Control of U.S. Senate Up for Grabs in Close-Fought Midterm Elections

Political

Summary:

Senate incumbents including Democratic leader Chuck Schumer and senior Republican John Thune won re-election in Tuesday's U.S. midterm elections, on a day Republicans were expected to wrest control of Congress away from President Joe Biden's Democrats.

Thirty-five Senate seats and all 435 House of Representatives seats are on the ballot. Republicans are widely favored to pick up the five seats they need to take over the House, but control of the Senate could come down to tight races in Pennsylvania, Nevada, Georgia and Arizona.

Three dozen governors' races are at stake as well; Florida Governor Ron DeSantis, a possible contender for the Republican presidential nomination in 2024, defeated Democratic Representative Charlie Crist, Edison Research projected.

The final outcome, particularly control of the 50-50 Senate, is unlikely to be known any time soon. Democrats currently control that chamber through Vice President Kamala Harris' tie-breaking vote.

In a competitive House race in Virginia, Democratic Representative Jennifer Wexton held off a challenge by Republican Hung Cao.

More than 46 million Americans voted ahead of Election Day, either by mail or in person, according to data from the U.S. Election Project, and state election officials caution that counting those ballots will take time. The Georgia race could end up in a Dec. 6 runoff to determine which party holds the Senate.

High inflation and abortion rights were voters' top concerns, exit polls showed, in an election where voters were poised to hand control of at least one chamber of Congress to Republicans. A divided government would likely spell the end of Biden's legislative agenda.

Local officials reported isolated problems across the country, including a bomb threat in Louisiana and a paper shortage in a Pennsylvania county.

In Maricopa County, Arizona - a key battleground - a judge rejected a Republican request to extend voting hours after some tabulation machines malfunctioned.

The problems stoked evidence-free claims among former President Donald Trump and his supporters that the failures were deliberate.

Scores of Republican candidates have echoed Trump's false claims that his 2020 loss to Biden was due to widespread fraud.

In swing states such as Nevada, Arizona and Michigan, the Republican nominees to head up the states' election apparatus have embraced Trump's falsehoods, raising fears among Democrats that, if they prevail, they could interfere with the 2024 presidential race.

"They deny that the last election was legitimate," Biden said on a radio show aimed at Black voters. "They're not sure they're going to accept the results unless they win."

Trump, who cast his ballot in Florida, has frequently hinted at a third presidential run. He said on Monday that he would make a "big announcement" on Nov. 15.

Biden was expected to watch the results from the White House, where the usually quiet corridors were abuzz with aides. A Biden adviser, anticipating a tough evening, said Democrats had done the best they could given higher gas prices and inflation, in part due to Russia's invasion of Ukraine.

Economic Worries

The party that occupies the White House almost always loses seats in midterm elections, but Democrats had hoped the Supreme Court's June decision to overturn the nationwide right to abortion would help them defy that history.

But stubbornly high inflation, which at 8.2% stands at the highest rate in 40 years, has weighed on their chances throughout the campaign.

"The economy is terrible. I blame the current administration for that," said Bethany Hadelman, who said she voted for Republican candidates in Alpharetta, Georgia.

Fears of rising crime were also a factor in left-leaning areas like New York, where incumbent Democratic Governor Kathy Hochul faced a tough challenge from Republican Lee Zeldin.

"We have criminals constantly repeating crimes. They go to jail and come out a few hours later or the next day," said John Delsanto, 35, a legal assistant in New York City who said he voted for Zeldin.

A Reuters/Ipsos poll this week found just 39% of Americans approved of the way Biden has done his job. Some Democratic candidates deliberately distanced themselves from the White House as Biden's popularity languished.

Trump's polling is similarly low, with just 41% of respondents to a separate recent Reuters/Ipsos poll saying they viewed him favorably.

In Congress, a Republican-controlled House would be able to block bills addressing Democratic priorities such as abortion rights and climate change, while a Republican Senate would hold sway over Biden's judicial nominations, including any Supreme Court vacancy.

Republicans could also initiate a showdown over the nation's debt ceiling, which could shake financial markets, and launch investigations into Biden's administration and family.

Republicans will have the power to block aid to Ukraine if they win back control of Congress, but analysts say they are more likely to slow or pare back the flow of defense and economic assistance.

Source: Reuters

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Kevin Du

Political

As Election Day draws closer, candidates for office at the federal, state and local level are competing for the support of the voting public both online and off. A new Pew Research Center analysis of more than 8,000 candidate Twitter accounts nationwide finds that the online campaign is in full swing. Since the start of the year, candidates for office at all levels of government have shared almost 3.4 million tweets, including nearly 14,000 tweets per day in October.

Here are some of the key themes in how candidates have used Twitter during their 2022 campaigns:

1.One-in-five candidate tweets in 2022 have mentioned race, abortion, education or the economy.

In public opinion polls, the economy has consistently ranked among the most important issues for registered voters ahead of Election Day. But on Twitter, discussions by candidates around the country have focused on a number of issues – with race and ethnicity, abortion and education ranking alongside the economy among the key areas of focus.

As the 2022 Campaign Draws to A Close, Here's How Federal, State and Local Candidates Have Used Twitter_1

Tweets mentioning these issues have accounted for roughly 20% of all political candidates' posts in 2022 and have the highest average weekly ranking during the study period. More than three-quarters of the candidates included in this analysis have tweeted at least once about all four of these issues in 2022.

2.Democrats have produced most of the candidate tweets focusing on issues like climate change and abortion, while Republicans have produced most of those focusing on immigration.

Across all three levels of government, Democratic candidates have produced the majority of all tweets regardless of topic (55% in total). Republican candidates have produced just 33% of all tweets. This pattern aligns with other Pew Research Center studies showing that Democrats and Democratic-leaning independents are more likely than Republicans and GOP leaners to use Twitter in general.

As the 2022 Campaign Draws to A Close, Here's How Federal, State and Local Candidates Have Used Twitter_2

But in addition to these differences in basic tweeting behavior, there are partisan differences in how certain topics are being discussed by political candidates this year. So far in 2022, Democratic candidates have produced almost three-quarters of the tweets mentioning LGBTQ+ issues and identity and two-thirds or more of those mentioning environmental issues or abortion.

Conversely, Republican candidates have produced almost two-thirds of tweets about immigration – nearly double the GOP's total share of candidate tweets overall. Republican candidates have also produced a large share of tweets mentioning topics like foreign policy (43%) and taxation (43%).

3."Critical race theory" vs. "systemic racism": Republicans and Democrats often use different language when talking about the same broad issue area.

Republicans and Democrats often use very different language in their tweets, even when posting about the same general topic area. For example, in their tweets mentioning race, Republican candidates frequently reference the Black Lives Matter movement and use phrases such as "critical race theory" and "woke." By contrast, Democrats' tweets about race tend to be characterized by terms such as "equity," "discrimination" or "systemic racism."

As the 2022 Campaign Draws to A Close, Here's How Federal, State and Local Candidates Have Used Twitter_3

When discussing the economy, Republicans and Democrats alike commonly reference inflation or the cost of living. However, Republicans often frame the issue with terms such as "crushing," "skyrocketing" or "Bidenflation," while Democrats commonly reference "recovery" and frame inflation with terms such as "price gouging" and "corporate greed."

Although a recent survey by the Center found that Republican voters are much more likely than Democrats to consider violent crime to be a serious issue, candidates from both parties have tweeted about violent crime at similar rates throughout the year. However, Republican candidates' tweets on crime are often characterized by terms such as "homicide" or "robbery" and make references to urban areas such as "Chicago" or "NYC." By contrast, Democratic candidates often frame violent crime in the context of mass gun violence, especially in schools.

4.Republican candidates are more likely than Democrats to use negative language on Twitter – in general and for all major topics studied.

When examining all candidate tweets in 2022, Republican candidates are more likely to take a negative tone: Some 33% of tweets from Republicans have used negative language, compared with 25% of tweets from Democrats. Republican candidates have been especially likely to use negative language when discussing topics such as immigration (54% of such tweets from Republicans were negative in tone), the economy (53%), the pandemic (51%), climate policy (46%) and LGBTQ+ issues (45%).

Indeed, none of the 16 substantive topics identified in this study saw a larger share of negative tweets from Democratic candidates than from Republican candidates.

5.Discussion of the economy has been a constant on Twitter during the 2022 campaign, but other topics have fluctuated over time.

Candidate tweets mentioning the economy have been relatively consistent in terms of the overall volume of activity, with Democrats and Republicans trading places in terms of total tweets mentioning the economy from week to week. Similarly, immigration has been a relatively consistent theme, apart from a small increase coinciding with Florida Gov. Ron DeSantis' decision to send migrants to Martha's Vineyard in September.

Other topics have shifted in both overall volume and partisan composition over the course of the year. For instance, the Supreme Court's decision to overturn Roe v. Wade and the shooting at Robb Elementary School in Uvalde, Texas, led to significant spikes in candidate tweets mentioning abortion and guns, respectively. And in each case, Democratic candidates have continued to tweet about these issues at substantially higher rates than Republicans.

6.After a brief period of interest in the early part of the year, candidate discussion of the COVID-19 pandemic has largely faded from sight.

One of the defining events of recent years, the COVID-19 pandemic, has largely faded from the political conversation over the course of the 2022 campaign. Candidates for office have tweeted roughly 70,000 times about the pandemic since Jan. 1, but nearly half of those tweets (46%) were posted during the first three months of the year. From Sept. 1 through Oct. 24, candidates mentioned the pandemic in just under 11,000 tweets.

For registered voters, the pandemic also has slipped as a campaign issue. In an October survey by the Center, just 23% of voters said COVID-19 is very important to their vote this year – the lowest percentage among the 18 issues asked about in the survey and down from 33% in March.

7.As Election Day draws closer, partisan opposition has become more common in candidates' tweets.

As the campaign has progressed, candidates from both parties have more frequently referenced the opposing party – including specific prominent public officials – in their tweets. The overall volume of these tweets rose from roughly 5,000 per week in the early stages of the campaign to almost 10,000 per week by October. And when candidates have mentioned the opposing party, these references have been nearly universally negative. Some 95% of these tweets express disagreement, while fewer than 4% express some level of agreement.

As the 2022 Campaign Draws to A Close, Here's How Federal, State and Local Candidates Have Used Twitter_6

In tweets mentioning the specific topics measured in this study, Republican candidates have mentioned Democrats in 20% of their tweets, while Democrats have mentioned Republicans in just 11% of theirs. Republican candidates have been especially likely to mention Democrats in tweets about topics such as foreign policy, taxes, climate and environment, the economy, immigration, and energy production. Meanwhile, Democrats have been especially likely to mention Republicans in tweets about the Jan. 6 hearings, tax policy, immigration and abortion rights.

8.Political candidates have mentioned Joe Biden and Donald Trump on Twitter as often as they have mentioned many issue areas.

Even though 2022 is not a presidential election year, Joe Biden and Donald Trump each loom large on political candidates' Twitter feeds. Some 4% of candidate tweets have mentioned either the current president or the former president – comparable to the share of candidate tweets that have mentioned the economy.

While Democratic and Republican candidates have mentioned Trump in a comparable share of their tweets this year, Republicans have been far more likely than Democrats to reference Biden or his administration (5% of tweets vs. 1.6% of tweets). Biden mentions are most common among Republican candidates at the federal level (7% of tweets from this group mention the Biden administration), but they are also fairly common among GOP candidates at the state and local levels as well (3% and 2% of tweets, respectively).

9.Mentions of bipartisanship are largely nonexistent on candidates' Twitter accounts this year.

Neither party's candidates have had much to say about bipartisanship over the course of the year. Democrats are roughly three times as likely as Republicans to reference cooperation across the aisle, but even among Democratic candidates, this concept is mentioned in only 0.3% of tweets – versus just 0.1% of tweets by Republicans.

10.Candidates in California have contributed heavily to Twitter discussions about climate change, while those in Texas have contributed heavily to discussions about immigration.

Candidates from California posted 8% of all candidate tweets in the Center's analysis, but nearly 18% of tweets mentioning climate change or environmental issues. Likewise, candidates from Texas accounted for nearly 10% of all tweets, but almost 20% of tweets that mentioned immigration during the campaign.

11.Nearly two-thirds of all tweets from candidates running for office in 2022 did not mention any of the 16 issues included in this analysis.

Most of the Twitter conversation among political candidates this year has focused on something other than the 16 substantive topics the Center classified in this analysis. Much of this content appears to be less about discussing substantive issues and more about raising general support and awareness for the candidates and their campaigns.

Source: Pew Research

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Samantha Luan

Stocks

Asian shares rose and the dollar wobbled on Wednesday as investors awaited U.S. inflation data as well as the results of the U.S. midterm elections that could signify a power shift in Washington.

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.45% higher, while Japan's Nikkei rose 0.2% and Australian stocks gained 0.70%.

China's stock market opened flat, with Hong Kong's Hang Seng Index 0.12% higher.

China stocks soared last week on hopes that authorities in the country would relax their zero-COVID policy, but rising COVID-19 cases have tempered expectations.

"Despite all the positive talk about slowly unwinding zero-Covid and experimenting with bigger events, it looks as if more lockdowns might be on their way," ING regional head of research Robert Carnell said.

Meanwhile, China's factory gate prices for October dropped for the first time since December 2020, underlining faltering domestic demand and disruption to production amid strict COVID-19 measures and a sluggish property sector.

On Tuesday, all three major U.S. stock indexes notched their third straight session in the green.

Results of the U.S. midterm elections will decide whether the Democrats lose or retain congressional control halfway through President Joe Biden's term, with investors expecting Republican gains.

Republicans are widely favoured to pick up the five seats they need to control the House, but control of the Senate could come down to tight races in several states.

A split Congress would diminish the outlook for fiscal support measures, leading to investors to expect the Fed to sooner become less aggressive in raising interest rates, strategists at Saxo Markets wrote. They added that such an outcome could spark an equities rally and would likely put downward pressure on the dollar.

Historically, stocks have tended to do better under a split government when a Democrat is in the White House, with investors attributing some of that performance to political gridlock that prevents either side from making major policy changes.

Initial results showed that several Republican senators had easily won re-election but the final outcome probably will not be known any time soon.

In the crypto world, bitcoin fell nearly 1% on Wednesday after sliding 10% following crypto exchange Binance's announcement that it had signed a nonbinding agreement on Tuesday to acquire rival exchange FTX in the face of an apparent liquidity crunch.

U.S inflation data scheduled for release on Thursday will also be on investors' mind, with economists forecasting a decline in both the monthly and yearly core numbers to 0.5% and 6.5%, respectively.

Fed funds futures have priced in a 67% chance of a 50-basis-point rate hike in December, and a 33% probability of a 75-basis-point increase.

In the currency market, the U.S. dollar has been under downward pressure from bets on the Federal Reserve easing back on interest rate rises and on China reopening and driving growth.

The dollar last traded at $1.1006 per euro and bought 145.20 yen.

Oil prices were mostly unchanged in early trade on Wednesday, after sliding 3% in the previous session on demand worries.

U.S. crude recently fell 0.01% to $88.90 per barrel and Brent was at $95.40, up 0.04% on the day.

Source: Reuters

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Alex

Political

The U.S. midterm elections on Tuesday will determine whether Republicans can seize control of Congress from Democrats. At the same time, some governors' races could determine the future of such issues as abortion and voting rights and potentially shape the 2024 presidential race.

Here are some takeaways from the early results:

Storm Clouds

As polls closed across the country, Democrats had largely conceded they were going to lose control of the U.S. House of Representatives to Republicans but hoped to retain a razor-thin majority in the Senate.

Early exit polls from Edison Research, however, showed reason for concern as Democrats appeared to be losing support from crucial voting blocs.

The exit polls showed 54% of voters with college degrees picking Democrats while 45% voted for Republicans. That nine-percentage point advantage was slightly lower than the 12-point spread that Democrat Joe Biden had over Republican Donald Trump among college-educated voters in the 2020 presidential contest.

Of perhaps even greater concern for Democrats was the continued movement of Latinos toward the Republican Party. Exit polls showed Republicans were winning 40% of the Hispanic vote, compared to 32% won by Trump in 2020.

But Democrats could take heart that their share of support from white college-educated women seemed to be holding steady. In 2020, Biden beat Trump among that cohort by about 9 points, according to Edison, and Democrats were leading on Tuesday by a similar margin in the exit polls.

Democrats made protecting abortion rights a central tenet of their midterm election pitch in the closing months – an issue likely to resonate most with college-educated women.

Overall, 52% of all suburban women nationwide were voting for Democrats compared to 47% picking Republicans. That five-percentage point spread was slightly less than the seven-point advantage Biden had over Trump in 2020.

DeSantis' next move?

Ron DeSantis took care of business. As expected, he was handily re-elected on Tuesday as governor of Florida.

Now all eyes will be on his next move — and whether he has the guts to take on Donald Trump for the 2024 Republican presidential nomination. Think two gunfighters eyeballing each other on a dusty main street.

That DeSantis is considering a White House run has been an open secret for months even though he never talks about it publicly.

He felt so comfortable about his re-election bid that he frequently left the campaign trail in Florida to stump for other Republicans across the country. His campaign, and the super PAC backing it, amassed a massive war chest, far more than he needed to fend off Democrat Charlie Crist.

Trump has suggested he will announce another presidential bid, perhaps as soon as Nov. 15. He has taken to mocking DeSantis at rallies and arguing that the governor would not be a viable contender for the nomination if he runs.

David Jolly, a former Republican congressman from Florida, said he expects DeSantis to signal his presidential ambitions shortly.

"DeSantis is prepared for a head-to-head primary, and I anticipate he or his team will indicate that in the coming days," Jolly said. "They believe they can win sufficient delegates to capture the nomination and defeat Trump."

About 60% of Republicans surveyed by Reuters/Ipsos last month said they thought Trump should run again in 2024, with 36% saying he should not. In an exit poll published by Edison Research on Tuesday, six of 10 respondents said they had an unfavorable opinion of the former president.

A recent poll of Floridians by Victory Insights found Trump and DeSantis knotted at 50% each.

Source: Reuters

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Devin

Central Bank

The Bank of England is preparing to further raise interest rates over concerns that inflation could become embedded in the British economy, despite the growing risks of a prolonged recession, its chief economist has warned.

Huw Pill said there was "still more to do" to tackle soaring inflation after the central bank raised interest rates to 3% last week with the biggest single rise in borrowing costs since 1989.

Dropping the broadest possible hint that the Bank's monetary policy committee (MPC) would use its next meeting in December to push interest rates higher, he said: "I think there is more to do. We've done some, that's what we did last week. And there's still more to do."

A further rate increase next month would spell successive decisions to push up borrowing costs at every meeting of the MPC this year, as the central bank responds to inflation at the highest levels since the early 1980s. Such a move would mean higher costs for mortgage borrowers after Jeremy Hunt's autumn statement next week.

The Bank's chief economist said there was a danger that a "self-sustaining" inflationary cycle could take hold whereby businesses continue to raise their prices to accommodate higher wage settlements for their workers long after pressure from soaring energy costs fade.

Speaking at a conference in London hosted by the investment bank UBS, he said: "The tightness in the labour market remains very persistent here in the UK, and that is despite the fact that we already have a slowing economy, and maybe an economy that is in recession at the turn of the year."

Unemployment is at the lowest levels since the 1970s while job vacancies remain close to record highs as employers struggle to find workers, despite fears that soaring inflation and a looming recession could drive up job losses. It comes amid a rise in economic inactivity – when working-age adults are either not in a job or actively looking for one – since the Covid pandemic.

Pill said the central bank "cannot declare victory" against persistent inflationary pressures despite the risks of a recession. Threadneedle Street warned last week that the UK risked being plunged into the longest recession in 100 years by the cost of living emergency, as soaring prices for goods and services force households and businesses to rein in their spending.

The Bank's chief economist said the MPC weren't "inflation nutters" and would still take into account risks to the economy and employment while setting interest rates, but warned that its overriding responsibility was to ensure inflation is steered back towards its 2% target.

Inflation rose to 10.1% in September, the highest level since 1982, driven up by the rising cost of food and fuel.

Pill said he acknowledged there was a danger that the Bank could be "blamed for the recession", but he insisted it was being primarily driven by "other forces" including Russia's war in Ukraine driving up energy costs.

However, he suggested that the Bank would still need to take action where it could even if the causes of inflation were not entirely within its control, adding: "The weakening of the economy is to some extent a necessary part of the disinflationary path we need to see."

Source: The Guardian

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Thomas

Economic

Malaysia's economy grew in double digits for the first time in over a year in the third quarter, boosted by strong domestic consumption and robust exports, according to a Reuters poll, but the outlook ahead was clouded by risks of a global slowdown.

In September, Malaysia posted a trade surplus of $6.7 billion, the largest in over two decades as exports saw strong double-digit growth of 30.1%, led by higher shipments of electronics, oil and gas products amid high prices.

The Nov. 1-8 poll of 22 economists predicted the economy expanded 11.7% in the July-September quarter compared with the same period a year earlier. In the previous quarter, the economic grew 8.9%.

"A low statistical base from the third quarter of 2021, when the economy was in lockdown, will contribute towards an elevated year-on-year GDP growth reading for Q3 2022," said Shivaan Tandon, emerging Asia economist at Capital Economics.

"The reopening of international borders should help to ease labour shortages in certain sectors and also drive a continued recovery in the tourism sector. However, the boost is likely to be offset by drags from elsewhere, with tighter monetary policy, slower employment and wage growth alongside weaker external demand."

In its latest budget estimates the Malaysian government upgraded growth forecasts for this year to 6.5%-7.0% from 5.3%-6.3% but expected growth for 2023 to slow to 4.0%-5.0%.

Trade and economic activity was also likely to be affected by China's strict COVID-19 containment measures and a slowdown in global growth.

A separate Reuters poll showed Malaysia's growth would average 7.2% this year and then fall to 4.2% in 2023.

Malaysia's ringgit has underperformed this year, affecting inflation, despite the central bank steadily hiking interest rates to "preemptively" manage price pressures, albeit in increments of 25 basis points, amid a strengthening U.S. dollar.

"The currency is likely to remain under downward pressure until U.S. bond yields peak and market participants remain risk averse amid elevated levels of global economic uncertainty," added Tandon.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

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FastBull Featured

Daily News

[Quick Facts]

1. Russia-Ukraine talks are out of reach.

2. U.S. Democrats may lose control of Congress.

3. British PM Sunak considers raising the top rate of income tax.

4. Eurozone retail sales and consumer spending outlook remains gloomy.

5. Kishida's Cabinet approves a 29.1 trillion yen extra budget spending.

[News Details]

Russia-Ukraine talks are out of reach

Ukraine denied on Tuesday that it was pressured by the West to talk with Russia. President Volodymyr Zelensky insisted that talks could only take place if Russia gave back all the territory it had occupied since the February invasion.

The Washington Post reported last Saturday that the U.S. had encouraged Ukraine to show its willingness to negotiate. U.S. midterm elections were held on Tuesday, the results of which could test Western support for Ukraine.

Zelensky on Tuesday stated again that conditions for peace talks required by Ukraine include the restoration of territorial integrity, compliance with the Charter of the United Nations, compensation for all losses caused by the war, punishment of every war criminal, and a promise not to repeat similar operations in the future. Zelensky said Ukraine had repeatedly proposed talks under such conditions, but Russia had always responded with new terrorist attacks, shelling, or blackmail. Zelensky insisted that talks could only take place if Russia gives back all the territories it has occupied since the February invasion.

Kremlin spokesman Dmitry Peskov on Monday reiterated Russia's openness to talks, but Ukraine has refused to negotiate. Russian authorities have said they will not negotiate over the territories it annexed from Ukraine.

U.S. Democrats may lose control of Congress

The U.S. midterm elections took place on Tuesday, which will determine whether Republicans will win control of Congress. If it does, it would give Republicans the power to block much of President Biden's agenda for the next two years, such as abortion rights and climate change issues. It's also likely to slow or scale back defense and economic aid to Ukraine.

Thirty-five Senate seats and all 435 seats in the House of Representatives would have to be re-elected. It's widely believed that Republicans will gain the five seats needed to take control of the House. The two parties have equal seats in the Senate, but Democrats hold the deciding vote. The battle for control of the Senate could come down to the four swing states: Pennsylvania, Nevada, Georgia and Arizona.

As voting proceeds, U.S. officials said they saw no "specific or credible threats" to disrupt the election infrastructure.

Polling stations closed from 6 p.m. ET in succession, but in closely contested states, the results may not be known for days or even weeks.

Which party will control the Senate may not be known until a possible runoff in Georgia on December 6.

British PM Sunak considers raising the top rate of income tax

British Prime Minister Rishi Sunak is considering raising the top rate of income tax next week as the HM Treasury warns that more money is needed to protect pensions and benefits, The Daily Telegraph reported. The options being discussed include raising the 45% top rate or lowering the £150,000 annual income threshold. Such a move is a dramatic reversal of the position since this September when former Prime Minister Liz Truss scrapped the 45% tax levy scheme, which was later reinstated due to the market turmoil it caused. Raising the rate of income tax or National Insurance would violate the commitment clearly made by the Conservatives in their 2019 election manifesto that Sunak has stuck to since he moved into the No. 10 Downing Street.

Eurozone retail sales and consumer spending outlook remains gloomy

Eurozone retail sales edged up 0.4% in September, ending the disappointing third quarter. But the outlook for retail sales remains gloomy, with persistent inflation eroding consumer spending power and economic uncertainty on the rise. Retailers have become so pessimistic that their expectations for sales have fallen below the levels seen during the financial crisis in 2008-09. Consumer confidence hit record lows in recent months as a result.

While this may not a strong predictor of household spending, such pronounced volatility is always associated with a contraction in consumption. Consumer confidence has also collapsed, suggesting that overall household spending has fallen sharply despite retailers' high price expectations. Falling real incomes and rock-bottom consumer confidence indicate that household spending in the Eurozone will fall sharply over the winter.

Kishida's Cabinet approves a 29.1 trillion yen extra budget spending

To fund the economic stimulus program and support domestic pay raises, Japanese Prime Minister Fumio Kishida's cabinet reportedly approved on Tuesday a second extra budget spending for the current fiscal year, with total extra spending of 29.1 trillion yen (equivalent to $198.54 billion). The total general public budget spending has been adjusted to 28.92 trillion yen ($197.7 billion) after some expenditures have been offset.

Of the new extra budget spending, 7.817 trillion yen (nearly a quarter) will be used to address upward pressure on prices, including promoting price relief, measures such as subsidies for electricity and gasoline, and encouraging companies to raise wages. In addition, 5.49 trillion yen will be used to distribute wealth more widely and promote Kishida's "new capitalism" idea; 7.54 trillion yen will be used to improve disaster resilience and ensure a safe environment for citizens; the rest will be used as a reserve for emergencies such as the COVID-19 pandemic and the Russia-Ukraine conflict.