Transcripts For CNBC Street Signs 20171214

Sustain a strong labor market and stabilize inflation around our 2 longer run objective. Striking gold. Lonmin shares spike after sibanyestillwater makes an offer to buy the platinum minor miner at a 35 premium gemalto gets an offer that it says fails to support the company and address shareholder interests. Good morning ecb and bank of england, busy day today. First eurozone numbers, the december numbers, the flash estimate crossed at 58 this is higher than forecast, 57. 3 the november buy comparison was just a fraction lower at 5 7. 5 a beat on the numbers. When it comes to manufacturing numbers, the flash level crossed at 60. 6. We used to take about 50 being the crucial tipping point. Now were in expansion territory on the manufacturing numbers the Services Side not as strong as the manufacturing level, 56. 5 but also better than forecast. Better than the previous month some of this from germany you think . It appears as though the Growth Outlook in germany is picking up you can see that in the numbers momentum but its broad based in europe every think tank upgraded their forecast for next year it puts mario draghi in interesting position do we have a eurozone growing in lock step, a sink kro niced growth step playing out, but even some doves saying next year we have to think about how much qe remains in place and do you tackle the negative deposit rate in europe. All about inflation we have no change in rates, and that was highly expected another bank pointing that inflation is still low and weaker than expected numbers may lead to a faster ride in inflation than forecast. So you have the tradeoff between weaker currency and inflation. Who moves first almost dancing around policy f, norges banthe ecbk or the ecb it will be a delicate act for norges bank to manage expe expectations throughout 2018 lets look at how things are moving this morning in europe. In front of me, the picture is broadly based distributed leading to a slightly weaker trading session for the stoxx 600 trading below the flat line at 0. 1 . Yesterday the main event in the afterhours session was the fomc decision and on the back of that, a bit of market disappointment with respect to the dot plot forecast for next year, only three hikes. At the end of the day, dow jones reached new heights. S p struggled a little bit that continued into the asian session. Lets take a deeper dive into european indices see how the picture is there its a big day when it comes to Central Bank Policy, ftse 100, down 1. 5 . The main story in the uk is that theresa may faced a defeat when it came to the eu withdraw bill in the house of commons. Xetra dax, cac trading heavy ahead of the ecb decision. Not expected to announce much. All eyes on the outlook. Well talk more about that in the show lets switch to sectors and see what sectors are outperforming today. Basic resources up 0. 75 utilities, 0. 5 . Oil and gas holding in strong there. You can see to the down side this is in line with the activity in the u. S. Session Financial Services struggling, down 0. 5 . Technology sector continues to lag down 0. 4 . Lets talk about oil. As the International Energy agency sees Global Demand growth for oil Holding Steady this year and next the latest iea report shows demand rising 1. 6 this year and 1. 3 next year november Global Supply hit the highest point in a year, aided by rising u. S. Production, opec supply dropped for the fourth consecutive month. Look at the price, brent adding close to 1 in the early part of the session. A fairly wide range for brent in the last few weeks at the lows, 61, 65 at the high its been a little bit choppy. Today in the green, though, for some of the oil. Uk listed london shares opened sharply higher after an offer to buy lonmin from sibanyestillwater the stock jumped 28 in south africa the deal valued the troubled miner at 285 Million Pounds the stockwell and truly beaten up this year its been a horrible year for the stock. It does make sense its been a local solution given all the labor disputes, uncertainty around politics in south africa. I think the fact you have a local player coming in when a lot of International Players have been gun shy around some of the assets in south africa it is a reflection of the industry in total. The platinum industry has been struggling a bit a lot of that is on the back of the advent of electric vehicles. Platinum is a key component that goes into car generation what youve seen with all of the the shift away from fuel combustion cars towards electric vehicle cars, that sector struggled a lot. We saw a similar thing happen to silver when photography got digitized. You can see it now in platinum this is not just a lonmin story, its a story for the commodity as a whole so there have been labor disputes, thishas been an issu for a lot of producers in the region it was given a deadline by authorities to fix noncompliant parts of a social plan or have mining rights suspended. So theres issues around that and debt kcovenant they started to embark upon an asset disposal or bring in partners to fund some of these issues now you have a Strong Player coming into the mix. Theres a feeling more broadly in Mining Companies you dont want a lot of noncore assets, but the assets youre operating in, you want a strong position or a fully integrated platform right its a vertical integration story that comes through whats been mentioned is the combination of lonmin and sibanyestillwater creates a Larger Company with a greater geographical and with more diversification. They can withstand Foreign Exchange volatility and how the rand has traded in the last couple of years around politics. Switching to one of our main stories in the uk, theresa mays government suffered another setback as its brexit blueprint was defeated in Parliament Lawmakers backed an amendment that requires a meaningful future parliamentary vote on any final brexit deal. The Prime Minister travels to brussels today where she will appeal eu leaders to move on to the next phase of brexit negotiations speaking to cnbc, mario santano said brexit will be one of the biggest risks facing the eurozone next year was the choice of the uk citizens to vote for the brexit. We have to accommodate that in our policies and to take the best out of this process given it is a slight shock and change this is something we have to follow closely and to be very positive in the solutions that we find to accommodate these in our policies we are about to reach a very, very prolonged Recovery Process in the euro area which is now shared, as i mentioned before, by all countries, and we need to understand that the economy cycles, and we need to be prepared so this roadmap is very important to be accomplished in the next year so that the major changes are adopted by 2019 because the economy cycles, and we need to prepare ourselves to what can be in the near future reversion to positive move and face it not in panic mode as we did before, but reassuring ourselves and citizens that our economies are much more resilient today than they were before and this is good for them. Is brexit a positive risk or a negative risk for the eurozone well, given that it is a structural change, and because a choice from one part of europe, which is the uk, i wont say that it is a positive risk it certainly brings about difficulties and changes that if you ask me, if id rather prefer not to have it, that will be my option which is not to say everything will be as it was before because i think we need to continue deepening our relationship within the euro Union European union and the euro area as well. The brexit is a challenge, and its a challenge in the sense that its a negative shock certainly for all these economies. Thats my evaluation but from a negative shock we can and should build positive solutions, and explore in the best way we can the alternative ways that we may face in the future karen, i cant help but think its a bit ironic that we hear from the exportugal finance minister that the major risk for europe is the uk and brexit. Huge reliance for portugal regarding trade among the two countries. Things have changed a lot in the last few years from now on the outlook, head to cnbc. Com. German flash pmis were strong across the board for december composite services and manufacturing surveys came in higher than forecast the Ifo Institute increased its Growth Outlook for 2018 exceeding forecasts from other global agencies like the world bank it expects german Economic Growth to strengthen to the highest rate since 2011. Joining us no is klemmens s fs. Nice to have you back on the program. Were looking forward to the release of your information at 9 30 give us a sense of how strong the German Economy is growing in your view. Its growing very strongly. Especially in the last two quarters its been strong whats going on here is that growth in the last year was mostly driven by domestic demand domestic demand continues to be strong there is strong employment growth, still moderate wage growth, its increasing as well. Now exports are joining the show exports are strong, reflecting recovery throughout the eurozone and in the rest of the world, and this explains the jump in the numbers and our revision of the forecast weve seen a terrific set of numbers across the yureurozone, which leads to the narrative that you have now a growth story in lock step across many of the nations, from strong countries like germany to the weaker peripheral nations it sets an interesting scene for mario draghi today do you think the narrative coming through is the economy is growing too fast for loose Monetary Policy we have today . This certainly hasnt been the case if we look at the taylor rule, Monetary Policy is much too expansionary not just for germany but for the eurozone as a whole. One thing that may justify this expansionary policy is relatively no wage growth. I believe that explains the relatively moderate inflation we still have i think there is, you know, there are ways still to defend caution in exit from expansionary Monetary Policy, but it is quite clear it will be very hard to justify continuing the bond purchases beyond september. My personal view is that they should end in march, but that has been announced to continue to september after that, it will get difficult to justify it. I would like to ask you about the political back drop. Theres been a lot of talk about whether or not these Coalition Talks between the chancellor merkels party and spd will go anywhere do you think that will have an impact on Business Sentiment and Economic Sentiment so long as those talks really dont lead to any substantial conclusion i dont think so. There is nothing urgent to do really if there was, there would be ways of agreeing on that, i think. Theres a debate about how this will impact brexit negotiation this is an area where things may get slowed down a bit. Still in that area theres no great disagreement among german Political Parties and other eu decisions, the bunds league pbuy any great role this would all be difficult if the Political Landscape changed in germany to more instability in the longterm thats something i dont see let me ask you about something that the markets are talking about at the moment, thats bitcoin its not typical for us to ask you about a cryptocurrency theres a feeling that you may see regulators step in at some point because cryptocurrencies have been trading on wild valuations, and some say its down to supply and demand. If its brought into the system and used by a number of different jurisdictions it could make Central Bank Policy more difficult because it has the potential to be deflationary whats your view on bitcoin . I think there is a case for looking into this and for regulators being more interested in this. One reason is Financial Stability and Monetary Policy. Another reason is tax avoidance, financing of illegal activity. Bitcoin is a currency where payments can be made with very little or no supervision unlike cash in a way i think there are, you know, quite strong reasons beyond Monetary Policy to regulate this more closely thank you very much for taking the questions feel free to join in the conversation you can email the show, streetsignseurope cnbc. Com, or follow us on twitter, streetsignseurope cnbc coming up, hold steady the ecb is expected to leave rates unchanged at todays meeting, but will there be signs that the Bond Buying Program is coming to an end more when we come back. To show my love. Tada all this devotion only calls for a little bit of dawn ultra. So concentrated, just one bottle has the grease cleaning power of three. Bottles of this other liquid. A drop of dawn and grease is gone. Try using dawn beyond the sink. The European Central bank is widely expected to hold steady on rate hikes when it meets today. Mario draghi is likely to argue that eurozone Growth Continues to require ultra low rates ecb watchers will be looking out for signals from the ecb of an end to the Asset Purchase Program, and a gradual end to quantitative easing. Asset purchases were cut in half at the ecbs last meeting. Speaking exclusively to cnbc, Jeffrey Gundlach says he doesnt see rates rising any time soon the real worry from the Central Bank Activity would be forward about a year mr. Draghi has said astonishly that they will continue 30 billion euros per month of quantitative easing at least until september, and threw in, to put a cherry on top of the cake of stimulus, and negative rates well past the end of quantitative easing. Sounds to me youll have negative rates as long has mr. Draghi is around which is another two years. Let get out to annette for more many are trying to figure out what 2018 will hold for the ecb. Already we know the bond purchases will be trimmed in half from january. Do you think the market will feel this change and is mario draghi going to guide us along this socalled diet well see on markets . Yeah. I think the market is going to feel the change that the asset purchases will be cut in half. But he should not forget the reinvestments. Thats another estimated 10 to 15 billion euros a month on top of the 30 billion euro so the reinvestments are sizable and getting more sizable the longer we do qe. Thats one of the effects that mario draghi was pointing at during the last press conference, without giving us a huge understanding of what they are actually going to do with the reinvestments. I think the point of free investments will be one where he will be quizzed during the press conference once again. Bottom line what to expect from today. Today we most likely will get an upgrade on the Economic Growth projections. So a somewhat more rosier picture from Mario Draghis team the projection will give us an idea of where they see growth and inflation going for 2020 so a long time horizon and anything, which could give us a hint that they are more optimistic on inflation could give us hawkish surprise from the market reaction. So also if we get some tweaks to the Forward Guidance towards more of a hawkish tilt, meaning that he could actually envision qe to stop earlier than anticipated could be potentially hawkish surprise having said that, the market is not anticipating major changes when it comes to the qe program. I early on caught up with the chief investment strategist for german speaking countries from blackrock, martin lurke, and asked him his vision when it comes to qe. There is now a broad majority to at least in the october meeting, there was a broad majority in the ecb to keep qe openended i think there would be some uneasing among the dovish members of the governing counsel to go beyond september 2018. I think theyll keep it open formally and then slightly tweak the Forward Guidance towards an end of end of september 2018, and i do not think the ecb will go beyond that unless there is something really unexpected happening. So mario draghi will be under increasing pressure next year to end qe of course looking at the economic situation, it is stellar Economic Growth, not record but close to tenyear High Economic activity in the eurozone at the same time we have ultra loose Monetary Policy. The Asset Purchase Program still around so critics are already now saying, listen, we are heading into consideration that when the economic downturn will hit europe, the eurozone, the central bank, the ecb will not have any ammunition left to actually counter such economic downturn if you continue to do quantitative easing. Because clearly the Forward Guidance from the ecb foresees theres no rate hike on the horizon before the end of qe so the market is pricing in something in the First Quarter of 2019. Whether this is coming true is still highly questionable with qe having not ended formally the majority of economists are expecting a reduction to zero by the end of next year but this remains very much with the question mark. Back to you. Well find out in a few hours time thank you very much for that, its a big bumper day, central bank on cnbc at 12 55 we will have the bank of englands latest Rate Decision then well be back from 13 30 cet for the latest from the ecb meeting. A lot of chitchat from me and karen coming up in the next couple of hours. Looking forward to spending the day with you. Flashes from Vladimir Putin talking about the upcoming election next year russian authorities should focus on the development of infrastructure, education, and healthcare according to putin. Hes speaking at an annual press conference he declined to give details of his election manifesto we have to stand by for the exact detail hes running for a new term in a president ial election scheduled for next year. Hes also gone on to comment about the opposition when questioned, he said theres doubts made about the political opposition the opposition should represent what russian people will believe. So he will run as an independent candidate in 2018. Good luck to him. Coming up on the show, Bitcoin Futures slump to their lowest level since launching at a u. S. 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Lonmin shares spike after sibanyestillwater makes an offer to buy the platinum miner at a 35 premium gemalto rejects a bid from atos as the dutch firm says it significantly undervalues the company and does not address shareholder interests. All right. We have just got some uk retail Sales Numbers out. As we can see, the numbers look to be quite bumper versus the last month retail sales coming in at 1. 6 year on year versus the october print of 0 . The forecast was 0. 3 . A lot of that effect will be on back of the black friday sales which were extremely strong for the month of november. Retail sales has been a big focus in this country. Previous numbers have been quite week this is the first bumper number in a while i was reading a report from lloyds, saying there were lumpy numbers coming through and expectation s for black friday their view was that you would see effectively a weaker number today on the retail sales, which just hasnt transpired perhaps some of the activity around the special holiday window has been supportive and perhaps more discounting than expected or perhaps all online lets look at Foreign Exchange into this big Central Bank Day euro dollar not doing much 1. 1824 dollar yen is stronger the dollar has pushed the currency pair a bit higher this morning. Up 0. 2 . Cable also stronger, 1. 3450, up 0. 25 , despite the defeat mrs. May faced in parliament. And dollar swiss also stronger lets look at individual european markets and see what picture is like there. Quite a different picture from what we just saw in currency space. Ftse 100 dont 0. 24 dax and cac struggling going into today ftse mib is up 0. 2 . So perhaps periphery markets are expecting something positive out of mr. Draghi. The picture for u. S. Futures at the open, pointing to a firmer start to the day. S p 500 seen to open 7 points higher dow jones up 71 points dow jones yet again made another record high in yesterdays trading session. I feel like a broken record. I say that every day new high for dow jones s p did struggle after that fomc meeting. Equities continue to do well this is the first time in a decade and a half of anchoring, that i had to read a christmas rhyme on air two weeks before christmas when all through the house, not a currency was stirring except the crypto mouse the bonds were hung by the chimney with care, in hopes that st. Nicholas soon would be there. The investors were nestled all snug in their beds, while visions of bitcoins danced in their heads. Wow wonderful i feel like we should give that a pause listen to the music. Take it all in and sing jingle bells very sweet. Beautiful christmas rhyme. Its the december decision for Central Banks with the fed, ecb and bank of england all making their final moves of the year the fed raised Interest Rates for the third time this year and indicated more hikes are coming in 2018. Brexit threatens to overshadow the bank of england as mark carney is seen Holding Steady aftd first hike in a decade last month. The ecb looks set to stick to its gradual easing path when we hear from mario draghi at 14 30 cet. Janet yellen said that soft inflation readings should we begin to strengthen. We continue to believe this years surprising softness in inflation primarily reflects transitory developments that are largely unrelated to broader economic conditions. As a result, we still expect inflation will move up and stabilize around 2 over the next couple of years nonetheless, as ive noted previously, our understanding of the forces driving inflation is not perfect. The chief executive for Goldman Sachs Asset Management joins us on the show its not often we introduce our guests with a rhyme. Consider yourself lucky. Im not sure i can compete with a nursery rhyme lets talk about the fed and your impressions of yesterday going in and going into the meeting Market Expectations was that they would upgrade the number of dots for next year and announce a faster rate hiking cycle, four hikes going into 2018. But they stayed put and the market seems to be disappointed on the back of that. Dots aside, anything else that came out of the meeting . I think janet yellen was clear that theyre staying the course theyll continue withthis pace of gradual raising of Interest Rates. I think she was doing her best to stick to that line. It was interesting, the growth forecasts were modestly higher, yet they didnt change inflation forecasts. Its a continuation. They wanted to carry on this path of gradual Interest Rates they probably didnt want to invoke volatility as janet yellen hands over, i think, from their point of view, it would be great to make sure the transition was as smooth as possible the last time we spoke you were a big proponent of the stronger u. S. Dollar going into next year. Does yesterday or the fact that theres a change of hands in the central bank change your outlook . No, were sticking to that stronger dollar view, as it plays out against the yen. We still like other emerging currencies relative to the dollar but i think the dollar versus the yen looks like a reasonable view again, predicated on this really solid underlying growth in the u. S. I think thats what the fed is outlining when they put their growth forecast there. In terms of those three hikes next year, three hikes in 2019, again, that underlines the support for the economy. I want to pick out a point from your report for 20 1 its the year that Central Bank Policy tightening starts to matter i want to challenge that a bit if you consider where we are historically low rates on Interest Rates most of us looking at three rate hikes. I fail to see how that moves the needle for i investors in 2018 you have to look at it in terms of what is priced in even after the fed announcement yesterday evening our time the markets barely got three hikes priced by the end of 2019, bearing in mind the fed said they will raise rates six times. How is that different to how we started this year weve seen no disruption the market has ticked to alltime highs theres been no problem with market assumptions that were out of kilter. What will happen at some point, i go back to financial conditions, i think whats been remarkable is despite that tightening in policy, three hikes, weve had an easing in u. S. Financial conditions. Our thesis is this cant carry on the Unemployment Rate is coming down it is below 4 should the Unemployment Rate be something to seize upon this whole notion that we will have Wage Inflation coming through, because we have the Unemployment Rate being low at this point in time it doesnt add up. We are seeing the early part of automation coming into the system, thats on the skilled jobs we have ae rtificial intelligene affecting higher waged jobs. Wont that affect things even janet yellen said they dont understand all of this, but theres only so far you can take the rate before you get a shortage of labor coming through. The headline inflation will have upward pressure. Again, janet yellen pointed out there are transitory factors, particularly as it relates to mobile phone charges that will drop out at the end of q1. We will get headline inflation moving higher. Of course wage demands may come off the back of this to be clear, were not talking about a dramatic increase in inflation, but this period of always being lower than people expected is likely to come to an end in 2018. I want to talk a bit about the yield curve. Of course theres been attention about twoyear yields and moving with market expectation of the fed hiking cycle theres also been a lot of attention about the flatness of the curve. Weve seen a huge amount of flattening, and some people say that bodes badly in the sense that the market is anticipating the next recession whats your take on the flatness of the curve we are a bit surprised that the curve flattened so much. Its likely to steepen theres little term premium in there. Weve had instances with flat curves that dont necessarily foretell a recession its not a forgone conclusion. You need to see the yield curve inverted were a long way from being inverted think about the lags so when you see the curves invert, its a 12 to 18month time horizon before you see a recession. Were still looking well into 2019, or maybe 2020. Can i ask about the bank of england as we get sed ft for a meeting today. Retail numbers just came through. Terrific numbers, and the market was expecting that to fade terrific spending on the high street, which almost defies reality. What do you make of the conditions are we setting ourselves up for a crunch consumer in 2018 which could hamper the bank of england . Or are there things behind the scenes that none of us are picking up on . The numbers leading into this have been relatively soft. So maybe there was some holding off of spending ahad tead of blk friday some of that could be pent up demand over the last couple of months overall you have this pressure on real incomes that the bank is conscious of our own view is that inflation will come off a bit from here. We are seeing the benefits of that or the pain of the weaker sterling flowing through to the inflation rate as that inflation rate comes off, then maybe a little bit of relief for the consumer. We are not seeing wages pick up in the way you need to to feel confident about consumption. So won aone and done is there more to come . I think theres more to come. Maybe another one, possibly two. Its going to depend on that tension between the squeeze on real incomes and how that plays out for the consumer versus does the inflation rate stay above the 3 and the bank feels they need to do more. Thats the tension that plays out next year for the bank we need to talk about the European Central bank. Its not a big one today, the focus is on the forecast im curious to hear again what your view is on european fixed income and how the currencies will evolve over the next year the ecb is in position where everything is looking strong, momentum is strong, Inflation Numbers are picking up, yet theyre still injecting all of this liquidity into the system i think mario draghi has to walk a fine line today clearly the Growth Numbers have been improving their own forecast will likely be revised up today. At the same time they dont want to cause a big appreciation in the euro before we came on, there was talk about theyll be much more bullish. I think the ecb will be a bit concerned about being too optimistic about r around growth if they see the euro appreciate. I think hell walk a fine line hell be relatively optimistic about growth thats whats going on, the underlying economy, i dont think hell get a clear sense of curtailing the quantitative easing sooner. I think hell be very question sh cautious about tightening policy too much into 2018 its all about the Forward Guidance they will do anything they cannot to let the market anticipate earlier rate hikes. Do you think that means perhaps the long end of the curve could be at risk here once they start winding down the Asset Purchase Program . Central banks globally are unwinding this Quantitative Easing Program if you think of purchases this year, 1. 5 trillion, next year 0. 5 trillion its still a lot theyre buying, but much less. Theyll be mindful of that and the impact that will have on yields wthere was a suggestion of buying back from sovereigns and focuses on private companies we have had a week where one company that the ecb was found to be holding, steinhoff, went from Investment Grade to junk. You have to say if the ecb is invested long ner private compa longer in private companies, theres more chance of this happening. Would you caution against the ecb stepping away from sovereign bond buying into the private sector i think the ecb wont want to change their program theres always a conflict of interest for any central bank once they start buying corporate bonds. Its unlikely they will change that composition or send any signal of pulling back from any particular market. Theyll do their best of being violent silent on that market. Thank you very much for joining us today Bitcoin Futures slumped by more than 10 in trading yesterday. It was the worst day of trading for the cryptocurrencies futures contract since debuting on the u. S. Exchange this week. Germanys Deutsche Boerse has decided to launch their own bitcoin future Officials Say the decision is still some time from being finalized. A spokesperson said the bitcoin future could launch and the euronex bitcoin plays a small in the payment system. Its not a stable source of value, it doesnt constitute legal tender it is a highly speculative asset. The fed doesnt really play any role, regulatory role with respect to bitcoin other than assuring that banking organizations that we do supervise are attentive that theyre appropriately managing any interactions that they have with participants in that market and appropriately monitoring antimoney laundering bank secretsee secrecy act responsibilities they have. Coming up on the show, u. S. Congressional republicans come to a deal on tax overhaul with a Corporate Tax rate that President Trump promises will be thrilling. Well see where it ends up. Its at 35 right now if it got down to 21, i would certainly be thrilled. I would be thrilled. We havent set that final figure yet. Certainly 21 is a very great difference welcome back to street signs. Congressional republicans have reached a deal on a tax bill paving the way for the biggest u. S. Tax overhaul in decades the plan would see the corporate rate slashed from 35 to 21 , and a 37 rate for the wealthiest individuals legislators hope to pass the plan and have it on President Trumps desk before christmas. Speaking to our colleagues in the u. S. , Jeff Gundlach said a tax cut would be negative for bonds. If there is a net tax cut, it has to be bond unfriendl unfriendly the fed is letting bonds roll off, the budget deficit is increasing, a tax cut would increase the deficit further if the tax cut is friendly to the Economic Growth, bonds dont like that. Andrew, i want to ask about the impact the tax reform bill will have on growth in your assessment it varied between what the white house themselves are saying versus what some other people in the market are saying. It appears as though things are settling around 0. 5 on an annual basis we would be a bit more cautious than that we need to see the details were assuming it gets done. Weve seen firtwists and turns politics before. We would be more cautious that it would have that much growth impact i would say 0. 2 , 0. 3 growth on gdp would be more reasonable we also need to look at when that started some of that will not happen until later in the year. I think the growth impact will be more muted and spread over a longer period of time. If you look at the numbers yesterday from the fed, you saw that it was 2020 where the adjustment was in terms of the rates, 3. 06 is where they got to up from 2. 08 they saw the dots say well go above a longterm rate which remained unchanged around 2. 7 a theyre seeing longer taking through. If things happen quicker, they can adjust those forecasts we would share that view it will be a longer, more drawn out impact on growth rather than something that has as big an impact does it impact the terminal rate then of 2. 75 we nudged higher than that yesterday. Do you think the tax reform plan can give us a much higher end rate i think its unlikely theres not enough to generate a much higher growth rate over a sustainable period of time its unlikely. As the fed forecast, they may need to go above that for a short period of time i dont think it changes the longterm rate, thats determined by your longterm assumptions around growth, demographics, productivity, labor participation, those things i think they dont change materially off the back of this tax plan do you agree with the assessment that the tax plan will be bond negative . We wouldnt be as bearish on that aspect of it. Comes back to the growth story i dont think the growth picture from tax alone will be that strong we maybe disagree at the margin around the driver of that growth story. Generally still bearish fixed income still bearish on fixed income andrew wilson, thank you very much now, disney is closing in on a deal to acquire the entertainment assets of 21 century fox. The agreement is expected to be announced later today. It would see disney pick up the fox movie studio, cable channels and Key International properties those assets are reportedly valued at 60 billion including debt at the 40 per share offer, the full company is valued at 75 billion. The deal would help disney scale and compete with other Major Players as the Media Industry evolves and end more than 50 years of expansion from the murdoch empire gives the murdoches 5 in disney and a seat at the table in a large empire. It is bumper Central Bank Day on cnbc. Well be back at 12 55 cet well have the bank of englands latest Rate Decision well also be back at 13 30 with the latest from the latest Interest Rate meeting. Lets take a quick look at u. S. Futures and see what picture is there s p pointed to open 6 points higher dow jones, 73 points higher. Thats it for todays show Worldwide Exchange is up next some air fresheners are so overwhelming, they can. Send you and your family running. Introducing febreze one for fabric and air. No aerosols. No dyes. No heavy perfumes. It cleans away odors for a pure light freshness. So you can spray and stay. Febreze one, breathe happy. Ready, set, hike the dow at an alltime high after the fed raises rates and signals more to come lawmakers reach an agreement on a sweeping tax overhaul plan. And decision day for disney. The media giant expected to officially announce its buying parts of 21st century fox. Its thursday, december 14, 2017 Worldwide Exchange begins right now. Good morning very warm welcome to Worldwide Exchange on cnbc. Im wilfred frost