Russia Increases Key Interest Rate to 17% to Stem Ruble Decline

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BFW 12/15 22:09 Russia Raises Key Rate to 17% Amid Devaluation, Inflation Risks BFW 12/15 22:05 *BANK OF RUSSIA SAYS SEEKS TO STEM DEVALUATION, INFLATION RISKS BFW 12/15 22:03 *RUSSIAN CENTRAL TO HOLD 1-YR FX REPO AUCTIONS WEEKLY BFW 12/15 22:03 *BANK OF RUSSIA TO RAISE LIMIT ON 28-DAY FX REPO AUCTION TO $5B BFW 12/15 22:02 *RUSSIAN RATE INCREASE TO 17% EFFECTIVE DEC. 16 BFW 12/15 22:01 *RUSSIA RAISES KEY RATE TO 17%: CENTRAL BANK WEBSITE STATEMENT

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Russia Increases Key Interest Rate to 17% to Stem Ruble Decline 2014-12-15 22:11:06.528 GMT

By Olga Tanas (Bloomberg) -- Russia’s central bank raised its benchmark interest rate to 17 percent from 10.5 percent at an unscheduled meeting after the ruble fell the most in 16 years. The bank increased borrowing costs to limit the currency’s drop and inflation risks, it said in a statement on its website today. Russia’s central bank raised interest rates for the sixth time in 2014 after more than $80 billion spent from its reserves failed to stop a 49 percent selloff of the ruble, the world’s worst-performing currency this year. President Vladimir Putin, whose incursion into Ukraine’s Crimea peninsula in March prompted the U.S. and its allies to strike back with sanctions, this month called for “harsh” measures to deter currency speculators.

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To contact the reporter on this story: Olga Tanas in Moscow at +7-495-771-7705 or otanas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at +36-1-881-0227 or bpenz@bloomberg.net

>>> US Close Dow-0,58% S&P-0,64% Nasdaq-1,04% Russell -1,05%

Closing Market Summary: Crude Oil Leads Stocks Lower

The major averages began the new week amid some old concerns. The S&P 500 settled lower by 0.6% while the Nasdaq Composite (-1.0%) underperformed, but most of the attention was directed to crude oil trading pits once again.

After plunging nearly 4.0% on Friday and inviting questions about macroeconomic implications of the continued weakness, crude oil enjoyed an overnight rebound before resuming its downtrend. The energy component ended the pit session lower by 3.2% at $55.96/bbl and continued its retreat into the $55.50/bbl area in electronic trade.

Similar to oil, European equities and U.S. equity futures rebounded in overnight action, but accelerated their retreat from highs once the U.S. cash market opened. All ten sectors finished the day in negative territory with heavily-weighted financials (-0.9%), health care (-0.9%), and consumer discretionary (-0.6%) keeping the market under pressure.

Notably, financials and health care finished at the bottom of the leaderboard with the health care sector enduring significant weakness in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 297.66, -8.44) plunged 2.8% and contributed to the underperformance of the Nasdaq.

Although the Nasdaq finished behind the broader market, the tech-heavy index was prevented from sliding deeper into the red by relative strength among some influential components like Accenture (ACN 81.88), Oracle (ORCL 41.11, +1.16), and Qualcomm (QCOM 70.37, -0.21). Of the three, Oracle rallied 2.9% after Morgan Stanley upgraded the stock to ‘Overweight.'

Elsewhere, the energy sector (-0.9%) held up well during morning action, but retreated to lows after crude oil locked in a decline for the day. Dow component ExxonMobil (XOM 86.90, +0.30) bucked the trend, climbing 0.4% after BMO Capital Markets upgraded the stock to ‘Market Perform' from ‘Underperform.'

When the dust settled, the industrial sector (-0.3%) represented the top performer on the cyclical side. The sector benefitted from gains among transport stocks with the group likely responding to cheaper fuel. The Dow Jones Transportation Average ended just above its flat line with Alaska Air (ALK 57.65, +1.84) climbing 3.3%.

Likewise, retailers rallied in response to lower oil prices as evidenced by a 0.2% advance in the SPDR S&P Retail ETF (XRT 92.47, +0.19). However, the broader discretionary sector ended in-line with the market as quick-service restaurants weighed. McDonald's (MCD 88.46, -2.16) and Yum! Brands (YUM 70.63, -2.22) lost 2.4% and 3.1%, respectively.

Treasuries ended the day modestly lower with the 10-yr yield higher by two basis points at 2.12%. On a related note, the Dollar Index registered a slim gain of 0.1%, but the greenback retreated more than 100 pips against the yen to 117.70.

Participation was ahead of average with more than 940 million shares changing hands at the NYSE floor.

Economic data included Empire Manufacturing, Industrial Production, and NAHB Housing Market Index:

* The Empire Manufacturing Survey for December registered a reading of -3.6, which was below the prior month's reading of 10.2 and below the consensus estimate, which was pegged at 14.0  * Industrial production increased 1.3% in November after increasing an upwardly revised 0.1% (from -0.1%) while the consensus expected an increase of 0.7% 

* That was the largest increase since a 1.6% gain in May 2010 o Manufacturing production increased a solid, and perhaps unexpected, 1.1% in November after increasing an upwardly revised 0.4% (from 0.2%) in October  * Capacity utilization exceeded 80% for the first time since March 2008 and increased to 80.1% in November from 79.3% in October 

* The NAHB Housing Market Index for December slipped to 57 from 58 while the consensus expected the reading to hold at 58 

Tomorrow, November Housing Starts ( consensus 1.035 mln) and Building Permits (consensus 1.06 mln) will be reported at 8:30 ET.

* Nasdaq Composite +10.3% YTD  * S&P 500 +7.6% YTD  * Dow Jones Industrial Average +3.6% YTD  * Russell 2000 -1.8% YTD

WSJ BT Group in Exclusive Talks to Buy EE

BT Group in Exclusive Talks to Buy EE
Deal Valued at £12.5 Billion ($19.6 Billion) in cash and stock

LONDON— BT Group PLC said it has entered exclusive talks to buy U.K. mobile operator EE for £12.5 billion ($19.6 billion) in cash and stock from Germany’s Deutsche Telekom and France’s Orange SA .

The period of exclusivity will last several weeks, BT said in a statement.

If a deal is reached, BT said Deutsche Telekom would end up with a 12% stake in BT and Orange would hold a 4% stake in BT.

FT : Rouble slump by most since 1998; worst in world

Whisper it quietly, but Russia could be facing a full-blown currency crisis.
Rumours of Russian central bank intervention briefly calmed the rouble somewhat, but the currency is now careening lower again, falling almost 8 per cent – the most since its 1998 financial crisis - to a new low of 63.667 versus the dollar.
That makes it the worst of all 174 currencies tracked by Bloomberg this year, finally pipping the Ukrainian hryvnia today with a total 48.2 per cent slump in 2014.
Moscow's financial markets have been pounded by a wave of selling today, bond yields soaring and the stock market sliding.
In US dollar terms the Micex index has now lost over 26 per cent this month - already making it the worst month for the Moscow stock market since October 2008 (see second chart below).
But the rouble remains ground zero for the rout.
The turmoil sent the rouble to a low of 61.46 versus the dollar at around 1pm in London, before talk that the Russian central bank was intervening steadied the currency at just over 60 to the greenback. But as the trading day went on the rouble resumed its tumble, and is now at 63.44.
Analysts are now worried the slide is becoming uncontrollable and could lead to more systemic financial problems in the Russian economy, due to the heavy foreign borrowing of Russian companies and possibility that locals lose faith in the currency.
Bernd Berg, a strategist SocGen, said that there was a danger that the rouble's rout becomes a complete collapse to 70 per US dollar unless the central bank steps in forcefully in the coming days.
The third chart below shows the one-day moves since 2000. You have to go back to 1997-98 to see movements this sharp.

FT : BT close to exclusive talks to buy EE



BT is close to announcing exclusive talks to acquire EE, Britain's largest mobile group.

EE was formed only five years ago from the merger of Deutsche Telekom's T-Mobile and the UK operations of France's Orange.

A deal would see BT pay as much as £12bn in cash and shares for EE - in what would be the largest deal struck by the former state-owned British telecoms incumbent – to make a remarkable return to the mainstream consumer mobile market after it was forced to spin off O2 in 2001.

The FT's Daniel Thomas and Arash Massoudi report that according to people familiar with the matter, BT could announce its decision later this afternoon.

But these people cautioned that Telefónica could still disrupt the talks with a counter offer to sell O2 at a more attractive price.

The combination of the country's largest fixed-line and wireless networks would create a dominant telecoms and TV group in the UK, returning BT to a leading position in the provision of broadband and mobile contracts.

The decision follows several days of intense negotiations between the three parties, according to people familiar with the matter. All parties declined to comment.

BT has overseen an unusual "reverse auction" in recent weeks as the owners of O2 and EE have battled to sell their businesses to the British telecoms group.

>>> Songbird’s independent directors could hold sway over QIA/Brookfield board s

Songbird’s independent directors could hold sway over QIA/Brookfield board seats

* Governance changes to require impartiality from directors
* Major shareholders ability to vote questioned

The fate of Songbird Estates [LON:SBD] could rest on the company’s two independent board members if a bid by Qatar Investment Authority (QIA) and Brookfield Property Partners [NYSE:BPY] attracts more than 50% but less than 90% acceptance, said two sources close to the deal.

QIA/Brookfield’s final 350p cash offer is conditional on a minimum of 90% acceptances. But the bidders said in their offer announcement that they could lower the acceptance threshold if they were to acquire more than 50% of Songbird and were allowed three board seats in return.

Songbird has 11 board members and under its existing article of association, the four named major shareholders are able to appoint a maximum of three directors each based on their shareholdings. Simon Glick’s Glick Entities (25.9%) and Morgan Stanley Real Estate (8.5%) have three board seats each. Songbird’s other major investor – China Investment Corporation (15.8%) - has not appointed any directors.

QIA currently has three board seats on Songbird, but they would not be carried over under QIA/Brookfield’s ownership. Instead Songbird’s board would need to vote on whether to attribute QIA/Brookfield the three board seats it is asking for. QIA’s three current directors would not be able to vote based on a conflict of interest, said the sources.

The sources argued that of the 11 current board members, only the two independent directors representing free float shareholders could be entirely impartial. They also questioned whether six board members representing Simon Glick’s Glick Entities and Morgan Stanley Real Estate would be able to vote.

Major shareholders who might feel they would be better off if the deal did not go through could not be expected to act in the best interests of all shareholders, said the sources.

The question of impartiality would be likely to provoke debate among lawyers, the sources said, noting it is a question that should interest both major and minor shareholders who are concerned about the company’s future governance.

“The point is to avoid paying a premium price for shares and (in doing so) giving more control to those who didn’t tender,” said the first source.

According to the offer announcement, the bidder said it “would not wish to arrive at a situation where, despite Bidco acquiring more than 50% of Songbird, any one major shareholder, by not accepting the Songbird offer, could end up with its directors having veto rights over material decisions when today that Major Shareholder has no such veto rights.”

The first source said the bidder was only asking for representation on the board commensurate with its shareholding, in the event that its offer did reach over 50% acceptance.

But even before that question is asked, the QIA/Brookfield bid still needs at least one major shareholder to tender its shares in order for the offer to gain at least 50% acceptance. The entire free-float shareholder base of 21.1% combined with QIA’s existing 28.6% share comes up just short of 50% of Songbird’s shares.

So far minority shareholders representing 6.7% of Songbird shares have agreed to tender their shares.

The second source would not comment on whether discussions between the bidder and the major shareholders were already happening, but said final decisions were not expected until after the offer document was issued sometime before the end of December.

A minority shareholder with no direct knowledge of the major shareholders’ intentions thought Simon Glick would be least likely to tender his shares as his investment is believed to be “more personal” both financially and emotionally.

CIC and Morgan Stanley should be more financially motivated and would be well compensated by accepting, the shareholder speculated.

Songbird Estates issued an announcement last week denying media reports that major shareholders including Glick Entities and CIC had decided not to tender their shares while Morgan Stanley was opposed to the offer.

Songbird board has not formally rejected the 350p offer but has said the bid still undervalues the company. It said it had taken no decision on the bid and no guarantees had been made or sought from shareholders, despite Songbird’s board rejecting the first offer.

Fwd:>>> EUROSTOXX vs SPX - big move on this spread again today...

We continue to this spread trading higher with SPX outperforming the EuroStoxx...not so far from top levels...it looks like that Crude continue to weight on sentiment...
0.6621 now vs top @ 0.6689 on the 13th of November....spread is up +4.5% since the 4th of Dec.


From: LAURENT CHEKROUN (MAKOR SECURITIES LLP) At: Dec 12 2014 16:49:03
Subject: Fwd:>>> EUROSTOXX vs SPX - big move on this spread again today...
This trade is hurting a lot investors as many accounts tried to play the end of QE in the US and the begining of one in Europe...can't see till the end of the year what will stop this trade to go back to top levels as many investors/traders will cut their positions...


quick chart attached