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    BOJ’s Kuroda: Premature to debate review of policy framework

    TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Tuesday it was premature to debate the chance of reviewing the bank’s monetary policy framework as more time will be needed to sustainably achieve its 2% inflation target.Kuroda made the comment in parliament, when asked about BOJ board member Naoki Tamura’s recent remarks that the central bank should review its monetary policy framework and tweak its massive stimulus programme depending on the outcome. More

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    Japan Oct real wages post biggest fall in 7 years with hot inflation

    Falling real pay highlights households’ growing burden and policymakers’ conundrum in the wake of rare price hikes in Japan, while businesses are buckling up for annual labour talks next spring.Inflation-adjusted real wages, a key indicator of consumers’ purchasing power, fell 2.6% in October from a year earlier, according to the labour ministry.The real pay contraction was the sharpest since June 2015’s 2.8% decrease and followed a revised 1.2% dip in September.The consumer price index the ministry uses to calculate real wages, which includes fresh foods but excludes owners’ equivalent rent, rose 4.4% in October from a year earlier, at the hottest pace since June 2014.Although nominal total cash earnings rose 1.8% in October, price inflation pushed real wage growth into negative territory for the seventh consecutive month.On the bright side, overtime pay, a gauge of business activity strength, rose 7.9% year-on-year in October, the largest gain in 15 months. Growing extra work hours in services industry drove up the figure, a health ministry official said. Overtime pay among restaurants and bars jumped 52.2% in the 12 months to October, while other service sectors, from barbers to banks, also saw double-digit increases in overtime compensation.Special payments grew 1.1% in October after a revised 20.2% surge in the previous month. The indicator tends to be highly volatile in months other than the June to August and November to January bonus seasons.The following table shows preliminary data for monthly incomes and number of workers in October:—————————————————————-Payments (amount) (yr/yr % change)Total cash earnings 275,888 yen ($2,039.84) +1.8-Monthly wage 269,603 yen +1.8-Regular pay 250,081 yen +1.3-Overtime pay 19,522 yen +7.9-Special payments 6,285 yen +1.1—————————————————————-Number of workers (million) (yr/yr % change)Overall 51.660 +1.1-General employees 35.313 +1.0-Part-time employees 16.347 +1.3—————————————————————-The ministry defines “workers” as 1) those who were employed for more than one month at a company that employed more than five people, or 2) those who were employed on a daily basis or had less than a one-month contract but had worked more than 18 days during the two months before the survey was conducted, at a company that employs more than five people.To view the full tables, see the labour ministry’s website at: ($1 = 135.2500 yen) More

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    UK consumers tighten belts before Christmas as cost of living bites

    UK consumers are tightening their belts in the run-up to the festive period, according to new data that showed retail sales growth lagging far behind inflation in November and pointed to the impact of the cost of living crisis. The value of retail sales rose 4.2 per cent year on year in November, according to a report published on Tuesday by the British Retail Consortium, a trade body, in association with professional services group KPMG. As Black Friday offers launched this winter’s shopping season, November’s figure was an improvement on the 1.6 per cent annual growth rate recorded in the previous month.However, the figures are not adjusted for consumer price inflation, which hit a 41-year high of 11.1 per cent in October, so the annual rise in the value of sales conceals a much larger drop in sales volumes, once CPI is accounted for.Paul Martin, UK head of retail at KPMG, said retailers were hoping that the “Christmas feelgood factor” would trump low consumer confidence during the festive season, adding: “The next few weeks could be critical to their [business’s] survival.”But BRC chief executive Helen Dickinson warned that “the cost of living crisis means many families might dial back their festive plans”. Separate data published on Tuesday by payments company Barclaycard showed consumer spending rose 3.9 per cent year on year in November, up from the 3.5 per cent annual growth recorded in October. Barclaycard, which gathers figures from almost half of the UK’s credit and debit card transactions, attributed most of the rise to the high cost of essentials.

    The annual rate of spending on necessities, such as groceries, fuel and healthcare, increased by 7.1 per cent in November, beating the previous month’s figure of 5.7 per cent. The boost in grocery spending, largely driven by food price inflation, has surged further as many UK shoppers report stocking up on Christmas items earlier this year in order to help spread the cost, said Barclaycard. An additional measure in Barclaycard’s monthly data showed spending on utilities rose by just over 40 per cent in November, exceeding October’s 36 per cent increase, as the colder weather prompted more households to switch on their heating for the first time. Barclaycard director Esme Harwood said: “Cutbacks are affecting non-essential spending on clothing, department stores and restaurants.”Barclaycard’s consumer confidence survey for November showed that half of respondents planned to reduce spending this Christmas, either by buying fewer gifts or scaling back on social activities.As inflation strains the discretionary budgets of many households “many Brits intend to reduce festive spending on presents and parties in an effort to save money”, added Harwood. More

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    Investors need to adapt to the new multipolar world

    The writer is chief investment officer at Legal & General Investment ManagementOf the many risks asset managers need to consider, one has become increasingly prominent in 2022: the shift towards a multipolar world. This has profound implications for companies, policymakers and investors.Ever since the emergence of China as a superpower, we have been travelling towards a world in which tensions between global powers — and their proxies — appear harder to contain. And Russia’s invasion of Ukraine, together with growing jitters over China-Taiwan relations, shows that the pace of change has only accelerated.Following the fall of the Berlin Wall and China’s ascension to the World Trade Organization, the world economy reaped the benefits of globalisation. Growth in international trade and the exchange of ideas, supported by a digital and information revolution, lifted global gross domestic product.Globalisation was the key driver of the stable period of the “Great Moderation” leading up to the 2008 financial crisis, in which companies were able to access low input costs while economic growth benefited from enhanced productivity. Similarly, governments felt comfortable reducing defence budgets and relying on other nations for financial services and energy supplies. Such global efficiencies created the backdrop for low inflation, in turn allowing persistently accommodative monetary policy.Unfortunately, the significant wealth created by both globalisation and central bank largesse was distributed unevenly, stoking income inequality between and within countries. It is not hard to link this byproduct to recent unpredictable and extreme political outcomes.The conflict in Ukraine, meanwhile, is only the latest in a series of recent developments to destabilise the decades-old, US-led world order: the ongoing tension between the US and China, rising political populism and the Covid-19 pandemic. As a result, we are experiencing what at the very least can be termed “slowbalisation”, if not outright deglobalisation.In light of intensifying geopolitical risks and pandemic-induced disruptions, companies are reconsidering where they operate and how they construct global supply chains. Many will face greater costs and tighter margins, with an increasing share of global income going to labour rather than corporate profits.At the same time, countries are looking at security spending and sources of reliable energy, shifting economic resources and borrowing from future generations via massive fiscal deficits. This points to slower economic growth and higher inflation.Given their mandates, rising inflation pressure means that central banks are being forced to undermine aggregate demand by tightening monetary policy. Equity and credit investors, therefore, have to deal with lower economic growth, higher input costs and a reduced likelihood that central banks will intervene to support markets in times of turmoil. In other words, lower returns and higher volatility.And while the dollar is likely to remain the reserve currency of choice for the foreseeable future, we believe it faces a long-term challenge to its position as a haven during risk-off moments and the go-to location for international financing. That’s because more countries are curbing their reliance on the dollar-based financial system, in part to undermine the potency of sanctions such as those imposed on Russia.That said, there are currently no obvious alternative candidates. For example, the euro bloc is too linked to US policy, while the renminbi is not sufficiently international. Cryptocurrencies may play their part, but they need to be embraced by countries that would be giving up huge power by relinquishing their fiat currencies. Perhaps the clearest conclusion is that currency volatility will rise, requiring investors to diversify yet further.Against this backdrop, policymakers face an array of challenges that require urgent attention and fresh thinking, from the diplomatic and economic to the environmental and even cultural. To name but a few, there is the need to tackle the squeeze on consumers while achieving energy security, at the same time as averting a climate catastrophe.As investors, we need to switch our mindset away from chasing asset appreciation in a world of easy money and instead allocate capital to companies that advance the global energy transition, reshore production, provide stable supply chains and bolster global security. In a multipolar world, those that achieve this are likely not just to survive, but to thrive. More

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    Corruption charges dismissed against ex-New York lieutenant governor; U.S. appeals

    NEW YORK (Reuters) -A U.S. judge on Monday dismissed the main criminal counts in the federal government’s corruption case against former New York Lieutenant Governor Brian Benjamin.U.S. District Judge Paul Oetken in Manhattan said the Department of Justice failed to allege an explicit “quid pro quo” between Benjamin and Gerald Migdol, a real estate developer in Manhattan’s Harlem neighborhood, to support bribery, honest services wire fraud and conspiracy charges in the indictment.Oetken said prosecutors can pursue two falsification of records charges against Benjamin, concerning the identities of campaign contributors and a background check to become lieutenant governor.The office of U.S. Attorney Damian Williams in Manhattan appealed the decision late on Monday to the 2nd U.S. Circuit Court of Appeals, also in Manhattan.Benjamin, selected by Governor Kathy Hochul in August 2021 for the state’s No. 2 job, resigned as lieutenant governor on April 12 when the charges were announced. He pleaded not guilty.Barry Berke, a lawyer for Benjamin, said his client was “thankful for his vindication” and looked forward to further serving New York and his Harlem community, after what the lawyer called the “flimsy and unwarranted” charges unfairly cost him his job.Last week the U.S. Supreme Court, which has grown more skeptical of federal prosecutions of public corruption, appeared poised to impose further limits on such prosecutions when it heard arguments in a case involving Joseph Percoco, a former aide to Hochul’s predecessor Andrew Cuomo.Prosecutors said Benjamin directed a $50,000 state grant in June 2019 to a charity Migdol ran in Harlem, where Benjamin was then a state senator, in exchange for contributions to his 2020 re-election campaign and unsuccessful 2021 bid to become New York City comptroller.But Oetken said the government merely “implied” an agreement between the men, and the awarding of the grant was not “proof” there had been one.Migdol pleaded guilty to bribery and fraud charges and cooperated with prosecutors.The case is U.S. v. Benjamin, U.S. District Court, Southern District of New York, No. 21-cr-00706. More

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    FirstFT: Renminbi hits 12-week high in China rally

    Chinese stocks shot higher and the renminbi rose to a 12-week high against the dollar yesterday on further signs that Beijing was easing its harsh zero-Covid restrictions and as Morgan Stanley upgraded the country’s equities to “overweight”. Hong Kong’s Hang Seng China Enterprises index jumped 5.1 per cent, while the CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 2 per cent. China’s currency also rallied, with the renminbi rising 1.3 per cent against the greenback to Rmb6.9629 per dollar, the highest level since September. The gains for Chinese assets come on the heels of further easing of Covid-19 restrictions over the weekend, stoking expectations that authorities may drop the longstanding economically disruptive zero-Covid policy more quickly than expected. Officials in Beijing, Shanghai and Shenzhen said commuters would no longer need to present PCR test results to use public transport, while some apartment complexes in Beijing told residents they could quarantine at home if they tested positive.In the US, stocks fell on Monday after data showed the vast American services sector was still growing, even though the Federal Reserve has been trying to cool the world’s biggest economy with aggressive interest rate rises.Five more stories in the news1. Start of Russian oil cap causes tanker traffic jam A traffic jam of oil tankers has built up in Turkish waters after western powers launched a “price cap” targeting Russian oil and as authorities in Ankara demanded insurers promise that any vessels navigating its straits were fully covered.2. Covid chaos at Foxconn causes 29% revenue fall Revenues at Foxconn, Apple’s biggest manufacturing partner, fell sharply in November during a crucial pre-holiday period, in the latest signal of the damaging impact of its chaotic handling of a Covid-19 outbreak at the world’s largest iPhone plant. It is the first time in 12 years that the company has announced a month-on-month fall in November, a time of high production to meet Christmas sales.3. Crypto group Circle ends $9bn Spac deal Stablecoin group Circle has ditched plans to go public in a $9bn deal through a blank-cheque company chaired by former Barclays chief executive Bob Diamond, underlining how successive crises have hit the crypto sector.4. Canada to send more warships through Taiwan Strait Canada plans to sail more frigate warships through the Taiwan Strait to affirm the waters claimed by China are international after Ottawa released an Indo-Pacific strategy that described Beijing as an “increasingly disruptive” power. “We will continue to enforce the international rules-based order when it comes to the Taiwan Strait,” Canada’s foreign minister Mélanie Joly told the FT. 5. Turkish inflation cools for first time in 18 months Despite the slowdown in inflation, prices are still far higher than the central bank’s forecast for the end of the year. Consumer prices rose at an annualised rate 84.4 per cent in November, official data showed yesterday, roughly meeting economists’ expectations of 84.8 per cent in a Bloomberg poll. The day aheadState memorial service for Jiang Zemin A memorial service for the China Communist Party general secretary of 13 years will take place in Beijing today. Current and former leaders are expected to attend. (FT, SCMP) Reserve Bank of Australia interest rate decision The central bank is expected to raise interest rates by another 25 basis points, according to a poll of economists. (Reuters) US Senate runoff election in Georgia Voters will go to the polls in a contest between incumbent senator Raphael Warnock and Republican opponent Herschel Walker that will determine control of the US Senate. Join us online for FT Advancing Sustainability in the Service Sector today. Speakers include Infosys vice-president Mitrankur Majumdar, Swissport International chief strategist Nadia Kaddouri and more. Register for free here.What else we’re readingFT Person of the Year: Volodymyr Zelenskyy Written off by many before the February invasion as something of a joke, the 44-year-old president of Ukraine embodies the resilience of his people and has become a standard bearer for liberal democracy. He has earned a place in history for his extraordinary display of leadership and fortitude.

    Volodymyr Zelenskyy was a former comic actor who won his election as president with an overwhelming majority © Serhii Korovayny/FT

    Australia, China and the judgment of the Solomons Despite their remoteness, the Solomon Islands have become an unlikely flashpoint in the growing strategic rivalry between China and the west as the signature of a security pact between the Solomons and China continues to spark alarm in Washington and Canberra, writes Gideon Rachman. India takes off? Huh. We didn’t this coming, writes Robin Wigglesworth in Alphaville. India has quietly become an emerging-market standout over the past decade. Not only has it easily posted the best performance of any leading EM, it’s also been pretty much the only one to generate positive returns.The hunt for the next market fracture With soaring inflation, rising rates and fiscal shocks sucking liquidity out of markets and sudden price moves provoking vicious margin calls and forced sales, where will the next shock come from? Here are the corners of the market that policymakers and investors are watching closely.Why HR needs to go back to basics Too many leaders have been tempted to think that a book club, a meditation app or a weekly yoga session will be enough to make their restive troops more loyal. But post-Covid and in a tight labour market HR departments are overwhelmed. If they can get the basics right, they might have to spend less time and energy on hollow perks, writes US Business Editor Andrew Edgecliffe-Johnson.Plus: Does the 4-day week actually work? Seventy UK companies signed up to a trial and researchers measured the impact of the shorter week. Here’s what they discovered.Crossword Do you know who the manager of Manchester United was from 1981-1986? Try your luck at 33-across in this week’s Polymath crossword puzzle. More

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    ‘Innovation Hubs’ Aim to Lift Distressed Areas. Congress Just Has to Fund Them.

    A new report suggests where 20 newly created research centers could best revitalize struggling economies and accelerate new technologiesWASHINGTON — Included in the bipartisan industrial policy legislation that President Biden signed into law this summer was a $10 billion effort to jump-start economically sputtering regions across the country: a series of “innovation hubs” across 20 metropolitan areas.Supporters of targeted federal efforts to revitalize struggling areas are eager for the Commerce Department to start picking the sites for those hubs. Researchers from a Washington think tank, the Economic Innovation Group, are set to release a comprehensive report on Monday that draws on a wide array of economic data to calculate where the hubs could best achieve their dual goals. Those include helping areas in need of an economic jolt and accelerating technological advancements that lift the U.S. economy as it competes on a global stage, and the list of potential sites is heavy on cities in the Mountain West, the Carolinas and Ohio.“The stakes here are really high,” said Kenan Fikri, director of research at the Economic Innovation Group. “They’re high in the competition between the United States and China, and they’re high for the future of place-based policies.”But before the Commerce Department can start the process of deciding where to put the hubs, Congress must actually fund their creation. The need for Congress to greenlight actual money extends to many of the key provisions in the new law, the CHIPS and Science Act, which authorized lawmakers to fund a variety of new programs without actually laying out the money for them.As Mr. Biden prepares to fly to Arizona on Tuesday to celebrate investments in semiconductor manufacturing catalyzed by the CHIPS Act, the immediate fate of the innovation hubs is in flux. Lawmakers are debating whether they will be able to pass a comprehensive spending bill before the end of the year, or just a stopgap one, which would be less likely to include money for the hubs.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Marketmind: Reopen Sesame

    (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.Wall Street slumped on Monday, battered by the old ‘good news is bad news’ adage following unexpectedly strong U.S. service sector activity figures, which should set a negative tone for Asian markets on Tuesday.But could Asia be gathering some independent, locally-driven positive momentum of its own? Things are moving in China as it starts loosening its ‘dynamic zero-COVID’ policy following unprecedented protests recently, although how far it will go and whether it will satisfy investors’ hopes remains to be seen.More cities announced an easing of coronavirus curbs on Sunday, and as many as 10 new easing measures may be announced as early as Wednesday. This follows comments last week from Chinese President Xi Jinping, according to EU officials, that the dominant Omicron variant of the virus – as opposed to the more lethal Delta variant – should pave the way for further relaxation.Also last week, Sun Chunlan, China’s top pandemic official, suggested the central government was rowing back on the zero-COVID policy.This is putting a fire under Chinese assets, and prompting many analysts to look on 2023 in a more positive light. Morgan Stanley (NYSE:MS) updated its China equity recommendation to overweight, citing “multiple positive developments alongside a clear path set towards reopening,” while Standard Chartered (OTC:SCBFF) and Nomura have also turned cautiously optimistic. Chinese stocks jumped 2% and Hong Kong stocks surged 4.5% on Monday, and the yuan rallied through the closely watched 7-per-dollar level. All hit multi-month highs. Chinese yuan – trade-weighted and vs $ The yuan has tumbled almost 10% this year, easily on track for its worst year since Beijing revalued the currency and shifted to a more flexible FX regime in July 2005. That said, its recent rebound has been equally powerful. Last week’s 2% rise was its best weekly performance since 2005, and it appreciated a further 1.3% on Monday. It has only posted three bigger daily rises since 2005, and two of them were in the last two months.On the data front, eyes on Tuesday turn to Australia, where the central bank is expected to raise rates by 25 basis points to more than 3% for the first time in a decade. That would be the third quarter-point hike in a row, following four half-point increases. Three key developments that could provide more direction to markets on Tuesday: – Australia interest rate decision- Australia current account (Q3)- India trade (November) More