Any hints of restoring price stability, with yet another rate cut imminent. Manus a warm welcome to bloomberg daybreak europe. The fed near the line that defines this message, in order to move rate ups move rates up, i want to see inflation that is persistent and significant. That is the message from the bed from the fed. Those who saw was hikes rather than cuts, its interesting that with this decision we have total unanimity on the hold in rates. Commentary saying that the times when the fed has been unanimous is when the fed has gone in a different direction. Manus is it time to check out hotel california, you can check out what you can check in. 2019, christmas came early for donald trump, with a very dovish fed message. Saying the impact was quite astonishing, a message from the fed about open to expanding is it a message on qed . Gold is giving back a little bit of value. Some saying goal has further to run. Hold, talking about 1600. Nehra jp morgan taking the other side of the trade in terms of gold. In thely saw some buying equity market in the u. S. Session yesterday. Forng in the Asian Session a second time today. The pound stronger against the dollar for the fourth day in a row. The of it could be down to dollar weakness you just talked about. U. K. Votes to determine whether force johnson gets the mandate he wants to get brexit done or whether it had hence the range to the labor party. Will close at 10 00 p. M. London time. The result should be in by early friday. Here is our guest had to say on todays vote. Majority ofervative around 28 seats. This is a binary decision in many ways. A Boris Johnson government could deliver brexit or Jeremy CorbynHung Parliament. Usually you have labor significantly down. Now its saying were in the margin of error of almost a Hung Parliament. I think because they brought labor down weve got a good chance of a small labor majority. A Hung Parliament is definitely a possibility. Boris johnson and his party dont have many to ally with. Who areiberal democrats seeking more than 100 seats would have a significant we will not be going into coalition with either Jeremy Corbyn or Boris Johnson. We have made that clear. Nehra great to see you. The latest polls not showing anything different terms of the expectations of the conservative majority. Is that your based cases we had into the election today . Using polls to predict whats going to happen, we have seen some surprises in the past. Everyone is in wait and see mode. Its been interesting because its only the currency that has taken it as it lead to move upwards while the equity markets have remained relatively flat and is probably in wait and see mode. Manus good to see this morning. The fx market is literally on fire, breaking the 200 day moving average. Yesterday we had a conversation saying the position is long. I want to get a sense from you a positioning in the equity market what terms to 2020, the equity position in the u. K. For 2020 . Thats a very good question. It has been less obvious what has been happening. Talk to couple of times that particularly International Investors are disengage with the u. K. Market and it will be intriguing to see whether this is going to change on the back of these elections. What we have seen clearly is that the big internationals that have a benefit from the currency move, in particular when it was lower initially, has moved very much on the back of this, with a more favored earnings backdrop. U. K. Domestic or small business. Aps, a clear positioning there was a headline on your webpage yesterday that the small seenut u. K. Etf have massive inflows. If you believe we get a clear outcome from the election and conservatives will win come they have been left behind in this market movement. In your 2020 outlook you say we should watch the u. K. For clues to the trajectory of global fiscal and Monetary Policy going forward. Why do you say that the bank of england in some ways has been an outlier. Thats true. We have heard from both parties with a distinct focus on fiscal policy. It is something we will watch globally because it is clear that we might have seen depletion of Monetary Policy with a stronger focus on what governments will do and whether they will take over from central banks. With the u. K. Election today, there is probably a bit of a precursor because we will hear more on how its going to work out in the u. K. I think the situation is very in the u. K. Might be the first to say more about it. Little deeperig a into the fiscal strategy, the japanese set their benchmark down by 3 . The deficit would be the line in the sand for the tories. Do you think that fiscal pulse in the u. K. , because either party is suggesting that, does it shift your thinking and how might it impact u. K. Investments . Two things to that because in general, if we really were to see a much stronger emphasis on fiscal and policymakers more willing to use fiscal stimulus as a tool to revive the economy, than i believe as investors we have to understand that it probably comes with greater uncertainty and more volatility. Monetary gotten use to policy support for such a long time that obviously we have seen volatility at very low levels on the back of this. Theres a level of certainty attached that investors like to see because it gives them a better framework to invest against. With fiscal, its a much more broad and uncertain backdrop. We might see markets more volatile against it. Manus thank you very much. Forget our Election Special coverage begins this evening as soon as the polls close. Dont miss it, 10 00 p. M. Kickoff. Word newsthe first from hong kong. Read rate cut is looming in turkey. President erdogan saying Interest Rates will be moving to Single Digits in 2020. But economists disagree everyone in a Bloomberg Survey sees it continuing. That decision is due at 11 00 a. M. U. K. , u. K. Time today. The centerright cutting its rate to a record low 4. 5 . Many analysts also expecting policymakers to signal and into the easing cycle. The Central Bank Left the door open for additional cuts. Israel is heading for its third election in less than a year. The country has until midnight to find a lawmaker who can former governing coalition. This after Prime MinisterBenjamin Netanyahu and the Opposition Leader failed to form a government. U. S. Sees deeply troubling indications north korea may be planning a major provocation. One ambassador said they could test launch Intercontinental Ballistic Missiles designed to attack the u. S. With nuclear weapons. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thank you so much. Signals of being kept on hold until next year. We will get into that conversation. This is bloomberg. Manus this is bloomberg daybreak europe. Nehra here are some of the event you should be looking out for today. Its ecb decision day in Christine Lagardes first policy meeting is unlikely to deliver breaking news butter press conference will give a flavor of her style and tone. Turkish central bank may break the trend and cut rates. Morning, later this the oil report at the annual general meeting. Left rates reserve unchanged and signaled that would keep them on hold through 2020. Keeping it on the sidelines in an election year. Ahead, we will be monitoring the effects of our recent policy actions. Course if developments emerge that cause a material reassessment of our outlook, we would respond accordingly. Jay powell also open with saying the fed might buy shortterm coupon bearing securities. Temporary upward pressures on shortterm money market rates are not unusual around year in. Purchases are intended to mitigate the risk that such pressures pose to our federal funds rate. We think the pressures appear manageable and we stand ready to adjust to details of our operations as necessary to keep the federal funds rates in the target range. They also remove the word uncertainties. Sinces the first decade 1850 there has been no recession. Is it a little too soon to remove the word uncertainty for 2020 . I assume he will be able to adjust the wording because i think we have to accept that for the fed it is particularly difficult against the political backdrop. If you were to look at just the banks case from an economic standpoint you would probably be with him and say it looks reasonably manageable. You still have the ongoing trading negotiations between the u. S. And china and you have to prepare for eventualities that he simply cannot forecast at this moment. The fed has prepared the market that this would be coming and as such it has not been a big surprise that the wording was as it is. Commentn interesting from the u. S. Economists who said history has shown that whenever the fed is unanimous in one direction, the economy or inflation is about to take another direction. Agree or disagree . Forecast, wer own have been facing potentially a binary path for the economy because it all comes down literally to what the trade tensions will bring. We know if there was deterioration it could decelerate quite quickly. And obviously if theres a resolution to the trade tensions it would be potentially a slight acceleration. The gap between those two is large and as such you have to understand what we are doing, we obviously have to turn to political analysts these days because these are such important forces for 2020, that understanding and getting these right will tell us more than just looking at the underlying data. Manus its almost as big a graveyard for 2020 as this year for Political Risk. There was one line from the fed memo that caught my eye. In order to move rates up, i would want to see inflation that is persistent and significant, something we dont have. What does that mean for you in terms of translating that into investment theory . This is a very interesting one because i think we all agree that markets would potentially react before it this is even happening. It would not wait for centralbank action but would carefully analyze inflationary data coming in, and as such, this is something to watch very carefully in 2020. Gotten so used to Inflationary Pressure to remain subdued that securities its clear nobody really expects inflation to be a threat next year. Youa so how would pretension for that potential threat . ,he risk is asymmetric especially when you think of the market as facing a cut, whereas if a move was to happen in 2020 it would more likely be a hike than a cut. Im not too worried about this because i believe its been a while since the market was so close weve had bigger gaps in the past where weve seen a significant disagreement between believe the i underlying data could drive markets much more than just the narrow. Ion to i believe that to become investors would probably have to be more opportunistic and except that with the binary nature potentially in the economic outcome, Market Reaction will be strongly linked to that. Manus in terms of the preference in the market for bonds and equities, j. P. Morgan had a no doubt this morning, the top 20 calls saying short gold, they like japanese stocks, german equities and emergingmarket spirit is at the same message for you, remain invested even late cycle . Yes, remainsay invested, although we have reduced our equity risk in particular, simply because we have the u. K. Election today, we have obviously more political news to come, not only with regard to the trade tension but in preparation for the u. S. Election next year. We feel there might be better opportunities to fully engage in risk. If you look how strongly equity markets have performed this year we believe there might potentially be better entry points. Nejra we will pick up on this point later. Bloomberg business flash from hong kong. They wanted trading went well for saudi aramco. Allowed. The 10 limit lifting the market cap to 1. 88 trillion. Thatuch touted level saturday hopes to list at. , a dealrrys selling worth 4 billion. Nestle wants to grow to challenge the Global Leader in ice cream. Predictions of another 15 deadly crashes over 45 years if nothing were fixed after an faa Risk Assessment into the boeing 737 max. It was put together after the first of two deadly crashes that claimed over 300 lives. Dixonministrator steve said officials acted in good faith by not rounding the plane until after the second fatal accident. Thats your Bloomberg Business flash. Much. Thank you very coming up on the show, the hong kong dollar is of the most in over four months. That as liquidity worries surface. Nejra this is bloomberg daybreak europe. Manus lets turn our attention to hong kong and the dollar, of the most in four months after liquidity worries surface. Juliette saly is on the case. Cominge a big jump through in the hong kong dollar today, the most in four months. Is months of unrest barking gears of capital outflows but also seasonal demands for cash as well. Its interesting when you look at the hong kong interbank Interest Rates, trading about 73 basis points higher than the equivalent of the greenback overnight borrowing cost at the moment, very different to what we were seeing last time this year. Some banks are likely buying hong kong dollars at the moment to try to make the year on demand push for banks. We also have that weakness coming through in the greenback as well overnight. Thank youiette saly, so much. Jamie dimon said he expects a phase one trade deal between the u. S. And china. If it doesnt happen, it will hit markets and u. S. Economic growth. China is expected to come up with details on this Economic Strategy for 2020 today. Sonja is still with us. If thats what we get from the work conference from china, do you have faith they will manage the slowdown and the Financial Stability risk effectively . Sonja i think we have to bear in mind that for them to come up with the plan now when they havent settled the trade dispute might feel a bit premature. You would wonder whether there is something they know that we dont so far. Again i believe they will want to wait and see how this unfolds. The data weve had recently is a bit more stable, not an acceleration so it would probably project grow slightly below 6 . We will return to this a little bit later on. Sonja again, wait and see. Interesting that chinese stocks do not always correlate with the economy. It might be too early. The earlybird always catches the worm. We will dig a little bit deeper. We will continue the conversation and hit all the big issues, including madame lagarde. Im naraom london, chain which with manus cranny, live from to buy. This is bloomberg daybreak europe. And these are todays top stories. Manus 30 minutes until the polls open and the u. K. Votes yet again. Is at 10 00it poll p. M. London time. Dont miss our Election Special. Stands pat on rates and signals it will keep rates on hold through next year. Jay powell said the labor market has improved further and unemployment is at a halfcentury low. Christine lagardes first press will bece as president dissected for more hints on price stability. And yet another rate cut issue. Nejra equity futures drifting, the 10 year treasury yield holding and the bloomberg dollar weakness holding. We have all the Market Action for you from around the world. And kissing a to trillion dollar valuation. That aramco will open our round trillion dollars. This is music to the leaders ears. Is a split, theyre looking for 2. 1 trillion valuation. Lets get to the rest of the team. Off. Kick it big rise inng at a chip stocks in asia, helping push the msci asiapacific index and it could see that index trade out of the range it has been in for about a month now. Samsungen it overtake with a fresh record high. The kospi getting more broker love as well, upgrading the index 12 higher than yesterdays close following similar calls from Goldman Sachs and morgan stanley. So the big rally in chips helping the msci asiapacific index and it could break out of that very tight trading range. S p global has warned it ratedowngrade indias debt if it does not recover. How are the bond and equity markets reacting to that . The bond market, the 10 year , since december for us when we had a policy seen itment, weve moving to 6. 78 where it is currently at. On the equity market, the session seems to be going strong. Will be watching throughout the day today. 30 minutes until the polls open in the united kingdom. Of talking minutes about polls. What sort of lastminute election positioning are we seeing . I will try to make it count. Definitely the pound trading at eight month highs of skiers the uncertainty we are seeing below the surface. Volatility has skyrocketed. Of talk to letter traders about how theyre playing the election and i keep hearing the same thing. You go along in the cash market but underneath you by put options. Thats what has happened in the asian trading session with overnight volatility skyrocketing to its highest since the 2016 referendum. Socgen saying its a strategy they are seeing across the board. Perhaps there is a consensus that conservatives keep the majority but there is that lingering uncertainty that we might get a Hung Parliament and breaks its Development Gets thrown into question. Much. Thanks so news get the first word with annabelle in hong kong. Reserves l expects to stay on the sidelines in 2020. The fomc kept Interest Rates on hold forecasting no change through next years president ial election. Chairman jay powell saying current policy will remain appropriate unless the alec changes. Another rate cut is looming in turkey. President erdogan saying