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Dec. 5, 2016, 11:51 a.m. EST

Ciao, euro! Global markets gird for the next wave of global populism

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By Shawn Langlois, MarketWatch

The fate of global markets is up in the air after the latest from Italy.

Another wave of global populism is headed our way after the Italians voted “no” to constitutional reforms. In real terms, it was a “no” to Prime Minister Matteo Renzi, who dutifully announced his resignation, casting Italy’s future into doubt.

“Now all bets on Italy’s political, economic, and financial stability are, once again, off. And by extension, the stability — what remains of it — of the eurozone,” writes Wolf Richter of the Wolf Street blog.

Read: What to know about Italy’s “no” vote.

Cheers from the right rung out across Europe. This tweet, for example, came from one of Italy’s leading right-wing politicians:

Add this result to the “swampy” administration that’s taking shape in the United States, and it could be another one of those gut-check weeks for investors.

Up to this point in the post-election era, speculators have been riding big bets on the long side — at least when it comes to small-cap stocks.

In fact, speculative longs on the Russell 2000 /zigman2/quotes/210598147/delayed RUT +0.18%  have risen 88% since the Trump win and are hovering around at decade-long highs. Meanwhile, shorts bets have dropped 16%, according to Jones Trading’s Michael O’Rourke.

For the broader S&P 500 /zigman2/quotes/210599714/realtime SPX -0.91% , however, speculative shorts have actually increased 26% since the election and, for the first time since May, they are consistently higher than the longs. Shorts have also increased on in gold positioning.

“All in all, many of these moves are dramatic,” O’Rourke said, “thus it will be interesting if the early post-election trends continue or reverse.”

Key market gauges

At last check, the euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.3315%  was rising against the dollar, bouncing back after tumbling to a 21-month low. The Dow /zigman2/quotes/210598065/realtime DJIA -0.48%    has opened at a record high, and the S&P  is up as well at the start of trading. Oil /zigman2/quotes/209723641/delayed CLF27 +0.79%  has been marching higher and gold  has been dropping.

Asia markets /zigman2/quotes/211618636/realtime XX:ADOW +0.35%  closed lower, while Europe /zigman2/quotes/210599654/delayed XX:SXXP -0.88% is gaining after opening in the red. Keep an eye on Italy’s FTSE MIB , which gave up an early lead to drop 1.2% — and has been getting hammered this year. More on Italian stocks here.

The buzz

Cerecor  shares are down 31% after a disappointing midstage trial for a nicotine withdrawal treatment.

Consolidated Communications /zigman2/quotes/209212218/composite CNSL +3.83%  is buying FairPoint   in a $1.5 billion stock and debt deal. The latter is up 13%.

Chalk one up for the protesters. The U.S. Army Corps of Engineers said Sunday it wouldn’t allow the Dakota Pipeline project to proceed, denying permits while it conducts an environmental review to assess route of the 1,170-mile pipeline.

No surprise. Donald Trump and his itchy Twitter finger are back at it. On Sunday, he took aim at the Chinese government with these tweets:

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