Aurelia Butler

Turkey’s exports to Russia grew 46 per cent by value over the past three months compared with the same period last year as Ankara allowed its companies to step into the gap created by an exodus of western businesses.From May to July, Turkish exports to Russia were worth $2.04bn, $642mn higher than in those same months in 2021, according to export data compiled by the trade ministry and the Turkish Statistical Institute. For last month alone, the value of exports to Russia increased 75 per cent year on year, from $417mn in July 2021 to $730mn.The $313mn rise between July 2021 and July 2022 was the largest for any country that Turkey exports to. Russia’s share of Turkey’s total exports in July was 3.9 per cent, up from 2.6 per cent 12 months earlier.The surge follows an initial decline after Russia’s full-scale invasion of Ukraine in late February. While the overall sums involved remain relatively small — and are dwarfed by Turkey’s large imports from Russia, dominated by energy — the evidence of growing trade between the two countries is likely to irk western officials dismayed by talk of deepening economic co-operation between Ankara and Moscow.Figures from the Turkish Exporters Assembly, an industry body, suggest sales of chemicals, fresh fruit and vegetables and other food products, along with textiles, electricals and furniture drove the increase in exports to Russia.

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A four-hour meeting between presidents Recep Tayyip Erdoğan and Vladimir Putin in the Russian resort of Sochi this month culminated in a joint promise of expanding collaboration on energy and trade, triggering warnings from western capitals that Turkey could face retaliatory steps if it acts as a conduit for sanctions evasion. Turkey, a Nato member that has supplied armed drones to Ukraine while also seeking to maintain and deepen its ties with Russia, has not signed up to western sanctions, choosing instead to pursue what it calls a “balanced” approach to the conflict.

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Western officials have largely accepted that Ankara will not adopt the measures aimed at punishing Putin for the war against Ukraine. However, EU member states are becoming increasingly uneasy about Turkey’s booming trade with Russia and the potential for it to assist Moscow as a substitute for other European imports and exports, two EU officials told the Financial Times. Some capitals have requested information from Ankara regarding its relationship with the Kremlin. “It’s on our radar,” said one of the officials. “It’s not nice and is not being perceived well by the EU. It’s an irritant.”A spokesman for the Turkish trade ministry said there was “not a remarkable change” in trade volumes with Russia. The person did not return phone calls when asked for additional details.The lira has lost a quarter of its value against the dollar this year as Turkey sticks with a loose monetary policy despite runaway inflation. Relatively cheap Turkish products have helped boost export sales. In value terms, exports were 13 per cent higher last month than in July 2021, with sales to the US up by 25 per cent to $1.32bn, the trade ministry said.Some Turkish officials are celebrating the growing commercial links with Russia. Adil Karaismailoğlu, the transport minister, said in a tweet that a 58 per cent jump in automotive trade by sea with Russia in the past three months, compared with the first four months of the year, showed the “leadership of Turkey” in opening sea corridors.

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EU sanctions against Russia, imposed in seven packages since Putin’s invasion of Ukraine, include bans on exports of cutting-edge technology such as high-end electronics and software, types of machinery and transportation equipment, goods and technologies used by the oil refining, energy, aviation and space industries.Several western officials also voiced alarm at the idea that Ankara sees the exodus of western companies from Russia as an opportunity for Turkish businesses to step in — something that some Turkish officials and business figures have voiced in the past.“At the time when the European Community is scaling down its ties with Russia in response to its aggression against Ukraine, it is not really appropriate to increase links or engagement with Moscow,” said Peter Stano, spokesman for the EU’s foreign and diplomatic arm.

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But potential action against Turkey is complicated by its role as a powerful and influential Nato member and its role in hosting almost 4mn Syrian refugees.Western officials acknowledge that Erdoğan’s ability to negotiate with Putin remains an asset, as demonstrated by the recent deal to allow Ukraine to restart seaborne grain exports, which was brokered by the Turkish president along with the UN.“It’s Turkey, everyone [in the EU] needs them, for one reason or another,” said a European official, who spoke on condition of anonymity owing to the sensitivity of the issue. “And the EU has to be aware of its abilities . . . we can’t just tell [Erdoğan] he has to follow our rules.”Eir Nolsøe in London, Laura Pitel, Ayla Jean Yackley and Funja Güler in Ankara and Henry Foy in Brussels More

Investing.com — The health of the U.S. consumer is in focus as Walmart and Home Depot report earnings. Stock futures are cautiously lower ahead of the releases. Monthly data for U.S. housing starts and building permits will likely corroborate a sharp drop in the NAHB’s market index. Germany’s economic outlook worsens as power prices surge to new records, and a revival of the UN-Iran nuclear deal edges closer. Here’s what you need to know in financial markets on Tuesday, 16th August.1. Walmart, Home Depot earningsTwo big bellwethers for the American consumer report earnings early. Home Depot’s (NYSE:HD) numbers are already out, fractionally ahead of expectations.However, the big number is Walmart (NYSE:WMT), whose scale and breadth of operations make it a generally reliable proxy for consumer spending in general. The group’s disappointing first quarter figures and outlook had set the stage for a nightmarish couple of weeks for the retail sector, so there’s a lot riding on whether or not the Walton family store has gotten on top of its problems since then.Analysts expect Walmart to report earnings per share down 15c from a year ago to $1.63, while inflation is expected to have taken revenue up to $150.9 billion from $141 billion a year ago.2. Housing starts data to follow an apocalyptic warning from the NAHBThe U.S. will report housing starts and building permits for July, two numbers that are expected to show a further cooling-off in a housing market struggling with affordability issues and the sharp rise in mortgage rates over the first half of the year.Housing starts are expected to have fallen for a third straight month to 1.54 million, which would be their lowest since October. Building permits are likewise expected to have edged down to 1.65 million, which would be their lowest since September.In a longer term historical context, those numbers are still well above average – building permits would still be in line with their pre-pandemic record-high – but attention is likely to focus on the pace of the decline, given the precipitous drop in the National Association of Home Builders’ activity index on Monday.3. Stocks set to open cautiously lower; Tencent, Meituan eyedU.S. stock markets are set to open cautiously lower, with futures sitting out the release of Walmart’s data before making any major moves.By 06:20 ET (10:20 GMT), Dow Jones futures were down 56 points, or 0.2%, while S&P 500 futures and Nasdaq 100 futures were down by a fraction more.In addition to the major retail earnings, Agilent (NYSE:A) and Jack Henry (NASDAQ:JKHY) will report after the closing bell. Other stocks likely to be in focus later include Chinese ADRs Tencent (OTC:TCEHY) and Meituan (OTC:MPNGY), after a report suggesting that Tencent is looking at selling its entire holding in the food delivery group to relieve the pressure from Chinese antitrust and Internet regulators.4. German power prices hit new high as Rhine dries out, gas surges againEurope’s energy crisis shows no sign of easing up as the continent’s drought compounds the misery created by the sharp reduction in Russian gas supplies.Germany’s benchmark baseload power price rose to a record for a fifth consecutive trading session, briefly topping 500 euros a megawatt-hour against the backdrop of another 7% rise in natural gas prices.The latest leg up has been caused by water levels in the river Rhine dropping below a critical threshold, stopping barges from carrying alternative fuels such as coal and diesel to power plants in the south of Germany. Power prices have now doubled since June. The drought has also forced a sharp cut in output from France’s nuclear reactors, which are typically big exporters to the rest of Europe.Earlier, the ZEW German economic sentiment index, the first of the big European sentiment surveys this month, showed a further decline – although a smaller one than feared.5. Oil under pressure as Iran deal edges closer to revival; API inventories dueCrude oil continues to bounce along near its 2022 lows amid signs that Iran is inching toward acceptance of an EU-proposed plan to revive the 2015 nuclear deal.The EU said it had seen ‘nothing alarming’ in Iran’s response to the plan, received late on Monday, which raises the chance of the Biden administration also accepting it – subject to the usual caveats of U.S. politics.By 6:30 AM ET, U.S. crude futures were down 1.2% at $88.34 a barrel, while Brent crude was down 1.6% at $93.63 a barrel. The American Petroleum Institute releases weekly inventory data at 04:30 PM ET as usual. More

(Reuters) – Seven U.S. Western states that share Colorado River water are poised to miss a federal deadline for drastic consumption cuts amid a megadrought.The U.S. Bureau of Reclamation in June gave the states 60 days, until mid-August, to devise a plan as human-influenced climate change worsens the region’s driest 22-year period in at least 1,200 years.Without a deal, the bureau may mandate reductions.”Despite the obvious urgency of the situation, the last 62 days produced exactly nothing in terms of meaningful collective action to help forestall the looming crisis,” one of the negotiators, John Entsminger, general manager of the Southern Nevada Water Authority, said in an open letter to the bureau on Monday.While officials had given the states 60 days to negotiate an agreement, the firm deadline was seen as Tuesday, when officials with the reclamation bureau were scheduled to release their projections for Colorado’s two largest reservoirs, Lake Mead and Lake Powell. Bureau officials have scheduled a news conference on both topics for 1 p.m. ET (1700 GMT) on Tuesday.The impasse is testing the strength of the 100-year-old Colorado River compact, which determines the water rights of Arizona, California, Colorado, New Mexico, Nevada, Utah and Wyoming.Citing “dangerously low” water levels at Lake Mead and Lake Powell, federal officials called on states to cut their overall usage of Colorado River water by 2 million to 4 million acre-feet of water per year, an unprecedented reduction of 15% to 30% in the coming year.The lakes hover at around 25% of capacity. If they fall much lower they will be unable to generate hydroelectric power for millions in the West, and also will not allow water to flow downstream.”The bureau is asking institutions used to working over the time frame of decades to do something drastic in a few months. States have been given 60 days to come up with more than twice the cuts that they agreed to over 20 years of previous drought agreements,” said author and former water manager Eric Kuhn, who supports the ambitious cuts sought by the bureau.The Colorado River compact assumes the river would have roughly 20 million acre-feet of water each year. The river’s actual flow the past two decades has averaged 12.5 million acre-feet, leaving state water managers with more rights on paper than water that exists in the river. More

PUTRAJAYA, Malaysia (Reuters) – Malaysia’s top court on Tuesday denied a request by former Prime Minister Najib Razak to introduce new evidence in his final appeal against a 12-year jail sentence for a case linked to the multibillion-dollar 1MDB financial scandal.Najib, 69, faces dozens of charges over the alleged theft of $4.5 billion from 1MDB, a state fund he co-founded as premier in 2009, in a wide-ranging scandal that has ensnared high-ranking officials and financial institutions stretching from Hollywood to the Middle East.In the first of several trials, he was convicted in July 2020 for criminal breach of trust, abuse of power, and money laundering, for illegally receiving about $10 million from SRC international, a former unit of state fund 1Malaysia Development Berhad (1MDB). An appeals court upheld the verdict last year. Najib, who has pleaded not guilty to all charges, replaced his legal team just three weeks before his final appeal at the Federal Court began Monday. Out on bail pending the hearings, he could become the country’s first prime minister, former or sitting, to be jailed if the appeal fails.Defence lawyers had asked the court to admit new evidence that they said would prove that the trial judge who convicted Najib had a conflict of interest, owing to his previous employment at a bank that had conducted business with 1MDB.In a unanimous judgment, the five-member court on Tuesday rejected the motion, finding that the evidence sought had either been publicly available or could have been obtained with reasonable diligence during the trial.”The entirety of the additional evidence sought to be introduced is, in our view, irrelevant to the charges proffered against the applicant and fails to disclose any conflict of interest,” Chief Justice Tengku Maimun Tuan Mat said. The court also denied a request by Najib’s newly-appointed lawyers for a three- to four-month postponement, to fully prepare their arguments given the complexity of the case.Najib told reporters after the hearing he was “shocked and disappointed” by the judges’ ruling, but remained hopeful that he would eventually be exonerated.The ex-premier has previously cited 94 reasons why he should be acquitted, including that lower courts had erred in some of their findings, documents submitted before the appeal showed.The hearing resumes on Thursday. More

WASHINGTON (Reuters) – The U.S. Transportation Department said on Tuesday it is awarding $1.66 billion in grants to cities and states to buy 1,800 buses in a shift to cleaner, lower-emission travel.The grants will fund 1,100 zero-emission buses, which will nearly double the existing 1,300 zero-emission transit buses, the White House said.The funding for 150 bus fleets from the $1 trillion 2021 infrastructure law will help cities and states retire older polluting buses.The funding will also buy 700 buses, which include hybrid-electric, natural gas and diesel models. “These grants are going to be used in every corner of this country,” White House infrastructure coordinator Mitch Landrieu told reporters.Buses account for about half of the 10 billion U.S. transit trips Americans took in 2019. But there are still few green buses – just 18% of the 72,000 U.S. transit buses were hybrid electric in 2020, according to the American Public Transportation Association. Public transit suffered through COVID-19 as tens of millions of Americans worked from home and curbed business and tourism travel, but systems are reporting increasing use as Americans return to offices and travel.The New York Metropolitan Transportation Authority (MTA), the busiest U.S transit system, will receive $116 million to buy about 230 electric buses to replace older diesel ones, electrifying nearly 4% percent of its 5,800-bus fleet.The Los Angeles County Metropolitan Transportation Authority (Metro) will receive $104.1 million to acquire about 160 electric buses to replace older compressed natural gas (CNG) buses, while the Massachusetts Bay Transportation Authority will get $116 million to buy up to 85 EV buses to replace diesel models.The infrastructure law provides $5.5 billion over five years for bus grants, six times prior funding levels and $2 billion for buying and rehabilitating buses and building bus maintenance facilities.Memphis will receive $54 million to build an operations/ maintenance facility, while New Jersey Transit will get $44.6 million to renovate its Union City garage near New York and create a public bus terminal. More

In June, Prime Minister Boris Johnson said he wanted to start a new trade system to reduce costs and simplify rules for 65 developing countries to replace the EU’s Generalised System of Preferences, which applies import duties at reduced rates.Trade minister Anne-Marie Trevelyan said the Developing Countries Trading scheme (DCTS) would extend tariff cuts to hundreds more products exported from developing countries, a system, she said, that goes further than the EU scheme.”As an independent trading nation, we are taking back control of our trade policy and making decisions that back UK businesses, help with the cost of living, and support the economies of developing countries around the world,” Trevelyan said in a statement.”UK businesses can look forward to less red tape and lower costs, incentivising firms to import goods from developing countries.”The DCTS covers 65 countries, simplifies rules such as rules of origin, which dictate what proportion of a product must be made in its country of origin, and removes some seasonal tariffs, such as making cucumbers tariff-free in the winter. More

SHANGHAI (Reuters) – China’s surprise cut in key policy rates this week highlights a dilemma facing Beijing as authorities try to revive an economy awash with cash in the financial system but still lacking in consumer demand.Monday’s 10 basis point cuts in the People’s Bank of China’s (PBOC) 7-day and one-year lending rates isn’t much of a spur for banks to boost lending – they already lend to each other at much lower rates – and analysts say more fundamental measures are needed to revive confidence in an economy ravaged by a property crisis and ongoing COVID lockdowns.The PBOC is facing the challenge of a “partial liquidity trap”, says Alicia García Herrero, chief economist for Asia Pacific at Natixis, as interest rates are not low enough to be defined as a Japan-style liquidity trap, but “cash remains trapped in the largest banks” due to growing systemic risks.Beijing needs more “heterodox measures” to lift growth, for example, injecting liquidity into smaller banks that lend to small businesses, albeit creating a moral hazard, García Herrero said.Other analysts say China requires measures beyond monetary easing to revive its economy, such as less severe COVID policies, and government bailout of failing companies.Rocky Fan, economist at Guolian Securities, said the property market downturn is affecting confidence, as people dare not buy houses amid a debt crisis and boycotts to pay mortgages for unfinished homes.”You need to address the property woes to revive the economy, but it’s a thorny issue,” Fan said. “I don’t see a solution unless the government bails out all the troubled developers, at the risk of moral hazards.”TRAPPED CASH Official data on Monday showed China’s economy slowed across the board in July, dashing hopes for a post-lockdown economic boom. Bucking a global trend of rate hikes to combat red-hot inflation, China has been easing monetary policies, and repeatedly prodding banks to lend more. Still, new bank lending in China tumbled in July while broad credit growth slowed, reflecting anaemic demand.The banking system, however, is bursting with cash. China’s broadest measure of money supply M2, that includes cash and deposits, jumped 12% last month, the fastest pace in six years. Chinese households added 10.3 trillion yuan ($1.52 trillion) in deposits in the first half.”Chinese banks are amassing deposits at an alarming rate as both corporates and households over-save,” Jefferies analysts said in a note. Monday’s rate cuts are “a response to a dearth of spending, which has resulted in a flood of deposits,” the brokerage said, adding the move is “unlikely to move the economic needle”.David Chao, global market strategist, Asia Pacific ex-Japan at Invesco says cutting rates “is a good start, though more policy support is needed, especially to put a floor in the property market and to boost household and corporate sentiment”.Concrete measures could include cutting mortgage rates, relaxing payment requirements, reducing bureaucratic red tape, and easing leverage limits for developers, he suggests. BALANCE SHEET RECESSIONKaiwen Wang, China strategist at Clocktower Group, said that, with short-term interbank rates already near record low, “it is unclear whether PBOC will feel comfortable with a much lower rate environment given its concern over financial bubbles.”Even before Monday’s rate cuts, China’s interbank market rates were already much lower than policy rates, making PBOC’s move look superfluous.Balances at money market funds (MMF) ballooned to a record 11 trillion yuan in May, overtaking Europe as the world’s second-biggest MMF market, after only the United States, according to Fitch.There are already signs of froth in some corners of the financial markets, as some investors seek higher yields.Trading in the domestic money market jumped 44% from a year earlier in June, according to latest official data, while average daily turnover of exchange-traded bonds more than doubled from a year earlier, amid signs of more leveraged trading.In the stock market, outstanding margin loans have climbed to a four-month high of 1.64 trillion yuan, while the small-cap CSI1000 index – more vulnerable to speculative trading – has jumped more than 40% from an April low, to a five-month high. “The rate cuts can only trigger a carnival in the bond market,” said Xia Chun, chief economist at wealth manager Yintech Investment Holdings, referring to a jump in bonds after the policy move that saw China’s 10-year treasury futures hitting two-year highs.”The problem is there’s not a shortage of liquidity, but households and companies have gloomy expectations and weak confidence. It’s a typical balance sheet recession.” ($1 = 6.7928 Chinese yuan renminbi) More

Real levels of UK wages fell at the fastest rate for at least 20 years in the second quarter of this year, but the labour market remains too tight for the Bank of England to feel comfortable about inflationary pressures. Data from the Office for National Statistics showed that in the three months to June underlying real wages fell 3 per cent, the steepest decline since comparable records began in 2001, as regular pay growth of 4.7 per cent was dwarfed by prices rising even faster. The figures highlight the difficult financial position of households even before energy bills rise sharply in October. They also show the cost of living crisis to be much tougher for those working in the public sector, with regular pay levels rising at an annual rate of only 1.8 per cent, compared with 5.4 per cent in the private sector. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that despite the sharp squeeze in real wages, pay was still growing faster than the levels at which the BoE’s Monetary Policy Committee thought would bring inflation back to its 2 per cent target. It is currently at 9.4 per cent and is projected to rise to over 13 per cent early next year. “Wage growth has more momentum than the MPC can tolerate,” Tombs said. The wage data from the ONS came alongside broader labour market figures showing only the early signs of cooling. Unemployment was still close to 50-year lows, with historically high levels of vacancies and employment levels fairly stable. In the second quarter, the unemployment rate crept up 0.1 percentage point to 3.8 per cent, while the employment rate fell by the same amount to 75.5 per cent. That rate was 1 percentage point below the pre-pandemic level and left 281,000 fewer people in work than before Covid-19 struck.The unemployment rate was only marginally higher than its 3.7 per cent level in the first quarter of the year, which was the lowest rate since the early 1970s. With unemployment low, vacancies were still very high, showing that most people who wanted work could find it. After a small decline from a record level, there were still 1.27mn job vacancies on offer in the three months to July for the 1.29mn people who were registered as unemployed and seeking to start work immediately. Ruth Gregory, senior UK economist at Capital Economics, said that “by any metric the labour market is still exceptionally tight” and would put pressure on the BoE to raise interest rates by another 0.5 percentage points in September.Nye Cominetti, senior economist at the Resolution Foundation, said the real pay decline was probably worse than at any point since 1977. “This squeeze has come about despite robust pay growth and a lively jobs market, with pay settlements strengthening slightly,” he said. Chancellor Nadhim Zahawi said the labour market data showed there were “no easy solutions” to the cost of living pressures that the country faced.

“Whilst we cannot completely shield everyone from these global economic shocks, we are targeting this support on millions of the most vulnerable people in our society: those on the lowest incomes, pensioners and disabled people,” he said in a statement. But in a sign that pensioners are feeling increasingly vulnerable about their financial position as energy prices bite, the data showed a surge in the number of over-65s going back to work or staying in employment. Although the state pension age rose to 66 in October 2020, there was a sudden surge of 180,000 in the number of people aged over 65 working or available to work in the second quarter alone. That was an increase of 13.6 per cent on the figures for the first quarter. More