Volkswagen has embarked on crucial discussions with its trade unions, initiating a pivotal negotiation phase that will shape the future of the company’s workforce and operational structure in Germany.

These talks, set to begin on Wednesday, come at a time when Europe’s largest car manufacturer is weighing significant layoffs and the possible closure of several plants in the country.

The outcome of these negotiations will largely determine the company’s course in navigating high costs and intensifying competition.

The threat of plant closures, which surfaced earlier this month, has placed Volkswagen on a direct collision course with IG Metall, the influential union representing workers at the automaker.

IG Metall has pledged strong resistance to any factory shutdowns, positioning itself as a defender of the company’s workforce.

Adding complexity to the situation, IG Metall must also secure a new labor agreement for the 130,000 workers employed under Volkswagen’s core brand.

This task follows Volkswagen’s recent termination of employment guarantees, which had shielded jobs at six major production plants in western Germany since the mid-1990s.

Volkswagen’s cost struggles amplified by global competition

Volkswagen has voiced concerns that Germany’s rising energy and labor costs put it at a disadvantage compared to other European competitors and aggressive Chinese automakers who are looking to capture a larger share of Europe’s electric vehicle (EV) market.

This pressure, according to the company, forces it to consider drastic measures, including layoffs and facility closures, despite the longstanding agreements with its workforce.

Germany’s industrial sector, including titans like BASF and Thyssenkrupp, has been grappling with similar challenges.

Soaring costs, coupled with labor shortages, have pushed several major companies to downsize or even contemplate partial exits from the country.

This strain is echoed across the German automotive industry, as evidenced by recent profit warnings from fellow automakers Mercedes-Benz and BMW, both of which have suffered from waning demand in China.

Cavallo to defend Volkswagen workers as talks begin

At the heart of these negotiations stands Daniela Cavallo, head of Volkswagen’s works council.

The 49-year-old, who has long been a staunch advocate for workers’ rights, is set to face off against Volkswagen executives in what could be the most contentious labor discussions in recent memory.

Cavallo, who ascended to her leadership role as the first female head of the company’s works council, is determined to shield the “Volkswagen family” from the looming threats.

The high-stakes talks come on the heels of Volkswagen’s announcement that it may close plants in Germany for the first time, ending a fragile two-year period of calm between the unions and management.

Although tensions had temporarily eased under Cavallo’s leadership alongside CEO Oliver Blume, the automaker’s ongoing struggles—fueled by high operational costs and shifting market demands—have forced these difficult decisions to the forefront.

Cavallo expressed her dismay earlier this month, shortly after Volkswagen informed employees of the potential plant closures, saying:

Unfortunately, I’ve got to admit that this is the darkest day so far.

The breaking of employment guarantees and talk of shuttering factories mark a cultural shift at the company, a development that Cavallo and her fellow union members view as a serious blow to worker security.

Volkswagen maintains that such moves are unavoidable given the challenging market conditions and the high cost of doing business in Germany.

However, the unions remain unwavering in their opposition, preparing for a hard-fought battle to protect jobs and prevent the closure of vital production plants.

As the talks progress, all eyes will be on how Volkswagen and IG Metall navigate this volatile situation, with broader implications for Germany’s automotive industry hanging in the balance.

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Inflation in Australia slowed significantly in August, hitting its lowest level in three years.

This welcome development was largely attributed to government rebates on electricity bills, which played a crucial role in easing consumer price pressures.

According to data released by the Australian Bureau of Statistics (ABS), the annual pace of consumer price inflation (CPI) dropped to 2.7%, down from 3.5% in July, aligning with market expectations.

The ABS reported that federal and state government subsidies reduced electricity prices by nearly 15% in August, counterbalancing an otherwise slight increase of 0.1%.

Petrol prices also saw a decline of 3.1%, adding to the favorable inflationary conditions.

However, despite these positive signs, the Reserve Bank of Australia (RBA) remains cautious about interpreting the decline as a signal for an imminent rate cut.

Core inflation trends lower, but rate cuts still a waiting game

While the headline inflation rate provided optimism, the central bank continues to focus on underlying inflation, which is a more stable measure excluding volatile items such as holiday travel and fuel.

Encouragingly, the core CPI—which strips out these fluctuating categories—fell to 3%, positioning it at the upper end of the RBA’s target band of 2-3%. This marked a decrease from July’s 3.7%.

Moreover, the trimmed mean, a critical gauge of core inflation, slowed to an annual rate of 3.4%, compared to 3.8% in the previous month.

The RBA projects this figure will settle at around 3.5% by year-end.

Despite this progress, the RBA has signaled that it is not yet prepared to initiate rate cuts, citing the need for sustained movement in the right direction.

“What really matters—and as the RBA keeps reminding us—is the sustainable return of underlying inflation to target. That’s still a little way off, but August’s print shows momentum is moving in the right direction,” Harry Murphy Cruise, an economist at Moody’s Analytics, told Reuters..

He added that while rate cuts may not happen until February, the likelihood of further delays is decreasing.

Market reactions and economic outlook

Despite the positive inflation data, market reactions were relatively muted.

The Australian dollar remained steady, last trading at $0.6891, and three-year bond futures showed little movement, standing at 96.63.

Financial markets are currently pricing in a 75% chance that the RBA will begin cutting rates by December, following its decision earlier this week to hold rates steady without discussing further hikes.

The RBA has maintained a cash rate of 4.35% since November, a considerable increase from the pandemic-era low of 0.1%.

The central bank believes that this level is sufficiently restrictive to bring inflation down to its target range without jeopardizing employment gains.

However, core inflation, which was running at 3.9% in the last quarter, has been slow to fall, adding to the RBA’s cautious approach.

Treasurer Jim Chalmers expressed cautious optimism about the latest inflation numbers.

“These figures are heartening, encouraging, and welcome,” he said, referencing both headline and core inflation declines.

However, Chalmers emphasized the need to remain vigilant, noting that inflation trends can be volatile.

Chalmers stated during a press conference in Brisbane:

We’re not getting carried away because we know that monthly numbers can fluctuate. Inflation doesn’t always move in a straight line.

The ABS report also provided the first insight into services inflation for the quarter, which remained relatively high at 4.2% year-on-year in August, only slightly down from 4.4% in July.

Rate cuts on the horizon?

With the next quarterly inflation numbers expected soon, analysts are already predicting that continued easing of inflationary pressures could lead to a change in the RBA’s stance.

“If the reductions in underlying inflation are replicated in the Q3 data, we could see the RBA adopt a more dovish tone at its November meeting, possibly paving the way for a 25 basis point rate cut in December,” Tony Sycamore, an analyst at IG, told Reuters.

Although inflation is trending in the right direction, the RBA is expected to maintain a careful and measured approach before making any decisions about rate reductions.

Until then, the Australian economy continues to grapple with the challenges of balancing inflation control and preserving employment gains, with markets watching closely for the next move.

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Thailand has officially launched the first stage of its ambitious $14 billion stimulus plan aimed at revitalizing the country’s economy.

Dubbed the “digital wallet” scheme, the initiative is designed to provide financial relief to millions of citizens, eventually covering 45 million people who will each receive 10,000 baht.

The government believes this direct infusion of cash will drive consumer spending and generate economic momentum.

In the first phase, 14.5 million welfare cardholders and individuals with disabilities will receive the cash payout by the end of the month.

Prime Minister Paetongtarn Shinawatra, speaking at the program’s launch, expressed optimism about its impact:

Cash will be put into the hands of Thais and create a tornado of spending.

Government eyes economic recovery through spending

The digital wallet initiative was originally intended to operate via a smartphone app, allowing recipients to spend the funds within their local communities over six months.

Despite initial technical plans, the program begins with direct cash handouts as the government seeks to accelerate economic activity.

“There will be more stimulus measures, and we will move forward with the digital wallet policy,” the prime minister emphasized during her speech.

While the scheme is intended to jumpstart Southeast Asia’s second-largest economy, which is projected to grow by 2.6% this year following a modest 1.9% increase last year, the program has faced significant opposition.

Economists question fiscal responsibility

Despite the Thai government’s firm stance on the stimulus plan, concerns have been raised by economists, including two former governors of the central bank, who argue that the initiative is fiscally unsustainable.

Critics worry about the impact on national finances, especially as the government struggles to secure adequate funding to support the large-scale handouts.

However, the administration has stood by its decision, viewing the program as a necessary step to boost the country’s economic growth, which has lagged behind other nations in the region.

Thailand reconsiders tourism amid revenue concerns

In a separate move aimed at increasing government revenue, newly appointed Tourism Minister Sorawong Thienthong has announced plans to reintroduce a tourism tax that had been previously shelved by Prime Minister Srettha Thavisin.

The tax, which requires foreign visitors arriving by air to pay 300 baht, and those entering by sea or land to pay 150 baht, is expected to contribute to the government’s goal of increasing tourism revenue to at least 3 trillion baht this year.

Thienthong stated:

I believe the collection of the tourism fee benefits the tourism industry since the revenue can be used for the development of infrastructure and attractions, along with ensuring tourist safety.

However, the minister also indicated that the system’s readiness to collect these fees still needs to be assessed before finalizing a start date.

With these dual strategies—the digital wallet stimulus and the reintroduction of the tourism tax—Thailand’s government is aiming to both stimulate domestic spending and bolster its tourism sector, hoping to set the country on a path toward economic recovery in the face of both internal and external challenges.

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In a landmark decision, Vanguard Investments Australia Ltd. has been fined A$12.9 million ($8.9 million) by Australia’s Federal Court for making misleading claims about its ethical investment options.

The penalty marks the highest greenwashing fine issued in the country, as regulators ramp up scrutiny on environmental, social, and governance (ESG) claims by financial institutions.

The Australian Securities and Investments Commission (ASIC), the nation’s securities watchdog, led the case against the US-based asset manager’s local unit, accusing it of providing false information about its Ethically Conscious Global Aggregate Bond Index Fund.

The fund, with nearly A$1 billion in assets, claimed to screen out industries such as fossil fuels from its portfolio, a promise that was found to be largely untrue.

The court discovered that 74% of the securities in the fund were not properly researched or evaluated against the ESG criteria Vanguard had outlined in its public communications.

The asset manager had issued 12 misleading product disclosure statements, along with false claims in a media release and on its website. “Vanguard benefited from its misleading conduct,” the court declared in its judgment.

Despite the significant penalty, Vanguard stated there were no findings of financial loss for investors.

“Vanguard apologizes to its clients for these errors, which were unintentional,” the company said through a spokesperson, emphasizing that they have strengthened internal governance, technology, and training processes to prevent future errors, according to a report in Bloomberg.

The case is part of ASIC’s broader effort to tackle greenwashing, a term that describes companies or funds overstating their environmental credentials to attract investment.

Since mid-2022, the regulator has made close to 50 regulatory interventions to address false environmental claims, underscoring the growing importance of transparency in ESG-related investments.

In recent months, ASIC’s focus on this issue has intensified, with another asset manager, Mercer Superannuation Australia Ltd., facing an A$11.3 million fine for similar greenwashing offenses in August.

With the increasing penalties, Australian regulators are signaling a zero-tolerance approach toward misleading sustainability claims.

Looking ahead, Australia is set to introduce mandatory climate-related disclosures from January, requiring companies and fund managers to be more transparent about their sustainability claims.

Additionally, the country is working on implementing stricter ESG labeling standards for financial products to ensure that investments marketed as sustainable truly meet the advertised criteria.

These steps, regulators say, are crucial to rebuilding trust in ESG investments and ensuring that both institutional and individual investors can make informed choices in a market that is increasingly valuing sustainability.

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​​Bitcoin has been wrongly categorized as a “risk-on” asset, says Robbie Mitchnick, BlackRock’s head of digital assets.

In a recent Bloomberg interview, Mitchnick argued that the crypto industry has misinterpreted Bitcoin’s risk profile, comparing it to stocks in a way that oversimplifies its behavior.

He explained:

Some crypto publications have taken Bitcoin’s inherent riskiness and stretched it to mean it’s a ‘risk-on’ asset like equities.

But, he argues, Bitcoin’s long-term drivers differ from stocks and traditional risk assets—sometimes moving in the opposite direction.

Bitcoin’s market drivers differ from equities

BlackRock’s new white paper describes Bitcoin as a “unique diversifier,” offering protection against monetary and geopolitical risks.

Mitchnick highlighted that Bitcoin is a decentralized, non-sovereign asset with no country-specific or counterparty risks.

He said:

It’s confusing to call it risk-on when its fundamentals suggest it’s more like a risk-off asset.

Risk-on assets typically thrive in favorable economic conditions, like tech stocks and certain commodities. In contrast, risk-off assets, such as gold and government bonds, perform better in uncertain times.

Bitcoin, he stressed, does not align with these definitions.

BlackRock calls Bitcoin a hedge, not a risk-on asset

Mitchnick also addressed concerns over a recent change to BlackRock’s iShares Bitcoin Trust (IBIT) ETF, requiring 12-hour withdrawals from Coinbase, its custodian. He downplayed the update, calling it routine optimization.

“Nothing significant has changed,” he said, adding that such tweaks are standard as the ETF evolves.

Bold prediction: Bitcoin to hit $1 million by 2025?

Meanwhile, the crypto community buzzes with a daring prediction from analyst PlanB.

He suggests Bitcoin could hit $1 million by the end of 2025, outlining a scenario where Trump wins the US election, ends the “war on crypto,” and drives Bitcoin to $100,000.

By 2025, he predicts, Bitcoin could climb to $400,000 before a surge in investor FOMO pushes it to $1 million.

While many find this forecast overly optimistic, it has certainly sparked discussion.

According to Coin Telegraph, one crypto trader said, “If this happens, I’ll run naked in the streets.”

Amid all the hype, Mitchnick remains focused on the fundamentals, reiterating that Bitcoin’s true value lies in its potential as a hedge rather than a speculative risk-on play.

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