Welcome to countdown. Show asn the shoe oil extends its losses, Jack Osbourne says the move is welcome. The fall and oil prices is very basically a good thing for the u. K. , u. S. And europe. Up itsia is ramping economic defenses in the biggest hike since 1998, after the lostl lost 10 ruble 10 of its value in one day alone. Give us the scale here. There are rate hikes and there are rate hikes. The benchmark was 10. 5 and it is now 17 . Thursday we heard the governor of the central bank said it would raise rates from nine point i percent to 10 . Many said that wasnt enough. Itmany when im expecting and looks like she change strategy and nelly got 600 and 50 basis point and now we got a 650 basis point rate hike. You to go back to october of 1998 to find that kind of oneday slide in the ruvell. Ruble. In two dozen 15 the joke was circulating hooton will turn 63, oil will hit 63 and the ruble will be 63 to the dollar. It looks like oil and the ruble got ahead of themselves. 62, and the ruble at 64. The joke is not so funny anymore. What you know about this meeting . It was a midnight meeting and a surprise meeting. This this is the sixth time this year. They dont like surprises and shejust last week she said didnt think raising rates dramatically was the way to curb the rubles depreciation and then she did that last night but they put out the statement at 1 00 in the morning when i dont know is if they had somebody sitting at their desk and waiting. To what extent is this to do with the fall in the oil price . The oil price has helped, weve seen the ruble have in terms of its value against the dollar and a lot of that is the oil price. Yesterday oil was down 1. 5 and the ruble close to 10 there is a lot more going on. Geopolitics and sanctions, that is something the chancellor of this country was gloating about yesterday. We dont have the sound. There he goes. I think it puts global ,ressure on Vladimir Putin people saying a few weeks ago our western sanctions working . Pugin ride this out putin ride this out . Canty rong oil price cant he . I dont think that is so clear now. They are heavily dependent on a High Oil Price and the russian economy is not has not made the investment in supplyside reforms we would have liked to see. Perhaps too early to count the russian president out yet, he has a historic high rating but people have talked about the euphoria of the annexation of crimea which was popular in russia and supported by the vast majority is now going to have to give way to a bit of economic pain. The questions we were posing on friday is the ruble shot versus the oil price, did the central bank go for a big tight and rakes which was damning to the economy or do not height rates hike rates and risk the ruvell spiraling out of control. Spiraling out of control. The damage to the economy that will already fall into recession. Over the last two weeks we heard the economy minister say the predictable fall 1. 8 and before we got into this we are the central bank say oil at 60 a barrel with expected this wall somewhere between 4. 5 and 6 and now with this rate hike we can only guess but we are looking at a deep recession. 1998 mustparison with be slightly worrying. Theyre worried about a run on the banks. August 17, 1998, lack thursday that was the day that russia defaulted on its debt and what you got was people lining up outside the bank to pull their rubles out. I dont know if you member the fight in the queue to go to the bank and i was with a cameraman and that is exactly what flight amir putin wants to of avoid. To avoid. Vladimir putin wants to avoid. Is worth sparing the economy to do and they made that decision to save the Banking System. We will turn to the story many times during the program. British banks are the focus us morning due to the british stress test and look at some of the criteria eight banks are being stress tested. Barclays, hsbc, rbs, coop bank and nationwide. They are being expected to withstand a house price crash, rising unemployment and higher Interest Rates. If you dont think this is tough enough, it tests them for an economic catastrophe so severe it has only happened once in the last 150 years. Fall in house prices is modeled that has not happened since we modeled prices in the u. K. In the 1950s. In interestrate hike to 4 by the end of next year. Mark carney says rate rises will be slow and they will peak below the historical levels 4 is way above the intimation of Interest Rates and finally it factors in unemployment rising to 12 . U. K. Guilty of hitting 6 lenders must maintain a core Tier One Capital and that is blowing your head off. Bankimply, that measures a s holding at the highest quality measures of capital. You make it sound stressful but i know some of the guests we have dont think it is stressful enough some people say that 4 Interest Rate by the end of 2015 might not be the projected path. Talking about which banks will do well and badly, the bank has already said it will come as no surprise if they do not meet the desired capital ratio. As we saw a failure of the coop that perhaps will not come as a big surprise. It has a recapitalization plan in discussion and so certainly that will not be an enormous surprise. Lloyd Banking Group says they are confident the bank will pass the stress test. What will it do to the dividend paying prospects of the bank . That will be a key thing investors are looking more. We get the results of the stress test and will also get the Financial Stability from the bank of england. Manus will be there, our countdown anchor. As soon as they break. We will also hear from someone trying to do challenge the britain big bank. Sayill see what he has to about the health of the Banking Industry in the u. K. 10 past 6 00 in london, ec has picked the proposed suitor and has agreed to enter exclusive talks of by the mobile Company Rather than buying 02. For more on the return to the market, airline height is here. What is the price look like. 12. 5 billion pounds that is about eight times the projected earnings. Quite a nice price tag and getting a lot for it, ee is the biggest mobile network and it will be getting 20 weight 28 million customers. Vu, they sold off their mobile unit in 2007 and here they are buying it all back. Ee is the four year venture of Deutsche Telekom and orange. This is the biggest quad layer out there, quote play is mobile isng with quad play mobile along with tv and internet. We want to make it easier for ourselves, easy interesting to see if thats the way we do go but they feel they will have less turnover and more ofalty if they do a combined all our bills into one. How are they structuring the deal . They have about 7 billion pounds of debt, more than half of what it is pumping out and it is notably if youre thinking what does 7 billion mean, it is triple b rated. That is the Second LowestInvestment Grade rating of a company so it is not exactly flush with cash relative to debt. Relatively risky when it comes to the debt rating but bp says this structure is aimed at preserving a conservative financial profile. There is a reason that this is coming in cash in stock they will be trying to minimize their ramp up in debt by stockng Deutsche Telekom in the combined happening sewed which telecom will hold so Deutsche Telekom will hold 12 . It is interesting that Deutsche Telekom is giving the company a vote of confidence they are saying, so secure are we that revenue will be driven higher that you have all four mobile, tv and broadband in one go that we would be willing to take on our orange share in the future according to people familiar. Telekom giving a vote of confidence. What could this mean for the sector . This is what we have been talking about what will vodafone do and the other players we understand vodafone has been eyeing a deal with malone the billionaire or a merger of media in the u. K. At so far we have had wholesale deals struck but it would come as no surprise if they have got into bed with ee. Theyre sending some of their parts to each other, ee was offering tv and certain wireless connections but bt was offering ee mobile to business providers. They were already sharing from their deals and were in cahoots, vodafone is potentially going to be starting to sell bt as well vodafone was looking at reselling bt internet will they want to do that Going Forward . They want to sell their own wireless and tv packages i teaming up with him unlimited mobile. Network here. By 02. Uld potentially there are all sorts of permutations. What is really interesting is vodafone is slightly worried about the deal and are already going to people familiar and the regulator to make sure that bt plays fair because remember bt was the former monopoly it is the one that plugs in all your transmissions with companies and vodafone relies on bt. Bt says we are ready have open reach units we are separate from the Parent Company and we are playing there. Follow the conversation on twitter. Are you a quad fan . Do three. O four, i you are near four. Coming up, we will go live to siege for a 16 hour cafe left two hostages and the gunman dead. Lets get back to a top story, russia ramping up the ruble defense the biggest rate stemsince 1998, an attempt the route in its currency. The economy hurting from sub oil prices and western sanctions, lets bring the guest into the conversation, patrick armstrong. Got there in the end. Thank you for joining us, will this substantial hike in russian straits put a line in the sand for the ruble . Thats what they are trying to do. It is a very high cost of carry at 17 Interest Rates and they still have a lot of things working against the russian economy with oil prices and and you willows obviously be in a steep recession with the oil prices where they are now and the sanctions. So when they talk about currency regulators . This is the attempt to do that, it may be short but at a 17 cost is not something you can do unendingly. Im doing a chart later and i will show various emerging markets and bonds and equities they are all pointing in the same direction and people like in this the 1998 should be like in the two areas or not . It is the capital outflows that are the currency side of things we are not there right now it is much more isolated in russia and it was in 1998 with the reserves are quite strong. When we look ahead to 2015 where does that leave you positioning your investment . Emerging markets depends on the market, i like raising market currencies against the euro but i dont know if i like them against the u. S. Dollar. Two dozen 15 we will see the euro weakened substantially. Because the ecb will do Something Big . Toour view is they just want get the Balance Sheet back to 2012 and larger and it needs to. You need a very weak euro to facilitate the recovery and get away from the deflationary risk. Once upon a time you will greek Government Debt didnt you . There was a time. 8. 81 is the 10 year yield and we are entering a critical week which starts tomorrow and could go three rounds it could lead to an election which could lead to the antiausterity party taking over what scenario are you painting . I think you could make a case for either way but i think there will be moderation whichever once ats in here party comes in the power you move towards a center so i think even the most scary scenarios for greece it probably will not be as bad as people worry. You do like some eurozone assets dont you, you have zero Interest Rate will see an quantitative easing very proactive Central Banks in the German Economy is not in this dire situation as the broader eurozone as a whole. Yet interestrate policy that is going to disconnect. In a nice staff on the Banking Sector compared to apple we on apple as well but 200 billion more the market cap of apple than all the list of the eurozone banks right now, it shows how Little People are evaluating european banks and the customers in these price increases. Read this question a while ago that apple is worth more than the russian stock market would you sell apple if you owned it to all those eurozone banks and the russian stock arc it if you had to choose one . I would rather have the eurozone banks i dont want to own russian assets. I would rather own apple. What about stress tests . Theyre coming up in the u. K. We talked about the eurozone and you like that i remember talking to you before the eurozone stress test and you like them because you are expecting things to recover do you have a similar outlook for the u. K. Banks . Are cheap but not quite as cheap as the eurozone banks the stress test will be very good and the banks will eventually give investors confidence and i think the stress test is credible and you are talking about a big selloff. More credible than the ecb stress test . The scenarios are more adverse youre looking at a 20 drop in house prices and the u. K. Looking at 30 so i think the banks will pass with the cooperatives a different case but the four banks participating in the euro zone i think they will all pass this one in you should have a significant buffer above the minimum threshold. Internationals will do better in this test . The stress test is on the u. K. Theres International Pressure it is a cushion. Its not saying that more capital but are on the secure side. Think for joining us. We are learning more about the hostage standoff in sydney, two hostages and the gunmen were killed, earlier tony abbott made a statement. Juliet, what has been the mood like today . Certainly very somber as you would expect, it has been a tough day at the Prime Minister said it was probably the most attesting 36 hours the people of sydney have ever had and has been really emotional. It is past 5 00 so workers have clocked off and there certainly getting a lot more people coming through to pay their respects, there is a can olans condolence board a lot of people have been signing, a lot of sydney flower sellers have run out of flowers and people were queuing for a long time to try to buy flowers to pay respects to those, the names of which we did not know until today but now sydney feels really horrified for what they went through and how their families are feeling in the sector and will have christmas without their loved ones. What we know about the victims what do we know about the victims . We know that the gunman was killed and also two victims of a son of an Australian Artist in the cafe manager who was 34 years old, unconfirmed reports that he was potentially a hero in the siege by trying to wrestle the gun from the gunmen and allowing others held up in the cafe to escape. He died upon going to hospital in the early hours of the morning as it sydney barrister katrina who is a 38yearold mother of three and came from a sydney lawyers family had a greek background and a welltodo family. Herwas respected in profession, two young lives cut very short. You can see some of the tributes andnd for them and Sydney Australia as a whole feeling healing hearts for those who lost their lives innocently when they went to get a cup of coffee. How long will the city remain in lockdown . Lockdownnot so much in anymore but we certainly do still have that cafe as a police crime. Program, we on the will take a look at the Hotel Industry facing tough competition. Watchinge back, youre countdown. Lets look at the turkish lira, yesterday we saw substantial move in the currency, and hit a new record low. Theres been speculation more broadly affecting emergingmarket currency. Rates and fears about contagious in the russian situation and all that weighing on sentiment. The internal politics within turkey taking its toll on the currency. 20 people ated various media groups and the government says a link to a usbased cleric who president erred one has accused of plotting against the government. He says it is not a matter of press freedom and tells the eu to mind its own business but certainly it has put that sort of political conflict and internal political struggle to the floor again. That has been weighing on turkish currency. Consider that the Lower Oil Prices helped the country and the last time we saw it hitting a record against the dollar in january a record low was the emergency centralbank meeting. We will see where this one develops. These are the Bloomberg Top headlines a surprise move in the early hour as russia centralbank raised key benchmark rakes from 10. 5 to 17 . Singlee is the largest increase since 1998 and the biggest step taken by russia. Chancellor suggest Falling Oil Prices are heaping rusher on the russian president. Flat amir putin speaking in new york that the declining crude prices are a good thing for the u. S. , u. K. And europe and also had words of support for the European Central bank president. I fully support Mario Draghis efforts to make sure the ecb does whatever it can to meet the mandate. I agree with him that the eurozone needs to do more to. Trengthen institutions more evidence of a slowdown and the chinese economy. The purchasing manager index fell to 42. 5, a number below 50 the latest data shows that chinas downturn deepens this month even after a tough rates lasto interest month, measures factory output, orders and employment declines. Primeney this trillion minister has laid flowers in tribute to the two hostages who died at the end of yesterdays siege. Says the siege shows that australia is not immune to terrorism attacks. Tens if not hundreds of haveons around the world been touched the city of sydney which has been touched by terrorism for the first time in 35 years. Paul allen looks back to the day when the worlds attention was focused on sydney. The siege and