“Elsa Fornero in Lacrime” was the short headline in many Italian newspapers and online publications this morning. As the scope and damage of the new austerity autocracy was finally revealed by the unelected technocrats in Italy on Sunday evening a minister was left in tears. Now powerless to stop the relentless invisible hand of the market bulldozer deciding her citizens’ future, Elsa Fornero broke down and wept as she tried to explain the sacrifices required of Italians after the re-modelled cabinet passed a budget with initial net cuts of €24 billion.
She shouldn’t weep alone, the paradigm shift ‘ordinary’ Italians will experience over the remainder of this first decade of the 21st century will be both brutal and extreme. The ironic juxtaposition between her reaction and the man in the blue suit next to her should also be noted by ‘ordinary’ Italians. With a mixture of embarrassment and incredulity Marion Monti, the ‘super banker’ technocrat installed to do the market’s bidding, forced a ‘sympathetic’ smile that wouldn’t have looked out of place at a house of Borgia’s insular feast.
Monti will no doubt quickly search for a modern day Lucrezia Borgia to do his bidding, ruthless Machiavellian politics will need to be implemented in order to navigate the groundswell of hostility towards his new version of the Renaissance Papacy and in his ‘new order’ there’ll be no room for sentiment…
German Chancellor Angela Merkel and French President Nicolas Sarkozy will hold talks in Paris today starting at 1:30 p.m. over lunch. With a European Union summit in Brussels looming Dec. 9, U.S. Treasury Secretary Timothy Geithner arrives in Frankfurt tomorrow to ‘prod’ political leaders, the European Central Bank holds a policy meeting Dec. 8.
Markets rallied last week after central banks moved to help European banks and on hopes of a Franco-German master-plan. ECB chief Mario Draghi signalled that a euro zone “fiscal compact” could nudge the bank to act more decisively to fight the crisis. The sticking point is that France opposes Germany’s push to have euro states surrender budgetary control to a European authority with veto power.
While Germany, increasingly hostile towards costly bailouts, wants a more federal EU system, Sarkozy is under fire five months from a presidential election from political rivals who accuse him of being ready to hand over sovereignty to unelected EU officials.
Stocks rose in the morning session extending the biggest weekly gain since March 2009, as the euro and oil advanced as Italian Prime Minister Mario Monti proposed budget cuts and leaders prepared to meet on Europe’s debt crisis.
The MSCI All Country World Index increased 0.3 percent as of 8:01 a.m. in London, adding to its 8.4 percent surge last week. The Stoxx Europe 600 Index gained 0.7 percent while Standard & Poor’s 500 Index futures jumped 1.1 percent. The euro appreciated 0.3 percent to $1.3429, while the yen fell against most of its 16 major counterparts. Oil climbed for a second day to $101.41 a barrel.
S&P 500 futures expiring in December climbed to 1,257.2. Treasuries fell, pushing the yield on the 10-year note up three basis points to 2.06 percent. Service industries in the U.S. probably expanded in November at the fastest pace in six months, a sign the economy is accelerating in the final months of 2011, economists said before a report today.
The euro extended its first weekly climb against the dollar in more than a month. A proposal to channel European Central Bank loans through the International Monetary Fund may deliver as much as 200 billion euros ($268 billion) to fight the region’s debt crisis, according to two people familiar with the negotiations.
Oil for January delivery rose as much as 0.8 percent to $101.73 a barrel. Iran said oil will breach $250 a barrel if nations threaten to ban its purchases, according to the Shargh newspaper. Iran pumped 5 percent of the world’s oil last year, according to BP Plc’s Statistical Review of World Energy.
Market snapshot at 10:15 am GMT (UK time)
Asian markets were mixed in the early morning overnight trading session, the Nikkei closed up 0.6%, the Hang Seng closed up 0.73% but the CSI closed down 1.4%. European bourse indices have rallied this morning due to increased optimism with regards to the Eurozone economic crisis. The STOXX 50 is up 1.29%, the UK FTSE is up 0.61%, the CAC is up 1.12%, the DAX is up 0.91% and the MIB is up 2.01%.
Economic calendar data releases that may affect the afternoon session sentiment
15:00 US – ISM Non-Manufacturing Index November
15:00 US – Factory Orders October
Factory orders for October may affect sentiment. According to a Bloomberg survey of economists, a change of -0.30% is expected, compared with last month’s figure of 0.3%