to ask the Italian citizens what they want to do," Maio told CNBC on Thursday.



Sunday, December 4, 2016

Monday December 5 2016 Housing and Economic stories

TOP STORIES:

U.S. to Forgive at Least $108 Billion in Student Debt in Coming Years - (www.fortune.com) Students will see more of their debts forgiven than previously thought. An estimated $108 billion or more in student loans will be forgiven over the next 10 to 20 years, thanks to federal programs that help ease the financial burden for those attending higher education institutions. That figure is roughly one-third of the $352 billion in estimated loan volume U.S. students are expected to take out between 1995 to 2017, according to a Wednesday report from the Government Accountability Office. The report, which criticized the Education Department for understating the cost of government debt relief programs, noted that another $29 billion in loans would be discharged.

Chinese Developers Reassess U.S. Projects - (www.wsjloomberg.com) Some Chinese real-estate developers are lowering their profit expectations on U.S. projects or shelving them entirely as frothy prices and rocky partnerships force them to rethink their strategies in the American market. Swelling supply of high-end New York condominiums could result in losses for some Chinese developers, analysts said. A push to partner with U.S. developers on other projects, meanwhile, has brought unexpected legal spats and other delays. “I see a danger in the real-estate market in the U.S.,” said John Liang, Xinyuan Real Estate’s managing director of U.S. operations. “With its seven- to eight-year cycle, you get a sense now that it’s peaking.”

Household Debt Hits $12.4 Trillion As Subprime Loan Delinquencies Hit Highest In 6 Years: NY Fed - (www.zerohedge.com) The latest just released Quarterly Report on Household Debt and Credit  from the New York Fed showed a small increase in overall debt in the third quarter of 2016, prompted by gains in non-housing debt, and new all-time highs in student loans which hit $1.279 trillion, rising $20 billion in the quarter.11.0% of aggregate student loan debt was 90+ days delinquent or in default at the end of 2016 Q3. Total household debt rose $63 billion in the quarter to $12.35 trillion, driven by a $32 billion increase in auto loans, which also hit a record high of $1.14 trillion. 3.6% of auto loans were 90 or more days delinquent.

Why Italian Stability Is in the Hands of One Bank’s Bondholders - (www.wsj.com) Italian insurer Generali has gone in to bat for Banca Monte dei Paschi di Siena, but the troubled lender and the rest of the Italian banking sector face a tense wait-to-see if other bondholders will support its capital raising. The insurer has pledged to swap the MPS junior debt it owns into new shares. That gives the bank a healthy €420 million ($445.5 million) step toward its unofficial target of getting €1 billion to €1.5 billion from this crucial first leg of a three-part recapitalization. Most of Italy’s banking sector is praying that MPS succeeds in a week beset with political risk. The country is struggling to sort out Europe’s biggest bad-loan pile and if MPS fails to raise the €5 billion it needs, it may be impossible for others to complete their own repairs.

Higher interest rates crush mortgage application volume, down 9.4% - (www.cnbc.com) The highest interest rates in well over a year are putting a dent in the mortgage business. Total mortgage application volume fell 9.4 percent last week versus the previous week, on a seasonally adjusted basis. The Mortgage Bankers Association adjusted the weekly reading to account for the Thanksgiving holiday. Volume was 0.5 percent lower than the same week one year ago, the first annual drop in total volume since January. "Mortgage lenders have been very thankful for a strong 2016 in terms of origination activity. However, mortgage application volume in the Thanksgiving week dropped sharply to the lowest level since early January, as mortgage rates increased to their highest point since July, 2015," said Michael Fratantoni, chief economist for the MBA.


Steven Mnuchin, Expected Treasury Pick, Is an Outsider to Public Policy - (www.nytimes.com)
Auto Loans Get Even Dicier - (www.wsj.com)
China capital curbs reflect buyer’s remorse over market reforms - (www.ft.com)

Thursday, December 1, 2016

Friday December 2 2016 Housing and Economic stories

TOP STORIES:

Strongest Pillar of Shaky US Economy has Cracked – (www.wolfstreet.com) A “car recession,” as the industry is calling it, or the “so-called car recession,” as Ford called it on July 28 in its 10-Q filing, is taking hold. The more politically correct term that Ford also used is the “plateauing” of industry volume. Which means, after six boom years, sales are going down. They’re not crashing, for the moment. They’re facing tough headwinds, and so they’re drifting lower, despite enormous industry efforts to prevent it, and they’re now expected to drift lower next year as well. Steven Szakaly, chief economist of the National Automobile Dealers Association (NADA), which represents about 16,500 new vehicle dealers in the US, forecast that sales of new cars and light trucks in 2017 will drop to 17.1 million.

 

CalPERS Weighs Pros/Cons Of Setting Reasonable Return Targets Vs. Maintaining Ponzi Scheme - (www.zerohedge.com) In just a couple of months, the largest pension fund in the United States, the California Public Employees' Retirement System (CalPERS), will have to decide whether they'll rely on sound financial judgement and math to set their rate of return expectations going forward or whether they'll cave to political pressure to maintain artificially high return hurdles that they'll never meet but help to maintain their ponzi scheme a little longer.  The decision faced by CALPERS is whether their long-term assumed rate of return on assets should be lowered from the current 7.5% down to a more reasonable 6%.  As pointed out by Pensions & Investments, the decision has far-reaching consequences.  First, a lower rate of return will equate to higher contribution levels for municipalities throughout California, many of which are on the verge of bankruptcy already.  Second, given that CALPERS is the largest pension fund in the United States, a move to lower return hurdles could set a precedent that would have to be followed by other funds around the country in even worse shape (yes, we're looking at you Illinois).

Monte dei Paschi’s Future Hangs on Sunday Vote - (www.wsj.com) The day of reckoning for Banca Monte dei Paschi di SienaSpA, Italy’s No. 3 lender by assets and one of Europe’s most troubled, is drawing near. Long-simmering political, financial and market tensions promise to come to a head next week when it becomes clear whether Monte dei Paschi will be able to succeed in executing a make-or-break plan to bring itself back to health. This weekend will be decisive, when Italians vote on a referendum that could open the door to political instability and unnerve investors, threatening to derail Monte dei Paschi’s rescue plan. That in turn could force a state bailout of the lender, perhaps by year-end—deeply complicating Italy’s efforts to clean up its banking sector.

Exclusive: ECB ready to buy more Italian bonds if referendum rocks market - sources - (www.reuters.com) The European Central Bank is ready to temporarily step up purchases of Italian government bonds if the result of a crucial referendum on Sunday sharply drives up borrowing costs for the euro zone's largest debtor, central bank sources told Reuters. Italian government debt and bank shares have sold off ahead of the Dec. 4 referendum on constitutional reforms because of the risk of political turmoil. Opinion polls suggest the 'No' camp is heading for victory, which could force out Prime Minister Matteo Renzi in the latest upheaval against the ruling establishment sweeping the developed world. The ECB could use its 80-billion-euro ($84.8 billion) monthly bond-buying programme to counter any immediate, further spike in bond yields after the vote, smoothing market moves and supporting bonds, according to four euro zone central bank sources who asked not to be named.

Auto Loans Get Even Dicier - (www.wsj.com) After a yearslong boom in lending, signs of trouble are popping up in auto loans. In the past few weeks, some auto lenders have warned that default rates are creeping upUsed-car prices are also falling faster than many anticipated, leading to lower recovery amounts when borrowers do default. The latest stress signal comes from auto research firm Edmunds.com, which said in a recent report that record numbers of shoppers are trading in old cars for new ones when they still have substantial amounts due on their existing car loans. In the first three quarters of 2016, the number of these new-car purchases with negative equity on previous loans reached a record 32% of all trade-ins, according to Edmunds data. That is up from 30% in the same period a year earlier and just 22% five years ago. The average amount of negative equity also reached a record, at $4,832.




Wednesday, November 30, 2016

Thursday December 1 2016 Housing and Economic stories


Greece introduces tax on bank withdrawals as elitists seek to criminalize cash - (www.naturalnews.com) The Greek financial crisis continues to escalate, as the government recently put in place a controversial revenue-generating policy aimed at improving its economic position at the expense of its citizens. The government will introduce a "surcharge" -- really, just a tax on cash -- for all cash point withdrawals, such as at banks or at ATMs, in what is proving to be a last-ditch, desperate attempt to prevent citizens from taking their money out of beleaguered financial institutions altogether. Greek leaders are hoping that the controversial decision will raise as much as €180 million (about $203 million), which the government in Athens then hopes will assist in avoiding a default on Greek debts owed to international creditors.

Things Are Getting Serious in Mexico’s Corporate Debt Crisis - (www.wolfstreet.com) Since central banks embarked on their madcap ZIRP and QE during the Financial Crisis, emerging-market companies have not been able to resist the fatal allure of cheap dollar debt. As the good times rolled, the risks were ignored. In relative terms, dollar-denominated debt recently reached a record 17% of global GDP excluding the US, a ratio that has doubled over the past 20 years. Some countries are more exposed than others. In its latest report on Mexico, the IMF pointed out that almost a quarter of all of the corporate debt in circulation in the country is denominated in dollars. That’s roughly the equivalent of 25% of Mexico’s GDP ($1.1 trillion in 2015). Foreign denominated liabilities jumped 83% over the past four years to 1.7 trillion pesos ($82 billion). During the same period, Mexico’s non-petroleum exports increased by just 10%, meaning that the ability of private companies to generate the dollars needed to continue meeting their burgeoning dollar-denominated debt obligations has weakened significantly.

Best Emerging-Market Bonds Jolted as India’s RBI Drains Cash - (www.bloomberg.com) Indian sovereign bonds slumped the most in 15 months on concern demand for debt will wane after the central bank announced steps to drain funds from the financial system. The Reserve Bank of India told lenders to set aside more deposits as reserves as the government’s Nov. 8 move to ban high-denomination currency notes saw citizens rushing to banks to submit or exchange the old bills, flooding them with excess cash. That risked prompting a slide in borrowing costs, threatening to hurt financial stability and stoke inflation in Asia’s third-largest economy.

Italian Lenders Slide on Vote Worries to Drag Down Europe Stocks - (www.bloomberg.com) Italian lenders declined on rising concerns about risks to their financial stability from the upcoming referendum, bringing an end to a three-week rally in European shares. Banca Monte dei Paschi di Siena SpA, the lender burdened by bad loans and under pressure to raise fresh money, tumbled 14 percent. UniCredit SpA and Intesa Sanpaolo SpA fell at least 3.2 percent, dragging the FTSE MIB Index to one of the worst performances in western-European markets. The Financial Times reported yesterday that as many as eight Italian banks risk failing if Renzi loses the vote. “It’s a nervous market at a time when liquidity isn’t great,” said Kevin Lilley, a manager of euro-area equities at Old Mutual Global Investors in London. His firm oversees the equivalent of $32 billion. “We have more political and economic uncertainties that need resolving. People are getting worried about the impact that a power vacuum in Italy could have on the refinancing needs of its banks.”

Monte Paschi Starts Crucial $4.6 Billion Bonds-to-Equity Swap - (www.bloomberg.comBanca Monte dei Paschi di Siena SpA started the first crucial stage of its turnaround plan on Monday as fresh worries about the future of Italy’s government rattled financial markets. The Italian lender is asking bondholders to swap 4.3 billion euros ($4.6 billion) subordinated bonds for equity, a step that would allow the bank to proceed with a share sale by the end of the year. Bond investors have five days from Nov. 28 to sign up. The board of directors at Assicurazioni Generali SpA, Italy’s biggest insurer and an investor in the bonds, voted in favor of a conversion.