French president due to his lack of popularity. And pobama becomes an obstacle as he says he will block a chinese takeover. Welcome, its friday. And not the casual friday many people were hoping for. We have the italian infrastructure, austria elections, nonform payrolls. And more nominations for cabinets state side. Which is causing people to be nervous. Here in europe, we were mentioning the italian market, we have seen a recovery in the last laugh an hour or so from some of the early underperformance from some of the italian players. The referendum on sunday super important and well be crossing over to julia to get more on the latest of what to anticipate and why its so importantly. We have seen the italian banks continuing to come off a little bit, but again some of these losses that we saw earlier this week having just mild they have neutralized a little bit. But italian banks and stocks have been higher for three days up until today. So we did see narrowing of short positions there. I guess because of some of the more informal polls, formal polls closed three weeks ago, but informal polls and on social media, those have shown a narrowing in terms of the yes and no vote. We had the report out by the ft at least saying that it would be pretty dire for the italian banks if we were to see a no vote. But again, there is a lot going on. And there is a lot of differing pin p i dont knows, also, on no and yes. Lets get to the Credit Suisse opinion. They say a no vote is probable, and 50 of a soft note. The Prime Minister saying that a no victory would make it tougher for the italian banks to raise capital. He qualified his warning saying that the Financial System is solid, but admitted that three of the countrys lenders are in a difficult position. They are trying to raise 5 billion euros to avoid a capital shortfall. And some of the banks out there again not a lot of movement compared to initially earlier this week, were just seeing a little buts of recovit of recov. Again bearing in mind how much theyre worth per share. Julia is in rome. Just map out why a no vote necessarily would have to make it more difficult for some of these italian banks. The focus has been on what the results of a no vote would be. And the Prime Minister said that it would make the environment more challenging for the banks. Why . Because the likelihood is if we get a no vote, Prime Minister renzi will step down and then the search will be on for a new Prime Minister. So youre look at some elements of political instability even if renzi continues to hold the helm until that replacement is found. As you pointed out, you have banks like monty depassky undergoing a debt to equity swap as we speak and they were hoping to raise capital starting next week. So if you have political instability here, then the ultimate question is that going to create challenges and make investors more nervous about perhaps participating in this equity raise than they might have been before. Remember there was already reluctance that we were hearing behind the scenes. Let me give you a sense of what the local people and press are saying about the likelihood of a result here in this referendum. We have the headline here, renzi continuing to say that look, this reform is a good thing and it will guarantee some element of stability in government itting for forward. And the clown here has nothing to do with renzi of course or the focus of the five Star Movement. And this paper is more to the left. Saying its an ultimate showdown between renzi and grillo. You have an estimated 07 of ittaliance living aboard, 40 believed to have voted already. An estimated third italians are up decided at this stage, so still difficult to call. And a very busy weekend for you. Let get out to managing director trusted sources joining us. Thanks so much for taking the time. You say the markets are overplaying the significance of this referendum. Why . Because the referendum does not represent a Critical Path to any particular result. For example, the Italian Economy ministry you just quoted saying the kn no vote is what theyre expecting and thats what the markets are betting on, which is different than the brexit, but if the no vote does win, you heard the minister saying that would make more life difficult for the banks. Probably it would panic the eurozone authorities to relax their rules on state aid for Bank Recapitalization and their insistence on bailins in the process of restructuring banks. But it doesnt lead in itself the referendum to any crisis straight away. But it would if there is a yes vote and the five Star Movement gains power and they want to exit the eurozone. And that is the point which the market is missing, the yes vote which would surprise the markets on the up side. So italian assets would rally strongly on monday morning which by the way is certainly not impossible. I think weve all learned not to place too much trust in opinion polls. And your colleague in rome there is saying there is a yes vote coming from the huge italian, london, many parts around europe. And i think that there could be a surprise. But i so agree that the yes vote would perhaps create greater risks. It would leave italy for us brits a bit like here in the uk. You get a lower house of parliament which can get outright power in the state. Because the local governments would be downgraded, as well, in this constitutional reform. So you have a system where a challenger like for example an ally answer of the five Star Movement in the Northern League could win outright power in the italian state and take italy out of the euro. So the yes vote is a harbinger of risk and i think investors are missing that point. And were hearing that the five Star Movement that theyre backing a no in order to get n renzi out of power. And that could be short sighted. Could be. And we talk about changes in democracy and whether its a smart thing quote unquote for italy to be taking away power from the senate. Well, every democratic country has its open from a decisions. I think most people would although they may question one or another electoral system would say the uk is no more or less democratic than eigitaly. Would italy become more or less democratic . You can debate that until the cows come home, but really these are democratic cultures. After the brexit vote, we havent seen this massive uprising of other countries in europe expressing that they would want to leave the eu, as well, that that kind of hasnt happened yet. Im sure there are more outlier parties that would want that to happen, but we havent seen that real push from some of the main European Countries. Well, you have in the major european economies like italy and france which have had pretty dismal Economic Performance especially italy, you have parties that have a program tha you have to focus on single. Others explicitly want a mandate to take their countries out of the euro. And in italy, the scenario is a little more realistic than france. But i think these in any case even if still a low probability, but well below 50 , these are nonnegligible tail risks and the question is are markets pricing them adequately. Stay with us. We want to talk to but another political story. Hollande has announced he will not seek reelection for a second term. He shocked the nation in acknowledging his Widespread Lack of popularity and injecting new uncertainty into next years race. Hollandes decision marks the first time an incumbent president has not sought a second term since 1958. He delivered the news in a televised address. Translator being in power, ritual of holding power, never made me lose my lucidity, neither about myself nor about the situation because i have to act. And today im con shups of the risks such a move would have if it doesnt get widespread support. Also ive decided not to be a candidate in the president ial election. I wanted to tell you directly as promised if he beginning of december as i have announced it. Christopher, to be honest, it didnt shock me at all because thats pretty much what france was expecting because his popularity ratings are at 4 , lowest since anyone of anyone president since the he said of the second world war. Was it the right decision . I think the answer is obvious it was certainly the right decision in the sense that if president hollande had run again, he would have crushed out disastrously from the election. So what happens to the social lists then, what happens to the left side of the political spectrum . He will face a primary election a bit like the center right party has been having. And he will be up against the left wing. And then the i said center left candidate. So there will be plenty of jostling for position on the center left and left part of the spectrum. But the incumbency at a time of economic weakness and terrorist outrages in france is going to make it extremely difficult for even a fresh or fresher face than president hollande as the candidate of the left to get through to the second round. So i think the boring conclusion has to be that france is still looking at a second round runoff. So how do we trade it . I think investors need to take a view of whether the victory of a challenger party like for example the brexit cause or the Trump Victory in the u. S. In these core European Countries and i stress again eurozone, france and italy, whether that is simply a tail risk talking say 5 , or whether its a substantial possibility, is it 25 or 30 . Because i think risk positioning would need to be very different in one or the other case. If you position that the National Front in france has a one in tour chance of taking power in the french state, then that becomes not very likely but possible. Do you buy sovereign bonds or is that seen asing a risk play basically . The hire ygher you think thel risk is, the more you should be hedged for severe financial shock in the bond markets. And you say in the case of a no vote in italy, we might see a big selloff, that would be a buying opportunity you think. I think that some of that selling has already taken place. So as i said a minute ago, up like brexit or trump, the market is better positioned for another voter revolt. But never the less there would probably be more uncertainty, more selling on monday. And i think would be a buying opportunity. Thank you so much for your time. Once again a busy weekend for all of us. M m its fantastic to hear from you always. Were also on twitter live. You can follow us at street signs cnbc or tweet us directly. And still coming up, the deal is off. Find out why president obama block blocked ax tron being acquired. Welcome back. Youre still watching street signs. Lets head out to singapore and get the latest on the asian markets. Good morning. Im afraid we at the present time gididnt give you a good leadin as we saw a pull back as theyre waiting for the u. S. Jobs number and the italy referendum. As we saw a pull bace waiting for the u. S. Jobs number and the italy referendum. Hang seng down by 1. 4 , dragged down by the casino sector even though macaos revenues are up year on year. The nifty oig continues to trade lower being dragged down by the auto sector saying november sales have been hurt by the demonitization move that happened earlier in the month. Nikkei 225 ended down half a percent off its 11 month highs as we saw investors taking procht respe profits of off the table. Kospi also down with the Semiconductor Space hit significantly. It was tracking its counterparts in the u. S. Which ended more than 5 lower on the u. S. Asx 200 down 1 with banking and resource stocks dragging down that index. Back to you. Pauleen, have a fantastic weekend and see you next week. The british home builder berkeley posting a 34 rise in pretax profits in its first half, but warned of a 20 drop in demand since the brexit vote. They said uncertainty was com pounded by a rise in property tax. And reforming its financial targets. Ceo says his firm is facing significant challenges. But swiss re says it is still aiming to increase its economic net worth by 10 at year. And i didnt see what the shares were doing. They flipped too quickly. Very fast. Got to stay on it or you snooze you lose. Talktalk is the latest victim of a cyberattack. Items left some customers without internet now for days. The hackers reportedly used the same Malicious Software used in a string of attacks on several websites earlier this year. The white house has decided to block aixtron from being acquireded by a chinese buyer. President obama is expected to uphold the u. S. Committee on Foreign Investments recommendation to reject the deal on National Security grounds later on today as shares off by a little more than 3 in german trade. And huge moves in the price of oil as many oil related stocks after seeing a postopec deal boost, shares there again in focus this morning. Oil prices have now slipped as investors they shift their focus to details of how the deal will be implemented. The landmark Production Cut marks the First Time Since 01 that opec has coordinated with nonmember russia and of course those moves were yesterday and the day before yesterday. And meanwhile russia says it is actively working out details of the deal with opec, that is according to comments this morning from the countrys Deputy Energy minister. The minister added all agreements will be based on november output figures and thats quite interesting because there was there was some confusion as to whether there would be based on next years output figure. So that seems to clarify some of the confusion. Definitely. And also i guess keeping in mind as well that theyre still putting out the most oil they have ever put out like saudi for example. Russian president Vladimir Putin has said that inflation in russia may reach 4 by 2017. But hes warned that end of the year 2016 inflation figure might be below the 2011 record low. Speaking in his am state of the nation address, putin said that the russian government will present a new plan before may of 2017 and he added that the country will consider changes to its taxation system and implement new mechanisms starting from 2019. Daniel slaughter is the global head of equity strategy from renaissance and hes with us. Talk to us about the trump trade and whether or not its in place when looking at the russian trade, you know, whether or not russian market is a trump trade given that we anticipate sanctions for an example might be lifted at some point in the future. Sure. If you look at emerging markets since the u. S. Election, youve got three are market which is are up. Egypt, greece and russia. So the market is already telling us there is something of a trump trade. Putin and trump have held out hands to each other. They have yet to meet, so we dont know what will happen on sanction. We dont know who the secretary of state is in the u. S. Yet. But they have held out their hands to each other, so were saying now that the possibility of sanctions coming off has moved to 50 50 probability rather than a 10 chance which we had thought previously. Secretary of defense we heard more are about this morning, james mattis, we know bannon is probably chief strategy, Reince Priebus taking on a main role, as well. Do you think that the emerging market trade necessarily has to be a negative one if we continue to see the trump trade being in place . I mean arent emerging markets being lumpeded too much together in the same so the trump trade so are far has been for emerging markets, youve had the strong dollar, rising u. S. Bond yields and threat of protectionism. So people are cautious and uninvestors we speak to will come back in the first quarter, see what the actual will be and reassess. Investors we speak to back in the first quarter, see what the actual will be and reassess. They are looking for i h idiosyncratic trades that can do well. Listening to putin was quite shocking to hear him say that our economy is suffering because of internal problems. And he usually blames the rest of the world for the problems. Now he admits that and also were seeing maybe a Seismic Shift when it comes to the opec deal and oil prices rising. How much of a change a does that mean for the russian economy . I think that the three things that can help russia, one is sanctions coming off. The second one is reform, that would help russia a lot. And the third is the oil price. So far were saying the oil price is helping. Sanctions we dont know yet. And reform we think is the story for after the 2018 elections. But putin is laying the ground for Reform Program after those elections. You have an overweight on russian equities. I would note msci is at an alltime high. Its the markets that not all investors have returned to. Many that we speak to are still qui ske skeptical. And you have growth coming back next year. Investors will be prepared to look at it again particularly if the geopolitical environment looks better. Quick note a greek and egypt . Yes. Three markets that are up, greece there is optimism about the review that the eu is doing about the reform package in greece that is due next week. And then egypt, youve had a huge devaluation, currency is very cheap. So that is a decent recovery story we think over the next 12 to 18 months. Daniel, thank you very much. Global head of equity strategy from renaissance capital. Check out World Markets live, our blog, which runs throughout the year. Well be back in two. Welcome back. Nervousness rains in early trade with the ftse underperforming its european peers. Italian banking stocks trading mostly lowerish. They have come around here over the last half an hour or so. That as the finance minister is warning that a no result are ma will make difficult to raise much needed capital. Francois hollande with the latest shock saying he will not run for a second term as french president due to his lack of popularity. And obama becomes an obstacle for ax drixtron and shares sink warns that he will block a chinese takeover of the company. Good morning and w