Finance

Pedestrians walk past a Gap Inc. store in Shanghai.
Qilai Shen | Bloomberg | Getty Images

Check out the companies making headlines in after-hours trading.
Gap — Shares surged 15% in the postmarket following the retailer’s earnings report, which showed a major improvement in margins. Revenue was a hair below expectations, coming in at $3.28 billion, while analysts polled by Refinitiv anticipated $3.29 billion.

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Costco — Shares slipped 0.2% after the retailer posted a miss on revenue, recording $53.65 billion for its fiscal third quarter while analysts forecast $54.57 billion, per Refinitiv. Costco saw $3.43 in adjusted earnings per share, higher than the $3.29 anticipated by analysts.
Ulta Beauty — Shares of Ulta fell 8% in extended trading after the cosmetics retailer reaffirmed guidance for earnings and comparable sales for the full year. Ulta slightly raised its outlook for revenue for the year. The company posted earnings of $6.88 per share on $2.63 billion in revenue. Analysts called for earnings of $6.87 per share and revenue of $2.62 billion, according to Refinitiv.
Workday — The cloud stock added 7% after hours following a strong earnings report and its announcement of a new chief financial officer. Workday reported $1.31 in adjusted earnings per share, while analysts polled by Refinitiv estimated $1.12. The company also narrowly beat expectations for revenue, coming in at $1.68 billion against a $1.67 billion forecast. Workday also announced Zane Rowe, most recently chief financial officer of VMware, would be the finance chief starting next month.
Marvell Technology — Shares jumped 14% in post-bell trading after the semiconductor producer beat analysts’ expectations for its first quarter. Marvell notched 31 cents in adjusted earnings per share on $1.32 billion in revenue, while analysts polled by Refinitiv estimated 29 cents per share and $1.3 billion in revenue. The company also said revenue growth should accelerate in the second half of the fiscal year.
RH — Luxury retailer RH slipped 3% after hours as weak guidance for the current quarter pulled attention from strong first-quarter earnings. The company said to expect between $765 million and $775 million in revenue in the current quarter, lower than the Street’s estimate of $784 million, according to Refinitiv. Still, RH beat expectations on revenue in the first quarter, posting $739 million compared with analysts’ forecast of $727 million.
— CNBC’s Darla Mercado contributed reporting. More

The market may contract along with the economy in a possible recession, but there are two ways retirees can protect the invested savings they’re living off of, says Christine Benz, director of personal finance and retirement planning at Morningstar.
One of those defenses is changing the source of withdrawals — for example, pulling from cash or bonds instead of stocks.
The second defense is to reduce the overall dollar amount retirees withdraw from their investments.

Getty | mihailomilovanovic

The federal debt-ceiling standoff and the specter of a possible recession on the horizon may mean turbulent times ahead for the stock market — and that’s especially worrisome for retirees who rely on their investment portfolios for income.
Retirees are generally advised to hold some stocks as part of their nest egg. Stocks serve as a long-term growth engine, helping to beat inflation’s negative impact over decades of retirement in a way that cash and bonds generally can’t.

But pulling too much money from stocks during periods of sustained losses can be dangerous for retirees. The risk is particularly acute for people who’ve recently retired.
More from Personal Finance:Credit card debt nears $1 trillionHow to get started with investing, budgetingHow much emergency savings you really need
Fortunately, there are ways retirees can cut that risk.
“You really have two defenses if you’re retired and are pulling from your portfolio for your living expenses,” said Christine Benz, director of personal finance and retirement planning at Morningstar.
One of those defenses is changing the source of withdrawals — for example, pulling from cash or bonds instead of stocks. Ideally, retirees would pull from an asset type that hasn’t been declining in value, Benz said.

That’s sometimes a tough proposition: 2022 was a rare case when stocks and bonds both suffered steep losses.
The second defense is to reduce the overall dollar amount retirees withdraw from their investments, Benz said.

Why retirees need to be careful

Here’s the crux of the issue: When the stock market pulls back, investors must sell more of their stocks to generate the same level of income. When the market eventually stabilizes and swings positive, the portfolio has less of a runway for growth.
If retirees aren’t careful, this dynamic may cause them to run out of money sooner than expected in their later years.

Here’s one way to think about it: Retirees often peg the amount of their annual withdrawal to a percentage of their portfolio, perhaps somewhere in the range of 3% to 5%.
If a retiree continues to pull the same dollar amount from that portfolio after stocks suffer a prolonged decline, that share could jump to 7% or 8%, for example — a perhaps-unsustainable amount that inadvertently hobbles the portfolio, said David Blanchett, head of retirement research at PGIM, the investment management arm of Prudential Financial.
The key is flexibility, to the extent retirees have wiggle room, he said.

Economy, market pullbacks aren’t a sure thing

There are many caveats here.
For one, a stock-market pullback isn’t guaranteed in the near term. U.S. lawmakers may reach a debt-ceiling deal by early June and avert likely financial chaos.
And while Federal Reserve economists expect the U.S. to tilt into a mild recession later this year, it’s not guaranteed. Neither is a stock-market pullback if an economic downturn does materialize; while stocks frequently contract during recessions, there are instances (like in the early 1980s and 1990s) when that didn’t happen, according to a Morningstar analysis.
Further, adjusting withdrawal behavior is more important for younger retirees — especially healthier ones expecting to tap their nest egg for decades.  

You really have two defenses if you’re retired and are pulling from your portfolio for your living expenses.

Christine Benz
director of personal finance and retirement planning at Morningstar

Consider this illustration of risk from Charles Schwab, which examines two newly retired individuals with $1 million portfolios and $50,000 annual withdrawals (adjusted for inflation).
The only difference between them is when each experiences a 15% portfolio loss. One suffers a 15% decline in the first two years of retirement, and a 6% gain each year thereafter. The other has a 6% annual gain for the first nine years, a negative 15% return in years 10 and 11, and a 6% annual gain thereafter.
Here’s the kicker: The first investor would run out of money after 18 years, while the second would have about $400,000 left.
It may also be easier for certain retirees to be flexible than others.
For example, some may cover all or the majority of their necessities (like food and housing costs) from guaranteed income sources like Social Security, a pension or an annuity. They may more easily be able to throttle back spending from stocks or a broader investment portfolio, if it’s largely being tapped just for discretionary purchases like vacations and entertainment.

How to be flexible

Marko Geber | Digitalvision | Getty Images

There are several approaches retirees can take to be flexible with withdrawals, such as a “guardrail” strategy or forgoing inflation adjustments in down years.
Here’s one easy rule of thumb: Using your personal life expectancy to determine if you’re withdrawing a safe amount of money from year to year, Blanchett said.
(There are many online calculators that estimate how long you’ll live — and therefore how long you must make your retirement savings last. Blanchett recommends the Actuaries Longevity Illustrator from the American Academy of Actuaries and Society of Actuaries.)
The calculation is simple: Divide 1 by your life expectancy, which will yield a reasonable starting point (in percentage terms) for a safe portfolio withdrawal.  
For example, if a retiree determines their longevity to be 20 years, they’d use this calculation: 1/20 X 100. That yields a 5% withdrawal rate.
“It’s really important to take the temperature of the withdrawal rate on an ongoing basis,” Blanchett said. More

Nvidia has found success in China by selling automotive chips to the country’s electric car companies, but the U.S. semiconductor giant has been restricted from sending some products to China.
Budrul Chukrut | Sopa Images | Lightrocket | Getty Images

Check out the companies making headlines in midday trading.
Nvidia — Nvidia surged 25% during midday trading the day after it issued a blockbuster earnings report. The rally brought the chipmaker’s market cap to just below the $1 trillion milestone, last around $942 million, according to FactSet.

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Monolithic Power Systems — Artificial intelligence beneficiaries such as Monolithic Power Systems got a boost from Nvidia’s strong results. Monolithic Power Systems is an under-the-radar AI pick expected to provide power management solutions for Nvidia’s H100 graphics processing units, according to Needham. Shares surged 15%. Other AI beneficiaries that also got a boost include Marvell Technology and Broadcom, which rose more than 3% each. Adobe shares jumped 6%.
Dish Network — Shares jumped 7% on news the company is in discussions with Amazon to sell wireless phone plan services on the e-commerce platform, according to a report from The Wall Street Journal.
Advanced Micro Devices — Semiconductor and semiconductor equipment makers took off after Nvidia’s strong results. Advanced Micro Devices and Synopsys jumped 10%, each. Shares of Applied Materials advanced 5%.
Dollar Tree — Dollar Tree reported shrinking margins in its fiscal first quarter, sending its shares down 10% during midday trading. Competitor Dollar General also fell, down 2.6%.
Snowflake — The cloud computing stock tumbled nearly 17%. Late Wednesday, Snowflake reported second-quarter product revenue guidance below expectations, according to StreetAccount. It did, however, beat on the top and bottom lines in its first-quarter results.

American Eagle Outfitters — American Eagle Outfitters dropped 13% during midday trading. The apparel retailer lowered its outlook late Wednesday. The clothing retailer reported a mixed quarter, with revenue slightly beating estimates and earnings meeting expectations, per Refinitiv.
Ralph Lauren — The luxury apparel retailer saw its shares jump 6% after the company beat earnings estimates and reported a surprise rise in revenue for its fiscal fourth quarter, according to Refinitiv. Ralph Lauren also said its sales in China jumped 30% as demand for luxury items rebounded amid the reopening.
Best Buy — Shares of the electronics retailer gained 1% after the company issued its fiscal first-quarter results. While the company posted slightly better-than-expected earnings, according to Refinitiv, sales missed estimates. Best Buy also reiterated expectations for weaker spending on consumer electronics this year.
Carnival — The cruise line added 2% on the back of an upgrade to buy from neutral by Citi. The firm said Carnival is at a turning point in regard to its balance sheet, and the broader cruise industry is getting more attention from investors.
— CNBC’s Alex Harring, Hakyung Kim, Yun Li and Tanaya Macheel contributed reporting. More

The logo of NVIDIA as seen at its corporate headquarters in Santa Clara, California, in May of 2022.
Nvidia | via Reuters

Check out the companies making the biggest moves in premarket trading Thursday:
Nvidia — Shares soared 28% after the chipmaker reported blockbuster earnings. Nvidia said it expected a “giant record year” and guided for sales of $11 billion in the second quarter, more than 50% higher than analysts’ estimates.

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Best Buy — Shares of the electronics retailer gained nearly 5% in premarket trading after the company posted first-quarter earnings of $1.15 per share excluding items, topping the $1.11 expected by analysts, according to Refinitiv. Revenues of $9.47 billion came in below the $9.52 billion anticipated.
Snowflake — The cloud computing company slid about 13% following the company’s weaker-than-expected revenue guidance for the second quarter. However, Snowflake beat analysts’ estimates for first-quarter earnings and revenue when it reported after the bell Wednesday, according to Refinitiv.
American Eagle Outfitters — The stock shed nearly 20% in premarket trading after the retailer said it expects second-quarter revenue to fall. American Eagle Outfitters also posted first-quarter earnings per share in line with estimates and revenue slightly above expectations
Carnival — The cruise line added 2.3% following an upgrade to buy from neutral by Citi. The firm said Carnival is at a turning point on its balance sheet at a time when investors seem more interested in the cruise space.
Dish Network — Shares slipped 2.7% in the premarket after being downgraded by Citi to neutral from buy on Wednesday. The Wall Street firm cited Dish’s substantial capital needs combined with the drop in market value of its securities.

Dollar Tree — Shares of the discount retailer fell 11% in premarket trading after Dollar Tree reported shrinking margins for the first quarter. Gross profit fell 4.7% even as net sales rose 6.1%. The company’s first quarter adjusted earnings per share of $1.47 was below analyst estimates of $1.52, according to StreetAccount.
C3.ai, Palantir Technologies — The AI stocks rallied on the back of Nvidia’s earnings, with C3.ai popping 14% and Palantir Technologies gaining nearly 10%.
Advanced Micro Devices, Taiwan Semiconductor — The semiconductor stocks followed Nvidia higher in premarket trading, with AMD adding about 9% and Taiwan Semiconductor up nearly 7%.
— CNBC’s Alex Harring, Tanaya Macheel and Jesse Pound contributed reporting. More

Anne Boden, CEO and co-founder of British digital bank Starling, is to step down on June 30.
She will be succeeded by Starling’s chief operating officer, John Mountain.
Boden said she was concerned her significant shareholding in the bank could create a conflict of interest.

Starling Bank CEO Anne Boden.
Starling Bank

The co-founder of Starling, one of the U.K.’s largest digital banks, is set to step down as CEO next month, the company said Thursday.
Starling, which is backed by U.S. investment banking giant Goldman Sachs, is one of the most prominent fintechs in the country with a user base of 3.6 million customers.

Anne Boden is to step down on June 30, according to a press release. She will hand the reins to Starling’s chief operating officer, John Mountain, who has been with the bank since 2015.
“I have spent nearly a decade here as both the founder and CEO, a dual role which is unique in U.K. banking,” Boden said in a statement Thursday. “It’s been all-consuming and I’ve loved every minute of it.”
“Now that we have grown from being an aspiring challenger to an established bank, it is clear the roles and priorities of a CEO and a large shareholder ultimately differ and require distinct approaches. As Starling continues to evolve and grow, separating my two roles is in the bank’s best interests.”
Starling reported annual revenue of £453 million ($600 million) for the year to March 31, 2023, more than doubling from 2022, with pre-tax profits of £195 million, a sixfold increase year over year.

Total lending stood at £4.9 billion, up from £3.3 billion. Customer deposits increased 17% to £10.6 billion.

Boden, who co-founded Starling in 2014, took the startup from a tiny challenger in banking to a major player in the U.K.’s financial scene.
The often outspoken CEO has been a key voice behind the U.K. government’s attempt to make it an established fintech hub.
She is also a staunch critic of social media’s role in online fraud as well as a prominent crypto skeptic.
On a call with reporters Thursday, Boden said the main thing that triggered her decision was concerns that her significant shareholding in the firm could create a conflict of interest.
Boden owns a 4% stake in Starling.
She added that it was herself, not the company’s board, that initiated conversations about her departure.
Starling has raised a total of £946.5 billion to date from investors including Goldman Sachs, Fidelity and the Qatar Investment Authority. The bank was last valued at £2.5 billion.

In response to a CNBC question Thursday, Boden said that, were the firm to raise capital today, its shares would not decrease in value from their last price.
Asked how her plans to step down may impact Starling’s path toward an initial public offering, Boden said the IPO market is currently closed and the firm is in no immediate hurry.
The U.K. has received plenty of criticism from top tech bosses over its tech listings environment — earlier this year, the CEO of Revolut said he would never list in London.
Boden said that Starling has not yet taken a decision on a listing venue for its eventual public offering, however the U.K. was likely to be the place in which it debuts.
“We need to keep our options open. This is not the right time to make a decision on listing venue, however we’re a U.K. bank and a very successful U.K. bank,” Boden said.
“Customers love us and the default situation would be a U.K. listing because of the consumer enthusiasm for a brand that is as powerful as Starling.” More

Towards the end of last year America began running short of medicines used to treat attention-deficit hyperactivity disorder (adhd), including Adderall (an amphetamine) and Ritalin (a central-nervous-system stimulant). Nine in ten pharmacies reported shortages of the medication, which tens of millions of Americans use to help improve focus and concentration. Around the same time, something intriguing happened: American productivity, a measure of efficiency at work, dropped. In the first quarter of 2023, output per hour fell by 3%. Coincidence? Probably. Lots of other things could have explained the productivity dip. Equally, though, many of America’s most productive people rely on Adderall to get the job done. It often seems like half of Silicon Valley, the most innovative place on Earth, is on the stuff. And surprising things can cause gdp to rise and fall, including holidays, strikes and the weather. What’s more, the economic history is clear: without things that give people a buzz, the world would still be in the economic dark ages. Not all drug consumption helps people work better, of course. Don Draper from “Mad Men”, a tv series about advertising executives in the 1960s, came across many of his finest ideas three Scotches deep. But contrary to popular belief Ernest Hemingway, one of America’s greatest authors, never advised “write drunk, edit sober”, preferring to write liquor-free. In a book published in 1983 David Ogilvy, perhaps the most famous real-life mad man, warned of the dangers of drunks in the office. Use of cocaine, common on Wall Street and in Hollywood, can give people a short-term boost. It also causes grave long-term problems.Indeed, economists normally think of mood-altering substances as a drag on prosperity. One estimate in 2007 put the cost of drug abuse in America at $193bn, or around 1.3% of gdp. More recently economists have looked at “deaths of despair”, which many link to abuse of opioids. In 2021 more than 80,000 Americans died from opioid overdoses. But stimulants can play a positive role, too. Consider two of them: sugar and coffee. The first allowed people to work harder; the second allowed them to work smarter. Until the start of the 18th century calories were a significant constraint on Western economic growth. In 1700 total food supply per person in Britain was equivalent to around 2,000 calories a day—enough for the average man to survive, but not to do a great deal more. Workers were therefore inefficient. Many of the poor, who survived on even more meagre diets, barely had the energy to move, let alone do anything useful.This changed when sugar imports from Britain’s colonies increased. Annual sugar consumption per person rose from around 5lbs a year in 1700 to 20lbs by 1800—several times higher than in continental Europe. After 1800 imports then soared as Britons developed a taste for sweet tea and cakes. The change from a fibre-heavy to a sugar-heavy diet, noted Robert Fogel, a Nobel prize-winning economist, “raised the proportion of ingested energy that [could] be metabolised”. Some observed that a growing share of Englishmen were getting fat. But the imports also gave Britain’s economy a sugar high. In France in the late 18th century about 10% of people could not work for lack of nourishment. In Britain, by contrast, only the bottom 3% were incapable. In the 18th century British gdp growth was seven times as fast as France’s. Fogel reckoned that “bringing the ultra-poor into the labour force [and] raising the energy available for work by those in the labour force” explains about one-third of Britain’s economic growth in the 19th and 20th centuries. Coffee, meanwhile, pushed the middle classes to do bigger and better things. Joel Mokyr of Northwestern University has stressed the importance of a “culture of growth”, the title of a book he published in 2016, in explaining Europe’s industrialisation. During this period science became less academic, and more focused on solving real-world problems. Over time it became the handmaiden of inventions, such as the internal-combustion engine, which massively lifted living standards. Coffee houses, which some at the time called “penny universities”, played a crucial role. By the early 18th century central London was home to as many as 600 coffee shops. The Marine Coffee House in London was an early location for a set of lectures on mathematics, Mr Mokyr points out. The London Chapter Coffee House was the favourite of the fellows of the Royal Society, the intellectual godfathers of the scientific revolution, and was where people gathered to discuss how science could be applied. Caffeine lubricated the discussion in a way that alcohol—a depressant—never could. The chemical increases both selective attention (focusing on the relevant stimulus) and sustained attention (maintaining it). This was not the only way in which coffee fuelled growth. In the 18th century Europe came to rely more heavily on clocks to organise the timing of economic activity, and less on the natural rhythms of the human body, as was common in agricultural societies. Factories cannot function unless everyone is there at the same time. Yet if people now had to get up at unnatural hours, they needed something to pep them up. “Caffeine became instrumental to the regimented time of the urban industrialised societies,” according to Steven Topik of the University of California, Irvine.Flying highThe prolonged shortage of adhd medication has imposed real pain on those who need it to function. Fortunately, though, the shortage does now appear to be easing. Some pharmacies are finally getting drugs back in stock and regulators have removed some medications from their official-shortages list. Silicon Valley types have been experimenting with other stimulants, such as nootropics, which are not in shortage. American productivity appears, once again, to be rising. Coincidence? ■Read more from Free exchange, our column on economics:Robert Lucas was a giant of macroeconomics (May 18th)A new world order seeks to prioritise security and climate change (May 11th)How Japanese policymakers ended up in a very deep hole (May 4th)For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Remember the name: China Science Publishing & Media (cspm) might be the hottest state-owned textbook stock, ever. Shares in the company, which publishes titles such as “Gaseous Detonation Physics and its Universal Framework Theory”, are up 230% since the start of the year. It is not the content, riveting though it is, that has lifted cspm’s market capitalisation to nearly 30bn yuan ($4.3bn). Across the board, China’s state-owned companies have enjoyed a renaissance—at the request of regulators. Stop focusing on profits, authorities have insisted. Instead, think about firms’ social contributions and their broader impact on the economy. All told, the “reconsideration” of China’s clunkiest firms has been worth 3trn yuan in the first five months of the year.The success of the concept—called the “valuation system with Chinese characteristics”—is quite the coup for the country’s state capitalists. It suggests an ability to guide investment flows. First mentioned in November by Yi Huiman, head of the China Securities Regulatory Commission, the system’s principles continue to evolve. At their core is the idea that standard valuation methods are poor at assessing state-owned companies because such firms adhere to central-government policies which seek to improve overall economic prosperity, not simply a firm’s bottom line.China’s state-owned enterprises (soes) have a reputation for poor performance and stingy dividends. Their market valuations have reflected this. Part of the problem, say proponents of the new system, is that companies have communicated poorly with investors. Some have even asked analysts not to cover them. Now the firms should help investors understand their “intrinsic values”, Mr Yi has said. No method for doing this has been divulged, but investors speculate that these values include local employment and the hesitancy at many soes to lay off unproductive staff.This sounds strikingly similar to what investors grudgingly call “national service”, or sacrificing profits to boost economic growth. China’s largest banks are often asked to do this by lowering interest rates on loans to risky borrowers—defying all commercial logic—in the hopes of spurring growth. Kweichow Moutai, a state-owned liquor-maker and one of China’s most valuable listed firms, frequently spends on public works and has even started bailing out local governments in its province. By classic valuation models, this is all detrimental to shareholder value.The biggest beneficiary of the new system may be pensioners. China faces a gaping shortfall in its ability to support the elderly. Poor demographics and an early retirement age are exacerbating the problem. Officials are transferring trillions of yuan in state-owned capital to the national pension fund as part of a reform process. A boost in the valuation of the firms could eventually help the state meet its pension obligations. The new valuation system, says Meng Lei of ubs, a bank, is an attempt to help investors understand the broader implications of this transfer of state-owned capital to pensioners. Is there a more traditional case for investment in companies such as cspm? After a surge of excitement this year, state firms’ share prices are falling again. A new index tracking them is down by 11% since its peak on May 8th. The 291 state-owned shares that are included in the China coverage of msci, an index operator, trade at around six times forward earnings, or close to all-time lows, according to Goldman Sachs, a bank. This is about half the ratio for non-state companies. Even before the recent fall, soes were trading at a hefty discount. Officials now hope to match their fine words with actions. The regulator that oversees state assets recently switched its main gauge for evaluating company performance from net profits to return on equity. Analysts at cicc, a Chinese investment bank, reckon this might help lift capital returns and operating results. In which case, the interests of state capitalists and private investors would be better aligned than at present. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Central Asia’s top brass is on tour. On May 9th presidents of the region’s former Soviet republics were in Moscow, having been roped in as spectators for Vladimir Putin’s annual military parade. Ten days later, as g7 leaders gathered in Japan, it was Xi Jinping’s turn to play host, in Xi’an. At the first in-person meeting of a new group that China has dubbed the c+c5, he wooed Central’s Asia’s five leaders with a bonanza of investments, trade deals and knowledge transfers, to the tune of $3.8bn.Central Asia is home to untapped natural gas and oil reserves, supplies of copper and uranium, and 10,300km of land borders with China and Russia. Outreach to the region has occupied Beijing and Moscow since the fall of the Soviet Union. But owing to uncertainty in Afghanistan and war in Ukraine, Chinese officials have taken a particular interest of late. Security was top of the agenda in Xi’an, upsetting a long-term compromise in which the region’s armed forces move in lockstep with Moscow while Beijing pulls the region’s pursestrings by bankrolling colossal projects. The prizes offered by Mr Xi add to a push already under way to strengthen China’s economic ties with Central Asia. Beijing is involved in more than 90 industrial projects across the region. Turkmen gas alone accounts for more than 70% of the country’s annual gas imports. In 2022 China was Central Asia’s largest trading partner, as the value of imports and exports between the two parties rose to $70bn—up more than 40% from the year before, according to official Chinese figures. By contrast, trade between Russia and Central Asia amounted to less than $40bn.Mr Putin has stepped up his overtures, partly to counter Mr Xi. Russia has promised a slew of infrastructure investments. Competition is particularly fierce to build transport for the region’s natural resources, many of which are trapped underground. In Xi’an Mr Xi offered to construct a pipeline, the fourth of its kind, to ferry gas eastward from Kazakhstan, Turkmenistan and Uzbekistan. Russia wants as much fuel as possible flowing through its borders in the Caspian and Central pipeline systems, which it has the power to turn on and off. In the words of an academic in Moscow, “there is a silent stand-off.” Mr Putin’s diplomacy also has other motivations. Necessity has drawn Russia closer to its southern neighbours. War in Ukraine has left Mr Putin desperate to hold on to remaining allies, even though politicians in Central Asia have avoided openly supporting his invasion. Moscow is newly reliant on Central Asia to circumvent sanctions. Central bankers in Kazakhstan and Uzbekistan help settle payments, using gold and roubles, for transactions that before the war would have been made using swift, a Western system. Logistics bosses and customs officials receive Russian exports before passing them on to Europe. Such intermediated trade counted for 4-6% of Kyrgyzstan’s gdp last year.The result is that Central Asia’s economies are booming. Currencies in Kazakhstan, Tajikistan and Uzbekistan have risen against the dollar since the war began, bucking an emerging-market trend. The European Bank for Reconstruction and Development, a multilateral outfit, predicts that industries thriving on transporting Russian exports will contribute to gdp growth of 5.2% in the region this year, comfortably outstripping expectations. Capital, firms and people fleeing Russia, many of whom are highly educated, may well produce an even healthier 2024. Frenetic business has sent pay soaring, too. In November, annual real wage growth reached 10% in Uzbekistan and 7% in Kazakhstan, meaning the region’s workers have seen more of a lift than those in any g7 country. Newly flush households will spend more on food and energy during Central Asia’s freezing winters. Strong domestic demand has left the region’s governments struggling to keep up. Kazakhstan and Uzbekistan both paused gas exports in January, with a promise to bring them to a complete end by 2025. Whoever wins the charm offensive to build Central Asia’s new pipelines may find there is no fuel available to fill them. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More