Today's Headlines

Bloomberg:

• Russia, Venezuela Rekindle Memories of 1998 Emerging-Market Rout. Emerging markets are ending the year much like how they began it -- in freefall. From Russia to Venezuela, Thailand to Brazil, stocks, bonds and currencies across the developing world are plunging. The Russian ruble tumbled past 60 for the first time on record today while Venezuelan dollar bonds sank below 40 cents on the dollar and Thai stocks fell the most in 11 months. Brazil’s corporate debt market is reeling as a graft probe of state oil producer Petroleo Brasileiro SA infects the market. All of this has something of a familiar feel to it, dating back to 1998, when, just like now, oil was tumbling and driving crude exporters Russia and Venezuela into financial crisis. While lots has changed in emerging markets since then -- perhaps most importantly, countries have higher foreign reserves and more flexible exchange rates -- the signs of contagion are mounting.

• Russian Industrial Output Unexpectedly Drops Amid Ruble Debacle. (video) Russian industrial output unexpectedly shrank for the first time in 10 months as the country’s biggest currency crisis since 1998 spilled over to manufacturing. Output at factories, mines and utilities fell 0.4 percent in November from a year earlier after a 2.9 percent increase in October, the Federal Statistics Service in Moscow said today in an e-mailed statement. The median estimate of 21 economists in a Bloomberg survey was for a 1.2 percent gain. The contagion from the collapse of the ruble is spreading to manufacturing, dealing another blow to an economy on the brink of its first recession since 2009.

• Ruble Tumbles Most Since 1998 as Traders Pressure Central Bank. The ruble tumbled the most since 1998, sliding past 60 for the first time, as traders tested Russia’s willingness to defend the currency amid an oil slump that’s pushing the economy toward recession. The ruble weakened 9.1 percent to 64.0005 per dollar at 7:57 p.m. in Moscow, the steepest slide on a closing basis since the year Russia defaulted on local-currency debt. The 10-year government bond yield rose 23 basis points to 13.23 percent. Three-month implied volatility for the ruble climbed to a six-year high as the rout triggered the Bank of Russia to sell foreign exchange, according to BCS Financial Group and MDM Bank. 

• Russia Sees GDP Shrinking at Least 4.5% in 2015 With $60 Oil. (video) Russia’s economy may shrink the most next year since 2009 if oil averages $60 a barrel under a “stress scenario,” the central bank said, underscoring the toll exacted by plunging crude prices.

• Indonesia Rupiah Sinks to 16-Year Low as Bonds Slide on Outflows. Indonesia’s rupiah tumbled to the lowest level since the Asian financial crisis as an uptick in dollar buying by local companies before the year-end coincided with a rout in the sovereign bond market. The currency slid 1.9 percent to 12,698 per dollar in Jakarta, the lowest close since August 1998, prices from local banks show. That was the biggest drop since Aug. 1. In the offshore market, one-month non-deliverable forwards declined 1.4 percent to 12,919, according to data compiled by Bloomberg. Overseas investors have pulled 10.09 trillion rupiah ($795 million) from local-currency sovereign bonds this month through Dec. 11, finance ministry data show, as the prospect of U.S. interest-rate increases damped demand for emerging-market assets. 

• Forget the Toaster. Chinese Bank Offers Mercedes to Get Deposits. Chinese banks, desperate to attract customers who are finding alternatives for their savings, are turning to giveaways. On offer at one branch in Beijing: an iPhone 6 Plus or a Mercedes-Benz. Cash rebates, trips abroad, interest rates at the highest premium ever over the official benchmark rate, even free vegetables are among other goodies banks are dangling to get Chinese savers to deposit their yuan in savings accounts. The competition is expensive. “Chinese banks are hemorrhaging their deposits,” said Rainy Yuan, a Shanghai-based analyst at brokerage Masterlink Securities Corp. “There is no fix for this. All the efforts they made to win savers back will only push up the costs, so it’s a losing battle to fight.”

• Emerging-Market Stocks Fall to 10-Month Low as Currencies Plunge. Emerging-market stocks declined, with the benchmark index set for a 10-month low, as the ruble slid beyond 60 against the dollar for the first time ever and Indonesia’s rupiah sank to the weakest level in 16 years. PTT Pcl, a Bangkok-based oil company, slumped 4.9 percent, dragging Thailand’s stock gauge down the most since January. China Mobile Ltd. fell to a seven-week low in Hong Kong. The Ibovespa slid 3.1 percent as a report signaled that Brazil’s economy unexpectedly contracted in October. The ruble plunged to 63.5 per dollar before Russia’s central bank holds a long-term auction to provide rubles to banks. Indonesia’s rupiah depreciated 2 percent. A Bloomberg gauge tracking 20 developing-economy currencies declined 1.3 percent. The MSCI Emerging Markets Index lost 1.6 percent to 923.58 at 11:24 a.m. in New York.

• European Stocks Erase 2014 Gain as Miners, Energy Shares Tumble. European stocks reversed an earlier advance, posting their biggest six-day slump since August 2011, after data showed a decline in manufacturing for the New York area and oil prices resumed a decline. With today’s 2.2 percent slump to 323.29, the Stoxx Europe 600 Index has erased its annual increase, closing at its lowest level since Oct. 20. The gauge reversed an advance of as much as 0.8 percent today as the Federal Reserve Bank of New York’s Empire State Index unexpectedly dropped this month and oil prices erased gains. Stoxx 600 energy and commodity producers slid at least 2.9 percent. 

• Oil Falls; UAE Says OPEC Won’t Cut Output to Boost Price. (video) West Texas Intermediate for January delivery declined $1.32, or 2.3 percent, to $56.49 a barrel at 1:36 p.m. on the New York Mercantile Exchange. Futures touched $55.87, the lowest since May 2009. Total volume was 51 percent above the 100-day average for the time of day. It’s dropped 43 percent this year.

• Oil-Bust Vets Brace for Storm Unseen by Shale-Boom Neophytes. The West Texas wildcatter, 76, has weathered four such cycles in his 52 years draining crude from the Permian basin, still the most prolific U.S. oilfield. Though the collapse in prices since June doesn’t yet have him in a panic, Stephens recognizes the signs of another downturn on the horizon. And like many bust-hardened veterans in this region -- which has made and broken the fortunes of thousands -- he’s talking about it like a gathering storm. The ups and downs of oil are a way of life in Midland and Odessa, Texas, dating all the way back to the Great Depression. It’s as much a part of the culture as Gulf Coast hurricanes, and residents often prepare accordingly.

• Copper Drops on ‘Mixed’ U.S. Reports on Homes, Industrial Output. Copper futures for March delivery fell 1.7 percent to $2.8835 a pound at 11:49 a.m. on the Comex in New York. A close at that price would mark the biggest drop for a most-active contract since Nov. 28. Trading was 30 percent below the 100-day average for this time, data compiled by Bloomberg show.

Wall Street Journal:

• Sydney Cafe Siege: Three Dead in Standoff. Lone Gunman Identified as Man Haron Monis Pronounced Dead at Hospital, Along With Two Unnamed Hostage. A siege that shut down a large part of central Sydney for more than 16 hours ended in bloodshed early Tuesday, after two hostages and their armed captor were killed when police stormed the cafe behind volleys of bullets. New South Wales police said the lone gunman—identified as 50-year-old self-proclaimed cleric Man Haron Monis —was pronounced dead in hospital following the shootout at the Lindt Chocolate Café in Martin Place around 2:10 a.m. The two unnamed hostages, a 34-year-old man and a 38-year-old woman, also died following the confrontation between the gunman and police.

• Investors Fear Industry Is at ‘Top of the Cycle'. Investors are worried that the private equity market is at the “top of the cycle” and there is too much money chasing deals, according to a survey released this week. The survey of 90 global institutional investors by placement agent Probitas Partners found that the top concern for investors was that “too much money is pursuing too few attractive opportunities,” with 55% of respondents saying this was something that kept them up at night.

• UAW Chief Aims to Eliminate Two-Tier Wage. Union President Says Battling Right-to-Work Not Among Top Priorities. United Auto Workers President Dennis Williams said on Monday the lower wage scale for newer auto workers make is unacceptable, and the roughly $19.50 hourly wage new hires earn should only be seen as a “good starting point” or negotiations with Detroit auto makers next year. 

• Junk-Bond Worries Spread Beyond Oil. A Pullback From Junk Bonds Can Be Harbinger That Risk Is Being Reassessed.

MarketWatch.com: 

• Carl Icahn says oil’s woes may be proof of a junk-bond bubble. Billionaire investor Carl Icahn says high-yield corporate debt may be in bubble territory and that a recent hiccup in the market, as a result of plunging oil prices, support his suspicions.

CNBC:

• Now is not the time to play the market: McNamee. (video) There are times you just do not want to play the market, and this is one of them, Elevation Partners co-founder Roger McNamee told CNBC's "Squawk Alley" on Monday.

ZeroHedge: 

• That Escalated Quickly: Europe Goes From Up 7% To Down 1.5% For 2014 In Under A Week. (graph)

• WTI Crude Craters To $55 Handle, High-Yield Credit Crashing-er. (graph)

• Goldman Pours More Crude On The Fire: "Oil Prices Can Go Lower For Longer".

• Taper Tantrum 2.0: Emerging Currencies Are Crashing. (graph)

• Today's Market Contagion: Energy High-Yield Credit Spreads Blow Above 1000bps For First Time Ever. (graph)

• Industrial Production Surges Most Since May 2010 Thanks To Subprime Auto Loans & Polar Vortex 2.0. (graph)

• Empire Fed Crashes To Almost 2-Year Lows, Biggest Miss In 4 Years. (graph)

• Oil Volatility Is Exploding (And It's Spreading). (graph)

Business Insider:

• The Ex-Goldman Trader Who Correctly Shorted Subprime Mortgages During The Financial Crisis Has Made A New Bet. Now he's betting against something else: high-yield bonds.

• Incredibly Dramatic Photos Of The Hostage Crisis In Sydney.

• Mutual Funds Haven't Performed This Crappily Since 1997.

• The Reported Sydney Hostage-Taker Is A 'Spiritual Healer' With A Long Rap Sheet.

• DEUTSCHE BANK: The 10-Year Yield Is Going Under 2%.

Telegraph:

• Coal prices tumble on China slowdown. Coal prices have fallen sharply this year as China slowdown hits demand, writes Andrew Critchlow.

Handelsblatt:

• German Stability Council Sees Growth Goal Too High. The German stability council says 4 German states need to cut spending further, citing a paper due to be published today.

RIA Novosti:

• Russia to Send 10th Aid Convoy to Ukraine Soon. Russia's Emergencies Ministry organizing convoy, which will deliver New Year's presents to Donetsk, Luhansk regions, citing ministry spokesman.

meps:

• EU Steel Prices Fall in Line with Drop in Input Costs - to 58-Month Low.