headlines EasyJet

Headlines: O’Leary and Trump, euro rates…

In Business and Currency by Continental StaffLeave a Comment

This week: O’Leary joins the CPC leadership race; Trump’s treasury secretary faces a tough confirmation hearing; Burger King and Tim Hortons could introduce smartphone apps for pre-ordering and paying; Trump is sworn in as president; cheaper airfare, but less comfort; and China’s economy grew 6.7% in 2016…or did it?

Trump Inauguration

President-Elect Trump will become President Trump today as he is sworn in as the 45th president of the United States. Trump has promised to repeal Obama’s ‘regulations’ and health care reforms, but his actual policy positions on many economic issues remain unclear.

Euro rates stay at zero

The ECB’s governing body (made up of 25 members) kept interest rates at zero as expected. What came as a surprise was a renewal of the bank’s bond buying program. This program buys bonds from financial institution at a rate of €80 billion per month, increasing market liquidity. The program was due to end in March 2017, but instead will continue at a reduced rate of €60 billion per month, due to economic uncertainty and lingering fears over a potential Italian financial crisis. Low interest rates and quantitative easing increase liquidity, and encourage lending and spending, but also reduce the value of the euro. The announcement caused the euro to drop to a ten day low against the pound.

Apps before your meal

Tim Hortons and Burger King, who share the same parent company, are both looking to introduce smartphone apps that would allow customers to order and pay in advance, cutting down wait times. The apps are already being tested at 50 locations in Florida and Ontario.  

Mnuchin ado about nothing

President-Elect Trump’s proposed treasury secretary faced a tough round of questioning at his Senate confirmation hearing. The ex-hedge fund leader had to defend his record at OneWest, a bank that foreclosed on 36,000 loans during the property crash. Steven Mnuchin was accused of turning the bank into a “foreclosure machine” designed to increase profits. Mnuchin was also slammed for using tax havens. Like the President-elect himself, Mnuchin turned to the entertainment industry to start an investment group that financed movies in Hollywood. Mnuchin suggested that he would support “trade policies that keep our currency strong on the global exchanges and create and protect American jobs.” The treasury secretary is arguably the most important finance job in the world.

Asian Tiger, or Paper Tiger

China’s economy grew 6.7% in 2016, down from 6.9% in 2015, representing the lowest growth since 1990. Beijing had expected growth of between 6.5% and 7%. In Q4 of 2016 growth sped up to 6.8%, but Governor of Liaoning, Chen Qiufa cast shade over this heartening development by claiming his province had been part of a “a large-scale financial deception” to falsify growth. Many economists are suspicious of China’s real GDP (and many also contend that there are better ways to determine the health of an economy), but even the most pessimistic assessment estimates China’s actual GDP at 4%.

CPC’s Trump Card

Kevin O’Leary has entered the Conservative Party of Canada’s leadership race. Some foreign and domestic news outlets are calling him the ‘Canadian Trump’ due to his business background, wealth, and starring role on reality TV show “Dragons’ Den”. O’Leary films TV shows in both Canada and the US and spends almost half the year outside of Canada. Despite being from Montreal O’Leary is an Anglophone who does not speak French. He has also said that he may not immediately seek a seat in Parliament should he win the leadership race. Other leading candidates are Chris Alexander, Maxime Bernier, Steven Blaney, Michael Chong, Kellie Leitch, Pierre Lemieux, Deepak Obhrai, Erin O’Toole, Rick Peterson, Lisa Raitt, Andrew Saxton, Andrew Scheer, and Brad Trost. O’Leary is expected to run his campaign primarily on fiscal conservatism.

Economy basic

American and United Airlines are both preparing to roll out a “basic economy” fare which will offer a lower overall cost, with the option to pay for add-ons. The basic fares will allow people to bring on a bag small enough to fit under their own seat. Access to the overhead compartments will cost extra. Canadian airlines may soon follow suit. Cheaper airfare is in demand in North America, but how successful this bare-bones approach will be is yet to be seen.

Stay informed. Stay Current.