“Italy’s efforts to revamp the banking industry…”

Europe and Canada

The EU and Canada have secured clearance for a free trade deal and the removal of import duties that should support growth and jobs for both continents.

Eight years after negotiations started the Comprehensive Economic and Trade Agreement (CETA) will enter into force. CETA has been the focus of demonstrations in Europe led by trade unions and protest groups. Some opposing views are that it will lead to a race to the bottom in labour and environmental standards and that it will allow multinational corporations to dictate public policy. Supporters of CETA say that it has replaced arbitration panels with transparent and independent courts to settle disputes. Moreover, those who support CETA say that it will increase the Canadian-EU trade by 20 percent and boost the EU economy and Canada economy by EUR 12 billion a year and C$12 billion respectively. Whilst for Canada the deal will reduce its reliance on the United States, for the European Union it is the first trade deal with a G7 country. This comes at a time when the Britain has voted to leave the bloc in June 2016.

Stocks in US and Europe

On Wednesday stocks have risen to an all time high and the dollar rose for the 11th straight day after Janet Yellen hinted a possible interest rate rise next month. Yellen’s comments pushed Wall Street by boosting US bank stocks such as Goldman Sacchs which have increased by 37 per cent since the US presidential election. Financials also followed in Europe with the French biggest retail bank, Credit Agricole exceeded forecasts with a smaller than expected earnings drop in the fourth quarter. Also, out of the top 10 gainers in Europe six were banks.

Inflation

The US cost of living in January 2017 was the highest since February 2013, resulting from an increase in the cost of gasoline and other goods and services indicating inflation is gathering momentum. According to the labour department figures, the consumer-price index increased by 0.6 percent greater than forecast after an 0.3 percent gain in December. The costs to Americans for goods and services increased by 2.5 percent which is the most since March 2012. Steady demand is giving some companies some pricing power. Prices of clothing have jumped by 1.4 percent, which is the most since February 2009, while apparel for men increased the most. New vehicle prices increases by 0.9 percent in January, the highest rise since November 2009. The core CPI measures that excludes volatile food and fuel costs increased 0.3 percent, which is the highest in five months, whilst core inflation increased by 2.3 percent from January 2016. The higher cost of living had an impact on American’s citizen income.

Italian Banks

As part of the nation’s efforts to revamp the banking industry, Italian parliament has passed a law to inject as much as EUR 20 billion into Banca dei Paschi di Siena. The legislation includes emergency liquidity guarantees and capital injections for lenders who are struggling. Monte dei Paschi was the first bank to seek funds under this new law after it failed to raise fresh money from investors in December. According to the European central bank, in order for the Banca dei Paschi to follow up on the recapitalization plan that itself has requested must raise 8.8 billion euros to enhance its balance sheet. Italian banks are suffering from a 360 billion-euro bad loans, which had an impact on profitability and undermined investor confidence.

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