On Sunday’s Italian Referendum, and the November Jobs Report

Polls show “No” ahead in Sunday’s Italian referendum, which would potentially cause Renzi’s government to fall, leave Italy’s troubled banks without restructuring, and open the door to the anti-euro populist Five Star Movement. Based on the perfect recent record of polls to fail to predict “outsider” or pro-growth elections world-wide, we’re inclined to think that “Si” will be the surprise winner. A “No” vote is already largely impounded in markets, so we wouldn’t expect much effect. “Si” would cause Italian yields to fall, and the euro to rally. This morning’s jobs report, with a drop in average hourly earning showing absolutely no “wage pressure,” gives the Fed no cause to posture more aggressively after the inevitable hike at the December meeting.