The UK banking system, stressed

Do click through for the full thing — the Co-Op is the loser of the bunch and was told to hand in a new capital plan that “envisages a reduction in its risk-weighted assets of £5.5bn by the end of 2018, notably by selling some subprime mortgages.”. RBS and Lloyds were near misses:

From the report:

The stress scenario featured an initial shock to productivity, which led to an abrupt reassessment of the prospects for the UK economy.

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The research after the Russian hike before [updated]

For those of you who, like me, slept through the CBR’s attempt to sledgehammer the cumbling rouble back into some sort of shape by hiking 10.5 per cent to 17 per cent

Remember when breaking 60 was a thing? (Update at 0700ish: The rouble is up 6.2 per cent in early Tuesday trading to 60.27 per dollar) Read more

Further reading

Elsewhere on Tuesday,

- Michael Lewis wants all under 35 males with egos off Wall St. The value of personal experience…

- Russia and the Fed.

- Remember that highschool kid who supposedly made $72m in the stockmarket? Yeah? Well forget him.  Read more

FirstFT (the new 6am Cut)

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In today’s FirstFT: Rouble trouble, the end of the Sydney siege and the growth of gourmet pet food Read more

CBR rate hike in keeping with orthodox policy… for now

The reactions from research shops and sell-side analysts to the Russian rate hike will soon be flooding your inbox, but one of the first to land in ours comes from Alex Kliment, FT Tilt alum and director of emerging markets strategy at the Eurasia Group:

What happened: At an emergency midnight meeting, the Central Bank of Russia (CBR) has raised the benchmark interest rate by 650bp to 17%, tightened ruble liquidity provisions, and increased allotments of USD to the Russian market, effective 16 December. Read more

Russian rate hikes, then and now

Click to enlarge — from an old St Louis Fed paper

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The kitchen sinksky*

**10.5 per cent to 17 per cent**

Click to enlarge for the Central Bank of Russia’s emergency rate hike at 1am Moscow time — surpassing both the Turkish central bank’s hike in January this year and the Bank of England’s 500bps of moves on one day in 1992. Lamontsky.* Read more

Rouble, re-routed

The rouble tumbled more than 10 per cent in its biggest fall since 1998 as the implications of the fall in oil prices for the country’s energy-dependent economy triggered a rout across Russian markets.

In the bleakest official forecast yet from Moscow, the Russian central bank warned that the country could see a 4.5 per cent to 4.7 per cent contraction in GDP next year if oil prices remained at $60 a barrel. Read more

A pile of Rub (updated)

Will you still need me, will you still feed me, when I’m 64…

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FirstFT (the new Lunch Wrap)

Five people managed to escape from a café in the centre of Sydney where a gunman brandishing a black Islamic flag is holding hostages. The Lindt Chocolat Café in the city’s main business district is now surrounded and shutdown by heavily armed police. Meanwhile, the taxi service app Uber has been accused of profiteering from the event after it quadrupled taxi fares as people aimed to get out of the area. (FT, ABC live blog)

Heavily armed police surrounded the café

In the news

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Markets Live: Monday, 15th December, 2014

Live markets commentary from 

FCA = British Transport Police

Remember Jonathan Burrows? The ex-Blackrock serial fare dodger?

Well, the FCA are on it:

The Financial Conduct Authority (FCA) has banned Jonathan Paul Burrows from performing any function in relation to any regulated activities for not being fit and proper.

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Will US household formation growth finally accelerate in 2015?

Have we been early or just wrong? Read more

The oddly subdued optimism about falling oil prices

Our pal Josh Brown has a hilarious post highlighting the pessimism bias in how the fall of oil prices has been discussed in the US:

This past June, crude oil prices were hitting highs above $110 a barrel and the narrative was that this was why stocks were selling off. The S&P 500 had a weekly correlation of .55 with oil, meanwhile, and had actually spent most of the year rising with it. So not only was the “story” of why stocks were dropping false, the data was as well. Read more

The Sony Effect

Click to enlarge — in which Sony gets one of the top lawyers in the US to ask the media to destroy information from the company’s massive hacking. (Via the Hollywood Reporter)

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Your new (improved?) Chinese GDP

What you think of the new one will probably depend on what you thought of the old one. For many people “not much” seems inadequate.

From Capital Economics’ Mark Williams on the likely Tuesday announcement of an upward boost of up to 10 per cent to the Chinese government’s estimate of the size of its economy (our emphasis): Read more

Further reading

Elsewhere on Monday,

- Clearing houses, the most powerful financial regulators in the world — and they never asked for the job.

- Of British spies in Belgian comms.

- Pettis on the FT on “China turning away from the dollar.”

- Real business cycle theory and the high school Olympics.  Read more

FirstFT (the new 6am Cut)

A gunman waving an Islamic flag has taken customers and staff hostage in a Sydney cafe. People inside the Lindt cafe have been seen holding up a black flag with Arabic writing at the window. Police have cordoned off one of the city’s main business districts. (FT, ABC live blog)

Heavily armed police surrounded the cafe

In the news

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Money Supply: Farewell to Narayana Kocherlakota

Narayana Kocherlakota, president of the Minneapolis Fed, today announced he will step down in 2016.

“Earlier this week, I informed the board of directors of the Federal Reserve Bank of Minneapolis that I do not intend to seek reappointment to a new term as president of the Bank after my current term ends on February 29, 2016,” Kocherlakota said. “I became president of the Minneapolis Bank in October 2009 so that I could be of service to my country in an economic emergency.

I have been honored to play a role in shaping the response to that dire situation. While challenges lie ahead for the Federal Reserve System, the state of crisis has passed, and I have decided not to continue my service into a new term.”

It is rather early to announce a 2016 departure but Mr Kocherlakota had made his decision. “I think once he had made up his mind and informed the board we thought it was good governance to announce it,” said Randall Hogan, chairman of the Minneapolis Fed board. Mr Hogan said the board is not launching an immediate search process, implying Mr Kocherlakota will indeed serve out his term, which runs until February 2016. Read more

Comic release

Worthington Group plc (“the Company” or “Worthington”)

12th December 2014


Update Further to the Company’s announcement on 24th November 2014, the Company has, in relation to Listing Rule 5.6.4 (Reverse Takeovers), submitted details of a number of transactions and contemplated transactions to the FCA. The FCA has asked the company to provide further information and comment before reaching any final conclusions as to whether any of the transactions, or contemplated transactions, amount to, or may on completion amount to, a reverse takeover. The Company expects to provide this additional information and comment no later than Tuesday 16th December 2014.

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Reminding readers about the existence of Russell Brand…

The former comic in central London yesterday…

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Holding over London…

London airspace at pixel time:

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FirstFT (the new Lunch Wrap)

Oil’s slippery slide The IEA, the wealthy nations’ energy watchdog, cut demand growth forecasts for next year, sending the price of Brent — the international oil marker — down 56 cents to $63.12 a barrel, hitting fresh five-year lows. The US benchmark, which has dropped more than 10 per cent this week, slid further below $60 a barrel to $59.19 (FT)

The US House of Representatives avoided a shutdown and passed a $1.1tn spending package that will fund nearly all of the government through September. The House voted to back the bill less than two-and-a-half hours before the deadline after a flurry of late negotiations. (FastFT)

In the news

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“必有牛市” – “There must be a bull market”

You’ve read about the scope for a dynastic bull market in the Economist… now read the report. If you can read Mandarin, like P/E ratios and have a good feel for Chinese imperial history that is.

Do click through the below for the pdf from Cinda. Joseph Cotterill, our resident Mandarin translator, assures us that it’s a chart of the last two millennia of order and chaos in China… which is nice: Read more

Markets Live: Friday, 12th December, 2014

Live markets commentary from 

FX 2015, now with more hyperbole

It’s a variant on the ubiquitous “long dollar” that has passed through consensus into some region of near zen-like certainty, we grant you, but at least this is approaching the more outrageous corner of 2015 FX guesses. It’s entitled “How extreme USD strength can destroy the world” after all.

In two charts from HSBC:

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Further reading

Elsewhere on Friday,

- There’s a whole lotta stupid in Frankendodd, “Swaps Pushout” edition.

- “I would crawl on broken glass dragging my exposed junk to get this deal.” Good to know.

- The Sino-Japanese divergence.

- Bond market fairy tales part x. Read more

FirstFT (the new Lunch Wrap)

The US House of Representatives avoided a shutdown and passed a $1.1tn spending package that will fund nearly all of the government through September. The House voted to back the bill less than two-and-a-half hours before the deadline, after a flurry of late negotiations. (FastFT)

Democrats had revolted against provisions that would scale back the Dodd-Frank financial reforms and change campaign finance rules. (WSJ $)

In the news

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Things to say about Lending Club at parties

- Darling, 50 time revenues is what disruption goes for these days. Don’t tell me you got here in an actual taxi.

- Sure, WebBank could walk away in 2018 and anyway is a non-exclusive partner. Primary issuing banks are ten a penny; this is the new age of finance. Read more

ECB vs Fed stimulus in two charts

CreditSights points out today that changes in gross ECB liquidity provided to the euro area’s banking sector closely track changes in 10 year Bund yields:

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