Anna a very warm welcome to the program. This is our flagship europe show. Lets talk about what we heard from the fed and what that has done to the dollar. The the dollar the big beneficiary from what we heard from the fed. How the changing expectations from the fed around Interest Rates in 2017 have pushed up the dollar index. The rate went up 2. 75 percent as expected at the fed. The fed also signaling that the economy is strong and will improve and taking what some of our colleagues have called a victory lap. Lets put up the risk radar and on variousere we are asset classes. Weve seen reaction aplenty to what we heard from the fed yesterday. To reiterate what we heard about the dollar, this is the bloomberg u. S. Dollars stop index. What a of focusing on stronger u. S. Economy does to a Global Economy, the preoccupation is on what a strong dollar does to some of the corporate and others in emerging markets and focusing on the negatives there. Dropped to its lowest since march of 2015. Again it is weaker, down by. 3 . Yield ine u. S. 10 year there, its unchanged, but it got up to 2. 57 there on that chart. It was up by 10 basis points in yesterdays session and its highest since september 2014. The yield has climbed 45 sessions in a row. Lets talk about oil briefly, a big ball on the oil prices cushing is the delivery point for wti with increased with inventories increasing its hard to make up ground despite what opec has been doing. Now lets get bloomberg first word news. Here is angie lau. And you Technology Industry leaders have met with president elect donald trump. Bezos sandberg and jeff sought to persuade him to avoid policies that he thought would hurt their companies. Trump insisted that he was an ally of the tech industry. Mr. Trump im here to help you folks do well, and you are doing well right now, and im very honored by the balance. Bounce. Ed by the angie australias economy recorded its biggest jobs gained this year, more than double estimates. Rateigher participation signals a healthy labor market. It validates a central Bank Forecast that hiring would improve and suggest that policymakers will extend their Interest Rate pause. New york rather than the European Union may be the winner exodus ofexit driven Financial Services from london. Thats the warning today from u. K. Lawmakers. A house of Lords Committee report that unless negotiations are prismatic, jobs could go to wall street. During the last parliamentary hurdle to confirm his position as italian prime minister. He won a vote of confidence in the senate. The upper house voted to back his government following last weeks resignation of his predecessor, matteo renzi. Deployingars to be Weapons Systems on all seven of the reefs it has built in the sub china sea. The asian maritime transparency initiative, the installations call into question a pledge made by chinas president not to militarize the disputed islands. Day innews 24 hours a more than 120 countries. You can find more stories on the bloomberg. Im angie lau. This is bloomberg. Asianlets see how the markets are performing right now. Juliet has details of everything that is happening. Equity markets didnt much like what we heard from the fed yesterday. They didnt like it in the United States or over in asia. Thats true. Weve seen most asian markets weaker today although theres been a rebound on the nikkei of. 10 but thats all about yen weakness and Dollar Strength. Its been a case of buy the rumor, sell the facts. Janet rett Janet Yellens hawkish comments of more rate rises. Dollarr the hong kong pegged to the u. S. Dollar so on the hang seng are not seeing any gains at all. The hang seng one of the worst performers and australias market close down by. 8 . Unemployment ticking up to 5. 7 . 1. 5 buthold at certainly a lot of weakness coming through in those chinese and hong kong stocks. Looking at specific stock movements, the biggest tech ipo since 2007 on hong kong today made for a dismal day. We did see carmakers looking quite good, up 2 on the back of. Hat export story anna juliet with details of whats happening. The latest on fujifilms efforts melco, announcing the chemical reagent unit. It seems to been confirmed. Back to our top story, the Federal Reserve has raised Interest Rates for the second time in a decade and forecast a steepening path for borrowing costs in the coming year as Inflation Expectations continue to rise. Talked aboutement further strengthening in labor market conditions. Janet yellen insisted the central bank is not behind the curve. Year, 2. 20 5ast million net new jobs have been 2. 25 million jobs have been created. We expect the economy will continue to perform well. With the job market strengthening further and inflation rising to 2 over the next couple of years. Anna expectation for stiff with evening in borrowing costs dont sit well with growth. She questioned the ability to absorb a quick pace of policy tightening. I would doubt the ability of the Global Central Bank and the fed to raise Interest Rates three times a year for the next several years, because the Global Economy and even the u. S. Higher is relatively leverage, and housing will begin to reflect that. Anna joining us in london is the chief executive at hand mural. Mural. Mural pan she said there was no need for fiscal stimulus and sees further tightening in the labor market ahead. What does that tell us about a yellentrump combination in the u. S. . It was at best a rough guide for where the policy may head in 2017. I think what was most relevant in all of this was what was not in most fomc assumptions. Put those into three baskets. Start off with the tax cuts that have been spoken about, will thethe Senate Support that . We heard from mitch, Mitch Mcconnell that he wanted it to be mutually neutral. Did not hear if they believe that 1 trillion stimulus in infrastructure and how it would play out in the economy. We dont know what the , how itry standpoint will play into the fomcs expectations next year. Does it mean the fomc will accommodate all this, certainly not in their assumptions because they havent made any assessment of what the policy environment looks like. One on pulled up a new the bloomberg, it tells you how markets have moved since we got the decision from the fed. Outlier is the bloomberg dollar index. So the dollar the big beneficiary of this. What weve seen in emerging market currencies is despite the fact that the fed is talking about a strong economy, the rest of the world is not picked up on thepositives and saying u. S. Economy is strong, that is good. They focus on the negatives of this really strong dollar. The reaction on the market was a result of the two rate rises, to the december estimate that has three rate hikes. Started the year talking about the divergence between the fed and the rest of the Central Banks. We are back in the same place at the end of 2016, still talking about that. Its quite notable that the medium estimate was for three rate hikes. The balance of participants you 54 in either side was favor of those expecting a lower policy path. It will act as a softening impact on the u. S. Economy. Anna so youre quite dovish compared to the median of the fed and Market Expectations. A lot of the Broader Market expectations, believing we will get 3. 5 4 growth. I spoke about those three baskets. Im afraid im much more conservative in my outlook in terms of the ability to get some of that headline grabbing policy theiatives that will push u. S. Economy to where it is running hot. Anna we heard from bill gross come at talking about the speedy pace of rate hikes that are increasingly speedy, faster than before, as being a signal by the fed. Here is another chart that reminds us, because its been a long time since weve seen a tightening cycle of the fed at the fed. Have the 10 year yield and what happens to the s p. What can we usefully do looking back at the last cycle to look at this one . Lets remember the regulatory landscape for Financial Services particularly in the u. S. Economy at that time. 20042006 was a time when before doddfrank, when proprietary trading was commonplace. If you see the level of gearing and financial invasion that characterized that time, then its quite possible that you such an expansion in the u. S. Economy that the fed needs to aggressively tighten during that period. We live in a very different world. In, youd expect the leadin times to be most of 2017 to get that stuff through congress and the senate. Therefore i want to see it actually play out before then. Anna simon french stays with us here on the program. Coming up, a different kind of spread to worry about. Comments on inflation will be closely watched at todays meeting on rates day. Eu leader summit in brussels will focus on issues from brexit to russia, and donald trump. Theresa may is not invited to the end of year summit. Much patience how we look ahead to the Central BanksRate Decision this morning. This is bloomberg. Anna welcome back, everybody. Its 2 18 if youre watching in hong kong. The hang seng down by 1. 9 . We have weakness across asian equity markets as a result of the fed being a little more aggressive in its stock move. Lets get the Bloomberg Business flash. Yahoo fell in extended trade after announcing another Security Breach. It says an unidentified thirdparty stole data from a billion users, including more than 100 80,000 u. S. Government and military employees. Its of the act could allow Foreign Intelligence Services to identify employees and hacked their personal and work accounts, posing a threat to national security. To include the refinancing of existing capital from around 2 billion. The move comes as the special the chemically Company Seeks to focus more on health care. Uhe Chinese Tech Company meit is made its trading debut in hong kong. It raised 629 million u. S. Dollars in the biggest ipo by Technology Company in hong kong since alibaba in 2007. The founder and chairman told bloomberg the company has aspirations and social media. Our focus is to get more exposure and let more people know about our brand. Tu a tool fore mei them and later to turn it into a social media at. Despite an earlier report to the contrary, according to people familiar with the matter, nz is not in deal talks. Representatives did not immediately respond to a request for comment. After almost two years of waiting, the big day is finally and its firstndo game for smartphones. Todays release of super mario for apple devices is the first forecast for what the game maker can achieve. Announced lastre year, adding almost 20 billion to its market value. That is your Bloomberg Business flash. Goes global there productivity. Now from the fed yesterday, the central bank a little closer to us here in london. The bank of england decision is today at noon u. K. Time. The minutes make it the First Insight of their take on the state of fiscal consolidation. What are we expecting . Its not far from one side of the city to another, but a little bit of it technical problem there. We will try to get more in a moment. Simon french is still on set with us here in london. Lets talk about what the bank of england is going to tell us today. Stories all these ite and other things are pushing up consumer expectations. Quarterlysaw expectations last week from the bank of england survey showing a five year high in expectations. That really is the headline as the headline start to permeate what to expect postchristmas in terms of the standoff between retailers, suppliers, and consumers. It will be an uncomfortable surprise in the new year where most retailers will pass on the increases. Weve seen the Consumer Price index starting to tip up to 1. 2 earlier in the week. Bank of england has already said it will look through this currency led inflation. In the history of the bank of england since it became independent, its tended to only raise Interest Rates when it seen core inflation generated by the labor market pushing up the u. K. Cpi. How long do you see them doing that for . Does it mean they keep up with this neutral stance that seems to be the story from the bank of england of late . Simon i think there is a preference to sit in the middle of whats going on on the other side of the atlantic, but also the ecb is pushing the euro weaker and potentially materially weaker. Therefore in that environment, if not coming under large pressure to defend the currency, it seems to have found a flaw against the major currency comparisons. For most ofl see 2017 and 2018, the bank of england sitting tight and awaiting developments about it and will undoubtedly defined that path as we get or clarity on the terms. The new narrative we seem to be getting is not bad news, but it seems to be getting traction, around a description of the u. K. Losing its Financial Services. Weve had that kind of narrative and markip Hammond Carney even touched on it a little bit talking about disruption that will be created on the other side of the channel if there was not a smooth transition. Now we have the house of lords report due out today, saying that new york could be the big beneficiary if london loses out. Simon it holds water in the short term because there isnt an obvious european alternative to london. About thes we spoke idea about the situation regarding budget scoring in the u. S. , bring it back to a dynamic versus static situation regarding the Financial Market in london. You cannot immediately scale up to an alternative and therefore a lot of activity will not leave london. This is why brexit is a slow burn problem. Over a decade or two decades, you dont have access to your biggest trading partner. Other alternative financial areas in the eurozone will start to build up capacity and incrementally take trade off london. In the shortterm, they are its, but in the long term more negative for the u. K. Outside the European Union. Anna you need a longer verizon longer horizon to see the effects. The labor market got some slightly more negative news this week. Simon there was a small pair areback employment p in employment. With the introduction of the National Living wage, private pensions, these are all leading to employers they are likely to be like a lot of us, while we have no clarity of what brexit is going to look like, all we know is it means brexit. So were going to carry on broadly as we would do otherwise and look at the hollis environment, the Global Economy. In the shortterm, nothing has changed. Anna it might be hard or soft, clean or dirty. Weve heard all those things. Simon, thank you so much for staying with us on the program. Catch full coverage on the bank of england decision from noon london time. What will governor mark carney and his colleagues conclude on the path ahead . Meet,t, the eu leaders hoping to put her turbulent 2016 behind them. With more trouble ahead next year, how can they prepare . Were going live to brussels. This is bloomberg. Anna welcome back, everybody. Tokyo in the afternoon for you, the dollar against the yen. Yen weakness helping the japanese equity market, one of the only areas of positivity in the asian equity session generally, because the dollar was one of the big beneficiaries as result of what we had from the fed. And the mood for rates next year. A new edition of daybreak is available on the bloomberg and your mobile. Lets look at some of the top stories today. The cover story is in connection with that at going be story and the road ahead for the fed. Beconnection with the fo him fomb story. Ther janet yellen called move of confidence in the economy, citing rising inflation and a stronger labor market. More centralbank action or possibly in action. Possibly inaction. The particular focus will be on the bank of england minutes. The potential for a slower case of fiscal tightening, according to bloomberg insiders. Finally, daybreak focuses on yahoo , it has been hacked again. It exposed the second major Security Breach that may have affected one billion users. It has not been able to identify the institution intrusion linked to the fed that took place in 2013. More than one hundred 50,000 government and military employees are among those infected. Lets look at what is happening in the markets. Lets get uptodate on the post fed fallout in the markets. Up bloomberg dollar index is nearly. 10 . That hides the big moves up yesterday, up by 1. 1 in yesterdays session, as result of the fed and the stronger dollar. The euro dollar as well, weakness in the euro, down by. 3 . The dollar going to the lowest since march of 2015. We have not seen those levels quite some time. U. S. 10 year yield for thed at 2. 57 moment. We saw big movement yesterday, the highest since september 2014. That yield has been climbing for five straight sessions, much to think about four bond investors. We have the price of a barrel of crude in there for you, at 50. 96, down from those lofty heights earlier this week. Lets get to some other news, the retail giant amazon has made its first drawn delivery to an first drone delivery to an actual customer. Of George Jetson meets home drone delivery. The company sent its first package to an actual customer. It happened on december 7, but were just getting word now in cambridge, about 100 k