Europe

European shares dipped and U.S. equity-index futures (-0.3%) pointed to a lower open as traders questioned the stability of the Italian banking sector ahead of next weekend's referendum as well as the longevity of the Trumpflation rally, pressuring the dollar, sending the USDJPY sliding as low as 111.355 overnight, before rebounding over 112. That was the dollar's biggest fall against its Japanese rival since October 7 and against a basket of top world currencies it was the greenback's worst day since November.

Submitted by Sieren Kern via The Gatestone Institute,

Submitted by Gregory R. Copley via OilPrice.com,

US President-elect Donald J. Trump in many ways faces the most circumscribed strategic options of any modern U.S. President entering office. Not only has the global context changed — and will change rapidly even further — so also has the United States’ abilities, tools, and resources to assert itself on the world stage.

Just as we were concluding our write up on the return of Europe's solvency crisis, facilitated by Donald Trump's NATO funding demands and the end of the ECB's unprecedented can kicking exercise, the FT reported that as many as eight of Italy’s troubled banks "risk failing" if prime minister Renzi loses next weekend's constitutional referendum and ensuing market turbulence deters investors from recapitalizing them, citing senior bankers.

Since Drahi's infamous "whatever it takes" warning in the summer of 2012, European bond yields have been a one way street lower, and until the recent Trumpflation rally, had tumbled to all time lows, in many cases well below 0%.  There are two catalysts, however, that may be ending Europe's QE-driven free ride, and according to a recent report by Barclays, their names are Donald Trump and Mario Draghi.

First, when looking at the impact of Trump, Barclays notes that his election as US president may have created an additional burden on European budgets: defence spending.