15/01/2016 World Business Report

Now for the latest financial news with

Over a barrel: Russia set to slash public spending

Plus: Turmoil on the markets, chill winds from China

Can the giants of Wall Street carry on raking in the profits?

Plenty going on. Milton tells me that I have about eight minutes! You

give me that and I will give you a snapshot of what's exciting in the

news of business and money. No relief on the market at the

moment. We start in Russia,

where the collapse in the price of oil is taking an increasing toll

on the country's finances. Later today the Kremlin is expected

to slash government spending for this year to try and plug a

growing gap in the public coffers. Crude prices staged a small recovery

on Thursday. But they are still close

to a 12-year low of $30 a barrel. That's providing little relief for

Moscow. Today we are expecting Russia to cut

its budget for 2016 by 10%, Over half of all the money

the government gets is from oil, so as the price drops there is a direct

knock on effect for the country. The current budget was based

on oil price being $50 a barrel, but of course crude prices have

since slumped to around $30. That's compounding the economic pain

for Russia, which has been in There had been hopes that 2016 would

see an upturn in its fortunes But that is looking

increasingly unlikely. Oleg Kouzmin is an economist

at Renaissance Capital. Good to see you, as always. Let me

start by this. A cut of 10% may not be enough? One report suggests the

Kremlin would need oil prices to rise to $82 a barrel just to balance

its budget and UNIDO that is not going to happen. -- and you and I

know. Good morning. Indeed. If the price stays as low as $30 for the

next few months, then a 10% cut would not be enough to bring their

death -- the figure to 3%. It could bring the budget to pretty good

shape if it reaches $40, but not $30. As for the $82 oil price, this

could help to bring the budget 20 deficit. -- to zero. Let me ask you

this. This is serious stuff that Russia is facing. You talk about $40

might be OK, but the oil price continues to go south. It will go

lower than $30 a barrel, especially when a worm goes online and starts

putting its oil into the market. I was reading that if oil stays at $30

for all of this year, it will wiped out Russia's financial reserves.

Indeed, if the oil price stays at $30 for the full year Russia would

face another painful year with continued recession, boosted

currency and high inflation. As for the reserves, it could be pressures

on reserves of the government but overall

reserves are still in place. They would not spend a huge amount of

money this year, even if the price was $30. How much hardship are

ordinary Russians feeling on the street? You mentioned inflation.

Food prices have gone through the roof. Fruit and vegetables are up by

nearly 30%. Yes, indeed, Russia this year faces the highest inflation

into -- inflation. In 2015 it was the highest in seven years. Russian

citizens have to get through a 10% cut in their wages. This is the kind

of crisis Russia needs to adjust to, and generally it is better to have

this controlled cut in domestic spending, in consumption by 10%,

something like 5% in 2016, for example, this is better than trying

to keep it flat and go through some uncontrolled cut in consumption by

50% or something like this. Always a pleasure. Thank you for joining us.

The plunging price of oil has been adding to turmoil

Let's go straight to Asia and see whether there is any

Great to see you. Happy Friday! But not a happy time on the markets.

This whole mess continues, doesn't it? That's right. A turnaround in

fortunes in late Asian trade and the gains on Wall Street, which inspired

Asian equities initially, are starting to wain. And more

disappointing Chinese data keeping investors nervous. Brent and US

crude trading at about $30. You talked about this with your guest,

regarding more oil in the market, particularly from the likes of

Iran. Also more poor data from China showed their currency was down. And

also worries that a depreciating yuan could spark problems across the

region and this will hit shares today. Most

retreating from the likes of China, Japan, Korea, Hong Kong, Australia

and Singapore. Indeed. The currency war. That's what we will keep our

eyes. Thank you. Talk to you soon. Cheers!

From Moscow to Wall Street, where America's banking giants are

The biggest beast of them all, JP Morgan Chase, provided some much

needed cheer to investors on Thursday after it reported

better than expected profits for the three months to December.

That took profits for last year to a record of almost $25 billion.

Banks are facing a cocktail of challenges from the slowdown

in China, plunging commodity prices and financial market turmoil to

JPMorgan was the first to report fourth-quarter profit and they

actually beat expectations. The income rose both in the investment

banking side and on the commercial side, their main business. With

other big banks predicted to also impress, but will help ease fears

that a weaker trading market, low oil prices and a slowing global

economy will affect profits. All of the US banks have been cutting back

these last few months and increase costs -- increased costs from

regulatory reform. Under pressure from financial

having to shed assets, the real concern because in the start of the

financial crisis, when they were deemed too big to fail, tanks had

actually grown larger. Citigroup is perhaps the most exposed to the

slowdown in China. -- banks. It relies on Asia and emerging markets.

So investors will be especially interested in their performance.

While the Fed's rate rise in the December did allow banks to

immediately charge more for loans in the fourth quarter, in 2016 we will

see a bigger boost from that. Let me leave you with some other

stories making headlines around the world.

Goldman Sachs says it's struck a deal with the US Department

of Justice to pay $5.1 billion in fines and compensation over

its marketing of subprime mortgage bonds before the financial crisis.

The three biggest banks in the USA, JPMorgan Chase, Bank of America

and Citigroup, have already paid out some $37 billion in settlements.

US banks have taken much of the blame for the 2008 crisis after

granting mortgages to unqualified borrowers, then repackaging those

loans as safe investments and selling the risk on to others.

Fiat Chrysler Automobiles is denying allegations that it encouraged

The car company is being sued by the owner of two US dealerships, who

says it offered financial incentives to dealers to report unsold vehicles

as sold and then cancel those sales the following month.

Fiat Chrysler says it has carried out an investigation and found

Shares in French carmaker Renault plunged 22% on Thursday

before recovering to close 10.3% lower, after it confirmed there had

been police raids on the company's facilities to investigate

Investors are worried Renault might also be involved in cheating

emissions tests, following the Volkswagen scandal last year.

Comments backed up by French Energy minister.

A quick look at the markets. Lots going on. Marketing Asia down

A quick look at the markets. Lots going on. Marketing Asia down in the

dumps. China closed down and of course that affects elsewhere.

Don't forget you can get in touch with me and some

I will be back shortly to have a look at some of the papers from

around the world.