Economy

In a joint statement on Wednesday, the two companies said the ChatGPT maker would invest directly and indirectly in start-ups developing AI-based products or services through the venture capital arm of CDP.The agreement should give Italian companies access to OpenAI’s advanced technologies and funding from U.S. venture capitalists, the statement added. In April CDP Venture Capital said it would invest 1 billion euros ($1.11 billion) in AI and cybersecurity over the next five years. The agreement follows a meeting between Italian Prime Minister Giorgia Meloni and OpenAI CEO Sam Altman on the sidelines of the UN General Assembly in New York last week, CDP and OpenAI said.($1 = 0.9035 euros) More

The Bank’s twice-yearly systemic risk survey polled 55 financial firms between July 23 and August 12 and asked each participant to list the five risks they believed would have the greatest impact on the UK financial system if they materialised.One-third of participants flagged worries about the threat to the UK financial sector associated with an overseas/global economic downturn, an increase of 19 percentage points and the largest single increase compared with the results of the previous survey in March, the BoE said.The BoE said overall risks to British financial stability were unchanged compared with its last assessment in June, but that it would be wrong to draw comfort from a rapid rebound in asset prices after a drop in August.The two most frequently cited risks to UK financial stability echoed previous surveys. Some 93% of respondents cited geopolitical risk, an increase of 8 percentage points on the BoE’s previous survey, while a cyber attack was cited by 80% of firms, up by 10 percentage points.Respondents reported a range of concerns within these two categories, including ongoing conflicts, global elections, and the potential for cyber attacks to impact the whole financial system including banking system infrastructure.The proportion of respondents citing climate risk has fallen in recent surveys, and came in at 29%, some seven percentage points lower than the previous survey and the lowest since the second half of 2022. More

NEW YORK (Reuters) -President Joe Biden’s administration heaped pressure on U.S. port employers to raise their offer to secure a labor deal with dockworkers on strike for a second day on Wednesday, choking half the country’s ocean shipping.The strike by the International Longshoremen’s Association (ILA) union has blocked goods from food to automobile shipments across dozens of ports from Maine to Texas, a disruption that analysts warn will cost the economy billions of dollars a day.More than 38 container vessels were already backed up at U.S. ports by Tuesday, compared with just three on Sunday before the strike, according to Everstream Analytics. “Foreign ocean carriers have made record profits since the pandemic, when longshoremen put themselves at risk to keep ports open. It’s time those ocean carriers offered a strong and fair contract that reflects ILA workers’ contribution to our economy and to their record profits,” Biden said in a post on X late on Tuesday.He directed his team to monitor for potential price gouging activity that benefits foreign ocean carriers, the White House said.The ILA, which represents 45,000 port workers, launched its strike just after midnight on Tuesday after negotiations with the United States Maritime Alliance (USMX) for a new six-year contract collapsed.USMX had offered the union a 50% wage hike, but the ILA’s fiery leader, Harold Daggett, said the union is pushing for more, including a $5 per hour raise for each year of the new six-year contract and an end to port automation projects that threaten union jobs.”We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve,” Daggett said on Tuesday.Hundreds of dockworkers demonstrated at a New York City area shipping terminal in Elizabeth, New Jersey, on Tuesday, carrying signs and shouting slogans like “ILA all the way!” as music blared and vendors hawked food. Morgan Stanley economists said in a late Tuesday note that the strike could hit growth and raise inflation “but only if it is long-lasting,” noting that the implication for transport should be limited unless the strike lingers. Retailers accounting for about half of all container shipping volume said they have been busily implementing backup plans to minimize the impact of the strike as they head into the winter holiday sales season.Shares of shipper Maersk fell 2% in Copenhagen on Wednesday, while ZIM Integrated Shipping dipped 4% in pre-market action in New York.WATERWAYS CRUCIAL TO TRADEThe strike, the ILA’s first major stoppage since 1977, is worrying businesses that rely on ocean shipping to export their wares or secure crucial imports. It affects 36 ports – including New York, Baltimore and Houston – that handle a range of containerized goods ranging from bananas to clothing to cars.Roughly half of U.S. imports arrive via water, while 37% of exports are waterborne, Morgan Stanley noted. The walkout could cost the American economy roughly $5 billion a day, JP Morgan analysts estimate.The National Retail Federation called on Biden’s administration to use its federal authority to halt the strike, saying the walkout could have “devastating consequences” for the economy.Republicans, including Virginia Governor Glenn Youngkin, have also called on Biden to end the strike, warning of its effect on the economy. Biden has repeatedly said he will not do so. The U.S. Department of Agriculture said on Tuesday it does not expect significant changes to food prices or availability in the near term. More

MILAN (Reuters) -Moody’s would consider hiking UniCredit’s junior credit rating one notch above Italy’s sovereign rating if it bought Commerzbank (ETR:CBKG), depending on a number of factors including an ability to contain execution and operational risks, the ratings agency said.Italy’s UniCredit has built a near 21% stake in Commerzbank, pending supervisory approval, and says it is keen to explore a full takeover. The move has irked Germany’s establishment and Commerzbank has said its strategy is based on independence. An acquisition would be Europe’s first major cross-border banking deal since the global financial crisis. Moody’s (NYSE:MCO) said it would assess whether UniCredit’s standalone rating of ‘Baa3’, currently aligned with Italy’s rating, would merit an upgrade to ‘Baa2′ in the event of a deal.UniCredit’s junior unsecured debt rating would improve as a consequence, it said.Any upgrade “would depend upon the combined group’s degree of international diversification, exposure to Italian sovereign risk, and its post-acquisition capitalization, asset risk, funding and liquidity,” Moody’s said.Italy’s weak credit standing has traditionally posed a challenge to Italian lenders’ international expansion plans.Before courting Commerzbank, UniCredit underwent a long restructuring and amassed billions of capital in excess of its minimum target.In the event of a deal, a stronger footprint in triple-A rated Germany, more diversified funding channels, and a lower direct exposures to Italy’s debt relative to capital would “loosen the intrinsic links and correlation” between UniCredit’s and Italy’s ratings.”We would expect UniCredit’s currently very strong capitalization to be diluted in the event of an acquisition of Commerzbank, but to remain sound and at least consistent with management’s stated target range for a minimum CET1 of 12.5%-13%,” Moody’s said, referring to a key gauge of capital.”While any acquisition would likely reduce profitability in the short-term given restructuring and other costs, it would in the medium-term enable higher returns through cost synergies in Germany and deliver a stronger combined franchise,” it added.Meanwhile, Moody’s confirmed UniCredit’s ratings with a stable outlook. More

The call for protests came after Milei’s administration threatened to veto a law passed weeks ago by Congress to guarantee university funding, as Argentina faces an economic crisis with annual inflation close to 240% and over half of its population in poverty. “The government has a systematic, methodical and gradual plan to destroy public education,” Ricardo Gelpi, rector of the University of Buenos Aires, said in a statement. The university is the country’s largest and ranked among the 100 best in the world, according to QS ranking.Milei’s libertarian government has repeatedly justified budget cuts by claiming that public universities are sites of “socialist” indoctrination, but the good reputation of higher education institutions among Argentines has resulted in widespread social resistance.”This government is going to veto a financing law that would represent a very small percentage of the country’s GDP,” Gelpi said, adding that Milei’s administration does not care about education, science, or the universities’ social aspect.In April, a protest that drew hundreds of thousands of students and teachers forced Milei to reconsider a cut in the universities’ budget, although authorities from prestigious universities – which are mostly free in Argentina – said afterwards that the government did not comply with the promised improvements.Milei claims his economic plan works toward a fiscal balance in Argentina’s battered economy, but his opponents say that his adjustments have not been careful or equitable and have harmed more vulnerable people and the most sensitive sectors such as health and education.”Public university education was never defunded. The government’s commitment to public universities has remained firm,” Argentina’s Ministry of Human Capital said in a statement, claiming it just demanded more clarity in the management of resources.According to the University of Buenos Aires, which counts five Nobel laureates among its graduates, university teachers and non-teaching staff have lost around 40% of their purchasing power since December, “a figure that continues to deteriorate even further” to remain below the poverty line. More

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