Breaking pmi data slightly ahead of expectations. Pmi rising. 51 point five. Just half a basis points higher than expected. If you look at the competence of each country, it is the same as manufacturing that was week and some parts. We have to put up. For in percentage terms. We are trading at highs on the back of a composite number we have had out. I think what will be fascinating is to see how the european economy reacts to significantly lower oil prices. Russia. Lets talk about russia and what is happening there. The backbone for the ruble. The russians situated and cruising entries rate to 70 overnight to defend the currency. That went well. The Russian Central Bank 17 overnight to defend our currency. They lost percent of their value yesterday and you have to go back to 1998 to see a similar day loss. And a rate hike and today, the ruble has given up all of the gains on the back of that and is down against the dollar. I have to look at the screen, it keeps changing. Six and six rubles to the dollar. 66 rubles to the dollar a is retrieving. We reached 64 point 5 . Nobody could believe it. It was a joke circulating that putin will turn 63 and the oil will go to 63 per barrel and the ruble will go to 63. They are ahead of schedule. He may be aging. He remains 62. The question is the cut was so massive that completely lost control of the currency. The Russian Central Bank. They have other options of but i do not think they like them. They have reserves. In 10 billion dollars or 20 billion at the ruble. They could introduce capital control. These are actions and they do not seem to want to go after. We hear ahead of centralbank look,ng, she is saying, she is working to make ruble speculation more risky. It is a oneway bet others in the central bank of russia. Also saying that Russian Companies are still able to pay their at is dominated currency and a rate increase is all within the last few minutes. Because the fire just as thursday of last week, the less Rate Decision meeting, she was saying she did not think it was appropriate to hike rates to curb ruble depreciation. What she did last night at 1 00 in the morning was that. Making thebeen calls . The last we saw was 100 basis points and they overshot. Was that the crewmen saying, do not go too hard on this one . It was small made sure they had to go big overnight tonight. How is the relationship and working . How is the kremlin centralbank is going to develop . Formally, the centralbank is an independent institution. Informally, most people recognize it has a relationship with the crib one. We have heard the kremlin say they are not going to talk about rates because it is a bank of russian issue. Effectively, the bank of russia together with the kremlin, they had a very difficult decision. Do they sacrifice the economy next year to avoid a financial crisis right now . It appears they chose to avoid a financial crisis right now. Everybody remembers 1998 when the russian it was 1998, right . Russia defaulted on its debt and began a keynote of three months of instability. Run on the banks and i was there at the time and saw the lines outside of banks. If you saw the images of people fighting in line to get their deposits and this is what president putin and the bank of russia do not want to happen. They know that in the economy could go into contraction next year. Russia already said yesterday before they surprised us with a rate hike if oil stays at 60 bucks a barrel, they are forecasting 400 in terms of contraction. Obviously, they have hate hike by 60 basis points and it isl be much worse it better than people grabbing all of their money out of the banks they think is causing them to collapse. They would say there is more demand from households were rubles today, 4 times the daily. At a lunchtime. What you can hope is that average, 4 times daily thats not a run on the bank yet. What you can hope is people saw a window and said, back and maybe this is my opportunity and i do not believe it is going to work and i there are go byebye dollars right now. What about oil . We saw brent. A huge impact on russia. It does for you talk to russian businessmen and they say sanctions, sure, it was challenging but not the worst thing that could happen to us. The deterioration are run the geopolitical system, ukraine annexation of crimea, we could stomach it. They are concerned about the decline in the oil price. A decline creates all kinds of problem. Ae that could have been problem that russia has experienced since the collapse of the soviet union is unemployment. Drop, thata huge means Oil Companies have to lay people off. I was in vienna. That was on october 20. He told me we can handle in price even below 60 bucks a barrel before we supply cut. The moment has arrived. This is not a good time. The breakeven cost for production is 40 bucks a barrel. Heavily,t relies so about one three on oil. 1 3 on oil. The idea that can transform to diversify of missed this crisis is perhaps fanciful. Head of thee centralbank speaking this morning. It is likely that Vladimir Putin will step up to the microphone and talk as a result . Feel he has a hard enough grip . It is tuesday. He is making you a you will press conference. He is making his annual press conference on thursday. I do not know if he will decide to speak before thursday or not but he will have to address this issue on thursday. The Russian Parliament will be, they called an emergency session to discuss the situation. I think you can expect the governor of the central bank, who has presided almost 50 decline in the ruble, despite rates byshe has raised 50 to come under fire. Will it hurt putins approval . She is blaming every nonwestern. On he is my everything westerners. Doubledip inays price and they will not be happy. More importantly, what you will get is a transfer of the depreciation of the ruble that experienced by people who go on holiday through inflation. Consume imported goods and they get a more expensive because the whole sellers and providers will have to hike the their rates. It will put a lot of pressure on Russian Consumers across the economy. The thatssure on puts pressure on the russian president. We are keeping a very close eye. Onn chilcote with the latest ruble, oil, and Vladimir Putin. What else is on our radar . Maker to the sports revive the brand. Thats according to people familiar with the matter. Including thers middle east. It is unclear if the company will pursue the sale. Chinas biggest mall raise 3. 7wants to billion dollars in an upcoming ipo in hong kong. It is run by a billionaire. It plans to sell 600 million shares at 48 hong kong each. The company will use most of the proceeds to fund the development. The first country to lay claim to the north pole. The country presented a claim to the United Nations for 900,000 square cologne matters. Kilometers. It is a challenge to russia and canada who claims have. Half. Up next, we will go to mark press, boys giving a conference on the strip who is giving a stress test who is getting a press conference on a stress test. We will have more. Welcome back to the pulse. Jonathan ferro has had a busy morning. Me to start . Ant stop started high and dropped by 1 . The ftse state in negative are sent. Chineseks, the week numbers. Thehe ftse started in negative. The stocks, the weak chinese numbers. The other stocks, the Energy Stocks on back of the guess what . This one right here. Brenda drops. Drops. T what does that weaker oil price feed into . A weaker ruble. This is the chart of the day. 1 00 a. M. , moscow time, the centralbank hanks hike rates. The biggest single increases 98 1998. Ruble weakness dollar stores. Of 1 on dollar ruble. A weaker ruble even with the aggressive centralbank rate hike. Crisis. , back to you. Thank you very much indeed. A crisis. We are not done yet maybe. Another story. Tested the waters for a possible sale of this iconic sportswear maker. Hans nichols has the details on what is happening here covered happening here. Why is caring interested in selling the brand . Own gucci and pull the and two on two fundamentally different companies, with boards, the margins are sold the with sports, the margins are so thin. Our colleague saying they are approached potential buyers about selling part of their 86 stake. A company that has struggled over the past 10 years and is about 10. 5 billion euros. If you look at ourselves and our profits are down almost 50 from two years ago. The have gotten into the sponsorship. They have usain bolt at couple of footballers. Pounds if, 30 you go people the big boys, nike and adidas, that continue to sponsor in hopes their profits come back. Puma is not there yet. I asked the guys if they preferred puma or gucci . Guys, you are a gucci loafers kind of guy. Francine on the spot. Andou did a package on nike puma to figure out how german kits responded. They were talking about cleats. How german kits respond kids responded. Back to business. I have cleats that allows me to run into the camera. It is a little advantage. You call cleats spikes . Thats what iots, would call them. Very straightforward. Not that straightforward piece of equipment. Hans nichols, good to get the fashion advice for he is a known manner thank you. A company approached in the middle east to see if they managed to sell puma. , there he is. K man of the hour. Mark carney talking about a stress test. Maybe just rented through. We will have a more. And you risk in the past 18 months and the risk in the past 18 months. If it will carry on. We had to move the press conference, we cannot hear what the governor is saying. We are working on a career we will take a break. We will see shortly. 22 minutes past the hour. You are watching the pulse. One of our corporate news. Bp has agreed to enter exclusive talks to buy a mobile company. For more on the keys return, caroline hyde. What is the price on this . 12. 5 billion pounds. The biggest u. K. Mobile operator in the you take. The venture they have built up ee is potentially going to the, after talks the,. Com become bp after toast. Building the biggest court player. Able to sell the tv and broadband and landline. Thats a positive move. We will see how this deal is structured and how we understand Deutsche Telekom and the entire Company Going forward. We will be able to appoint directors and get cash. And a gets even more cash 40 stake. An interesting moving coming forward. Caroline, thank you so much. Consolidation in the sector. To the bank of england. We have discovered the ideal of mark carney. Some of the differences across throughout the financial sector. The bank will undertake further work to exploit in more depth but to underscore the benefit of judging capital adequacy against a leverage acquirement in addition to recent days capital ratios in future years and stress test. To conclude thomas is the crisis, authorities have been working diligently to a the Financial System safer, fairer, and simpler. Two year, we reached crucial milestones in a more robust framework. Agreement on total loss internationally and publication of a proposed leverage ratio domestically. ,ith these and other agreements the design of the overall Regulatory Framework is now set out to realize his full potential. It must be implemented. Ist implementation proceeding well and the united kingdom. U. K. Things happen cruised increase capital and our transition to greater resilience ahead of the regulatory timetable. Associatedst and capital plan suggest that growing confidence in the resilience of our system is merited. Misconduct and operation failings have highlighted we build confidence in the patent system requires more than just financial resilience. To modelsn, changes are expected to challenge management capacity over the next few years. In this environment, strong, effective, well informed governance will be essential. Through all of this, the sec will remain vigilant in environment of domestic and global risk. International risks are going to figure prominently in next year stress test. Continue to work closely with the pra and mpc to harness the synergies from having monetary credentials policies and micro supervision in a single restitution. This will promote stronger, sustainable world. I would be happy to take your questions. Next. Thank you very much. If you could say your name and testu emphasize the stress on domestic unrest. Can you talk a bit about the next stress test and the international emergingmarket risk that are dominating Market Sentiment particularly when you look at emerging markets of the lenders . And what worked the bank is doing at the moment with russia . Three points. In terms of the stress test, just so everyone is clear, as i said, this is built on the epa test. It was not purely a housing to a test which already has a european recession and a sharp snap back and Interest Rates. Some of those dynamics are captured. What isnt captured is a more andre emergingmarket risk a sharper slowdown in asia which is part of your question. We have not set the precise outline and framework for next year stress tests. We are just literally nation this today. Remarks, we can expect we will look towards some of those global risks much more closely and they will figure more prominently in this test. Given the footprint of some of our larger brings in asia, you would expect and the risk profile in asia, you can expect that will be a component. In terms of the work we are areg at present, we monitoring the situation very closely across a range of emerging markets. Part of what is discussed in the Financial Stability report is fromontagion can spread less liquid markets and particularly, markets that appear up until very recently to appear to be liquid. And how that contagion could spread to markets and thereby affected the united kingdom. Thats something we are watching and looking at in terms of her. In terms ofpretty russia specifically, the fourth point. Recognize have to exposure to the u. K. U. K. Institutions is very modest and look across the Banking Sector around 2. 5 around Equity Capital and exports to russia and sanctions, 1. 5 . Relatively limited ties, direct investment of the headlines of russia. Effectlatively modest is e situation rushing in russia is unique under major oilproducing nations that have some pressure. Few of them are subject to sanctions at the same time. Big red adjustments going on in russia and in other major markets. Saying wep it up by are not complacent about the. Ynamics in the Global Economy we see you there is some and back into rebound challenge financial conditions with some impact for Financial Stability and growth. All that said from a position of relative strength we are starting from in the u. K. The bbc. Governor, could you tell us more about Oil Price Risk and deflation risk and how that may affect not only stability but the big debt supporters of some the oil makers that are struggling because of the oil price . General deflation pressure and how you are working and how that may have an impact on Financial Stability and how about a reflection you do stress test next time . Of oil, this is a net positive developments. I went through some of the risks in my remarks, geopolitical, deflation point which i will expand on. We should be clear that the 40 plus drop in oil price will flow quite quickly to consumers and increase real disposable income, a net positive for the u. K. Economy. The relative exposure of the u. K. Financial system to the Energy Complex is manageable. Unambiguously net positive career. The net positive. In terms of low inflation, no question is challenges the ongoing need to the letter dlever. One of the reasons the ecb has been forcible it tends to be not just given there price mandate but to work in the same direction as what is needed for Financial Stability and the importance more broadly in the glow. In terms of united kingdom, i see it as a monetary press conference but you can expect that as we have indicated we would look for the direct impact of laura Oil Price Inflation in the u. K. Lower oil price in the u. K. Can you give us a flavor of the conversations youre having with the management of corporate banks on how they addressed this perceived capital shortfall . On the stress tests, you said the banks are not allowed to respond by cutting lending to the real economy, how practical do you think it would be in a reallife scenario . I will answer the second one. The important thing is the banks are in a capital position, so they will not respond by cutting lending to the real economy. Banks are in the business of lending and taking risk. The Risk Appetite perceives when the economy gets tougher. Subject to the strength of their balance sheet, look for lending opportunities. We expect to have a system that has that strength. That is whether this is about. We have been building the system over the course of several years. Repaircess of financial is virtually completed for all institutions and some that have a bit more work to do. It is about further building strength and building strength against tell risks as well. The expectation is absolute. One of the main purposes is to ensure that the system as a holder has this type of resilient so we can withstand the shock and land to households and businesses area by ensuring that our banks capitalize for those types of shocks, we can help to ensure thats what happens. Those shots, if they happen, daytoday come from outside of our shores have less of an impact. Thats what happened during the course of the last crisis. Specifically in terms of the conversations let me reiterate the governors opening remarks. , the past two years taken decisive actions to stabilize the bank in todays world. You can see whats presented in the change of the capital ratio. Usually 11. 5 . Now the stress test. This one the real values of a test like this. It is not a surprise but very theful evidence to provide evidence of what needs to happen next. To your precise point with theyement we have had, have been around this question of stabilizing the bank. The stress test is about severe crisis, not what we expect to happen, but we expect the system to be protected against. Us vised plan has given all about taking stronger action to provide the necessary. Process, you can do two things. Raise capital, reduce risk assess to fit in the u have read and the action they have taken has been broadly in the first category. Last six months or so, they started the work of the second category. The risk has started to come down questions essentially under the new plan they submitted and does more of it and particularly addressing the mortgage brokerages. That and theking risk exposure. It is a plan that brings exposures down and the size of the bank down where it fits what they want in the future. I wonder if you can say a bit more about russia. Irect exposure the same could be said of the Financial System in 1998. The russian debt crisis quite profound effects. Falling. Is still i was wonder what is your view with what is happening with russia and geopolitical risks you could talk about. A couple of aspects. Lifted through the 1998 russian crisis and without question, it was one of a series of factors that was a quite difficult time in Financial Markets that do not translate to the real economy. Stayed and itns was much more linked into the global system and there were many more assets on the banks Balance Sheets. Related to russia at that time. Then, there was an element othertagion which went to emerging markets which were of honorable situations. I recognize, russia is in a different position, not least because of his overall debt as well. To underplay the challenges that economy is facing. In terms of the linkages in the Financial System, wherein a very different place than 1998. That said, we highlight geopolitical risks. In fact, our survey of risk managers, geopolitical risk is a top risk they identified and a situation in the ukraine continues to be a source of great concern and the baltic situation and there is the reinforcey that could weakness in europe, core european economy. Aversion and Financial Markets. That thediscounting dynamics that could come from geopolitical situation. What i was trying to emphasize is the direct links are quite modest back into the u. K. And even into the broader core of the global Financial System. We are in a different place than 1998. The last point is we have to recognize that stress has been billed in this economy and this Financial System. And with that strength comes resilience against some of these shocks. The times. I just wanted to get a bit more information on the oil price, if it goes much further, will the banks being and is to greater losses this going to feature in your second round of stress tests next year . Is that kind of impact going to be accessed . Clearly, the further the Oil Price Moves down, the greater the exposure on a given Energy Credit is. And it is varying degrees of exposure. Not just u. K. Banks. Back to where i started that overall it is a net positive. And the risks around the oil prices sharpens oil prices and only really start to become feed broaderhey contagions through some of the other channels. We had seen some highyield markets over the course of the last couple of weeks in the u. S. Market and theres been sharp moves in or its not just for energy producers. There have been broader roles and new activity and has pretty much come to a halt in that market. You are seeing some of the effects in the short term. We are, geopolitical risk and disinflation. Necessarily were not going to set the terms of next years stress test today but stress test is going to be stress from the starting off point. We have to look if the oil price come off 50 . Going to do as much as possible to try to ground these in underlying macroeconomic dynamics. Impact onhen have an asset prices and quite frankly, funding conditions for banks. Thats where you get to the full benefit of having the mac world represented by the ftc and the supervision of the pra. A bloomberg news. Ask about tension between the bank of englands objectives and policy . It seems wouldve had a show where the bank of england moves to mitigate. The government comes and asks for more. Is there tension there . Well and there are differing objectives. You look at our object is in terms of the Housing Market and theres a fundamental issue in the u. K. Housing market was is the lack of supply. It is been issued for decades. We cant do anything about that. None of our policies are directly impacting supply. Relatedly, we dont target house price. We are concerned the indebtedness. Earlier this year, those measures were taken to ensure against a deterioration in underwriting standards of a sudden move for responsible underwriting standards which we have to reckless underwriting standards we saw in the past. We took out a short against it. These were measures that do not write. We took out insurance against it. Were over to the right, if you will, and prevent it until your ration. We have not seen that deterioration. Is second thing we have done with the stress tests is to make sure we have the Banking System is appropriately capitalize and resilient enough to withstand a house and shop. As we sit in front of you today we can answer the system as a whole from the perspective is resilient to that severe shock to the extent we would expect to land to the real economy. Were meeting our objectives there we are meeting our objectives there. And our individual contributions to Sustainable Growth over the medium term. The daily mail. You have been listening to the press conference which is designed to give us a few more details about the stress test with the bank of england and conducted into the Banking Sector. We also had inflation data coming out. 1 , beatinglling to imates of 1. 2 per Governor Carney fielding questions on inflation and oil. He talked about russia. Is effectingssia the british economy which he said is not geared towards what is happening in russia. As a result of the data we saw a death in the value of the pound. Thats the table rate. Washington that carries on for 2 days. The stress test it now. Joining us to analyze the stress test is the managing director, thank you for joining. You were listening to the News Conference with us. What do you make of that overall . The stress expected test and you were sure if they were stress in the right thing. Messagell, a christmas from the bank of england to the Banking System, largely expected. If anything, i would say that the lloyds, rbs, probably show up a touch weaker than one could expect. The coop bank, reported in recent data, no great surprises in there. Of, the question is sort talked about before it started, is the bank of england really testing the right things . If you put a from a different light, there will be more stress tests Going Forward. The ongoing statement that the banks will need to continue to do youore capital to risk the Balance Sheets and that whole trend, i do not think it has really been concluded by todays announcement and today stress test and emergingmarket, oil, russia etc. It only highlights. You would the stress test the tougher or expect current capital is nearing the point it will be able to cope with whatever is thrown at it . What is the mediumterm projection here . Do banks have enough capital . Are they going to have to attain more earnings is the higher ratios similar to the ones in switzerland . Over the mediumterm, the banks will have to continue to strengthen capital ratios to retain profit to some extent. There will be a gradual consumption, of course. Given that the economy overall is it growing an awful lot, you cant expect banks will continue to strengthen capital ratios and they need to. If anything,ts, they really indicated that quite clearly. Not only the risk based capital lloydseverage ratio, below 3 on a stress test. What does it mean for lloyds dividends . The plan that the lloyds has for its capital Going Forward was approved ultimately. I guess you could argue that plan contains consumption of and if so, thets pra seems to be on board with that. The markets kind of quietly expecting lloyds to start announcing a dividend. I do not know. It seems, for me personally, on the optimistic side. Thats where they are at the moment in that discussion there. Sector in isnking aggregate form, how expose is it to the emerging markets . We have hsbc and another bank with exposure to the emerging markets. If the story were talking about what is happening. The problem is, those banks certainve hsbc to a degree, any real exposure to the u. K. How should they read that story . The journalism are talking about are we stress tested the right thing . Does it really matter . Critics your point critics your point and corny when it got they u. K. Banks are not at the forefront of exposure to russia and eastern europe. Development, really, you can wonder if we are really starting to see the beginning of a wider problem here. Lets face it, russia is not the only country that exports oil and dependent on oil income. Countries almost 20 of the u. S. Market is related to shell oil. There will be fairly widespread repercussions. It does it price into the Banking Sector at the moment question how much is priced in . A good question. Not a lot judging by your reaction. There is potential for a lot of surprises. Corrections . Certainly. Thank you so much on the u. K. Bank stress test for europes largest process project and new energy and would seem more in a moment. Welcome back. Small cafe in downtown sydney. Paul allen takes a look back at how those hours in the event surrounded them unfolded. The siege in the heart of sydneys financial district last of more than 16 hours after a violent firefight and the gunman was dead and so were two hostages. A mother of three, Katrina Dawson and tori johnson. There are unconfirmed reports they try to disarm the gunman. The other 15 hostages survived. Those who do not make a scapegoat during several times were carried out by annulus officers after it was over. The man responsible was the third person killed. Man haron monis, the 50yearold self proclaimed cleric. On variouson bail charts include accessory to the death of his former wife. And he had a charge of right hate letters to the families of australian soldiers killed and appeared in the media. This pen is my gun. These words are live bullets. Against oppression to promote peace. Tragically, there are people in our Community Ready to engage in politically motivated violence. And the event in martin place too show that we are ready with the full force of law. The government and police have been reassuring locals they are safe and to go about their business. Almost all of martin place quickly reopened with the exception of the cafe it self. Thoroughfare, sydney comes to terms with the violent events that began the week. Bloomberg, sydney. A terrible, terrible tragedy. Todays new energy. Power gotgger nuclear an 80 stake. The wind farm is located in Eastern England and generates ns 60 of Chinas Nuclear reactors. A project has been completed. Sn electric. By it cost 80. 7 billion pounds. Is looking for the united will lasthe project until december 2016. If youre listening on radio, first word is coming up. For viewers, the pulse, we will be taught by russia and the ruble. We will talk to a key economies. Brent trades below 60. Russias massive overnight rent hike fails to stop the rubles decline. Barely passing the bank of test. Ds first stress good morning to those in europe, good evening to those in asia, a warm welcome to those waking up in the United States. This is the pulse. We are getting breaking news. Investorhe zew expectations. Much better than expected. We were expecting a figure of 20. It is almost double that. I did not see the breakdown of why that is, but it would be interesting to see whether it is related to the declining oil price. The recent turbulence being generated from russia, amongst other places. The battle of the ruble is underway. Central Bank IncreasedInterest Rates overnight to 17 . A as been something of theyd tried something, it does not appear to have worked. What prompted the rate increase was the ruble depreciating by 10 . We saw at the open this morning on the back of the rate increase that the ruble gained back everything that it had lost only to give it up again and now the rubles down even worse than where it was, where it ended yesterday. Agohe joke a couple weeks was that in 2015 bruton turns 63, oil hits 63, and the ruble hits 63, it is not so funny anymore. It is not entirely clear that the russian president was entirely opposed to a week ruble. Weak ruble. He sees it as a way to balance budget. The money goes straight into the budget and that has been helping russia to a certain extent. Has a lost control . The hike was so massive. It was the second one in a week. And yet it was really shortlived. They still have some things they can do. They could throw some money at it. They have money and reserves. They could introduce capitals control. They dont appear to want to do either of those things. ,he only thing i will say people have been quick to criticize the head of the bank of russia, is perhaps we should give her some time. Some analysts are saying, when you do a rate hike, it is the first step and then you have to show the resolve that you are willing to follow through on that. That may be what we see. They have sort of set a floor of sorts. The ruble is not too much where it was below yesterday. We are just going to have to watch. ,e have household demand foreigncurrency increasing. The bank still has a role to play and maybe it is too early to say that they have lost control. The sequencing this morning was very interesting. We have the rate hike, the market opens, the ruble gains, the dollar drops. The next headline we see is brent sub 60. On top of that, you start to see the reversal, the more aggressive reversal through the previous levels. The link between oil and the ruble is . Profound but not absolute. Obviously, the oil price has been a huge factor. Has encouraged many people to call the ruble a petro currency. Oil was more or less flat yesterday, may be down a tad. You have at least three factors going on with the ruble. You have the oil price. That has been significant. You have the sanctions. Then you have a crisis of confidence. That is perhaps what we saw yesterday. People losing confidence in bank of russia possibility to control the situation, in the governments ability to revive the economy. Thank you so much. The latest on the ruble with Ryan Chilcote. But scary on the conversation. Lets carry on the conversation. Putin, you have said that is responsible for what we are seeing on the currency markets. Is it one or the other or is the link not 100 as we would like to make it out . Rosnef placed a 1 billion ruble bond on friday, which was bought by state banks at a rate much lower than the sovereign yield. Some of that money could have gone to the currency market yesterday although rosenf denies it. It is a special deal that putins friends are getting. The market sees that and that feeds into the general lack of confidence and what the authorities can do. They can conduct a reasonable policy only until putin tells them otherwise. It is clear that putins friends are going to be provided for first. Then the other considerations will come into play, like keeping the National Currency stable. Together with the continuing downward trend in the oil price, that is feeding into the continued distrust and lack of certainty over the rubles future. Doesthe 17 Interest Rate not really make it all that interesting to hold ruble assets in a situation like this, when you never know what the policymakers could do at putins orders. One of the other things that comes out in your bloomberg what does it mean for the credibility of the central bank . Definitely undermines the credibility of the central bank because the central bank is not seen as an independent actor. It is pretty much seen as doing putins bidding. Apart from that, there is an inflationary sense of money being pumped into the economy, like that recent ross neff deal rosnef deal. There is the problem of this being not an economic crisis, but pretty much a political one exposed by the growing isolation of russia. Conditions under which things like capital become more of a possibility. There is obviously all of this contributing to the lack of and the ensuing volatility in the ruble rate. Fascinating stuff. Thank you very much indeed. Leonids piece on the relationship between oil and the ruble online at bloomberg view. Lets get perspective from russia. Thank you so much for joining us. Give us a sense of how disappointed you were over the fact that we had this huge move from the Russian Central Bank and yet it was very shortlived for the ruble. Yes, hello. The bankthink that tried to address the Financial Stability. Maybe this step should have been accompanied with bold interventions. The market is still expecting on the market because guides usevaluation on perpetual devaluation. Market received this step with only slight positive credibility. But it is not enough to reverse the market. Believe that the central bank may intervene and may persuade the mayet and its credibility encourage beats not only from its own. Right. At the moment, the central bank is using marketbased mechanisms to try to deal with the devaluation of the ruble. Are we a long way away from capital controls would you think the capital controls would be actively considered at this stage . Yes, personally, i think that the central bank may use a heavy intervention. Capital controls might be onlydered as a base case if these massive interventions fail. , im not sure that capital controls is the best case. Now. Bt it still, the central bank has its reserves near 200 billion at its own disposal and it may intervene heavily to turn around perception on the market. That heard this morning around threeand is to four times above the daily average. What do you make of this . After months of favorable tolerance, there is evidence now householdsthat resumed dollar hardened behavior. Obviously, i believe that this was one of the major triggers which pushed the central bank to mount this bold step. Do you think that there is a possibility what would you say about what the perception of the ruble decline is among the general public . I think that now we have credibility crisis and also uncertainty around oil. These two factors, credibility and oil, put pressure on the currency. Thanknk you so much you so much. We are going to talk to the ceo of intercontinental group. We will try to get a wider picture on what is happening in the hotel sector given the volatility we are seeing particularly in emerging markets. That is up next on the pulse. Welcome to the pulse. Hotels hastinental agreed to buy kinston hotels and restaurants. Joining us on the phone is richard solomons. Good morning to you. Good evening to you. Im struggling to get my head around time zones. Morning. Yes. Why this acquisition . Walk us through what you are buying. Happy to. We are very excited. And restaurants is the largest independent Boutique Hotel brand in the u. S. That is a fastgrowing market. Customers are looking for something different, more personal. This brand has delivered to that. This is been around 30 years. It is one of the largest in the market. That is why we are excited by it. It can add value to our group. They are experts at running restaurants and bars. Great design. We can add value to them. Ig revenue systems, we can bring in customers from outside. Will ultimately look at growing the brand outside the u. S. A lot of value added to a great business. Where exactly do you see opportunity . Where do you want to bring the brand first . Where people have money, where we are seeing growth which parts of europe do you see is the most promising . You are exactly right. It is interesting how consumers eryoss the world have vari particular needs and desires and how similar they are. We have seen that with hotel indigo, our boutique brand. There are real opportunities to do the same with kimpton. There is a demand for more personal products, for great experiences, for great design. We see tons of opportunity. This is an asset light model. Why do you need to buy this business rather than pushing organically to develop your own . Great question. We have developed a number of brands. Developed the wellness brand in the u. S. , but this brand is wellestablished. They have amazing locations in all of the key markets in the francisco, new york, boston, chicago, miami. Impossible to replicate today. So buying it makes a lot of sense. For us, you just could not replicated and the ability to take that incredible base, great , it ision, awardwinning right in mind with our strategy to move into this sector at the price point and take it overseas, it fits perfectly. Buying this company at this stage in its growth is the right thing to do rather than trying to replicate it. We have also been talking extensively about russia today. How concerned are you about what is going on in the country . How many cancellations are there from russian travelers around the world because the ruble has been going through such a fall . Russia is a market that we have talked about before as one of our real growth of fraternity markets. Opportunity markets. The longerterm Growth Prospects are going to be questioned until the future of the economy is clearer. Customers inssian other parts of the world, but it is not a major business. The biggest impact will be on high end luxury resorts. It has not been a major negative for us. There is opportunity for us to grow and we would like to see that, but right now it is not having a big impact. Ed in valuelvwe over the last few weeks and months. Do you draw a line between your business and this impact . You expect this to have a positive impact . Yes, i do. There is no question that pleasure travel, it can have an impact. For leisure travel, it is quite sensitive. We know that travelers have an amount of money they want to spend and when prices go down in one area, they will spend more in another area. We have seen that. If the air travel is 100 quit thanr than quid rather 200, we will see more leisure travel. There is no doubt about it. I think we will see a benefit and people will take advantage. Overall, do you feel a little bit better . [laughter] it verys. We are in 100 countries. Youve talked about russia. The u. S. Is very strong. Is that inat we see most years, we have more Growth Markets then decline markets. We have seen consistent growth since the Lehman Brothers impact. We are positive about global travel. The drivers of travel are very strong. Lowcost airlines, low price of oil. Thank you very much indeed. We are going to take a break and be back in a couple of minutes. Welcome back. I want to run you through some of the key numbers. Of which is the value of the u. S. Dollar versus the ruble right now. It was not meant to be like this this morning, but this is how it has turned out. The central bank intervened overnight and that is the reaction. Not what they were looking for. Certainly not. It was shortlived. That is the optimistic way of putting it. This is oil. The global price of oil plunging through 60 per barrel. In terms of what that is cn, u. S. Producers are not doing anything about that. Great news for the Global Economy as we were just hearing from the ceo of intercontinental group. When we come back, we will send you back to sydney. Make the best entertainment part of your holidays. Catch all the hottest handpicked titles on the winter watchlist, only with xfinity from comcast. Welcome back to the pulse. Are the top headlines. It has been a roller coaster ride for the ruble today. The currency rallied this morning after the Russian Central Bank unexpectedly raised benchmark Interest Rates to 17 . As you can see, those gains have been erased. s down against the dollar. It is now the worlds worstperforming currency this year. A deal would be worth 12. 5 billion pounds and would be split equally between the owners. Bt says the period of exclusivity will last for several weeks. Tony abbott has paid tribute to the victims of the sydney cafe siege. The 16 hour standoff ended just before dawn, when police stormed the building. Two hostages and the gunman were killed. Immune to the politically motivated violence, which has for so long stocked are countries. But over the last 36 hours, we have responded to this in character, with great stoicism, equanimity, and i am absolutely confident that whatever happens in the days and weeks and months to come, australia will always be a free and open and a generous society. Lets get straight to sydney. What is the mood like in town today . It was very somber today. Once again, very quiet and ear erie, though teeming with people. It has been an lineup of two hours for people to pay respects. A lot of sydney flower shops ran out of flowers. We have heard stories of people going as far as 1015 kilometers away to get flowers to come back to martin place and pay their respects. If the gunmans respects was to terrorize sydney, it seems to have brought all of sydney and australia together. It shows the resilience of the australian people. What do we actually know about the victims . Know that the two hostages that were killed, one was the 34yearold cafe manager t chocolate cafe and his name was tory johnson. Theyre all reports that he actually died trying to wrestle the gun from the gunman. Then we had a 38yearold mother of three, a lawyer, Katrina Dawson. And respected in the sydney law community. Sydneyll known in the law industry. She was not a coffee drinker. She only liked hot chocolate. That was her morning ritual, to go to the cafe and get herself a treat after dropping her three children off. Very sad news for two families in sydney, going to be without to loved ones in the lead up to christmas. What is the security story look like now . We have just had an update from police in the last half hour. They are basically saying that they have downgraded that exclusion. It is still a crime scene around the Lindt Chocolate cafe. Remain. L Everything Else will be business as usual from tomorrow. Things are operating as usual in the city, apart from that exclusion zone. Tomorrow, even the train station directly underneath that cafe will be open. All buses and trains will be back online from 10 00 a. M. Sydney time on wednesday morning. It does look like the city is getting back on its feet. Thank you so much. Lets check in on the markets with jonathan ferro. It has been a very volatile trading session. We are down on the dax. Now we are up. Gains in italy. The ibex climbing into positive territory. Is taking pain off the back of Energy Majors on the back of the falling oil prices. If i look at the equity markets, it tells me everything is pretty. If i look elsewhere, not so much. Brent is below 60 per barrel. 59. 51. Down 2. 8 . Down, it means two things for two different asset classes. Let me go to the bond market. U. K. Inflation data comes in at a low. U. K. Yields go lower in the three basis points lower. Year dropping below 2. 5 for the first time ever. Yields lower in germany. Bond yields down by one basis point. So, that is the bond market. Hike, put it up for another day. What does it mean in the fx market . Dollarruble. Up 2. 4 . 17 in moscowto from the Russian Central Bank. This is where we are now. This is brutal. There is no other word to describe it. The central bank of russia they cannot buy a rally in this currency. Thank you so much. Jonathan ferro with the latest on dollarruble, one of the many stories we have been covering on the pulse. Chinas biggest mall raise 3. 7s going to billion in a hong kong ipo. That will make the billionaire founder a richer man. For more on the man behind the company, we are joined by devon pendleton. Talk me through this guy. He is an interesting guy. As you said, he is about to get a lot richer. He is from an unusual background. A business have background. He was in the military. He does not have formal higher education. Is a quite a colorful character . He is. He is very colorful. He owns sun seeker, a yacht maker. He is very into real estate in china, but also in london. He is looking at building the citys largest residential tower. Western europes largest. He also likes a movie. He really gets into going big. When he goes for something, he does it big. Conglomerate is the largest cinema owner in the world and that is largely because they bought a cinema operator in the u. S. , amc. He is also looking to go hollywood and is looking to buy a stake in lions gate. He has big ambitions. Give us a sense of 2015. There is a big possibility of more billionaires coming up. Already, 2014 has been a down year for a lot of billionaires across the world. China has gained more wealth among their wealthiest than any other country. They have gained 42 billion already this year. Thank you so much. Devon pendleton from bloombergs billionaire team. Countriesores in across europe throw their doors open on sundays. Can germanys band survive . Welcome back to the pulse. Shares in metro are under a little bit of pressure today. We are getting some interesting commentary surrounding the ceo talking about the fact that he is not working on a rush ipo what the moment. Ssia ipo at the moment. But there are other issues that metro faces. Yes. There certainly are. Lets stay on shopping. It is a different story in germany. re as largest economy europes largest economy continues to sit out on sunday business. Think so much for joining us. So much for joining us. Retailers are pretty angry about this. Traditionally, consumers in many of these countries do all of the shopping quickly on a saturday. The problem is that the internet , sitting on your couch on sunday, you can order what you want and have it delivered whenever you want. Retailers are completely missing out. Retailers are saying, we cant get the sales and we would like to get though shoppers in. Consumers want more convenience and they are not getting it from the stores. How much longer do you expected to last for . Some of these things take time. There is a mindset with german consumers to think, you dont actually shop on sunday. They would like to, but the concept of getting the labor together. Gettingre multicultural. There is no shortage of people who are willing to work on sunday. This is now entrenched with unions and it is much more of a political discourse. I think this would happen a lot faster if it was a consumer discourse. I think this will probably be a program over a few years. Are talking about france when they are talking about liberalizing stuff, they are going from nothing to 12 sundays per year. It is baby steps. This is time that delayed, it is the opportunity for the amazons to come in, which is exactly what these countries dont want. Frances staunchly protective of national brands. There is a bit of a conflict. If the sale is happening anywhere, it is going to someone else. They could have employed more people. Then you have this conflict with the traditional way of doing things. You have this political fear of losing our way of life and therefore they are as being thrown kicking and screaming into todays world. [laughter] law forry passed a retailers to be open on sundays. They are pushing against something that is not going to be suspendable for a while. The rise of the consumer is the ultimate force which is going to dictate it. Stand inments can front for a certain amount of time, but this is about the consumer driving it. Amazon has relied that there is a need that the consumer wants that is not been fulfilled by somebody else and that is why they are doing so well. When they do that, they deepen their engagement with the consumer. All of us have big shopping lists on amazon. We get deeper and deeper into the online experience, which creates more problems for traditional retailers. If they have to respond, they do need to have all of these tools at their disposal. You can delay at for a while, but you end up missing the business. One of the countries in the business in europe that are most backward, i could not live without stores being open on sunday. Italy, there are places that you cannot even get gas on a sunday. Or monday afternoon. The u. K. Has a nice blend you can do your family shop on a sunday, but perhaps that is the balance you have to find. Groceries is the most obvious place to start. I think so. It is very hard to get your stuff done on a weekday or even on a saturday. There are other things you have to do with your kids on saturday. Are deliveries band . Banned . If i want to do have stuff delivered on a sunday, where does the transaction show up . Is it when they take my money on a friday or deliver it on a sunday . In italy, you cannot deliver on a sunday. Is there a way around it . Could you have a delivered on a sunday and get around some of these mordred coney and rules that exist . More draconian rules that exist . Royal mail is talking about sunday deliveries in the u. K. The Career Services are now looking at sunday delivery and it is becoming increasingly important in the runup to sunday christmas. Saturday and sunday are sometimes completely closed off when they want to deliver to you. Thank you so much. Guy johnson is changing europe one brick at a time. Waysm trying to think of around it. Lets get more company news. Talisman energy will be bought billion 8. 3 billion by respol. Sony warns that hackers had infiltrated its network. The latest piece of Sensitive Information to be leaked is a Financial Proposal that sonys entertainment unit received for 7 billion by a group in the middle east. Sony is no longer considering the deal. Strikerormer arsenal has retired from football at the age of 37. Sports as ag sky match analyst. Coming up, the russian hike sent theate ruble soaring and then flying back to earth. Will the roller coaster ride continue . Good morning, everybody. Welcome back. We are on bloomberg. Com. We are streaming on your ipad. We are joined by Ryan Chilcote for a look at what we are watching for the rest of the day. Oil is the basis for everything. It is the Global Benchmark and it is down below 60. The benchmark in the United States is down below 55. Is fallingr the rigs almost as fast as the oil price. Rig at amove the reduced cost with other lowercost fields. Rigsve seen a couple dozen come offline and those are for vertical drilling, conventional drilling, and that is not where you are getting all the growth in the United States. Maybe Goldman Sachs suggesting that the oil price in the u. S. Will not rebound tomorrow. Saying that we came out with a report less than a month ago. One of the things that everybody is watching very carefully is how the russian story changes as the oil story develops. It is kind of whether or not one is leading the other. The relationship is a little bit opaque. We have been talking about what has been happening with the story and what the story is. Supply, bonds, etc. Being issued by companies and that is sending a lot of rubles all over the market or whether it is the relationship with oil. Bit. Pect it is a little im sure putin is watching to see what Ryan Chilcote has to say. What happens next . Ati think we should look this as the first act in a very interesting drama. We are already seeing interesting rumors that putin has been talking to his finance minister and has built up the 400 billion worth of reserves that the russian government has been spending in support of the ruble. He has been offered the job of prime minister. He just denied that. Those rumors are very interesting, especially when discussed with state backed wire agencies. Those are meaningful. The russian president s giving a press conference on thursday. He normally talks for about four hours during those press conferences. You can expect he will have a lot to say during that. We have the Russian Parliament meeting on thursday. You can expect the head of the central bank to get a grilling. I think we are at the beginning of a much more complex story. That plan aalize was not working and that they have to change. Is it a complex story politically for Vladimir Putin . Or is it a complex story about how to get the ruble back up . I think he is concerned about his own back at this point. I was talking to him a couple of weeks ago in milan in the shale producers need a higher price. He was talking about how they are not going to spend their reserves with mindlessly. Andyet, they went out started spending the reserves and they already spend 80 billion. What we have seen is that countries like opec, the cartel, deciding that we are not going to cut production and let prices fall. Yes, i think he is scrambling right now for a new plan. Think you so much. The latest on russia. Here onit right bloomberg television. Surveillance is up next. You can follow us on twitter. We will see you tomorrow. This is bloomberg surveillance. Is this 1998 again . Fiercerning, there is a flex quality. Fromeak to richard haas the council on foreign relations. Janet yellen rounds up the usual suspects at the fomc meeting. There will be no slack in the heated debate. Good morning, everyone. This is bloomberg surveillance. Im tom keene. Joining me, tom keene and brendan greeley. Scarlet fu and friends in greeley. Brendan greeley. Russia across central bank bankssias central increased its Interest Rates to 17 , gained, and also the game. Then lost all o