Aurelia Butler

The higher expenditures will be mainly covered by hiking wealth and corporate taxes, with a special levy on oil and gas companies whose profits have soared during the energy crisis, broadcaster RTL said, citing government sources.Prime Minister Mark Rutte said early on Wednesday his government coalition had agreed in negotiations that ran well into the night on ways to combat record-high inflation.He declined to comment on details of the plan, which will be presented with the government’s 2023 budget on Sept. 20.Measures will mainly benefit people on lower incomes, RTL said, through a 10% increase of the minimum wage and higher income-related subsidies for health care and rent.The tax rate for incomes up to around 37,000 euros per year will be lowered, while cuts in energy and fuel taxes introduced this year have been extended into 2023. Inflation in the European Union member country reached 13.6% in August, the highest level since measurements based on a European standard for consumer prices were introduced in 1996.($1 = 1.0017 euros) More

Investing.com — Payrolls processor ADP presents its first report on private-sector hiring after a methodology makeover. Eurozone inflation hits a new record high as Russia turns off the gas taps on Nord Stream. Snap is reportedly planning big job cuts and HP and Best Buy earnings paint a bleak picture for consumer electronics. China’s manufacturing sector is still shrinking, and oil prices slump as stockpiles rise and reports of an imminent deal to restore Iranian exports circulate. Here’s what you need to know in financial markets on Wednesday, 31st August. 1. ADP payrolls are backThe ADP private payrolls survey is back, after a couple of months in which the payrolls processor worked to iron out some of the quirks in its methodology which had undermined its usefulness as an advance guide to the official labor market report.The market may not want to trade much on the first set of numbers under the new methodology but  the consensus forecast of a relatively modest 300,000 gain in nonfarm payrolls on Friday is already at risk of an upside surprise. The monthly Job Openings survey on Tuesday showed vacancies still abundant, while jobless claims numbers (due Thursday) have also stayed lower than many expected a month or two ago.Speeches from Federal Reserve presidents Loretta Mester, Lorie Logan and Raphael Bostic also punctuate the economic calendar.2. Eurozone inflation hits new record high as Russia turns off the tapsInflation in the Eurozone rose to a new record high of 9.1% in August, again overshooting expectations in a repeat of what has been a depressing pattern this year.The numbers add to pressure on the European Central Bank for a big rate hike at next week’s meeting. German central bank chief Joachim Nagel called in a speech for a “decisive” reaction from the ECB to stop inflation expectations de-anchoring. However, the bank’s dovish chief economist, Philip Lane, said on Tuesday that he favored a more gradual series of smaller steps.The euro was unable to hold above $1.000, falling 0.2% to 0.9990, pressured by Russia confirming its intention to stop gas supplies through the Nord Stream pipeline for three days of “maintenance”. Analysts fear a longer, politically-driven shutdown to intensify the economic squeeze on the continent as Russia struggles with its own problems on the battlefield in southern Ukraine.3. Stocks set to open mixed; Snap job cuts in focusU.S. stock markets are set to open mixed later, struggling to break a three-day losing streak driven by fears of higher interest rates.By 06:15 ET (10:15 GMT), Dow Jones futures were down 44 points, or 0.1%, while S&P 500 futures were up 0.2% and Nasdaq 100 futures were up 0.5%.Stocks likely to be in focus later include Snap (NYSE:SNAP), which is reported to be planning big job cuts, and HP (NYSE:HPQ), which is down over 6% premarket after giving a disappointing outlook for the PC sector. Weak spending on consumer electronics also hit Best Buy’s (NYSE:BBY) earnings, although its numbers were in line with forecasts. Crowdstrike (NASDAQ:CRWD) and Hewlett Packard Enterprise (NYSE:HPE) by contrast continued the relatively strong run of reports from the business software sector.JPMorgan (NYSE:JPM) may also get some attention after news that its German offices were raided in a wide-reaching probe into tax evasion by banks lasting years.Brown-Forman leads a thin slate of earnings.4. Chinese manufacturing still in contractionChina’s manufacturing sector spent another month in contraction in August, according to the official Purchasing Managers Index published overnight.The official PMI, which tracks the activities mainly of larger, state-owned enterprises, rose by more than expected but, at 49.4, was still below the key 50 line that signifies growth. The composite PMI, at 51.7, was consistent with moderate expansion, but came in lower than estimates due to a fall in the services PMI.The offshore yuan, which sank to a two-year low on Monday amid ongoing unease at the weakness caused by Covid lockdowns and the deleveraging of the real estate sector, strengthened by some 0.2%.5. Oil slumps on stock build, Iran reportsCrude oil prices fell sharply after reports said Washington and Tehran had reached an agreement to revive the UN-backed deal limiting its nuclear activities.By 06:30 ET, U.S. crude futures were down 3.3% at $88.62 a barrel, while Brent futures were down 3.2% at $94.75 a barrel.A deal between Iran and the West would lead to the lifting of sanctions on Iran and see the release of over 1 million barrels a day of supply into the world market.The Chinese PMI data and a surprise increase in U.S. crude stocks, measured by the American Petroleum Institute, added to the downward momentum. The U.S. government’s inventory data are due at 10:30 ET as usual. More

Whatever quarterly growth statistics are showing, there’s little sign yet of looming recession in U.S. employment.And if the Federal Reserve sees a tight U.S. labour market as both a window and a reason to aggressively tackle inflation, then this week’s readouts on hiring confirm the more hawkish interest rate horizon now being priced by markets.Stocks wobbled again after the numbers and two-year Treasury yields are hovering just under 3.5%, their highest since just before the banking crash of 2007/08. Inflation-adjusted two-year yields from the index-linked bond market are at their highest since the pandemic hit.But Tuesday’s surprisingly strong report on U.S. job vacancies was for the month of July, during a bout of summer optimism in U.S. markets around peak inflation. August readings on private sector jobs from ADP later on Wednesday and the national payrolls report on Friday will test how durable corporate hiring plans have been since. Consensus forecasts for both are strong, with the ADP expected to show job growth of 288,000 this month – more than twice the pace of July’s increase.Awaiting the report, there was no bounce in world stock markets or Wall St futures – with euro zone inflation showing few signs of peaking just as Russia started a 3-day gas outage through its Nordstream 1 pipeline amid doubts about when or even whether it will resume.Headline and core euro zone inflation exceeded expectations this month, with the former hitting 9.1% for the first time. Markets are now leaning toward 75 basis point interest rate hikes from both the Fed and the European Central Bank next month, with euro zone government borrowing rates climbing sharply to reflect that. Borrowing costs in Germany are likely to end August with their biggest monthly surge in over 30 years.While this has helped stabilised the euro against the dollar this week, the greenback remains pumped up against sterling, Japan’s yen and China’s yuan. The Bank of Japan shows no sign of joining the other G7 central banks in tightening as the economic recovery sputters. China’s central bank is trying to slow the pace of yuan losses as COVID-19 flare-ups and lockdowns pick up. The only positive development in the inflation picture is that crude oil prices are falling again – partly reflecting the recessionary storm clouds gathering.Key developments that should provide more direction to U.S. markets later on Wednesday:* U.S. August ADP private sector jobs* Chicago PMI for August * Dallas Fed chief Lorie Logan, Cleveland Fed chief Loretta Mester, Atlanta Fed chief Raphael Bostic all scheduled to speak * U.S. Corporate Earnings: Cooper Companies, Brown-Forman More

SACRAMENTO, Calif. (Reuters) – A record-breaking heat wave is expected to hit California on Wednesday, bringing temperatures of up to 115 degrees Fahrenheit (46°C) in the state’s inland valleys and 100 degrees along the coast over the Labor Day weekend, the National Weather Service (NWS) said.Excessive heat warnings were issued on Tuesday for much of the state, warning of the risk of heat-related illness for people exposed to prolonged outdoor heat, as well as stress to livestock.”It’s not uncommon to get some hot temperatures during the Labor Day period, but this is an extraordinary heat event,” said Eric Kurth, a meteorologist with the NWS’s Sacramento office.The heat wave comes on the heels of a bout of prolonged high temperatures just two weeks ago in a state that has been pummeled by extreme weather and ongoing drought.High temperatures, drought and severe storms are expected to increase globally as human-caused climate change progresses, scientists say. In Pakistan, massive flooding has killed more than 1,000 people, and parts of the southeastern United States have also been inundated in recent weeks.In California, the heat will gradually build throughout the week, hitting the southern part of the state first but then scorching the northern regions over the long holiday weekend, the NWS said. Temperatures could reach all-time highs in many parts of state, including the state capital of Sacramento, where the mercury could climb as high as 112 degrees on Monday and 113 degrees on Tuesday.The extreme heat is being caused by an area of high pressure that built up over the desert in the southwest, which will move through California over the next several days, Kurth said.Evenings, particularly in foothill areas, will likely bring little relief, he added.The heat is also expected to affect other parts of the west beginning Wednesday, including Washington State, Idaho, western Montana and Oregon, said Sarah Rogowski, a meteorologist and emergency response specialist with the National Weather Service’s regional office in Utah. A fire weather watch is in effect for the Northern California counties of Modoc and Siskiyou, which face a combination of extreme temperatures and high winds, she said. More

Investing.com — Germany’s central bank head called on the European Central Bank to act “decisively” to bring down inflation, adding to the pressure for a big interest rate hike at next week’s policy meeting. “Monetary policy must react decisively to preserve the credibility of its inflation target,” Joachim Nagel said in a speech on Wednesday, adding: “inflation rates will not come back to their target by themselves.” Nagel was speaking barely an hour after the publication of data showing inflation in the Eurozone hit a new record high of 9.1% in August, again overshooting analysts’ expectations in a repeat of what has become a worrying pattern for the ECB. The ECB’s governing council meets next week with all of its key interest rates at or above zero for the first time in eight years, having raised them by 50 basis points each at its last meeting in July. While it has indicated it intends to raise rates again in September, the bank’s top management hasn’t guided for a specific size of hike, and there are increasingly clear divisions between those – like Nagel – calling for the front-loading of rate hikes and others, such as the ECB’s Chief economist Philip Lane, who favor more gradual increases. Lane had said in a speech on Tuesday that he preferred a slower pace of hikes because of the extraordinarily high level of uncertainty about the economic outlook at the moment. He stressed the importance of not upsetting bond markets, which have a big influence in determining overall financing conditions in the economy. Nagel didn’t specify how big a hike he would argue for next week, but the Bundesbank is typically the most hawkish of the national central banks that are members of the Eurosystem. Newswires reported last week that some will press for a 75 bp hike in September. Nagel by contrast appeared more concerned about the effect of letting inflation run unchecked for too long.”The longer inflation stays high, the higher the risk that medium-term term inflation dynamics and inflation expectations, too, stick at a high level,” Nagel warned. Nagel had started his speech with an extended reference to the 1970s, attributing the popularity of Abba’s “Money, Money, Money”, Pink Floyd’s “Money” and Liza Minelli’s “Money Makes the World Go Round” to concerns about the inflation prevalent at the time. He acknowledged key differences with the 1970s, particularly in as much as the mandates of central banks to tackle inflation are more clearly defined and understood. He also noted that the automatic indexation of wages – especially in the public sector – has now all but vanished from Europe’s labor markets. However, Nagel argued, “certain parallels between the stagflation of that time and today do indeed exist.” He pointed to the fact that inflation had already been rising in both eras before the energy shocks that accentuated them. Fiscal policy, he added, had contributed to this, even though in today’s environment the big pandemic-era fiscal stimulus programs are now being wound down. More