CROSS-SECTORSECTOR COMMENT 15 November 2016ContactsBenjamin S. Garber 1.212.553.4732 Asst Dir-Economist benjamin.garber@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research,Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products.For further detail, please see the last page.Market CommentWill Italy Get Trumped? Anti-establishment political shockwaves are coursing across the globe, and the next key challenge to traditional governing structures is the Italian constitutional referendum on December 4. Prime Minister Matteo Renzi has staked his future on measures that will streamline the notoriously chaotic Italian Parliament and consolidate power within the central government. Yet with the country wracked by decades of economic stagnation and bloated unemployment, voters are poised to reject the reforms desired by mainstream politicians. Such an action could contribute to global financial market uncertainty, and greatly add to the concerns surrounding the restructuring of the Italian banking sector.Italian risk measures shift higher The great hope behind the Italian referendum is that its success can lay the groundwork for structural reforms and stimulus spending that would boost the moribund economy. The proposed measures would reduce the size and influence of the Senate, and in the lower house give a voting majority to the party that wins national elections. Additionally, power to push through infrastructure projects would largely be transferred from regional governmentsMOODY'S ANALYTICS CROSS-SECTOR2 15 November 2016 Market Comment: Will Italy Get Trumped?to the central government. Simplifying and emboldening the central government could help bring the stability needed to spur changes that improve Italys weak trends in productivity. Yet such proposals are not embraced by the majority of Italians. Led by the ascendant protest party, the Five Star Movement, a plurality of voters according to nearly every poll stands ready to vot...
