Economy

Higher oil prices and increased tax payments have helped the Russian government narrow its budget shortfall, which early this year was threatening to be far wider, with some economists expecting a deficit of as much as 5% of GDP. “Additional non-oil and gas revenues are coming in, the economy is working and growth rates allow us to talk about higher budget revenues,” Siluanov said. The deficit for January-October stood at 1.24 trillion roubles ($13.82 billion), or 0.7% of GDP, the finance ministry said earlier this month. Russia’s 2023 budget plan envisages a deficit of 2.93 trillion roubles, or 2% of GDP.($1 = 89.7230 roubles) More

For many Americans, the end of the year is a time for parties, family gatherings, festive meals and, of course, shopping. And all that holiday celebrating makes the fourth quarter the most important time of the year for the U.S. economy. 1995 2000 2005 2010 2015 2020 🎁 🎁 🎁 🎁 🎁 🎁 🎁 🎁 […] More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is a former chief investment strategist at Bridgewater AssociatesThe latest US inflation data has reinforced market expectations that a Goldilocks-style soft landing will emerge in the year ahead, with the Federal Reserve able to ease monetary policy despite a relatively strong labour market.In such a scenario, it would be reasonable if investors favoured stocks and even bonds over gold. Historically, zero-yielding gold has tended to perform better in the “tails” of the economic-cycle bell curve, either into a recessionary environment with low and falling interest rates and elevated uncertainty or an environment of economic overheating with high and rising inflation.Looking at the year ahead, however, there are at least three factors that could help gold keep its lustre, even if hopes of a soft landing are realised. Central banks suggest they intend to add more gold to their reserves, and China’s central bank in particular has room to do so. In addition, the ongoing property deleveraging in China, weighing down on the country’s economy and domestic assets, may keep Chinese households looking to gold as a preferred store of wealth. Finally, investors broadly may want to increase gold allocations as a hedge against an unusually busy political calendar that could exacerbate an already unsettled geopolitical backdrop.First, on central banks and gold, it is important to remember that reserve assets are chosen mainly for liquidity and stability, rather than returns. That is a key reason why central banks own so many US government bonds. Recent years have elevated another priority for central banks, however — diversification to protect against geopolitical shocks. Russia’s annexation of Crimea in 2014, and then the 2022 war in Ukraine, resulted in an increasing number of western sanctions on Russian assets, including its central bank reserves. This triggered a renewed focus on reserve diversification, especially by Russia and countries doing business with it. They wanted to shift reserves away from US dollar-denominated assets, as well as from assets of US allies that might be inclined to implement similar sanctions.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Gold benefited. It provided a relatively liquid, stable asset that could be used outside global payment systems (notably Swift) and historically had performed well in periods of heightened uncertainty. In 2022, central banks purchased a record 1,136 tonnes of gold, according to the World Gold Council, with another 800 tonnes bought in the first three quarters of 2023. Gold buying was led by emerging economies, notably China and Turkey.China has been the largest buyer of gold for central bank reserves this year by far with purchases of 181 tonnes in the nine months to September 30, taking total holdings to 2,192 tonnes. But it has ample room to increase gold holdings if it wants to further diversify. Gold represents around 4 per cent of its total reserves, near the low end of allocations by larger central banks. For comparison, Russia’s gold reserves are just under a quarter of the country’s total, while Turkey’s gold represents 26 per cent of total reserves. The US and Germany have about two-thirds of total foreign reserves in gold. A survey by the World Gold Council released in May found that two-thirds of emerging economy central banks and 39 per cent of developed economy central banks expected to increase gold holdings over the next five years — to 16 per cent or greater as a share of total reserves. That would be a multiple of China’s current allocation.In addition to China’s central bank, the country’s households, historically the world’s largest gold consumers, may be motivated to buy more. The country’s closed capital account and less developed financial markets limit ways to manage wealth. Historically, households have looked to housing, local equity markets and bank deposits. If the government is unable to sustainably stabilise property prices, the broader economy and equity market are likely to keep struggling. Against that backdrop, it seems reasonable that household savings may migrate more into gold in an effort to preserve wealth.Finally, gold could play a larger role in 2024 as investors broadly hedge against macroeconomic and geopolitical risk. The year ahead brings elections in dozens of countries; more than half of the global population will be deciding on their leaders. Outcomes have the potential to trigger stark policy shifts in critical countries, including in the US, Taiwan and Mexico. These votes also may exacerbate geopolitical uncertainty, with the potential to weigh down on growth expectations and drag soft-landing hopes towards a more gold-friendly economic “tail”. More

I’m sorry to bring you bad news but the song lyrics “The best things in life are free” aren’t true. Much more accurate is the title of the song, made famous by the Beatles — “Money (That’s what I want)”.In fact, nothing is free. Yes, the trees look amazing at this time of year. The autumnal hue with their spectrum of reds, oranges and golden yellow leaves. But who pays for the appalling leaf blowers, talented tree surgeons and grounds staff who make your local park presentable? Your council tax does.  Seaside air? Yes, it’s lovely and invigorating, but most of you will pay to get there. Or, in my case, I’ll have the second home to enjoy — and maintain at some expense. The water from the tap outside my beach hut may be “free” but the hut’s ground rent pays for that. And who wants to have a beach hut unless you’re able to quaff a few bottles of fizz of an evening? Along with everything else, the price of a decent bottle of bubbly is on the up too. Being British, we can all breathe a collective sigh of relief. The NHS is free at the point of use. Behind the scenes of course, it hoovers up a big chunk of our taxes. And with those waiting lists, that’s why I choose to pay for private health insurance. I cut the cost in half by electing not to be able to use every hospital across the UK. What about the joy of owning a dog? Even that waggy tail costs a fortune. The price of dog food, poo bags, the vet’s bills and insurance all adds up. The hound needs regular grooming and wears a very smart collar from Mungo & Maud. But I’m not here to moan — well, not entirely. In these pressing times, how can one take better financial choices while still enjoying the best that life has to offer?Start at home. Have two of everything, they used to say. Much has been written about the rise and rise of the two-dishwasher kitchen. I love this idea. Not because I want to show off. I just hate emptying the dishwasher. I want two so I can have one for clean and one for dirty. So I never have to unload it, avoiding domestic arguments with the other half. In every relationship one person will stack a dishwasher like a Swedish architect. And the other is like a raccoon on meth. I’m the raccoon in our relationship. To achieve the dishwasher double, you’re unlikely to pop online and buy the cheapest Beko for £239. Miele is the standard, setting you back around £950. Except no one with a half-decent kitchen wants a white machine. That, along with fluorescent strip lighting and Laura Ashley tiles, went out in the early eighties. So, you’ll either order the one with a matching front panel or stainless steel. Goodbye £1,769, times two. There is another way. The two-drawer, single unit Fisher & Paykel. A wonderful bit of kit. Two drawers can be put on independent cycles. £1,700 well spent. And remodelling costs avoided too. A double win! You can fill it quickly and put it on before the other half notices. Travel is another cash redistribution opportunity. I used to “Uber Exec” it everywhere. Why do that when you can use its “business comfort” options that are at least 10 per cent cheaper and usually a decent car (unless an awful MG or Kia slips through the net)? There’s more legroom, and it’s only around 20 per cent pricier than the basic service. Or better still — shudder — I can use public transport. I may as well save money and time by using the Tube, leaving more free cash for lunch. However, it’s international travel where my attitudes have really changed. For years, British Airways really was the World’s Favourite Airline and mine too. These days it’s just a no-frills airline with higher ticket prices. The seats are supremely uncomfortable and, because I’m no longer a gold or silver loyalty card holder, I tend to be seated at the back of the plane, next to the rear gunner. Mountain air isn’t free either, but I need my annual fix. How much? BA want to charge me £798 for two return flights to the Alps — not even at the times I want to travel. To cut a long story short, on my last trip I booked easyJet at £143, return — at the times I wanted and with reserved seating. That’s for two of us. Leaving £655 to spend in the mountains — mostly on lunch.Money may be limited but it simply requires the deckchairs to be rearranged on occasion. Spend the same but do more. Even the dog is economising by eating supermarket own-brand. He loves it!  It saves at least £30 a year, going halfway towards that swanky collar. And we bought a set of dog clippers for £15 to save on the £40 groomer sessions. Followers of this column will know that my black American Express Centurion Card costs a fortune, annually. But use those points, take advantage of the extras and freebies and your cash will go further. Having splashed out on various “essentials” over the year, I will get my rental car for the mountain trip on points. The fizz at the beach hut will be funded by “free” credits at Clos19 and Harvey Nicks. But all of this takes work. Instead of simply having more money and hosing it around, finding ways to use what you have more efficiently is something I can buy into. I’m not about to give up the fancy lunches, champagne-fuelled parties or far-flung holidays. I don’t need to if I am a little wiser about the journey and the choices taken along the way. The best things in life can be affordable when you take good financial decisions. Thankfully, I’m a columnist, not a lyricist.James Max is a broadcaster on TV and radio and a property expert. The views expressed are personal. X, Instagram & Threads @thejamesmax More

LONDON (Reuters) – Mobile phone tower operator Cellnex will accelerate asset sales in a bid to get an investment grade credit rating by the middle of next year and is preparing for a wave of consolidation in the sector, CEO Marco Patuano told Reuters. The Spanish company, which has grown through acquisitions since listing in 2015, changed direction last year when rising interest rates forced it to re-focus on cutting debt by selling non-core assets and simplifying the business. Patuano said he expected cash generation at the company would accelerate drastically in two or three years, when capital expenditure (capex) commitments reduce and assets are mature enough to generate higher returns. “Capex is (now) absorbing all the cash generating. 2024, big capex. 2025, big capex, and then there is a cliff. In 2027, you’re generating a lot of cash. You can’t imagine, a lot of cash,” Patuano said.At that time, Cellnex envisages consolidation among the six largest European tower operators, provided market conditions are favourable. “(In) Europe (what) will happen is that there are six tower operators today. And tomorrow, I think there will be less than six,” Patuano said. Patuano raised the possibility of reviving his predecessor’s 2022 bid for Deutsche Telekom (OTC:DTEGY)’s towers business – now known as GD Towers. “When the time will be mature, (it) could be a very appropriate use of resources,” he said. CAPITAL MARKETS DAY IN MARCH In March, Cellnex plans to announce a new strategy to take it through to 2026, incorporating longer-term capital allocation targets.Since taking the helm in June, Patuano has conducted a review of the company’s portfolio to identify core assets and potential disposals. “In Ireland and Austria we are considering the possibility of a full disposal,” said Patuano, who already agreed the sale of a minority stake in Cellnex Nordics operations in September.According to a report published in October by Kepler Cheuvreux, Cellnex’s units in Ireland and Austria have enterprise values of 1.05 billion euros ($1.15 billion) and 1.41 billion euros respectively.Cellnex aims to reduce its leverage ratio below six times its core earnings in 2024 to try to improve its credit rating.The Spanish company is also planning to invest about 150 million euros in acquiring the land where its towers sit. “In the next couple of years, we should improve even more the cash from operations,” said Patuano, adding land acquisition was one of the ways to achieve that. The company is committed to increasing shareholder remuneration in coming years, through dividend payments and share buybacks. “If you invest in infrastructure, you’re not looking for growth without yield, you’re looking at yield with a decent growth, which is better than the inflation,” Patuano said. ($1 = 0.9168 euros) More

Authorities also cut their view on capital expenditure for the first time since December 2021, saying the pace of recovery was “pausing”.The new assessment by the Cabinet Office came after data last week showed the economy shrank in July-September for the first time in three quarters as demand waned. “The economy is recovering moderately, although some areas showed stalemate recently,” said the report issued by the Cabinet Office on Wednesday. It was the first time the government has cut its view on the overall economy since January.”While business conditions and firms’ earnings continue to improve, the strength of the corporate sector is not necessarily translating into wages and investment,” an official at the Cabinet Office said.”Domestic demand such as corporate investment and consumer spending lack strength,” he said.Although the government retained its assessment that consumer expenditure was “picking up” in November, inflation squeezed consumer goods spending, while spending on services such as eating out maintained an uptrend.In a bid to soften inflation’s hit to the economy, Prime Minister Fumio Kishida’s government compiled this month a package of measures that will involve spending of more than 17 trillion yen ($113 billion). The government expects the economy to continue to recover moderately but there are risks such as those from global monetary tightening and the Chinese economy. Close attention needs to be paid to rising prices, the Middle East situation as well as financial market fluctuations, the report said.($1 = 149.6200 yen) More

LONDON (Reuters) – The most powerful man in crypto has lost his crown – and could see his freedom curtailed as well. Binance chief Changpeng Zhao on Tuesday stepped down and pleaded guilty to breaking U.S. anti-money laundering laws as part of a $4.3 billion settlement resolving a years-long probe into the world’s largest crypto exchange, prosecutors said. The deal with the Justice Department, part of a large settlement between Binance and other U.S. agencies, resolves criminal charges for conducting an unlicensed money transmitter business, conspiracy and breaching sanctions regulations.It also leaves Zhao’s future uncertain. “Today, I stepped down as CEO of Binance,” Zhao tweeted. “Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility.”Zhao, known as CZ, will personally pay $50 million and is barred from all involvement with Binance. U.S. sentencing guidelines call for prison time of 10 to 18 months for the charges he faces. Prosecutors are seeking an 18-month prison sentence, the New York Times reported. Zhao and his lawyers did not return calls seeking comment. LOFTY AMBITIONSAfter launching Binance in Shanghai in 2017, Zhao dreamed big. “We want to take over the entire market!” he told staff in a company chat group that year.The 46-year-old CEO did not waver in his belief as he built up his crypto exchange. Even this year, Zhao felt a major goal was within reach. “The idea that a five-year-old start-up could mature and operate at the same level as a financial institution that has been around for 200 years was once impossible to fathom,” Zhao wrote in January in a review of the previous year. “But we are nearly there today.” In that review, Binance hailed its progress in complying with regulations across the world. The exchange had strived through the year to strengthen client checks, it said, developing crypto’s “best security and compliance team.”Zhao’s public aim to be a part of all that has been dashed by Tuesday’s guilty plea and settlement.”By failing to comply with U.S. law, Binance made it easy for criminals to move their stolen funds and illicit proceeds on its exchanges,” U.S. Attorney General Merrick Garland said on Tuesday. “Binance also did more than just fail to comply with federal law. It pretended to comply.”‘ZHAO ANSWERS TO NO ONE’Zhao was born in China before moving to Canada in 1989 at age 12, two months after China’s Tiananmen Square crackdownon pro-democracy protesters, he wrote in a blog last year. The tycoon crisscrossed the globe in his quest forsuccess, working in Tokyo and New York before moving toShanghai, where he embraced crypto and founded Binance. Its expansion was dramatic. Binance became the world’s biggest crypto exchange within six months.While its market share has slipped this year, it still accounts for about half of global cryptotrading volumes, according to research firm CCData. From the company’s earliest days, Zhao kept a tight grip on Binance, as a powerful leader committed to secrecy and focused on market domination, a Reuters report last year found. As CEO, he remained in control of minute operational detail, at the same time posting social media selfies with world leaders and city mayors.Zhao installed a tight circle of associates, many ofwhom had worked or studied in China, into top jobs. Co-founder Yi He now runs Binance’s venture capital arm, as well as other key departments. As Binance hired more widely from traditional financial and regulatory worlds, Zhao’s tight control over his company was undiminished. The company, which calls itself an “ecosystem,” has set up more than 70 entities, most controlled by Zhao personally. “Zhao answers to no one but himself,” the Commodity Futures Trading Commission wrote in March after suing Binance for operating what it called a “sham” compliance program.It is unclear whether Zhao will now relinquish control of the firms. In the meantime, one of his appointees will take over running Binance. Richard Teng, a senior Binance executive who joined in 2021, is the new CEO, Zhao posted on social media on Tuesday. Teng “will ensure Binance delivers on our next phase of security, transparency, compliance, and growth,” he said. More

The agreement will resolve criminal charges that Binance conducted an unlicensed money transmitter business, conspiracy and breaching sanctions regulations, the U.S. Department of Justice said.Some of the charges, which are both criminal and civil, relate to practices that Reuters reported first in a series of articles in 2022.Here are the key allegations against Binance, its founder Zhao and other executives.UNLICENSED MONEY SERVICE BUSINESSThe U.S. said that Binance, Zhao and other executives “knowingly and willfully conspired” to operate as an unlicensed money services business (MSB) from August 2017 until October 2022.The exchange failed to register with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) as an MSB partly to prevent U.S. regulators discovering it facilitated crypto trades for its clients without proper checks on its users, the U.S. said.The move was designed to allow Binance to “gain market share and profit as quickly as possible,” the U.S. said, with the exchange attracting a “substantial number of U.S. users” to its main website.Binance “chose not to comply” with U.S. rules as it “determined that doing so would limit its ability to attract and maintain U.S. users.”MONEY LAUNDERING CHECKSThe U.S. said that Binance facilitated “billions of dollars” of crypto transactions for its customers, including in the United States, without implementing so-called “know your customer” checks.Binance’s compliance personnel, including its compliance officer, recognised that the exchange’s anti-money laundering controls “were inadequate and would attract criminals to the platform,” the U.S. said.Binance processed transactions by operators of “illicit mixing services” used to obfuscate the provenance of crypto funds, and “laundered proceeds of darknet market transactions, hacks, ransomware, and scams,” the U.S. said.Between August 2017 and April 2022, bitcoin worth $106 million was sent between Binance.com wallets and Hydra, a popular Russian darknet marketplace “frequently utilized by criminals that facilitated the sale of illegal goods and services,” the U.S. said.SANCTIONS VIOLATIONSThe U.S. said that Binance had a “significant customer base” from some sanctioned jurisdictions and was aware that Iran represented “the majority of such customers.”Binance knew that it would allow transactions between U.S. users and those subject to U.S. sanctions, “in violation with U.S. law,” the U.S. said.From around January 2018 to May 2022, Binance processed 1.1 million crypto transactions worth at least $898.6 million between U.S. customers and those who lived in Iran, the U.S. said.Around 2019, Binance continued to serve “thousands of users” identified as being from sanctioned countries, the U.S. said, including over 12,500 users who provided Iranian phone numbers.’TERRORIST’ FINANCINGBinance failed to report suspicious transactions associated with Palestinian militant group Hamas, the authorities said.Crypto wallets at Binance were found to interact with bitcoin wallets associated with groups proscribed as terrorist organisations by the United States and other countries, including Islamic State, the armed wing of Hamas, al Qaeda, and the Palestine Islamic Jihad (PIJ), the U.S. said. More