By Alex Plough December 26, 2014
Rockefeller Christmas Tree, © Chris Ford
Holiday Cheer From Corporate America
It wouldn’t be Christmas without cringe-inducing corporate holiday videos and Bloomberg Businessweek has collected three of the best (or worst depending on your tolerance for awkward gaiety). These seasonal masterpieces from private equity and venture capital firms are making the rounds this year. It’s tough to pick a favorite. Will it be the Carlyle Group co-founder David Rubenstein rapping or this snappy song and dance routine from the folks at First Round Capital?
Russia Fending Off Financial Crisis
Just days after hiking interest rates to stem a plunge in the ruble, Russian authorities rushed through legislation on Monday to head off a crisis in its banking sector. Legislators passed new laws allowing the state to bailout Russian banks before they face bankruptcy, in an effort to stabilize the system and prevent a run on its banks.
Russian 5000 Ruble Note. © Bob Marquart
The Central Bank of Russia (CBR) also suspended accounting rules, known as mark-to-market accounting, and allowed banks use September prices for balance sheet and local capital calculations. This will help soften the blow from a sudden increase in foreign-currency liabilities caused by the falling value of the Russian ruble, which is down 30 percent in three months.
Russian banks frozen out from US and European capital markets by sanctions are increasingly turning to the CBR as a lender of last resort. According to the rating agency Standard & Poor, the central bank has lent Rbs6.7 trillion (US$110 billion) to the country’s banks, and now provides 10.5% of their funding – up from less than 2% of funding at the low point back in 2010.
According to Bloomberg News, Standard & Poor is now considering downgrading Russia’s credit rating to ‘junk’ status. CNBC journalist John W. Schoen has produced an excellent explanatory video about the crisis alongside data analysis of the places wealthy Russians are stashing their money.
Oil Wars
The turf war between the world’s biggest oil producers is set to last into 2015 after Saudi Arabia’s powerful oil ministers said OPEC would not cut production at any price.
In a recent interview with the Middle East Economic Survey, Ali al-Naimi gave the clearest indication yet that Gulf OPEC members are refusing to budge as the price of oil continues to fall.
“As a policy for OPEC—and I convinced OPEC of this, even Mr. al-Badri [OPEC secretary general] is now convinced—it is not in the interest of OPEC producers to cut their production, whatever the price is,” the minister said. “Whether it goes down to $20, $40, $50, $60, it is irrelevant,” he added.
Oil train, © Russ Allison Loar
Veteran financial journalist Anatole Kaletsky, writing for Reuters, asks how low prices could conceivably go. According to Kaletsky, analysts expect that prices will stabilize once Saudi Arabia realizes it geopolitical ambitions to re-establish OPEC’s monopoly power. This would mean breaking the alliance between Iran and Russia, or reversing the growth of shale oil production in the United States, both outcomes that would take time to unfold.
Meanwhile in the US, American energy companies feeling the pressure from low prices are also refusing to slow production as rival firms play a game of chicken over who will cut first. It is a classic example of a game theory problem known as the “prisoner’s dilemma”, according to Roger McCain, a professor in Drexel University’s economics department.
Jobs Numbers Upbeat
A surprise drop in the number of Americans making new claims for unemployment benefits last week was the latest sign that the US economy will end 2014 on an upbeat note.
On Wednesday, the US Labor Department said that initial claims for state unemployment benefits fell 9,000 to a seasonally adjusted 280,000 for the week ending 20th December. This was the lowest measure since the start of November and represented the fourth straight week of declines.
The Bureau of Economic Analysis announced on Tuesday that US gross domestic product (GDP) grew at an annual rate of 5% in the July-September quarter, the fastest growth in 11 years.
The rising tide of consumer sentiment and optimistic growth estimates have been great news for Wall St traders. The Dow Jones Industrial Average, a stock market index of 30 of biggest publicly owned companies, reached a record high of over 18,000 on Tuesday.
The Interview Airs
Kim Jong Un ©thierry ehrmann
Sony Pictures announced that it would stream the controversial film ‘The Interview’ online on and screen it at select theaters on Christmas, following its widely-criticized decision to pull the film from distribution the previous week.
Major movie theatre chains had previously abandoned plans to screen the film on Christmas day following threats of violence from a hacker group that calls itself Guardians of Peace. The hackers were also responsible for the recent cyberattack on Sony Pictures that released hundreds of sensitive internal documents.
US authorities publicly accused North Korea of sponsoring the cyber criminals, who allegedly hacked Sony Pictures in retaliation for ‘The Interview’, a comedy in which two US journalist are sent to assassinate North Korean leader Kim Jong-un.
Digital attacks on data and servers are becoming more and more common. Cyber security firm Norse recently released this real-time animated map of global cyberattacks that tracks the origins and targets of each attack in a kind of shoot ‘em up style. The result is both mesmerizing and disconcerting.
Uber Surge Pricing
As the on-demand taxi service Uber gears up for the Christmas rush of intoxicated party-goers, software developers Jon Sadka and Nicolas Grenié have produced an interactive data visualisation of the cheapest and priciest hours to order an Uber car.
The pair’s data wizardry reveals a glimpse into how Uber manages its surge-pricing policy. They found that price depends both on where you’re being picked up and where you’re being dropped off, leading Sadka to recommend moving your drop-off location a few blocks to see if the price multiplier falls.
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Alex Plough is a freelance business journalist based in New York. Originally from London, England, he has a background in data-driven investigative reporting and has worked on a number of agenda-setting projects such as the award winning Iraq War Logs for the Bureau of Investigative Journalism. More recently he graduated from Columbia Journalism School’s masters program, business and economics reporting concentration, as well as Columbia’s Lede Program – a three month course designed to apply the tools of computer science to journalism. He is particularly interested in the overlapping fields of finance, technology and how young people are shaping the new American economy.
