Good morning New York,
FT ALPHAVILLE
FT Alphaville is hiring in NYC - Have a good sense of humour, a thick skin and you might even know how to manipulate a spreadsheet or fix a line or two of HTML? Want to work for FT Alphaville in New York? The team is hiring. Details here.
FX evolution: Izzy cites the BIS quarterly review on the rise, and rise, of the FX trading, the decentralisation and growing efficiency of the market. Though she's not sure where to place virtual currencies in that picture.
Banks and their raison d'etre: Izzy notes another good snippet from the BIS review: Banks are losing their funding advantage over non-banks, leaving them somewhat devoid of purpose in the capital markets.
NEWS
Ukraine: Riot police encircled central Kiev on Monday night, raising fears the authorities were preparing a crackdown on anti-government protesters just hours after Ukraine's president said he was prepared to hold talks with opposition leaders. (Financial Times)
Bank of England's Carney looks beyond rates to steer UK upturn: Mark Carney said on Monday that he favours initially using tools other than interest rates to help control the UK's economic recovery and to prevent the housing market rapidly moving from "stall speed to warp speed". In a dovish speech, the governor of the Bank of England indicated he was minded not to pull the lever on interest rate rises if unemployment falls quickly. (Financial Times)
Jump in mortgage borrowing a good for US consumption: The US has reached an important milestone in its recovery from the financial crisis after the first rise in outstanding mortgage debt since the beginning of 2008. After reducing debt for 21 consecutive quarters, US households increased their net mortgage liabilities at an annualised rate of 0.9 per cent in the third quarter of 2013, according to new data from the US Federal Reserve. (Financial Times)
"Federal Reserve Bank of St. Louis President James Bullard, a voter on policy this year, said the odds of tapering bond purchases have risen along with gains in the labor market, and any reduction should be modest to account for low inflation." (Bloomberg)
Draft Volcker rule gives leeway on hedging: Banks will have to set up ways for "ongoing recalibration of the hedging activity" to prove "specific, identifiable" risks, the draft says. But it does not explicitly prohibit hedging, which banks had feared, as long as it is done under certain conditions. (Financial Times)
Frank says Wall St attempts to derail Volcker will fail: Wall Street's efforts to overturn the Volcker rule, which regulators are due to ratify on Tuesday, will fail in the courts, according to Barney Frank, who spearheaded the US post-crisis overhaul of financial regulations. Even before Tuesday's vote, banks and their critics were preparing for fresh skirmishes over the Volcker rule, one of the most significant attempts to restrict banks' activity by prohibiting proprietary trading. (Financial Times)
Improving UK economy boosts Whitbread sales: The improving UK economy underpinned a rapid expansion of Premier Inn hotels and the Costa Coffee shop chain to boost sales at Whitbread. The hotels-to-cafés owner reported a 4.3 per cent rise in like-for-like sales in the quarter to the end of November, and an almost 14 per cent increase in overall revenue, driven by both the Premier Inn and Costa chains as well as an improved performance from its restaurants. The group said that it remained on track to deliver full-year results in line with expectations. (Financial Times)
Lululemon billionaire founder quits: The billionaire founder of Lululemon Athletica is stepping down as chairman. The departure of Chip Wilson caps a controversial year for Lululemon, which built one of the hottest brands in North American retail by selling stylish, high-priced yoga outfits to mostly young women. (Financial Times)
"China, the world's biggest shipbuilding nation, will increase cash subsidies for scrapping obsolete ships by 50 percent to help cut overcapacity and emissions." (Bloomberg)
Markets: The euro was at its strongest versus the yen in more than five years as central bank policy remained in focus, while US index futures held record levels on optimism over global growth. But a lack of fresh catalysts left many bourses struggling for momentum, with some dealers already chatting about a seasonal dip in activity. The FTSE Eurofirst 300 was down 0.1 per cent after the FTSE Asia Pacific index slid 0.2 per cent. The front-month S&P 500 futures contract suggested Wall Street's benchmark would add 2 points to Monday's record close of 1,808. Industrial commodities were mixed, with Brent crude up 17 cents to $109.56 a barrel and copper easing 0.1 per cent to $3.29 a pound. In precious metals, gold was up $6 to $1,246 an ounce after the market sensed positioning may have become overly bearish. However, it is currencies that arguably provided the clearest window into the market's current thinking. The renminbi rose to a record high versus the dollar for the second day in a row – hitting $6.0703 – as China's central bank allowed the unit to appreciate. That may be a bullish sign because it suggests Beijing feels the improving economy can cope with a more competitive exchange rate. (Financial Times)
