Stagnant growth and banks’ festering non-performing loan problems cast a pall over Italy’s prospects ahead of a referendum that could determine the fate of the prime minister Flat real GDP growth in Italy in the second quarter was below consensus expectations of 0.2% (quarter over quarter) and brought to an end five consecutive quarters of improving expansion. Overall, the outlook for Italy remains challenging. Assuming a pick-up in quarterly growth to 0.2% (the average since Q1 2015), the...
Read More »FX Daily, July 28: Dollar Pulls Back Further Post-FOMC
Swiss Franc The Swiss Franc is having a very volatile week. With the European stress tests approaching and with a bad U.S. durable goods release, the EUR/CHF is on the descent again. Data on net immigration to Switzerland has been published. The number of people who are leaving Switzerland is on the rise and the net immigration number has fallen. This is positive for the euro and negative for CHF. This decrease in...
Read More »Great Graphic: More Thoughts on Banks
Summary Italian banks have done worse that European banks. Italian banks outperformed Germany banks from end of H1 12 through H1 15. US banks and financials more broadly have outperformed Europe. Italian banks were struggling before the UK referendum. The result drove down interest rate, which keeps margins under pressure. The prospects of weaker growth as a result of Brexit means that demand for credit...
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