Aurelia Butler

Russia’s invasion of Ukraine was expected to hit the budget this year as the Czech Republic took in hundreds of thousands of refugees fleeing the fighting, and also seeks to ease the burden of soaring inflation for households and companies.In addition, the state is spending more on defence and increases to pensions. It has spent billions to add natural gas to state emergency reserves.”When we see the development of tax revenue, I expect the deficit will unfortunately be over 300 billion,” Stanjura told Czech Television on Saturday evening.Stanjura is due to present an updated budget to the government in July. The government has sought to cut the budget deficit from a record 420 billion crowns in 2021.The five-party ruling coalition won a general election last October and pledged to rein in public finances after a jump in debt in recent years due to the coronavirus pandemic and faster pension and wage hikes promised by the previous administration.($1 = 22.9910 Czech crowns) More

Investing.com — Stock markets ended the first week of June on a down note, as a strong U.S. jobs report made clear the Federal Reserve and other central banks can continue their monetary tightening policy, at the expense of risk assets.This week brings CPI reports in the U.S., as inflation remains the biggest concern at the Fed and other central banks. The European Central Bank meets this week amidst expectations of policy normalization. And with oil prices closing higher last week and a bevy of corporate rumblings over storm clouds ahead, reminders abound that a soft economic landing may be difficult to realize, no matter how strong the consumer is.Here’s what to watch in the markets for the week ahead:Friday’s U.S. CPI report for May comes a few days before the next Federal Reserve meeting, and will act as a final input before the Fed decides how much to hike rates. Inflation is expected to come in at 8.3% year over year, while core inflation (ex energy and fuel prices) is expected to come in at 5.9% year over year. The latter number would mark a third month of consecutive declines and make the case that core inflation may have peaked, which would echo the slower wage growth in last week’s jobs report. At the same time, the overall inflation number of 8.3% would be close to peak, and given the pain at gas pumps and grocery stores, consumers may take little solace in knowing the core number is leveling out.While central banks around the world have begun their rate hike cycle, the ECB is seen as a step or two away from it. Eurozone inflation hitting record highs, though, has added more urgency to the discussion, and analysts expect this meeting to make clear that rate hikes will be coming in Q3.ECB president Christine Lagarde said as much in a blog post two weeks ago, so both the ECB statement and the press conference to follow will provide a chance for Lagarde to elucidate the road back to positive interest rates and to re-affirm the bank’s credibility. The EUR/USDrose 1.67% since the end of April and 3.55% from mid-May lows, suggesting the bank has re-won at least a little bit of that credibility with markets.OPEC+’s announced 50% production increase did little to slow the rise of crude, with both WTI Futures and Brent finishing the week just shy of $120/barrel. Despite rumblings of slowdowns, economic expansion (PMIs) and consumer demand suggest that demand for oil will remain high, and there are doubts that OPEC’s production increase will be enough or even be fully realized.For the week ahead, eyes are on whether U.S. President Joe Biden will decide to meet with Saudi Crown Prince Mohammed bin Salman amid human rights concerns. As we enter the summer travel season, weekly crude inventories and gasoline inventories will be of interest, and they will likely correspond with the Michigan consumer sentiment survey, where readings are approaching 2008-09 lows (admittedly, lows also seen in the debt ceiling crisis of 2011, a reminder that the survey can reflect political sentiment as much as anything else).While we are through most of the Q1 earnings season, a few big names report numbers this week that will give read-throughs to various investing themes. DocuSign Inc (NASDAQ:DOCU) is poised to report Thursday after the bell; the software as a service former highflyer was one of the first to start warning of slowing activity, and investors may now hope it will join the recent resurgence seen in names like Zoom Video Communications Inc (NASDAQ:ZM) or Okta (NASDAQ:OKTA). Smartsheet (NYSE:SMAR) (Tuesday) and Coupa Software Inc (NASDAQ:COUP) (Monday) are also among software companies reporting this week.JM Smucker Company (NYSE:SJM) and Campbell Soup (NYSE:CPB) both report this week and may offer some insight into the impact of inflation in consumer staples. Likewise, Caseys General Stores (NASDAQ:CASY), Five Below (NASDAQ:FIVE), and Signet Jewelers Ltd (NYSE:SIG) all report from the retail sector, giving another round of inputs on consumer spending and appetite.Nio (NYSE:NIO) reports earnings on Thursday, with the Chinese electric vehicle automaker near 52-week lows as it has struggled with coronavirus related lockdowns in China.Check out our full earnings calendar here.Last week was marked by a number of comments and corporate announcements from big names, including Jamie Dimon’s economic hurricane forecast, Elon Musk’s email mooting a 10% reduction of Tesla’s workforce, and Coinbase (NASDAQ:COIN) announcing a hiring freeze and rescindment of some accepted job offers. With several investor conferences this week, there will be plenty of opportunities for executives from across the economy to weigh in on whether the economy is teetering on the brink, as Dimon argued, or whether, as former Goldman Sachs (NYSE:GS) CEO Lloyd Blankfein argued, “we may yet land softly.”The contrast between any further layoff news on the one hand and merger & acquisitions news, like Friday’s Bristol Myers (NYSE:BMY) Squibb acquisition, on the other hand, will also provide grist for the investor mill.It’s not the easiest market to navigate, but then again, when is it ever? More

Has US inflation already peaked?US inflation is expected to have moderated in May, in a sign that inflation may have peaked, as weakening consumer demand and loosening supply chains mitigate price growth.In April, the US consumer price index moderated for the first time in eight months to an annual pace of 8.3 per cent, 0.2 percentage points lower than the previous month. Despite the modest decline, inflation came in above economists’ expectations and remained at a 40-year high.Still, a second consecutive moderation in the annual rate should offer “hope that we have indeed passed the peak in inflation”, said James Knightley, chief international economist at ING.May’s consumer price index data, due to be published on Friday, may, in turn, give further clues as to how aggressively the Federal Reserve will raise interest rates in June and thereafter.Economists polled by Reuters expect monthly consumer prices to have risen 0.7 per cent in May. Consumer price growth slowed to 0.3 per cent month on month in April, as surging energy and food costs fuelled by the war in Ukraine abated. Housing, food and energy are likely to continue to contribute to inflation, as petrol prices rose in May, but that could be partially offset by auto prices and a loosening supply chain.“Auto prices could be one of the softer CPI components because consumers are unwilling to pay current prices, so demand destruction is bringing supply and demand into balance,” said Steven Englander, a strategist at Standard Chartered.There have been reports of increases in inventories and imports and recent rises in auto production, which could be evidence of some improvement in supply chains, Knightley said. “But order backlogs remain long and supply chains remain vulnerable to Covid containment measures elsewhere in the world.” Alexandra WhiteWill the ECB stick to plans to raise rates in July?With inflation setting new eurozone records every month so far this year, it will be hard for the European Central Bank to explain why it is not immediately raising interest rates when its policymakers meet in Amsterdam next week.Yet this is exactly what ECB president Christine Lagarde is likely to do on Thursday when she is expected to say that the central bank is sticking to its pre-announced plan to first stop buying more bonds before starting to raise its deposit rate from minus 0.5 per cent.That means the earliest the ECB could raise rates for the first time since 2011 is at its subsequent meeting on July 21, after it stops adding to its €4.9tn bond portfolio.The main question left to be resolved is how big the July rate rise will be. The ECB’s chief economist, Philip Lane, said this week that quarter percentage point rises were its “benchmark pace”. But he left the door open for others to “make the case for moving more strongly”.Klaas Knot, president of the Dutch central bank, and Robert Holzmann, Austria’s central bank chief, have both discussed the potential for the ECB to follow in the footsteps of the US Federal Reserve with a half percentage point rate rise. A majority of investors polled by Deutsche Bank in May thought this would happen.Andrew Kenningham, an economist at Capital Economics, predicted that “core inflation will continue to surprise on the upside and this will ultimately prompt the ECB to move more rapidly than many now anticipate” by ending its eight-year experiment with negative rates with one bumper rise in July. Martin ArnoldDid China’s economy stabilise in May?China’s economy was buffeted by strict and widespread coronavirus lockdowns in April, with several indicators plummeting to two-year lows. While the severity of restrictions largely stabilised in May — and even showed signs of tentative easing towards the end of the month — the limited respite was likely not enough to avert a further slew of weak data.Both manufacturing and services purchasing managers’ indices came in several points higher in May but remained in contraction territory, meaning that while the rate of decline in activity slowed, most companies still engaged in less activity than they did the month before. Caixin’s China manufacturing PMI also noted that the time taken for orders to reach manufacturers had increased “markedly” in May, suggesting that the country’s logistical problems were far from over.Other indicators will probably show similarly muted improvements: analysts at Citi predict that retail sales, which declined by 11.1 per cent year on year in April, will contract by a lesser 6.8 per cent in May. Likewise, while the analysts predict trade will recover slightly, April’s data suggest the days of booming Covid-era exports are well over.While Beijing on Wednesday instructed policy banks to extend an Rmb800bn ($120bn) credit line to fund infrastructure spending, overall stimulus is much weaker than in 2020.A question remains over whether the slight easing in restrictions that helped cushion China’s economy last month will be sustained as the country vows to stick to its zero-Covid approach, with economists worried about the possible damage from another round of widespread lockdowns.“Shanghai’s phased-in reopening may only represent a respite rather than a turning point,” Ting Lu, analyst at Nomura, wrote in a note. “The real turning point will be marked by a shift in China’s stance on its ZCS [zero-Covid stance] rather than headline Covid caseloads, the easing of some lockdowns or monthly activity data.” William Langley More

Janet Yellen has denied claims she wanted US President Joe Biden to scale back the size of his $1.9bn Covid stimulus package last year over fears it could stoke inflation.The US Treasury secretary issued a statement on Saturday rebutting claims made in a forthcoming book that she initially wanted to trim the bill by a third.The book threatens to give ammunition to Biden’s critics, who accuse him of having helped unleash the highest US inflation in decades with large spending bills in the opening months of his administration.Yellen said in her statement: “I never urged adoption of a smaller American Rescue Plan package, and I believe that ARP played a central role in driving strong growth throughout 2021 and afterwards.”She issued her statement after excerpts from the book alleged she initially agreed with Larry Summers, one of her predecessors at the Treasury, that the president’s signature economic measures were going to push up prices.

According to reports, Owen Ullmann states in Empathy Economics, his new biography of Yellen: “Privately, Yellen agreed with Summers that too much government money was flowing into the economy too quickly.” His publisher PublicAffairs claimed Ullmann had “unfiltered access” to the Treasury secretary while researching the book.Inflation has soared for much of 2021 and the early part of 2022. Core inflation was 4.9 per cent in April compared with the previous year, according to the Federal Reserve’s preferred personal consumption expenditures price index. It hit 5.3 per cent the previous month on an annualised basis.High prices have taken a heavy political toll on Biden, whose approval rating is languishing around 40 per cent, even as the jobs market continues its steady recovery from the Covid-19 lows.The president’s critics have accused him of ignoring the warnings of people such as Summers, who said last year the bumper Covid relief and bipartisan infrastructure bills would add fuel to an already overheating economy.Last week Yellen said she had been wrong last year about the likely path inflation would take. She told CNN: “There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn’t — at the time — didn’t fully understand, but we recognise that now.”Meanwhile Biden has been at pains in recent weeks to show that he considers tackling high prices his number one concern. Last week he wrote an article for the Wall Street Journal saying he realised Americans were “anxious” about high inflation. He has also given his public backing to Jay Powell, the Fed chair, to do anything he thinks necessary to curb rising costs.Last month the Fed raised its benchmark interest rate by half a percentage point for the first time since 2000 and signalled it would do the same at the next two meetings. More