And on that note, it’s time to wrap up.

A key measure of US inflation has hit its highest level since 1992, the final year of George H. W. Bush’s presidency. The closely watched core personal consumption expenditures (PCE) index increased by 3.1% in April, year-on-year, showing that inflationary pressures are building.

US incomes also fell last month, as the sugar-rush of stimulus checks faded.

Inflation worries also pushed US consumer confidence down this month, with Americans more concerned about rising prices eating into incomes.

Global stock markets have been lifted by the prospect of a massive US budget, with Joe Biden pushing for $6trn of spending in 2022.

Germany’s government is also planning to boost spending, agreeing a €2.5bn (£2.15bn) package to help the culture industry get back on its feet as the country slowly emerges from a third wave of the Covid pandemic.

France has fallen unexpectedly into recession, after its GDP for the first quarter of 2021 was revised down to show a small contraction.

But optimism over the recovery is rising, with eurozone economic confidence hitting its highest in three years.

Europe’s stock market hit a fresh record high, while the FTSE 100 was little changed.

Reddit-favourite stock AMC has been volatile. It surged 38% to a fresh record high above $36, but has now fallen back below last night’s close, to around $26.15.

Police have discovered a cryptocurrency operation that used stolen electricity to mine bitcoin in the West Midlands.

The UK’s financial watchdog is putting an end to companies charging a loyalty penalty, meaning customers who renew their home or motor insurance will not be charged more than new policyholders.

Twitter has listed a new paid-for “Twitter Blue” service on app stores, suggesting the social media company may launch its long-rumoured subscription service soon.

Tens of thousands of homes, offices and hospitals could soon be warmed with surplus heat from factories, incinerator plants and even disused mine shafts under plans by the government to fund low-carbon heating.

Our US Politics liveblog is here, and may have more information on Biden’s budget plans when they surface:

Goodnight, and I hope you have a good weekend :) GW

Europe’s stock market closed at a new record high tonight.

The Stoxx 600 ended around 0.5% higher at 448.98 points, having hit 450 for the first time earlier today.

Stocks were lifted by hopes of an economic rebound in Europe this summer, and president Joe Biden’s proposal for a $6tn budget in 2022.

France’s surprise fall into recession didn’t spook traders - it may even have reassured them that monetary and fiscal policy will stay loose for longer.

Every sector gained ground, led by technology, financial stocks, healthcare firms, and consumer goods and services makers.

Both Germany’s DAX and France’s CAC rose 0.75%, with Spain’s IBEX and Italy’s FTSE MIB both up around 0.4%.

After a relatively calm week in the London stock market, the FTSE 100 has ended the day roughly where it began.

The blue-chip index has closed just 3 points higher at 7022, which means it only gained four points over the week!

UK house-builders had a good day, with Taylor Wimpey (+2.6%), Persimmon (+2.4%), Barratt (+2.3%) and Berkeley Group (+1.9%) rallying.

Chemicals specialist Croda (+2.4%) did well too, a day after being upgraded by Goldman Sachs thanks to an improved outlook for its consumer care division (cosmetics and skincare).

Financial stocks, which benefit from higher growth and inflation prospects, rose too.

But materials stocks lagged, with copper miner Antofagasta and steel producer Evraz both down 2.2%, and online grocer Ocado dipping 1.9%.

The bigger picture is that, five months into the year, the FTSE 100 has gained almost 9%. The smaller FTSE 250 index has risen by 11%, while small-cap stocks are 16% higher.

AJ Bell investment director Russ Mould says:

“A relatively quiet period for corporate and economic announcements represents a good opportunity to take stock of 2021 so far.

“It has been five months of investors fluctuating between optimism over the recovery, concern over the state of the Covid-19 pandemic and fears the economy will overheat resulting in rampant inflation.

“A key feature has been a recovery in UK assets which, even before Covid struck, had been largely underperforming their main global counterparts since the Brexit vote in 2016.

“The drivers for the renewed interest in UK stocks have been the successful vaccine rollout and accompanying reopening of the economy, and some encouraging noises from the corporate world as firms have updated on their first quarter trading.

“The pound is at its highest level in three years against the dollar at $1.42, while the FTSE 250 and FTSE Small Cap indices, which have more of a domestic focus, have outperformed both the more globally-orientated FTSE 100 and some other major stock markets around the world, notably the technology-heavy Nasdaq index which had previously been on a supercharged run.

“Whether this trend can be sustained may come down to the battle between vaccines and variants and if the UK can stick to a road map which would see nearly all coronavirus restrictions lifted in a little over three weeks’ time.”

Joe Biden will set out a $6tn budget proposal on Friday that, if passed, would fund a sweeping overhaul of US infrastructure and pour money into education and tackling climate change while driving government spending to its highest sustained levels since the second world war.

The president’s first budget is largely a political document and faces months of difficult negotiations in Congress where Republicans are already balking at the scale of his spending plans. But it clearly sets out his ambitious plans to remake the US after the coronavirus pandemic.

“Now is the time to build the foundation that we’ve laid, to make bold investments in our families, in our communities, in our nation,” Biden told a crowd in Cleveland on Thursday.

“We know from history that these kinds of investments raise both the floor and the ceiling of an economy for everybody.”

The White House has set out a two part plan to overhaul the US economy by upgrading its infrastructure and expanding its social safety net. The New York Times obtained an early copy of the document that showed the costs of the programmes would lead to the US running annual deficits of over $1.3tn over the next decade and debt rising to 117% of the value of economic output by 2031.

Alongside rebuilding US bridges, roads, airports and other infrastructure Biden has proposed a massive federal to roll out broadband internet access. The Democrats are also pushing to expand and reform the US’s social programmes with government money for paid family leave and universal preschool....

Meme stocks are back in the spotlight.

Shares in AMC Entertainment, the movie theatre chain, soared by 38% in early trading today to hit a new all-time high, before dipping back slightly.

The surge comes as retail day traders, enthused by Reddit groups such as Wall Street Bets, pile into AMC amid cries of ‘HODL’, ‘diamond hands’ and heading ‘to the moon’.

Their target, again, is the hedge funds who have shorted AMC’s shares, and who can be caught in a painful ‘short squeeze’ as the price rises (as we saw with GameStop back in January).

AMC hit $36.72 in early trading, up from $26.52 last night -- and around $10 at the start of the month.

It’s currently trading at $31.20, up 17% today.

Volumes of AMC share trading are huge again today, as Bloomberg Intelligence’s Eric Balchunas points out:

CNBC pointed out yesterday that AMC short-sellers have racked up heavy losses this week:

The so-called short covering could be contributing to AMC’s massive rally this week. The company has about 20% of its float shares sold short, compared with an average of 5% short interest in a typical U.S. stock, according to data from S3 Partners.

“AMC short sellers have been covering some of their exposure lately reversing their short selling trend earlier in the month,” said Ihor Dusaniwsky of S3 Partners.

When a heavily shorted stock jumps higher in a rapid fashion, short sellers are forced to buy back borrowed shares to close out their short position and cut losses. The forced buying tends to fuel the rally even further.

Short sellers betting against AMC have incurred a $1.3 billion loss this week alone, according to the data.

But Nigel Green, the chief executive and founder of deVere Group, points out that retail investors can be burned if the short-squeeze fizzles out.

Green warns:

There’s a certain vigilante mindset amongst those traders being drawn into this social-media frenzy to pump certain stocks.

“They seem to believe they’re in a David and Goliath-style battle against Wall Street and, judging by some of the comments on the forum, it appears kind of personal.

“They’re behaving like activists, not investors. Frankly, those pushing these stocks don’t seem to care about it going up – instead they’re out to destroy the sellers.”

“Heightened emotions, hype and hysteria and investing are rarely good bedfellows. I can’t help but think this is likely to end in tears for many activist traders.”

Inflation worries pushed US consumer confidence down this month.

The University of Michigan’s index of consumer sentiment has dropped to 82.9 this month, rather weaker than the 88.3 posted in April (and broadly matching the reading in mid-May).

Current economic conditions, and consumer expectations, both deteriorated this month - but remained much higher than a year ago, in the first wave of the pandemic.

The fall was driven by a surge of concern about rising prices -- which rather chimes with the core PCE gauge hitting its highest since 1992.

Surveys of Consumers chief economist, Richard Curtin explains:

Consumer confidence remained largely unchanged at the reduced level recorded at mid-month. It is hardly surprising that the resurgent strength of the economy produced more immediate gains in demand than supply, causing consumers to expect a surge in inflation.

Record proportions of consumers reported higher prices across a wide range of discretionary purchases, including homes, vehicles, and household durables - the average change in May vastly exceeds all prior monthly changes.

Consumers are anticipating inflation to rise by 4.6% over the year -- or more than double the Federal Reserve’s target of 2%.

And in the longer term, they see inflation around 3% -- which might concern the Fed more, if it remains that high....

The impact of higher prices on discretionary spending will be offset by the more than $2 trillion increase in savings built up in the last year, Curtin says, and by improving job prospects:

An all-time peak proportion of consumers anticipated declines in the national unemployment rate during the year ahead.

While higher inflation will diminish real incomes, the gains in spending will nonetheless be substantial. The key issue is whether the timing of spending decisions will advance due to the expected price increase

Wall Street seems to be taking this jump in US inflation in its stride.

Stocks have opened higher, with reports that Joe Biden will propose $6tn of federal spending next year in his first budget still providing support.

• Dow: up 104 points or 0.3% at 34,568 points
• S&P 500: up 12 points or 0.3% at 4,212 points
• Nasdaq Composite: up 71 points or 0.5% at 13,807 points

Fiona Cincotta, senior financial markets analyst at City Index, says the Federal Reserve is expected to view the jump in PCE prices as temporary, rather than being spurred to raise interest rates.

Core PCE, the Fed’s preferred measure of inflation, jumped to 3.1% YoY in April, up from 1.8% in March and ahead of the 2.9% forecast.

The futures were already trading higher ahead of the release and barely reacted to the high inflation numbers.

Fed officials have been consistently reassuring the market that they are willing to look through a period of high inflation, which they consider to be temporary. This was particularly the case after CPI hit a 13 year high of 4.2%.

This strong rise in PCE inflation could make it more difficult for the Fed to defend its dovish policy, but for now the market doesn’t appear concerned. High growth tech stocks which are usually dragged lower by fears of the Fed moving early have held onto gains. The US Dollar also remains elevated.

A key measure of US inflation has hit its highest level since the early 1990s, as price pressures build amid the economic recovery.

The core personal consumption expenditures (PCE) index increased by 3.1% in April from one year ago, the Commerce Department reports.

That’s the highest annual core PCE reading since 1992, and is sharply higher than March’s 1.9% reading. Core PCE is closely watched by the US Federal Reserve as a solid measure of inflation.

This surge is higher than expected, and may fuel concerns that the US economy could be overheating as it bounced back strongly from the economic shock of Covid-19.

On a monthly basis, core PCE prices rose by 0.7% in April alone - again, a faster rise in inflation than forecast.

The broader PCE price index increased 3.6 percent in April from one year ago, “reflecting increases in both goods and services”, the BEA says. That’s up from 2.4% a month ago, and is the highest reading since 2008.

Energy prices surged by 24.8% year-on-year while food prices increased 0.9% over the year.

Fed policymakers see the core PCE measure as a good gauge of inflation as they try to deliver their mandate of price stability (around 2% inflation) and full employment.

Earlier this month, the consumer price index surged to 4.2% year-on-year in April, although some economists argue that these moves are transitory (and partly driven by base effects), as the economy emerges from the pandemic.

British police in the West Midlands had a surprise when they raided a suspected cannabis farm in an industrial estate earlier this month - and discovered an illicit bitcoin mining operation stealing electricity instead.

Officers executed a drugs warrant at a Black Country industrial unit, on suspicions that it might be growing cannabis plants.

West Midlands Police had heard that lots of people were visiting the unit at different times of day. Plus there was lots of wiring and ventilation ducts were visible, and a police drone picked up a considerable heat source from above -- all classic cannabis factory signs, they say.

But once they entered the building, they found around 100 computer units as part of what’s understood to be a Bitcoin mining operation. They’ve now been seized.

Sandwell Police Sergeant Jennifer Griffin explained:

“It’s certainly not what we were expecting! It had all the hallmarks of a cannabis cultivation set-up and I believe it’s only the second such crypto mine we’ve encountered in the West Midlands.

“My understanding is that mining for cryptocurrency is not itself illegal but clearly abstracting electricity from the mains supply to power it is.

“We’ve seized the equipment and will be looking into permanently seizing it under the Proceeds of Crime Act. No-one was at the unit at the time of the warrant and no arrests have been made – but we’ll be making enquiries with the unit’s owner.”

New bitcoins are created by “mining” coins, which is done by using computers to carry out complex calculations. The more bitcoins there are, the longer it takes to mine new coin, and the more electricity is used in the process.

Meanwhile, a new cryptocurrency is being blamed for shortages of hard drives and other storage systems, as speculators buy up critical components in anticipation of a price rise.

Chia aims to improve on more popular cryptocurrencies such as bitcoin and ethereum by removing the incentives to burn massive amounts of electricity -- but instead, it uses huge amounts of hard drive space. Here’s the story:

France, the euro zone’s second biggest economy, has unexpectedly fallen back into recession.

New GDP data released this morning showed that French GDP shrank by 0.1% in January-March, rather than the 0.4% growth that was first reported.

That follows a 1.5% contraction in the last three months of 2020, meaning France has joined the wider eurozone in recession as the Covid-19 pandemic hit the region’s economy.

It means France’s economy is 4.7% smaller than in the fourth quarter of 2019, before the pandemic.

Statistics body INSEE cuts its GDP estimate after finding that France’s construction output was much weaker than early data had shown.

It also reports that real disposable income of households fell by 1.0% in the first quarter while the savings rate dipped to 21.8% from a revised 22.7% at the end of 2020.

The downgrade is a blow to president Macron, who had resisted pressure from health experts to announce new lockdown measures until mid-March, when surging infections and hospitalisations forced the government to impose restrictions in Paris and parts of Northern France.

A country-wide lockdown was announced at the end of March, in an attempt to curb a dramatic surge in Covid-19 cases that threatened to overwhelm hospitals.

Those closures of non-essential shops and schools, and restrictions on travel (along with ongoing hospitality closures) have now hit the economy. INSEE reports that household spending - a key driver of growth - fell by 8.3% in April.

France’s lockdown is now being eased, and the government is hopeful of recovery this year, as Reuters explains:

COVID-19 restrictions are now being unwound in France. Finance Minister Bruno Le Maire on Thursday stuck to his growth forecast of 5% for 2021 and said the crisis was “moving behind us, though we must remain cautious”.

The wider eurozone shrank by 0.6% in the first quarter of the year, according to preliminary data, while Germany contracted by 1.8%.

The long-running problem of loyal customers being charged more than new ones should finally be over.

The UK’s financial watchdog has stamped down on the ‘loyalty penalty’; from next January, car and home insurance renewal quotes may not be more expensive than those offered to new customers.

This will prevent customers who stick with their insurer being quietly squeezed, but might also mean fewer cut-price deals aimed at those who shop around.

Our Money editor Hilary Osborne explains:

Customers who renew their home or motor insurance will not be charged more than new policyholders after the financial watchdog put an end to companies charging a loyalty penalty.

People who automatically renew their policy with their insurer are often charged higher premiums than new customers, who tend to be offered the best deals.

The Financial Conduct Authority (FCA) found that on average new customers paid £285 a year for motor insurance, while customers who had been with their provider for more than five years were charged £370.

In the home insurance market, new customers paid £165 a year for buildings and contents cover, while after five years, premiums had increased to £287.

It said its ban on the practice of price walking, where insurance premiums go up as a matter of course year on year rather than because the risk is higher, would save consumers £4.2bn over 10 years.

Here’s the full story:

Ian Mason, head of UK financial services regulation at law firm Gowling WLG, has welcomed the move:

“This is a welcome move by the FCA to protect consumers, so that existing customers are offered the same deals when renewing their insurance as new customers.

The FCA is increasingly focusing on firms providing fair outcomes for consumers, and this is in line with that trend”.

Economic confidence across the eurozone has hit a three-year high, as optimism over the recovery from the pandemic rises.

It was lifted by a jump in sentiment at service sector firms, retailers and among consumers, as Covid-19 restrictions are eased, new data from from the European Commission shows.

The EC’s index of eurozone economic sentiment has jumped to 114.5 points in May from 110.5 in April, higher than expected, and close to its December 2017 peak.

It also rose strongly in the wider EU, up 4 points to 113.9.

These readings are “markedly above its long-term average and pre-pandemic level”, says the EC, with employment expectations also rising.

Optimism in the services sector rose the most, and broke above its long-term average for the first time since March last year - jumping from 2.2 to 11.3 in the euro area.

The report explains:

Managers expressed more positive views on the past business situation and past demand, and were more optimistic on demand expectations.

Consumer confidence increased for the fourth time in a row (+3.0), driven by an improvement in all its components (i.e. views on their household’s past and future financial situation, their expectations of the general economic situation in their country, and their intentions to make major purchases).

Industry confidence increased for the sixth month in a row, with managers reporting strong order books and improved export demand.

Retail trade confidence rose for the third time in a row (+2.8), and construction confidence improved (+1.9), as managers reported improved order books and more optimistic employment expectations.

European stocks have hit a new all-time high, as optimism over the economic recovery continues to lift share prices across the region.

The Europe-wide Stoxx 600 index has gained 0.45% this morning to 448.45 points, a fresh record. Every sector is higher, led by financials, industrial stocks and utilities.

The Stoxx 600 has now gained over 12% so far this year, amid optimism that Europe’s economy will rebound strongly from the pandemic - now that Covid-19 vaccination programs have picked up speed.

Germany’s DAX and France’s CAC are both up around 0.4%.

Recent European economic data has shown activity is picking up strongly, with business growth hitting a three-year high this month and the EC upgrading its own growth forecasts.

America’s strong recovery, and president Biden’s spending plans, are also providing a lift.

Frédérique Carrier, Head of Investment Strategy, RBC Wealth Management, says the European economy is reviving faster than most observers expected.

Europe, where many countries had to extend lockdown measures, is finally emerging from a long economic winter thanks to lower infection rates and an accelerating vaccine rollout.

Carrier has upgraded her view on European equities to ‘overweight’, predicting they will see a ‘conducive climate’ over the next six to 12 months.

She writes:

As macroeconomic momentum builds, earnings delivery is strong and both management and consensus forecasts are being revised upwards.

The Q1 reporting season was exceptionally robust, with companies in the Euro STOXX Index, an index of some 300 European companies, easily beating consensus expectations and generating earnings per share growth of close to 40 percent year over year, driven by sales increases and margin expansion.

Moreover, management teams overall were optimistic on a demand recovery, though some noted concerns regarding supply shortages. Most were confident of their pricing power and ability to reduce costs. Following a heady Q1, upgraded forecasts suggest the earnings recovery is likely to last into next year. The consensus is looking for earnings growth of around 15 percent year over year for 2022.

In the City, the blue-chip FTSE 100 index has risen 30 points to 7050 points, up 0.45%.

Top risers include energy firm SSE (+2.6%), and UK housebuilders Taylor Wimpey (+2.5%), Barratt Development (+2.4%) and Persimmon (+2.1%).

Luxury fashion group Burberry (+2.5%), and financial stocks such as HSBC (+2.4%) and Prudential (+2.4%) are also higher this morning.

Richard Hunter, head of markets at interactive investor, says the prospect of higher inflation is pushing the market up.

“Further signs that the US economy is beginning to run hot prompted another switch into value stocks, at the expense of growth.

The renewed consideration of cyclical stocks as an investment destination has generally played into the hands of the FTSE100, which has now risen by 9% in the year to date. The index is replete with sectors falling into the recovery category, such as the banks, oils and miners. For the likes of the airlines and the hospitality sectors, however, the outlook remains rather more cloudy as both travel restrictions and the emergence of Covid-19 variants hinder a smooth return to some sort of normality.

Australia’s benchmark stock index, the S&P/ASX 200, has hit a record closing high today, amid renewed optimism in the global economic outlook and the prospect of a $6tn Biden budget.

The mining sector was leading the gains with financials, energy, industrials and consumer staples also higher.

Higher US spending could mean greater demand for commodities and a wider boost to growth.

This lifted the index to its highest close, and near the intraday high hit early in the pandemic.

The Australian Financial Review reports:

A sharp rally in domestic miners and energy stocks drove the S&P/ASX 200 Index to a fresh closing high of 7179.5, rising 84.6 points, or 1.2 per cent, on Friday amid speculation that US President Joe Biden is planning an infrastructure friendly $6 trillion budget.

Shares exceeded their May 10 record of 7172.8 points, but not the intraday high of 7197 set on February 20, 2020.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Global stock markets are nudging higher as investors brace for president Joe Biden to propose a $6tn spending package when he unveils his first budget later today.

Biden is expected to propose record federal spending of $6tn in the 2022 financial year, starting in October, rising to $8.2 trillion by 2031, according to a report in the New York Times.

Citing documents it had obtained, the NYT said the Democratic president planned to pay for his agenda through increased taxes on corporations and high earners, with budget deficits expected to decrease in the 2030s.

The budget will show how Biden intends to deliver on his sweeping domestic agenda. That includes the American Jobs Plan to build new transport, water, energy and broadband infrastructure, modernise homes, and boost manufacturing, and the American Families Plan to invest more in childcare and education.

The budget will also outline how the White House see inflation, employment, and economic growth panning out. The budget deficit is expected to hit $1.8tn in 2022.

But the documents will also be aspirational. Biden’s Democrats hold only narrow majorities in the House and Senate, and the Republicans are pushing for a smaller infrastructure package instead. So a pitched battle lies ahead.

As Reuters explains:

Republicans have criticized the president for seeking trillions in new spending, setting the stage for pitched battles over his priorities.

“It just seems like the trillions keep on coming,” Republican U.S. Senator Shelley Moore Capito, who is leading a group of colleagues pursuing a counteroffer to Biden’s current $1.7 trillion infrastructure proposal.

Yesterday, president Biden told an event in Cleveland that it’s the right time to invest in the economic recovery:

“Now is the time to build (upon) the foundation that we’ve laid to make bold investments in our families and our communities and our nation.

We know from history that these kinds of investments raise both the floor and the ceiling over the economy for everybody.”

Hailing the recent progress against Covid-19, Biden added:

“We’ve turned the tide on the once-in-a-century pandemic.

“And now we’re faced with a question: what kind of economy are we going to build for tomorrow? What are we going to do? I believe this is our moment to rebuild an economy from the bottom up and the middle out.”

Asia-Pacific equity markets have been boosted overnight, with Japan’s Nikkei jumping 2.1% and South Korea’s Kospi gaining 0.8%.

Investors anticipate that this surge in US spending will feed through to the global economy, as Jeffrey Halley, senior market analyst at OANDA, explains:

President Biden’s Preliminary Budget is envisaging a $1.8 trillion deficit next year, after tax rises.

Of course, what the President would like, and what he will get from Congress could be quite different, but with that level of spending, Asia appears to feel that some of that goody bag will fall their way, and Asian equity markets have risen today

Strong economic data yesterday is also supporting stocks, with the number of new US jobless claims falling to a pandemic low yesterday, and US growth confirmed at a pacy 1.6% in the last quarter (while the UK and eurozone contracted).

Ipek Ozkardeskaya, senior analyst at Swissquote, says:

A robust GDP growth in the first quarter, a fresh pandemic low print in weekly jobless claims and the talk of a $6 trillion federal spending package for the coming fiscal year boosted appetite in most equities and the US dollar.

But could inflation fears spoil the party again? Later today we get the latest ‘core PCE price’ index -- the US Federal Reserve’s preferred gauge of inflation, which excludes volatile food and energy prices. It’s expected to jump to 2.9% on a yearly basis from 1.8%.

The University of Michigan’s final consumer morale index for May is likely to highlight that inflation worries are hitting confidence (as the preliminary report showed earlier this month).

The agenda

• 10am BST: Eurozone consumer confidence report for May
• 1.30pm BST: US personal income figures for April
• 1.30pm BST: US core PCE Price index (the Fed’s preferred measure of inflation)
• 3pm BST: University of Michigan consumer sentiment index for May