The u. K. Prime minister suffers a blow at home as lawmakers secure a final vote on the brexit deal. She heads to brussels to continue negotiations with e. U. Leaders. Good morning, your risk radar, some the assets you should watch carefully today. Oil is on the top of my list. About. 2 after falling 2. 4 over the last two trading sessions after u. S. Eighth weekly his gain, now at a 30 year high. Watch for that number, kind of a dead cat bounce to possibly fade throughout the day. Take a look at the pound after said mays humiliate humiliation parliament yesterday. Up on the cable rate, just a slight gain their but you may see that new, depending on the headlines that come out of brussels today. And the 10 year after the fed 2. 36 percente ec is the yield here, rising as investors selloff that debt. Janet yellen telling investors the fed still expects to raise rates three times next year and does not expect a giant jump in the economy from the tax cut. So a lot of interesting things to parse through from Central Banks today. We really are global this morning. Lets talk about the market story, the cost of brexit. This is rand research. We have three scenarios for you, the most egregious which shave about 5 off gdp over the next 10 years versus the e. U. , which would only suffer a thumbnail of a chance,. 7 . That davidbrexit davis is talking about, is that is what is on the card . Well talk much more about that is the u. K. Parliament calls on the final vote on the deal. Scenario is perhaps the one with the least damage, the decent transitional deal. One lady is tracking the lady in charge, and edwards. You are in process. Good day to you. Good morning, i am in brussels, keeping track of theresa may. Last night she suffered a humiliating defeat in the house. F commons what is all of that mean . It means that parliament will get a veto, possibly in the type of brexit that is enacted. Could it mean we had for something a little softer as we saw the momentum in the pound bill yesterday. Perhaps the market is thinking will get something a little softer, not necessarily what may had originally set out. Will speak on the subject and many others. Well talk to simon fraser, former undersecretary of the foreign and Commonwealth Office and at Chatham House now. Felipe l. A. Will join us for an exclusive interview at vallee. Philippe here is Juliette Saly with the bloomberg first word news. Juliette the pboc race boring cost us hours a fed hike. Increasing the rates charged in open Market Operations and on mediumterm lending facilities. Retail sales and factory output came in just below estimates for last month. Both readings indicate continued momentum as a nationwide effort to tackle pollution ways on growth. Donald trump has promised Everyday Americans a giant tax cut for christmas. In a speech billed as his Closing Argument for the tax overhaul, he said a typical family of four earning 75 dollars a year with the attacks cut of more than 2000 under the legislation. The white house did not provide any analysis to support his claims. We want to give you, the american people, a giant tax cut for christmas. And when i say giant, i mean giant. [applause] as we speak, congress has reached an agreement on tax legislation that will deliver more jobs, higher wages, and massive tax relief for American Families, and for american companies. The u. K. Prime minister heads to european summit today that was set to be a celebration of the breakthrough victory in brexit. Last night, lawmakers voted to change the governments legislation, saying it guarantees it will now get a meaning vote on the final deal to leave e. U. At the end of negotiations in 2019. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Stories on the bloomberg at top. We had that surprised decision from the pboc weighing into equity markets here in asia today. You can see a little bit of downside coming through in the hang seng index, all by about. 5 . The csi 300 is down by. 8 . To nikkei closing lower you making players falling, not what we saw in the yen. Better 200 had a session, big surprise in terms of job numbers there. Lg electronics gaining after it outperformed. Japanommerce giant falling the most in a month today as it announced plans to set to set up a mobile phone carrier. Some saying it does have a market tapped into 15 million smartphone customers already. And imax china rising significantly in the hong kong session. Also as we start to see those star wars numbers trickle through. Matt thanks very much, Juliette Saly from singapore. President donald trump has promised Everyday Americans a giant tax cut for christmas. In the speech, he said a typical family of four earning 75,000 would see a tax cut of more than 2000 under his legislation. The white house did not provide an analysis backing up that claim, but they were very excited about it. Kathleen hunter joins us and our guest host today is lena komileva. Kathleen, i want to start with you. Janet yellen was asked about this a number of times yesterday and said she did not expect to provide a jet check any used to growth. Even reaching Donald Trumps target of 4 , Economic Growth would be challenging on a number of occasions, only expecting a modest and targeted move in the economy from this tax cut. Did he respond to those comments . Lena not directly. The response has been just wait and see, trust us. Its going to be what we are saying its going to be. That was more or less what donald trump reiterated last isht, when it comes to who going to benefit from the tax cuts. They keep stressing the middle class will benefit from this, but the data and it independent analyses do not back that up. The Trump Administration has not provided a lot of counterclaims to back that up. Kathleen they seem to be more high level policies. Kathleen, good morning to you. Who are the senators we need to keep an eye on . Casteen its kind of the of characters we are used to looking at it comes to every time the tax proposal comes up for a vote. Or when they were doing Obamacare Repeal, its a similar cast of characters for that. Keep an eye on marco rubio, who is from florida. Susan collins from maine. They havent quite said how they would vote and have not said exclusively they would withhold their support from the latest proposal that was tentatively agreed to yesterday. But theyve not given their support outright for it either. Along with senator john mccain, who you recall was the final boat that put the knell in the coffin of Obamacare Repeal this summer when that went down in the senate by one vote. Charactersthe main to watch, along with other republicans on the risk the more conservative side like ted cruz and rand paul who can throw a Monkey Wrench into the mix. Some phrases will stick in my mind and that is one of them for 2017. Lasthile, it was her policy decision news conference. Outgoing fed chair janet yellen wade into the tax overhaul that is currently being debated in congress. Changes in tax policy will likely provide some lift to Economic Activity in coming years. The magnitude and timing of the Macro Economic effect of any tax package remain uncertain. Manus the Central Bank Raised Interest rates, as expected. Fomc opted forecast in 2018 as it stuck to the protection of three fed hikes in the coming year. Joins us from the london studio. Great to see this morning. Her which jobed was hers and she declined to answer. Solid, labor market that remains strong. If its also strong and solid and we are also moderate in a business, lena komileva, why did they not raise their talked there. . They did not show their hawkish tilt. Lena the short answer is inflation softness. The fed basically downgraded its growth addressed it rate projections because although the economy is expected to be stronger over the next couple of years in the Unemployment Rate is expected to fall further below the levels the fed considers as consistent with the not inflationary pace of activity Going Forward. The fed essentially kept its rate projections unchanged, and the markets took that as a dovish signal. The fed actually balance set by signaling for going to have a time where the economy is running hot and labor markets are tightening with the help of the tax cuts that the white house is pushing through congress in the moment, at the is that time, youll probably end up with a higher rate. There is significant potential for the market to see a commensurate readjustment of forward rates in 2018, particularly as the tax cuts begin to affect activity and the economy continues to tighten labor markets. Does that give us some clue as to why janet yellen is not concerned . Suggesting she is not concerned curve. Flattening yield issue right not to be concerned then . Lena there is a risk that we are missing the feds message for its work. The yield curve is an important phenomena, but what is important to recognize is that the fed, even after yesterdays rate hike, the real fed funds rate is just barely zero, based on the core pce measure, or still negative, even though inflation has been trending lower this year. Fed policy is extremely accommodative, and for an economy thats running above 2 over the coming years and inflation running close to 2 . Unless they inflation risk returns, the fed is not likely to abandon its rate hike. But the fed has been very cautious, when moving at a faster pace. It has continued to sound very dovish and this is the consistent message which is why janet yellen into her tenure. Matt i thought it was interesting, yellen said we are prepared to adjust Monetary Policy as needed to achieve our inflation and employment objectives over the mediumterm your this as she was talking about the fact that they dont seem able to hit that 2 level. Does this mean the fed could turn more dovish next year . The fed has done a great job in terms of controlling market expectations. The outlook for rate hikes is linked to the faster pace of inflation Going Forward, even if they surprise policy positively. That financial conditions remain extremely accommodative, at the time when demand is pushing past capacity. Helpax cuts will probably in the margins by helping the demand side. The very vocal effects are still very unclear in terms of productivity and labor participation. The to the point about yield curve, is it really such a big concern . After for rate hikes in the last 13 months with an economy thats running so strong and the employment rate is falling faster than anybody projected, which simply makes no sense. This, but its not sustainable in 2018 unless we see the inflation risk returning, and that is not the feds projection. Anna thank you so much for your time. She will have a lot to sound the other subjects we are discussing this morning. Theresa may heads back to brussels, embarrassing after a Brexit Defeat at home. Rejecting a 5. 1 billion bid, we speak to the company ceo. This is bloomberg. Manus its official, stepping down it ubs, replacing him will blasi. In seller to step down from the business and return 2018. He stepped down from the executive board at the end of the year. Up your to date 7 . The head of Wealth Management was his right hand man. Yet the head of the Investment Bank just in the francine last week, Martin Blessing named president of both management. Out. See how it all pans the changing of the guard. Blessing steps up and a new president is named, from which mr. Blessing comes. What might this change mean at ubs . Thes on theresa may, another leader of the government in the u. K. Shes heading to brussels today for the european summit. But with that to be a celebration is been overshadowed by an embarrassment at home in her own parliament. Votearantees a meaningful in 2019. Anna is in brussels. I suppose the question is this, cable dropped on the back of this and then has rallied. Its his defeat in context politically and within the brexit context. Does not take us to a erratically softer exit outcome. Anna it seems to be the conclusion. This is something more to go stronger on in the interpretation there that this thisomething softer leads to something softer. Something parliamentarians will vote through. Its no good if she crab soup brexit deal that appeals to the brexiteers in her if she. Rafts a brexit deal the parliamentarian will be given a chance to veto the deal on the table. What they will be choosing between is not entirely clear, whether it some way of getting back into the e. U. That is not being talked about at the moment. Does soften the stance that the u. K. Government will go for a brexit. This is not the end of the story. We have more amendments to come on this so the brexit conversation could shift further next week. Matt clearly they will talk about exit at dinner later, but what else is on the menu tonight . Will be here may today. She is not your tomorrow because that is the day that will do some brexit conversation. About thee talking prospect of moving on to the trade arrangement. That will be decided on friday. Tomorrow really is a conversation around eurozone reform. Mario draghi will be here. Pray she, foreignpolicy challenges, sanctions against russia, all of that will be talked about. Manus they love the late hour discussion inute that part of the world. Decision day back at home, bank of england there. The economist do not expect any policy change. Focus will be on any comment on , of two moreicing increases over the next three years. Lets bring you this as a conversation. You look at the data from yesterday, i am sure the british papers at home have the full claim on this. The first of the shift in the Unemployment Rate. There are a few cracked in the brexit wall of employment. Think the market has gotten too far ahead of itself given it Economic Data in the growth numbers. I dont see the ability to do these hikes next year, do you . I agree the bank of england is in a Holding Period at the moment. Sterling has been the prevailing factor over the last year and constituted the ball of inflation margin over the 2 industry. The however, its a big question whether the bank of england can deliver more rate hikes. Based on yesterdays labor figures, it looks like it will be 2020 before inflation falls below the current place of wages and growth. Wages the degree of it will not be reversed anytime soon. That is a big tradeoff in terms of demand growth ahead and the uncertainty of activity that the effect of brexit brings. Matt we have a lot to get through with our guest post. This is bloomberg. Morning, 3 30 p. M. In tokyo. You looking at a gorgeous shot of the palace there. Whether every day is beautiful in tokyo. Manus, youre not there. How is the weather your way . Dubai, itdegrees in is 10 30 a. M. Paris it is 7 30 a. M. Thensolicited bid to buy Security Software maker. It was a unanimous rebuttal by the board. Citing doubts about the strategy. Vallee. Hillipe how open would you be to having , are you open to a discussion at all . Clear, we justbe that the news that they said priceill pursue at this and i need to discuss this with my board, but lets make clear we need to really push our arguments here. We think its significantly undervalued. More important, it is not take into account the interest of our sister of our different stakeholders and customers. We need to understand better what this means in terms of integration and how we would go through our strategy. For me, is not really clear. Breaking the company into different parts does not tell me how we will pursue what we have created. Morning, this is an and brussels. Your shareholders have been doing business through a couple of difficult episodes this year. What visibility do you have on the business . ,f you manage to stand alone what assurances do you have to give that there will not be further profit warnings . Philippe we have created a very compelling story in terms of security. We have different businesses that are growing. For example what we do for enterprise, governments, and we transition in the business. This is making [indiscernible] it representset only 17 of our businesses and in turn we need to accelerate the growing businesses. We made a significant acquisition 2017 and this is being integrated. Accelerateping us to our growing part of the business. Matt you mention you still have to talk formally to the board about this, but obviously nobody is going to forget to give you a call after this kind of news. The shareholders you have spoken to or the Board Members with whom you have talked, what is their reaction to this, and what have they been telling you . But feedback have you been getting what feedback have you been getting . Philippe is pretty clear, we oeed to understand how gemalt will use their strategy. We think the offer undervalues the company. Answer,ntil the 15th to which we did yesterday and indeed, we need to understand better what it means. The news we heard this morning actually does not change anything and this is something my board will do in the coming hours. Manus i would like to press you a little bit more on the phrase acceptable in standard in the market, that you refer to this undervaluation of the company. Then ofthe real value gemalto . What do you tell us shareholder, if you remain standalone, can you reassure your shareholders . I will add another billion euros to the business. What is the real value of your company . Where do you take it to as a defense . Philippe what is important for us and our team is to complete possibly 2017. Because of what has happened in the u. S. Banking business, this is part of the company. Fine. Nking business is we say to our shareholders, we come to them with a new plant and we say today, we need to helping customers to secure access and for this we have a very interesting element in our portfolio. Manus i get that, and we understand that you are nearly at the end of 2017, but you will have to come up with a very if they gonsive line hostile. It may not be the strongest of defense. We had a plan for Capital Market day in march. To tell our shareholders what is our plan to make sure we create more value. I can do, buting for me, the first point is we need to conclude 2017 on a more positive note, which we are about to do. Anna are you having conversations with any other companies . Are you considering a type with other companies to offer you some protection . Remember we got this offer on the 28th of november, which is pretty short. Withdecided to go public the offer, which is a little bit not friendly, i would say. To make sure we take enough time to answer, which we did yesterday. We will see what could be the , besides what we said yesterday. I have a chart that shows analyst ratings. Although your price has gone well past the 12 month price target. What do you tell analysts who as antching the stock advertisement for investors that they have gotten wrong . The only way to prevent that, we have a case that is a unique, nation of businesses. For the time being its a bit too early to get in the output from 2018. We may accelerate that to our analyst. What was going on with the growth part of the company. We need to come with something that is efficient, and we have a plan for it. Would clearly have a plan about what to do with our businesses. What about cash, can you give some of that back to shareholders . Philippe we have enough cash flow to generate and deliver company. Significant announcement of 2017 and both we haveare still addressed the question in many parts of the company. We are negotiating with the union france to see how we could do business again in this part of the world. , thereally important approach is opportunistic. Thanks so much for your time. Lets talk more about Central Banks, just a day after the fed hike, the European CentralBank Announces latest Rate Decision later on and the final policy of the year, mario draghi will unveil his updated economic projections. Investors will focus on the outlook as a clue to whether they may in the stimulus measures. Us. Komileva is still with its a good idea to start with the inflation outlook. I asked what is the ecb to do if . Inflation starts to pick up more than expected . . All in a likelihood at the european economy that inflation will pick up more than they expect . Possible. S chart thatfantastic separated french inflation into traded and not traded prices, and the gap is enormous. Lowcost traded items from china and asia are a dominant share of global trade flow. It has had a direct, Lasting Impact on inflation trends. When youting look at inflation beyond and look at trade versus domestically generated inflation, going to get the 20 cpi inflation projections for ecbfirst time from the staff today m a will show inflation moving close to the ecb target which will pave the way to the ecb to reinforce expectations next year. Anna many of our guests have been talking about how they are watching the german wage story to give them a clue as to how quick the inflation move might come. Version, a preliminary number, up 2. 3 for 2017 year on year. This is the highest in the past three years. That kind of move suggest that if wages are going to little higher that inflation might run a little faster . Its very meaningful news that will echo strongly with policymakers and investors. It shows the euro economy has been growing very strongly this year, stronger than anyone expected. To sustain cyclical aptitude as we get into 2810. 2018. The ecb will defend their position on the back of the pack that inflation is not a generalized phenomena in and there is a risk that expectations may remain less than anchored. Having prepared the markets very , probably another taper and in bringing asset purchases to an end by the end of 2018. The question is how the ecb will manage its former guidance on qe and on Interest Rates in reinvestment, given that this is not sustainable. The markets will be very sensible on rebalancing the forward guidance. Tous and bringing it back markets, some like it steep. Were talking about a flattening of the yield curve in the united states. Reallyse the markets could do with a little bit of help from their ecb friend and steeper. He curve as you look at the markets and the trajectory on the chart, mario draghi really wants a try to offer a bit of help here, doesnt he . Lena there are two stories here. The flatness the yield curve is linked to the elephant in the room, the evaluation of central , resulting inheet the hangover of liquidity from the Global Financial crisis a decade ago. Overhang will not disappear anytime soon. That is the positive news. , ecb hopese news financial conditions are strong and the markets have accepted the message of moving toward the anderbial exit door therefore bringing the prospect of rate hikes nearer on the rise in. The ecb faces a huge problem at home because of the huge exposure to credit markets, the tightening of credit spreads and spreads between Investment Grade and highyield investments. Even if the new policy rate is lower going toward, its difficult see gains of the credit market replicated 2018. That will make investors nervous. You would not want a much steeper yield her for fear of destabilizing a Financial System that is critical to the help of the recovery. Anna no time to ask you about fascinating story about pixie dust. Bloomberg tv for the p. M. U. K. Rence, 1 30 time. We will get the decision on the ecb and the press conference a little bit later. Lets talk about what is going on in china. The central bank unexpectedly raised borrowing costs hours after a five basis point hike. The mediumterm Lending Facility by five basis points. Tom mackenzie joins us from beijing. What is the pboc hoping to achieve with this rate rise . Is it about making sure there is stability in currency markets . They put out statement saying this was a logical move on their have. They said it was also part of the process of trying to move distortion out of the market and point things to the gap that were seeing with the money market rate. The numberse were higher than expected. You allude to capital outflows. They dont want to see a rush to the exit and they do have a window in which to do this, to raise rates. They have relative stability in the yuan. Sales,the retail pointing to a stable picture for the chinese economy. And Consumer Price inflation is still below target. About half of what we saw when they moved it up last come of which was in march of this year. We were surprised, we did not think they would do this because they have not mirrored, three hikes from the fed. They did not go in full syncopation. Do you think they are more worried about the bond market . You have a yield differential between china and the united states. A down want to upset the bond market anymore than has already they dont want to upset the bond market anymore than it has already been. They want to stay in lockstep with the u. S. On that. The bond markets have been under pressure in terms of Corporate Bonds. They stay in sync with the feds without putting too much pressure. Sayingd from agility they expect to see more people in the Corporate Bond space so far. While we have seen is a pickup in corporate profits, as a andlt of the clampdown pollution cards that have been put in place. Something that is mitigating the additional pressures on the corporate spirit but it is becoming more difficult to fund raise right now. So much for that, tom mackenzie, live from beijing. Thats get the Bloomberg Business flash with Juliette Saly. Disney is expected to they will pay 29 a share in an all stock deal with fox is mrs. , including a movie studio and international assets. A is the biggest deal ever significant milestone in the long career of rupert murdoch. Martin blessing currently helps oversee domestic Retail Banking and Corporate Lending to swiss clients and he will succeed him in january. He has rejected an offer to buy the securitybased Software Maker for 4. 3 billion euros. The companys board of directors unanimously rebuffed the bid, citing bits about strategic rationale and insufficient guarantees that the deal would go through to the end. That is your Bloomberg Business flash. Anna thank you very much, Juliette Saly. Talk about whats going on in the u. K. And on into brussels. Its not all celebrations, she suffered a setback at home. Us is simon fraser, managing partner at flint global. Great to have you with us once again, simon. Thats get your initial reaction to what we saw yesterday in parliament, the government losing this boat on the amendment. Do you sense that now we are going to end up with something of a softer nature . All the red lines that theresa may has talked about in the past. Ask i think it is a bit early to make that prediction. What happen yesterday was important. It showed they want the opportunity to make a serious decision on whatever the final deal is to pass this legislation. Those people who supported brexit said they wanted to do it to strengthen the sovereignty of the british parliament. So it is not out of keeping with that. It demonstrates that there has to be a deal which commands support in this country, across the political spectrum. I think that is probably a good thing. Anna what kind of deal with that look like . Weve heard from the labour party about not being in the what doet, but in you see is a final trade deal at this point . Isthe important thing to say today the European Council really marks the beginning of the real negotiation on brexit. But weve had so far is sort of a precursor negotiation. All these Big Questions about the economic relationship with europe will be on the table now. You are right to identify the tradeoffs that the British Government will have to confront. All those things are still to be negotiated. Trend over the last few days does support the thesis that a very hard crashing type of brexit is less likely. We have a process that will get underway. Negotiation onhe the comic relationship. But there is an awful long way to go where we know that will end up. Anna we did see the press conference last week. There is a lot of talk about finding a strong relationship into the future. Is that changing mood, does that seem significant to you to find a deal . I think it recognizes that the u. K. Has voted to leave. They did not want that to happen. It is in their interest to have a working relationship with the u. K. In the future. Recently, therned cabinet has not yet decided what its policy is on a number of the big issues. So the e. U. Will engage in the negotiations but they will negotiate to protect and promote as well asnterest making sure the relationship with us continues. Simon fraser, thank you very much. This is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Manus a very good morning from dubai. Imf this cranny. This is daybreak europe. I am manus cranny. Anna i am anna edwards. Matt i am manning the ship at bloombergs new European Headquarters in london. These are todays top stories. Rate hikes and tax cuts. Yellen pencils in three more increases for next year. The outgoing chair is not buying trumps talk of economic eric rowe from his tax overhauls. Miracles from his tax overhauls. That sent shivers through local equities. Time minister suffers a blow it home and lawmakers secure a final vote on the brexit deal. She had stood brussels to continue negotiations with eu leaders. Matt i want to bring you some breaking news on european car sales. We are getting figures and for the month of november. To 1. 2 6 risen 5. 8 million vehicles across europe so november car sales figure up 5. 8 to one point 1. 2 6 million vehicles. And toyotake peugeot are benefited by europes continuing growth in the economy. New suvs from peugeot and asian manufacturers who have that have a long way to grow in europe are in fact doing that. We see european car sales of almost 6 . Manus that will be a relief and central europe. The top line on the mliv log postpone your long lunch. The ecb and the bank of england are the highlight of the busy day. Janet yellen would not reveal what her dots were. This is what we have for you, london, paris, frank for indicating lower on the avi weif. Janet yellen does not believe there is going to be a recession. Do not get stressed out about the flat ucurve. The goldilocks rally will continue into 2018 for asia. The feds porridge is looking as if this will be more of the same. Butfactory output is slow you have a rebalancing that is going on. Oil is bid, that is holding the market. My these have a bit of a turn. These equity markets are a the start ofwer at futures trading. Risk radar, how does it look . Matt lets take a look at a couple of assets that could move today. Oil is one of them. Dead catsocalled bounce earlier. We see a gain of one third of 1 . Keep in mind nymex, wti crude is down over the last couple of trading sessions. Because u. S. Output is up after rising for eight weeks in a row. We had a drop the last few days and we have a gain of one third of one point 1 . Brussels anymay in headlines out of the eu capital could move the cable rate. 1. 34 basically unchanged. The yield rising, a few basis 2. 3 seven. With the feds comment yesterday not so gigantic growth expectations from the u. S. Economy from taxcut tax hikes, the yield is hanging around 2. 4. I want to mention stan steinhoff. This is an ongoing saga in the furniture sales company. They sell mattresses in the u. S. , Mattress Firm. Looking to fall another 14 . The stock has been clobbered over the last week as they andate their 2016 earnings the ceo left the company. This has been a continued problem and we can look forward to further drops this morning. Manus we have o. A. T. s and budgets along with u. S. Treasuries opening. Treasury futures down in price, up in yield. A knit lower. Goldman sachs is 75 chance the fed will hike in march after the growth upgrade. The fomc with stronger momentum, the impact of expected tax cuts. Look at the bonds, we are up by five pips, there is a lovely piece from our bond reporting team. Swan song. Enjoying a lift before the european tsunami retreats. Talk about the money that went out of europe. They are set to return according to oxford economics. Home to will bring a the european bond markets and that could shift the bunds and the o. A. T. s. Lets see what mario draghi does. Will he get away with a seamless day and central banking land . Int is the state of play bond markets. We have a business flash for you. Juliette saly is standing by. Juliette the pboc raised borrowing costs hour after the statement. A sales came in below estimates. Both readings indicate continued attemptsn as the at burrowing we on growth. Giant trump promised a tax cut for christmas. In a speech billed as the Closing Argument trade he said a typical family of four would see a tax cut of more than 2000 under the legislation. The white house did not provide any analysis supporting the claims. We want to give you, the american people, a giant tax cut for christmas. When i say giant i mean giant. [laughter] [applause] as we speak congress has reached an agreement on tax legislation. That will deliver more jobs, higher wages, and massive tax relief for American Families and for american companies. The u. K. Premised are heads to european summit that was set to be a celebration of the breakthrough victory in brexit. She arrived hours after a defeat at the hands of her own party. Lawmakers but it to change legislation saying it guarantees they will get a meaningful vote on the bill to and the eu as at the end of negotiations. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Can find more stories on the bloomberg at top. Chinese markets closing out, the mainland ones and we are seeing a little bit of rusher coming through those markets pressure coming through the markets. Down on the close, we saw some weakness coming through in the nikkei due to the fact that we undernking players coming pressure. And the surprise move from the pboc had an impact in stocks across asia. The us trillion sharemarket closed australian sharemarket closed higher. We have seen some significant moves coming through today. Algae electronics in Seoul Lg Electronics in seoul. An interesting one. It announced it will move into smartphones. It is an ecommerce company. It is saying it is not such a crazy idea. Imax is rising and Morgan Stanley coming through with an updated view of some of the tech players including imax and sunny optical and tencent saying the recent selloff and volatility offers opportunities for investors in that market. Thank you. All three of us this morning. Federal reserve has raised Interest Rates. Even as it stuck with the projections for three rate hikes in the coming year. No move in the stocks. In the last policy decision, janet yellen expects the labor market to remain strong with the same job creation, ample opportunities for workers and rising wages. Addressed the tax cuts. Changes in tax policy will provide lift to Economic Activity in coming years. The magnitude and timing of the Macro Economic [indiscernible] with any tax package remain uncertain. Anna talking about the uncertainty around the tax package. Good to see you in the london studio. They are very close to a deal on tax and janet yellen said it is uncertain what it will do to the economy. On the your assessment effect for the u. S. Economy . Thes we are upbeat on economy. The question is Going Forward what is it going to do to Market Pricing and the impact on Financial Markets . We are looking for three rate hikes next year, that is not priced in the market just yet. In the first quarter, the market represses to the fed dots. Rates continue to move higher. Good morning. A cracking story. Matt has pulled up the chart. Trying to bring this back to the dollar and two euro land. There is a correlation between the equity market and the third mandate, driving rates, 90 session correlation between two markets, the s p 500 in lockstep with the fiveyear treasury. That is the highest on record. We are seeing this as a third unofficial mandate that the fed into aaps being bounced more aggressive mode because of flight we markets. Flyaway markets. Chris janet yellen address that. Economists are not good at identifying valuation particularly in equity markets. There was a report talking about how she referenced Financial Stability risks. It is too early to say that the fed is going to go out that there to take the frost out of bond markets are the equity markets. There are comparisons to 1994 when we saw aggressive rate hikes in bond markets crash but it is too early to expect that in 2018. Matt you talk about frost and valuations are fairly high. Every chart you look at on prices goes up into the right and every chart i look at on volatility goes down into the right. And the mliv blog they are saying you can watch the cricket today. No volatility in the index. Volatility index is down at a low which i have here. Why is there so much complacency . Ofis it is a function abundant liquidity. One of the articles we put out, we did not know last year what was going to happen in regard to trumps policies. Uncertainty has come down and in a way the markets have learned to live with donald trump. The synchronized growth story has a lot of cracks. 2006, not seen that since 2007. You have to make a call what is happening to volatility. We will say this environment can last six to nine months and central bankd Balance Sheets start to contract in 2017. 2018 is when stiffer headwinds emerge. Anna where do you see the dollar heading next . When you look back over 2017, the dollar has not had a good year despite the differences that have been obvious in Monetary Policy in many areas. Is it the Global Growth story and the fact there has been enough confidence to invest elsewhere that kept the dollar under pressure and does that continue . Chris good points to make. If you look at the bloomberg dollar index matt i have the chart up. Chris it is 10 from the start of the year. Sayad a bounceback and you is this a function of u. S. Growth underperforming, is it a function of u. S. Rates coming lower . It has been the rerating of Major Trading partners, rerating of mexico, canada, and the euro. What is theargue story for 2018 and we would say that will continue. The further rerating of the global cycle is going to hook we will have a debate about the timing of the tapering or ending of the asset purchases, the first ecb rate hike. Theres a lot more to come. Were looking at the eurodollar at 130. The dollar in general, a benign for 2018. Matt i want to point out something that is very cool. On the dollares index, you can see the breakdown. Almost the 32 weighting on the bloomberg dollar index. Chris you have a lot more asian currencies. A good storyuld be for asia in general. We like things like the korean theasks exposed to cycle. We identified those currencies korea andenefit and europe in general. Western and Eastern Europe should participate as well. Much, head you very of fx strategy at ing. Coming up, 2020 vision. Mario draghi gives his Economic Forecast for two years time and the final policy meeting of the fed, we will talk about the ecb and the central banking just a continues. It is one word for it. We will be speaking to the snb president. This is bloomberg. Matt welcome back to bloomberg daybreak europe. Our flagship show from our new headquarters in the city of london. X futures trading down by. 251 percent. The focus will be on the macro picture on rates. 2. 37ee the u. S. 10 year at after the fed rate raised rates and left its dot plot unchanged. Positivees, a slightly start. Very Little Movement as far as stocks are concerned. Lets get a Bloomberg Business flash with Juliette Saly. Juliette the head of ubs says 1. 3 trillion Wealth Management unit is stepping down. Oversee Corporate Lending to swiss clients. It is the second to partner in two weeks after the chief left the bank. Steinhoff, the sire a south the insurance giant company which owns the Mattress Firm chain in the u. S. Whileered problems reviewing statements from 2017. Shares have plunged by around 80 in the wake of the scandal. That is your bloomberg is this flash. Business flash. After the fed day hike their rates. Final policy meeting where mario pollock mario draghi unveil his projections including the first estimates for 2020. Investments investors will emergencys to when stimulus measures will begin. Good to see you. The details of the qe tapering are still missing. Will mario draghi unveil them . Will the market close on the pace or with a focus on the reinvestment strategy . Will be interesting is to hear from mario draghi, how is he going to taper . They will cut by half but we do not know on which assets the reduction will fall. We do not know if they will buy less public bonds or the and the details are missing. The scarcityen issues that they will make the reduction in the Public Sector bonds. Under no obligation to disclose this. If they want to have flex as ity the better do it goes. We expect some questions and mario draghi might say a bit more. The last time they were sizable amounts that were still being purchased. We will get more information on the details more than on the pace. Anna we will look for the details as to what they will be buying. We are looking at what will they say on the forecast and how will they change their mind is the governing council . Forecast get the 2020 which is always very important. We expect the growth to be revised up because the out turn was much better in the third quarter. Momentum,bust growth it is strong at the end of the year. Oil prices have gone up since the last forecast and we expect that to be adjusted. What matters is core inflation, wage growth and we do not expect anything new. It is still weak and it is still ink for them to and qe september. We expect qe2 be extended by another six months beyond september. Matt thank you for joining us. The message is fantastic. It is in line across bloomberg. Chris turner is head of act fx strategy at ing. There is no room for the ecb to get more hawkish, no reason with inflation at 1. 5 . The only way they can go is down. Is that the case for the euro as well, either moves today, what is the euro going to do . Guest i would say probably not. Talking about the forecast 1. 7ation, it should be at or 1. 8. It should it is like signaling the all clear from the deflation battle. The market is prepared for these up lists to the great forecast. Increases to the inflation forecast. I do not see a big need for the euro to fall from here. Restrain,cb need to express any protest against what the market has done with the euro . Volatility is low. I do not see the need for a protest, a dovish protest from the ecb today. Anna where i am in brussels after mario draghi finishes with the ecb conference, he is going to be here talking to that heads of state from the eurozone, talking about the euro future and the Banking Union and the european monetary fund, they are set to be discussed at the conference. Not necessarily decisions made but up roadmap produced. A roadmap produced. Guest the german economist has written an detail about this subject. At this stage it is ongoing. We have to have a look at how whaterman coalition and concessions Angela Merkel has to make to the spd. It is more a story for early next year when things become a bit more clear in berlin. Manus do we reckon the bank of japan pullback in the control next year . Inflation expectations in japan, where will they had . We know activity is ok. Expectations are stuck and the bank is aiming at inflation of 2 . Are they ready to pull back from that . How will you would say no and we taxnsumption high high in 2019. It will remain at the back of the queue when it comes to normalization policy. Manus chris turner, thank you for being with an a in brussels. Matt miller in london and me in dubai. You cannot get enough of the trifecta show. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Or a little internet machine . [ phone rings ] it makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And ask how to get a 200 prepaid card when you buy any new samsung device with Xfinity Mobile. A new kind of network designed to save you money. Click, call or visit today. Guy welcome to Bloomberg Markets the european open. Me. Is behind 30h trade is less than minutes away. Guy so we go. Do not fear the flat curve react janet yellen said they will not signal a recession. I brexit breakdown