Surprise from draghi. We were expecting so much andriy the bets are out. Onld we see a squeeze higher the back of any disappointment . That is what we were warned about. Gold, how low can they go . It is the lowest since february 2010. We are ready for a rate hike in the United States. We see significant rallies in the dollar overall. Lets look at the stocks to watch in europe this morning. Lets step away from the Central Banks of focus. There were interesting stories out there. Green light in australia for the 70 billion deal for the bg group. Yesterday. Lower we have much anticipation of opecs meeting. 4 10 of 1 . By they are selling off the Premium Brands to get the billion dollars deal through the door. Goodbye perrone. Meanwhile, ryanair is up 1. 38 . Traffic is growing 28 for the month of november. Guy thank you, caroline. A lot to think about in asia. What is happening with the oil price and the fed . Reporter we see a bit of a mixed picture in the asian region. That came through just before japan closed. Japan has been in the red, closing pretty flat there. And korea there is some weakness despite encouraging data showing the Third Quarter came in better than expected. Of 1 . E still down 3 4 the oil is way down on australia. 10 ofre closing down 6 1 . The shanghai composite is up 1. 35 . We have a session of gains in china. A lot of that occurred in the last 90 minutes of trade. The big story today has been about the oil price. We have been watching oil producers. This is one of the worst performers in the region. Closing lower by x percent. Nufarm also watching ne in australia. It fell 2. 83 . Fast retailing in japan is down 1. 5 . The warmer than usual weather in japan has impacted its sales for the beginning part of winter. We do see a weakness coming through on the index. Guy that is the asian session. Here in europe, stocks are down by 11 points. That is what happening in markets. First up, draghi decides about auctions and how it will move the bond market. Euro a huge move in the against the dollar. Later, reports are swirling that saudi arabia is proposing a cut. We are live in vienna as opec decides. Jonathan we are all about the ecb today. We get the decision 12 45 london time. What options does the ecb have . We expect them to extend. We are largely talking about the deposit rates. For more, we are joined from frankfurt. What are the main arguments . Run us through what these guys will be talking about when they get there. What are they going to say to each other . Paul there are two key arguments you would expect. One is that inflation is not picking up fast enough. The other is that there are clouds on the horizon. The first of the arguments is somewhat undermined. The Economic Forecast will be revised and released at the meeting. It has barely changed since the last time it was published in november. The current stimulus same to be working as intended. Mean there is a good argument for more stimulus. The focus moves to the other angle, the risks ahead. The china slowdown potentially the Interest Rate rise in the u. S. Are things you can point to coming up in the future. That is where they will go. They will say, look, we have barely any room to maneuver. We dont want to overshoot a lot. Bit, doe so, a little five. Jonathan the news you broke this morning is important. Ammunition,ed some they could push back at anyone resisting stimulus. What are we expecting . Paul the forecast, the cut off was midnovember. Since then, we had novembers inflation data. That was bigger mark that was weaker than expected. What will the markets expect . If you disappoint the markets, that could hurt the Economic Outlook going forward. The confidence numbers we have seen come through have been pretty strong. You could argue that they bring in the expectation for more stimulus. That is why they are strong. That is something we expect to drahgi delivering on. Whether it is longer qe or broader qe. Jonathan were looking forward to your coverage. Paul gordon out of frankfurt. Guy lets go over to munich now. Andrew, the managing director at pimco. It is great to have you on the program. The one that stood out to me was the anticipated cut to the resting rate to zero. Guide me around the thinking of that, please. Good morning. The the rate cuts Interest Rates understanding, all three of them are up for discussion at the meeting today. Mostly, the focus is on the lower bounds. There is nothing special about negative Interest Rates anymore. There is nothing sacrosanct about them. From my perspective, the Interest Rate on the refinancing rate is up for discussion and could always be taken down. Me is of the argument to the symmetry. Usually the ecb keeps asymmetric symmetric band around the rate on the marginal lending facility. One potential scenario for today is they take the center rate down to zero, the refinancing rate and they lower the Interest Rate on the deposit facility as well to minus 30 basis points. Lesserhey will have minus 30 basis points they will have plus or minus 30 basis points. Guy lets talk about mindset here the noise is not that great at the moment. To do morefor them somewhat argue is demonstrated by the data earlier on this week. What is the mindset going into this meeting . To bey want the markets pushed further than people are thinking about right now . Give us a sense of what the thinking is behind this . When it you read through the speeches from the various executive board members, particularly those that are on the side, i think their biggest fear is Inflation Expectations the anchor from their 2 target. Happens, it is very difficult to get out of that a societylope down to expecting very low rates of inflation. They dont want to go there. When i look at the balance of risks to what the outcome, the policy outcome could be, i tend to think that they could do more. Part of that is related to the learning experience of what they see howg as they markets deals with negative Interest Rates. They have seen that in the eurozone. The money market continues to function. Yes, we have new challenges to price options and price looking floating rates. Markets generally function. The experience out of switzerland is, the lower bound Interest Rates are a lot below 20 basis points. Here is what interests me. We have read your research. The ecb preview promises to behave irresponsibly. What will the surprise be at the ecb today . Is there a chance they could do away with the yield of floor limit at the Asset Purchase Program . Is that a possibility . That is a possibility. Really, i think in this case, they are setting the rules by which they conducted the purchase program. Removing the floor is one possibility. Or, creating themselves more room to purchase. Taking the floor down is an intermediate version as well. I would say at least minus 75 basis points as a probable flo or on the deposit facility rate. The experience in switzerland seems to be, once you hit 0. 75, you break even from actually according notes, maybe large notes. This is clearly the downside on the deposit facility rate. That is a possibility for today as well. Do they have to leave something on the table . Does he have to have a plan b . Or is it go for it with plan a . Put all of plan a, these options in the field and see how they work. How should we think about the next few years . The next few years are a big problem for him as well. The economy is not turning around quickly. Does he need Something Else as backup . On that front they faced a dilemma. If they want to shock they have got to act quite bold late. At the same time, they dont want to signal that they have done everything and there is no ammunition left. Yellen gave us a reminder of what they can do yesterday. With her interview. Leave the purchase programs open ended. She said for the third time when the fed did it, that had a better affect. That is exactly what the ecb has done with q1. See where the theoretical plot is on that. I think they can do a reasonable bit of stimulus today. They can still leave themselves ammunition in case they need it in 2016. Jonathan up next, we continue the conversation on the bond market. This morning. S good morning, from the city of london. Jonathan that was janet yellen speaking. That wouldve been the main offend. The ecb decision is a few minutes away. Lets cross over to Caroline Hyde for an update on the markets. Caroline stoxx 600 is trying to push into the green. This is a nice function on the bloomberg terminal. It separates the Industry Groups and how they perform. 1 at the almost moment. It are clear concerns about what is happening in terms of global growth. We we see a and two stimulus . A rate hike comes from the United States. Happening tot is gold. This is the ramifications of that speech you just laid from janet yellen. She says it is time for a rate hike. Down goes gold. It is the lowest since february 2010. That is what feeding into being the worst performers on the stoxx 600. The eurodollar is lowered the head of that meeting. Will we see enough stimulus to make sure that all of those shorts out on the euro are meant to be at that level . We anticipate deposit rate cuts and significant bond buying coming from the eurozone from the ecb. Atch all of those the key take away is, stocks are trying to hold onto their games. Gold is lower, euro is lower, and the dollar is higher. Guy thank you, Caroline Hyde. The you ks ministry of defense has confirmed that its jet has taken part of state strikes against syria. They backed the governments plan for such an attack. Abm has confirmed it is exploring the sale of the premium european brent. The brand is other consideration for sale. Abm attemptss as to gain Regulatory Approval for the biggest ever brewing merger. Two high ranking have been arrested as part of fake usled a usled corruption case. That is your bloomberg first ward news. For more, go to the bloomberg terminal at bloomberg. Com. Lets get back to the guest this morning, the managing director at pimco. It is great to have you with us. We have dealt with what you expect in terms of policy. Lets talk about what you expect in terms of bond market. Where on the curve would you be positioning if you want to take advantage of stimulus effects . Andrew i think the belly of the care of, maturities of around 57. That is the safest part. Thes anchored by the low, negative rates by the central bank. The reasonably steep curve is up to that point. It is less correlated with what happens further out. That is more dependent on what will happen in the Global Economy and the u. S. The belly of the curve is one part which can go down lower in yield simply through the actions of the ecb. As time passes, i think that is the safe bet. Germany two. And yield spread at the moment, with 137 basis points. How is that going . Andrew i think that can go wider. The potential is down on the european leg. We dont how for the fed will go. They are expectations for using in europe and the hikes in the u. S. Into that spread. The economic data, momentum we see in the u. S. And europe going into 2016 should enable the Central Banks to validate those floor prices. What happens thereafter is an open question. Near 2002005 we were basis points. Will we get above that this time around . How much more is there still in that trade in terms of the physical positioning . Andrew no, i dont think we get to those sorts of levels. The markets are discounting two next year the fed and the year after. That will require a lot of very positive things to happen in the u. S. The Business Cycle is quite old. It has reached its midlife period. Tightening will come on top of that as we hit the voltage phase of the Business Cycle. Hit the old age phase of the Business Cycle. If you go back even further to 1994, that was the last time we saw the fed hiking rates. They hiked 250 basis points. That was enough for them to push the external value of the Deutsche Mark down by 20 in 1994. I dont think we will see the happened with the europe dollar. I think there is enough momentum in the policy responses to push the eurodollar down a bit more. That will make the spreads wider. Jonathan guy is talking about a u. S. German spread. 90 basis points, the italian euro. How much is left to squeeze from that trade . Andrew not much. I would say 75 aces points is where the equilibrium might be. When we look at that spread, we dont think there is a great deal of compression left in it in terms of Capital Gains that could come from this spread narrowing. Given the stimulus coming from the ecb side and the high yield, we call it a safe carry. That will have an implication in terms of scaling. Jonathan we have a lot to lose from the decision today, dont you think andrew . Andrew the Central Banks around europe, which are tied in one way or another through their Exchange Rates to the euro and ecb, will have to respond to additional stimulus from the ecb. That might mean more currency intervention for the danes and swedes. More action on of their Interest Rates or bond purchasing programs. The ecb is in a tricky situation. There is a lot of political pressure on, them in terms of the expansion of the balance sheet. They might have to tolerate a stronger frank. Guy a quick question on switzerland. If ecb will start to look like smb rates, will the german curve start to look like the swiss curve . What is it, 30 basis points . It is hard to imagine, but negative Interest Rates or a hard to imagine as well a figures ago. As well a few years ago. The Structural Reforms taking place in europe, i dont think the eurozone will go all the way down to the swiss level. We are getting close. Hurt to get some recovery going forward. Guy thank you very much, indeed. Next on this program, stay with us. Hugean sachs is calling a oneday move lower in the euro against the lower. That is the debate next. Decides. Good morning. Sure, tv has evolved over the years. Its gotten squarer. Brighter. Bigger. Its gotten thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. Welcome back to an ecb special. Jonathan ferro alongside guy johnson this morning. Guy i would argue, not much happening here. The reason for that is fairly obvious. In some ways, a lot has already happened. Yellen spoke overnight. That is a big market story. Oil is on the move as well. On a normal day, i am not sure you would see a market doing as little as what we are saying. Jonathan it is kind of eight nothina nothing move in stocks. We will have a look at the euro. 1506. Just south of we are virtually there, arent we guy . Have enacted the benefit, maybe not the benefit, but the story on that one is in the market. Again, we come back to the question. To getes he need to do this economy going . To get inflation moving in the right direction . Up 1. 2 . E is we dont a what is happening with commodities. Lets get some individual stock movements with Caroline Hyde. Caroline they are feeding in from other asset classes. Mining stocks are under pressure this morning. This concern is about global growth. Are we ready for the United States to step back from stimulus and push rates a bit higher . Bhp is one of the worst performers today, down almost 2 . Fresnillo is down 1. 3 . How much lower can gold go . Since februaryt 2010. This is the first rate hike in almost a decade from the Federal Reserve. Stocksactually seeing push into the green ahead of the ecb meeting today. Ryanair is up almost 1 . It is all to do with traffic. Back to you. Jonathan thank you, Caroline Hyde. Lets look into the fx market. How will be decision today affect the euro . A changeguest predicts of 15 basis points. We have the head of the european fx strategy. Him is the head of fx markets. Goldman sachs called today a big three figure move. Forget the 12 month move for now. It would be a significant move. I just wonder, what do you have to do to generate that kind of reaction in the fx market . Bitirst of all, it is a difficult. The market will gain 15 days points. There is a possibility of a deeper cut. Lookinget is probably at expansion. Isfar as im concerned, it in the prize. This is corroborated by the moves we have seen with the euro so far. And what we saw in the previous round of qe. For him to bring it consistently lower in a , i suspect fashion he would have to drop any reference to the end date. Strictly speaking, the Current Program is open ended. Daye drops the end altogether he will look at a bigger open. Ye we can get down 1. 03. What does he have to do to change the picture, the trajectory of what is happening . More. Basis points or now and a promise that they will be more in q1. The hallmark of our dollar view for next year, is the dollar picking in the middle of the next year. If the fed moves early, and they should have moved in september, but they will now more likely move in december. The inflation pressures are low. That will keep Interest Rates in the long run anchored. Datarend in the economic in the eurozone is much better that it was the last time to the ecb cut the deposit rate. We have a lot of problems believing this view there will be a huge influx of euro capital to the Global Economy. There are many risks surrounding the 2016 outlook. Many Central Banks are resisting capital inflow. On top of that, the eurozone has 3 of gdp accounts are goals it has to recycle. It is very difficult to do in this type of environment. Jon