“Milan Leads European Economic Rebound with Impressive 2.36% Growth”

The fear triggered by the failure of Silicon Valley Bank and Signature Bank seems, at least for now, to have passed.

Stock exchanges on both sides of the Atlantic advance strongly with gains of more than 2% thanks to the banks that are regaining momentum and US inflation in line with expectations.

Piazza Affari tries to leave behind the fears that new banking crises could follow the failure of Silicon Valley Bank, closing the session with a decisive reboundleading the European Stock Exchanges. Il Ftse Mib ended trading in progress of 2.36% at 26,800 points.

Closure in sharp rise also for the other European stock exchanges which are trying to overcome the shock of the failure of Silicon Valley Bank, confident that the meltdown will not affect the global financial system and not be followed by other banking crises. TO Paris the Cac 40 closed the session up 1.86% at 7,141 points, at Frankfurt the Dax index rose 1.83% to 15.23
2 points while a London the Ftse 100 finished up 1.17% at 7,637 points.

Even if the panic seems to have subsided, attention still remains high on the state of health of the American banking system, under special surveillance by the authorities and beyond. As Fed, SEC and Justice Department probe SVB bankruptcy, Moody’s cuts US banking outlook from stable to negative, and puts First Republic and five other institutions under review for possible downgrade. The investigations launched by the American authorities follow the avalanche of criticisms leveled against the rescue of the deposits of Svb and Signature Bank. And they add to the hunt for ‘responsible’ that is animating American politics. Donald Trump points the finger at the policies for diversity and the environment adopted by Svb and workhorse of the Democrats. Instead, liberals blame the former president and his deregulation for the failures. While the hunt for the culprit continues and the first legal actions against the two failed banks have been launched, the spotlights are on the crisis in Silicon Valley, until a few years ago an ‘underdog’ which has now become ‘too big to fail’, l label used for his ‘enemy’ Wall Street banks. The bankruptcy of Svb is in fact considered yet another sign of difficulty in Silicon Valley, already bent by the thousands of layoffs announced by its big names, the last in chronological order Meta with another 10,000 cuts.

A Silicon Valley rich which, observe some analysts, has not managed to find a solution for Svb, whose crisis helps to bring it back down to earth after years of unbridled growth that seemed endless. The shower of criticism does not spare the ESG – environmental, social and governance – funds either, which have invested in Silicon Valley Bank, an important lender of start-ups active in renewable energy. Focused on the environment, however, the funds have shown less attention to governance risks, completely ignoring them, according to some. Amidst the controversy and free-for-all, the Fed appears to be the institution in the greatest difficulty. The central bank has launched an investigation into the supervision and controls at SVB, whose supervision – being a bank against 100 billion in assets – fell right under its lens. While awaiting the results of the exam, the American central bank is preparing for an even more complicated test, that of seeking a balance between the fight against inflation and the tensions on the banking market due in part to the rise in interest rates.

Inflation, although slowing down to 6% in February from 6.4% in January, remains far from the 2% target, indicating that the central bank’s battle against the cost of living is still long. But the bankruptcy of SVB and the tensions on the banking system have highlighted how its aggressive campaign to raise the cost of money has unwanted and unexpected consequences that risk endangering the economy. In view of the meeting of 21 and 22 March, analysts are divided on the Fed’s next moves. Some believe that inflation at 6% – and especially with a 0.5% increase in the core index, excluding energy and food – requires at least a rate hike by 0.25%. Others are convinced that in light of the tensions of recent days, the Fed will decide to keep the cost of money unchanged. Still others believe that, surprisingly, he will cut rates by 0.25%. For the ECB, the road seems clearer: at Thursday’s meeting, a rate hike seems obvious, but the hawks pushing for a 0.50% hike will likely face strong opposition. It is therefore possible that in the end Christine Lagarde will opt for a touch up of 0.25%, thus confirming her commitment to the fight against inflation but at the same time giving her a shot in the arm. Powell at the window follows the decisions of the Eurotower from afar to understand the reaction of the markets and before deciding how to proceed.