Inflation in the United States already accelerated to more than nine percent
The rise in consumer prices, that is inflation accelerated clearly more than expected in June in the United States. The inflation rate was 9.1 percent, while economists estimated it to have been 8.8 percent, according to the news agency Reuters. In May, the inflation rate was 8.6 percent.
Faster-than-anticipated inflation led on Wednesday to stocks falling soon after the start of trading.
The exceptionally strong inflation is due to disruptions in supply and a noticeable increase in demand, which has been increased by a strong fiscal stimulus. The last time the inflation rate was over nine percent in the United States was in November 1981, when it was 9.6 percent.
To slow down inflation The US central bank plans to tighten monetary policy several times this year. According to the central bank’s price stability objective, inflation should be two percent on average over a long period of time.
Director general Jerome Powell announced in June, that an exceptionally large rate hike of 0.75 percentage points at once is also possible in July. The last time the central bank resorted to an interest rate hike of the same magnitude was in June and before that in 1994.
The central bank’s key interest rate is currently in the range of 1.50–1.75 percent.
Finland’s inflation at a historical level
Finland the inflation rate accelerated, according to Statistics Finland in June to 7.8 percent. In May, the annual change in consumer prices was still 7 percent.
In June, compared to a year ago, the biggest increase in consumer prices was the increase in the cost of gasoline, electricity, diesel, and renovations to single-family homes.
The increase in consumer prices from a year ago was mostly restrained by the decrease in daycare fees for children, non-reimbursable prescription drugs, itineraries by ship, examination and treatment fees, and document fees.
The last time inflation in Finland was faster than today was in March 1984, i.e. more than 38 years ago. The key question is related to how high inflation will rise at the most and how soon we will return to more normal readings.
“It is not completely impossible that the June reading will remain the inflation peak of the year. It is still more likely that the highest inflation readings will be measured only in the fall. After that, the pace starts to slow down at the end of the year and even more clearly at the beginning of next year. Expectedly, inflation will still remain at a higher level next year than we have been used to in recent years”, Chief Economist of the Central Chamber of Commerce Jukka Appelqvist rate in your comment.
In the shadow of the crisis, tough results are expected from listed companies during the earnings week
Based on forecasts of listed companies business has gone relatively well in April–June, but since then the outlook for the economy has darkened.
Accelerated price increases, the danger of a recession and a prolonged component shortage are three key issues that will likely color the starting earnings season for listed companies.
Based on a survey conducted by the Confederation of Finnish Business, industrial investments are expected to grow this year by 24 percent compared to last year. It would mean that the total value of industrial investments would be around 10.5 billion euros this year.
The Bank of Finland though estimated in Junethat investments are reduced not only by uncertainty, but also by companies’ lack of necessary materials and components, as well as rising costs and interest rates.
According to forecasts, the gloomy outlook has not yet necessarily affected the performance of listed companies. That’s why an extraordinary amount of attention is paid to how companies evaluate their future prospects.
Based on the forecasts of the financial company Nordea and the information service company Refinitiv, the combined turnover of the listed companies would have increased by 30 percent in April–June, and the operating profit without non-recurring items by 48 percent.
The value of the payment service company Klarna collapsed
The Swedish payment service company Klarna has collected funding of 800 million dollars, or about 794 million euros.
With the company’s latest financing round the value collapsed to $6.7 billion, compared to $45.6 billion a year ago. It is about an 85 percent drop in the company’s valuation.
Klarna the collapse in value is one example of how investors have lost confidence in loss-making growth companies. According to Klarna, the drop in its value is in line with other peer companies, which have also lost 80-90 percent of their value.
The company already anticipates a downturn in the spring, when it announced that it would lay off about 10 percent of its workforce.
The value of the euro fell below the dollar
Common currency the value of the euro fell below one US dollar on Wednesday for the first time in two decades.
On Wednesday afternoon, one euro temporarily fetched $0.998. Since then, the value of the euro rose back to just over one dollar. According to Reuters, the value of the euro was the lowest since December 2002. The value of the euro has fallen by more than 11 percent during the current year.
Euro already on Tuesday, the value slipped right to the brink of parity, i.e. an equal exchange rate with the dollar. On Tuesday afternoon, the value of the euro was slightly at 1.00005 or 1.00003 dollars, depending on the source.
The last time the euro and the dollar were very close to so-called parity was in 2017. In the years 2000–2002, i.e. 20 years ago, the euro was weaker than the dollar for almost two years.
Twitter sued Elon Musk
The social media company Twitter has been sued by a billionaire Elon Musk’s to court. Musk said a week ago on Friday that he was canceling his intention to buy Twitter for 44 billion US dollars.
Twitter has filed a lawsuit against Musk in the US state of Delaware. In its lawsuit, the company asks the court to order Musk to complete the acquisitions.
It is clear from the documents submitted to the court that Twitter describes Musk’s decision to cancel the deals as a model example of hypocrisy.
On Monday, Twitter’s price fell 11.3 percent to $32.65 per share.
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