- Russia Set to Raise Main Lending Rate. Russia’s central bank will probably raise borrowing costs to avert threats to financial stability as oil prices near the lowest in more than five years and sanctions over Ukraine risk the collapse of the ruble. The Bank of Russia will increase its key rate to 10.5 percent from 9.5 percent, according to the median estimate of 34 economists surveyed by Bloomberg. Nine analysts predict a bigger increase. Fifty of 77 traders polled by brokerage Tradition project a rate increase of between 100 and 400 basis points. The regulator will announce the decision at about 1:30 p.m. tomorrow in Moscow, followed by a news conference.
- Greece Reruns Doomsday Scenario. (video) Political tumult in Greece, plunging stock and bond markets, the threat of default and exit from the euro: the script is eerily similar to the nightmare scenarios of 2010 and 2011. Debt-infested Greece skidded close to the edge then, saved by 240 billion euros ($297 billion) in emergency loans improvised by European governments led by a reluctant Germany. Now, after achieving some signs of economic recovery, the government in Athens is again teetering, provoking a fresh round of doomsday speculation.
- Bank of Canada Says Home Prices Overvalued as Much as 30%. Canada’s housing prices are overvalued by as much as 30 percent, the central bank said in its latest assessment of a financial risk that’s built up over years of rising prices and low interest rates. Home prices are 10 percent to 30 percent above where the bank’s model suggests they should be, according to the Ottawa-based bank’s Financial System Review. Today’s report is the first time the central bank has published such a direct calculation of housing overvaluation.
- Bank of Canada Warns of Liquidity Risk in Corporate Bonds. Canadian corporate bond investors may be underestimating the difficulty of selling their holdings in a market downturn, leaving them open to greater losses, the Bank of Canada said. Rising holdings of corporate bonds in mutual and exchange-traded funds could exacerbate price swings if the funds are forced to sell in a rout, the central bank said in its semi-annual Financial System Review. Some market participants also believe dealers are reducing market-making activity, or acting as the middleman between trades, which may make it harder to unwind large positions.
- Airbus Slumps Most in Six Years on Muted Earnings Outlook. Airbus Group NV (AIR) fell the most in more than six years after saying earnings will be “rather flat” in 2016 and that generating cash will be tough as it spends more to upgrade aircraft and turn around its military unit.
- Europe Stocks Drop Third Day as OPEC Outlook Weighs on Oil Firms. (video) A drop in oil and gas companies sent European stocks down a third day after OPEC said it sees demand for crude in 2015 at the weakest level in 12 years. The Stoxx Europe 600 Index declined 0.3 percent to 339.32 at the close of trading, erasing an earlier advance of as much as 0.9 percent. A measure of energy stocks retreated to a three-year low, posting the worst performance among 19 industry groups on the Stoxx 600. Royal Dutch Shell Plc, BP Plc and Total SA lost more than 1 percent.
- Brent Crude Drops Below $65 as OPEC Sees Less Demand. Brent fell below $65 for the first time in more than five years as OPEC cut the demand forecast for its crude oil to a 12-year low. West Texas Intermediate dropped as U.S. inventories grew.
- Copper Drops as Lower Chinese Producer Prices Damp Demand. Copper futures fell the most in a week on concern that demand is ebbing in China, the world’s top consumer of industrial metals. China’s producer-price index in November fell 2.7 percent from a year earlier, government data showed today. The record 33rd straight decline was the biggest since mid-2013. Copper has dropped 15 percent this year, heading for a consecutive annual decline for the first time since 2001.
- Corn, Soybeans Decline as USDA Raises Forecast for World Crops. Corn futures fell after the U.S. government raised its outlook for global supplies as an expanding grain glut drives down global food costs. Soybeans declined for the first time in six sessions.
- JPMorgan(JPM) Sees ‘High Teens’ Decline in Trading Revenue. JPMorgan Chase & Co. (JPM) probably will report a “high teens” percentage drop in fourth-quarter trading revenue from a year ago, Chief Financial Officer Marianne Lake said. The shares fell as much as 2.3 percent. Most of the revenue decline will stem from the sale of the bank’s physical-commodities business and higher interest costs from the issuance of preferred stock, Lake said today at an investor conference in New York. The “core performance” of the trading business probably will slip 4 percent, she said.
- Oil Price Fall Deepens BOJ Policy Board Rift. Opponents to October’s Easing May Reject Push to ‘Mechanically’ Ease. The continued fall in crude oil prices is deepening a rift among Bank of Japan policy-board members, indicating that some of them may reject any push for extra stimulus next year.
- Here Are America's Most Levered Energy Companies. (table)
- Is Insider Trading Legal Following Appeals Court Tossing Out Two Hedge Fund Convictions.
- European QE Postponed Indefinitely? Leaked EU Draft Shows "Lack Of Political Cover" For Draghi.
- WTI Crude Crashes To $60 Handle As Saudis Shun Cuts. (graph)
- Ukraine Bonds Crash To Record Low After Economy Minister Asks For More IMF Bailouts. (graph)
- Central Banks Have Failed Because They Can't Push Wages Higher.
- Saxobank's 10 Outrageous Predictions For 2015 - A Reckoning's Coming.
- GREXIT Fears Spark European Peripheral Contagion, Silver Surging.
Business Insider:
- An OPEC Minister Just Made A Surprising Statement About Who Controls Oil Prices.
- The Party In Macau Is All But Over.
- NYPD Union Boss Says Obama 'Absolutely' Threw Police Under The Bus.
- Russian Companies Lost Tens of Billions of Rubles on FX Derivatives. Russian cos. lost tens of billions of rubles on OTC forex derivatives, citing Sergey Moiseev, head of the financial stability debt at Bank of Russia. Central bank has seen tens of billions of rubles in losses at large Russian cos. on FX side of contracts, he said. Central bank doesn't know size of "shadow" derivatives market, or actual amount of losses.
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