The ibex on the flipside is weaker. Political unrest in spain. Ahead of the ecb meeting, here is where we are stacking up. 43 basis points. Gold at a low. Ecbd says david the will hold its policy meeting where mario draghi is expected to announce tapering decisions. Now, lets get an update on what is making headlines. Taylor shinzo abe gambled on early elections and won. That boosts his chances of winning another term. That could make him the longestserving leader. Investors responded. The increased role in the counterterrorism policy. The cia has increased operations in afghanistan. Joining to hunt and kill the taliban. Spanish authorities have rejected a call for negotiations. Day, i ams 24 hours a taylor riggs. Messy politics in spain will be the backdrop for the meeting. The theme is lower the amount and extend the bond buying program. From london, i want to get your take from the unrest we have seen from spain. Does it influence the ecb at all . At the moment, it will not be a key focus for the ecb. The key focus will be on the economy and inflation and how they will pan out this tapering plan. Between sizebate of tapering and the timeframe over which they will continue the next stage of quantitative easing. All things will be in the air. The markets will listen closely. Jon lets start with mario draghi and how he will navigate in the news conference. It is a local issue. If you look at spanish bond will look to that. If there is no disruption in markets, he will put that issue to one side. Issue, thebecome an will get more interesting. It is remarkable how quiet the market has been about this issue. How important is it they signal there will not be a rate hike until 2019 and how does it affect how long extension goes for . Chris it is important they dont rush. As they pull that forward, it will concern markets. There is no sense that will happen. Data has been softer than it was three or four months ago. This. Not pushing hard on it is very gentle. They have been trying to reassure markets. It is something they will not encourage at all. David how seriously do you take the reports . If they keep going through at a 40 billion a month pace, will they be done with the buying early and my that trigger a rate hike . There is always finessing these details. The key will be to keep the qe going. Inflation is below its target. The ecb will be concerned about that. There is a split on the committee that the more hawkish german side and other parts of northern europe. On mass of them are focused keeping going. It is a trillion had of the total market. That means roughly 20 of Interest Rates are negative. The ecb is that we are having on thursday, but later down the road, when they continue to tighten is significant. Have 10 year bund yields going into anints ecb conference that could lay out the removal of quantitative easing over the next 12 months. Chris it tells you how structurally weak the western economic economy is. There is a theory that treasuries are anchored by unds, but if you look at it, the structural status of the western economies, we are in deflation. Look at the percentage of countries that are zombies in the western world. You can get between a percent, 9 , 10 of the corporate base listed as a zombie. The reason the yields are low is because of qe. Becauseds are so low productivity growth is weak. Alix if you look at the logistics, the blue line is net issuance for the european union. The gap is a norm us. The trickle down effect you have within the bond market should be huge compared to the fed. Absolutely. If you take the u. S. Yield curve, it is the most important. Every time the fed has announced qe program, we have seen yields go up. It is not about buying. It is about Monetary Policy. In the last two years, we have had the opposite from the fed. What the ecb is doing is an extension of timing in the global economy. That is what tapering is. Bund yields of 45 basis points. From they are, as we kick off a frustrating week and another alltime high with futures positive, this is bloomberg. David shinzo abe had a big win over the weekend. For what this means to the economy, we welcome tobias harris. He comes to us today from tokyo. Give us a sense of what this means. We are going to see a lot of. Ontinuity and stability. E is staying the course i brought japan prosperity and we should keep doing that, that is what we should expect Going Forward. Does it extend the Monetary Policy . That is the most likely outcome. The logic of keeping him around is the want stability and continuity. Least riskyly the option. A busy agenda going into 2018. You have the budget debate coming up in the spring. You have some legislation on work reform that was supposed to be done that will come up in the spring. It is the most logical thing is. N how crowded the agenda the i want to pick up on constitutional issue. The market has reacted positively. The yen is weaker. I want you to tell us whether there is a risk here. Maybe a whole lot less on the economy. It will be a messy debate. It is time consuming. Uphas to get his party lined behind him. That, he has to convince a majority of the japanese people to go with an amendment. Getting to that point, we should assume it will take more time than abe would think. Resistance. More alix thank you. The political capital, you have to expand versus reform. Jon he ran on a platform where one of the payloads was changing the constitution. This is something personal to shinzo abe. A good part of his political appeal. He was tough on north korea when they were becoming belligerent. Inx here is what happened equity markets. The nikkei rose. The yen weakened against the dollar. Chris netnet, it means the yen weakening relative to where we were before the election. What is interesting about japan beene stock market has degraded this year. It is lovely to see it making a new high. Very unloved, and interesting economy. Chris a number of signs suggest deflation is prevalent. It has been in japan for much longer. It is an interesting place to put money. David he has substantial challenges in front of him, specifically with the public debt. This make it a longterm investment . Chris what you see is the. Mmigration looks to us it is not going to offset the whole challenge of aging and challenge of shrinking population. You are bringing robotics and that offsets a lot of the reduced labor. Ways, japan is doing a lot of good things. Growth is strong ,ompared to most of the west and in particular, compared to europe. Will beris watling sticking with us. Looking forward to all of it. A big transaction in the Insurance Industry. Sees a deal adding to earnings next year. Hello fresh is seeking a market valuation as it kicks off its ipo this week. Shares are expected to start trading in frankfurt on november 2. Hello fresh will test appetites for Meal Delivery services. It has seen its value drop by about half since going public. Jpmorgan is bringing in Artificial Intelligence to predict market moves. The program will compile data from all desks and orders to clear picture in realtime. Jon ai for everything. Lets sixs a problem, it with ai. Alix that is the take away. Already be doing that . Jon i would have thought so. Theresa may might need Artificial Intelligence. She faces a new opposition to her brexit bill. It could force her to give parliament a vote on the final deal to lead the european union. Watling. H us is chris is the domestic pressure greater than the pressure coming from the . Chris it is a difficult negotiation. She is under a lot of pressure. We are keen on having some say as well. It is difficult in parliament jon Prime Minister may was discouraged and disheartened. The Spokesman Says no comment. Chris the leaks come from a variety of different parts of europe and london. Juncker is not conducting them. He does not have the final say. The final say as merkel, macron, the leaders of europe. It is confusing to get a real sense of what is going on. It is very difficult to get a clear sense of how we play up from here. David what these members of parliament want to do is look at it and decide whether they agree or not. There is no trade agreement that can survive that kind of scrutiny. Chris that will get hard. Tories, the leadership wants to avoid that if possible. It is another layer of intense scrutiny and negotiations. Process. Intense they are making progress. We should not be discouraged. The markets are relaxed at the moment. Months wherend six the markets are when the clock ticking is louder. Progress is being made. It is a tough negotiation. Jon lets be kind and say the economy is a little softer. Can you be kind when you look at the bank of england and questioned why they may raise Interest Rates in the next couple of weeks . Chris that is a good question. Stuck between a rock and a hard place. The economy has been on housing steroids and critics steroids for a number and credit steroids for a number of years. If they dont raise Interest Rates and the rest of the world is, the currency weakens, we get back into the real income squeeze we had over the end of last year and into early this year. A are stuck. They have to raise to keep up, but it is not what the economy needs. Jon it is great to catch up with you and get your insight. Shawn golhar chris watling. Golub will be joining us. The tone is good, the sentiment is positive. Jon we go into the results. Futures are positive. Another alltime high at the close. Two hours away from the opening bell in new york. Market, the the fx 1. 31. Rate is about we kickoff things unchanged, tooth. 3 eighth 2. 3 eighth on the 10 year. Taylor a day after abe paschi coalition retained its two thirds majority, the benchmark gained for the 15th day in a row. The victory means he is likely to continue his policy of monetary easing and fiscal spending. Areish manufacturers spending less because of a lack of specificity about brexit. Just one third of Companies Say brexit has had no impact on their plans. Oversaw the relationship between saudis and a rock vital to bolstering security and prosperity. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. David we welcome kevin cirilli. Lets start with tax reform. Mcconnell thinks it can be neutral. I thought we were past that. trump also says to be flexible on the number of brackets there will be. He has proposed reducing those brackets from seven to three. We could get four to five. Trump will be on capitol hill with gary cohn. To meetident is set with senators. They are going all in in terms of the time table and they are keeping the schedule. Holdsssing of the budget them to the schedule of wanting to get things done by the end of the year. David the president is not shy about giving interviews to tell us about his thinking. Kevin he said he could have a kevinion where you have or Jerome Powell in a oneto combination. 812 combination. 12 combination. Janet yellen was at the white house for a routine meeting with gary cohn. David thank you. Joining us, shawn golhar. Still with us is chris watling. With tax reform. Where are we in terms of timing . They want to get it done this calendar year. Is that realistic . Shawn it is possible. We have been telling clients we think it is doable, but probably by the end of q1, maybe the end of q2. You have lingering Health Care Concerns come january, the Cost Reduction subsidies. You have the docket immigrant the daca immigration issue. There is a lot on this agenda. Are investors focusing on the details on what it might cost . Said it mayonnell be neutral. One way to pay for it is to cut back on these special treatment for 401k contributions. Is a lot of different that the white house can use. Floathouse, they can ideas out there to see how investors react. We dont have legislation in hand. This will be a bill that is several hundred pages, not a nine page summary. A short in five year futures getting attention. Does that make sense . Chris the market is exceptionally short in five years and 10 years. Fundd the Merrill Lynch manager talking about 10 year shorts being a popular, crowded trade. Goingre we get tax cuts through, the more activity we get and the more we get short rates up, which flattens the curve, not steepen zip. S it. Ve not steepen from theet a reaction fed. It will be largely negative for the yield curve. If yout also flattens have a hall get as fed chair. Comingwe understand him out, trump saying he likes taylor, powell. How do i understand that . Where he isows going to go and all the moves. He likes this process. He likes to play it out. State secretary interviews, he had a lot of people coming in. He wants to showcase the different candidates, having them come to him to trial balloon the different possibilities out there. It sounds like folks like the idea of powell. Republicans in congress dont toe janet yellen if he wants reappoint her. Jon is the Senate Confirmed fed chair different to the nomination we get in the next week . Shawn i imagine he would call up Senate Leadership and talk this out ahead of time. Given the fact it is happening at the same time, you dont want to have any hiccups in the process. Theou are managing president pauls schedule, you will want to talk to the president about this to make sure they are comfortable with their nominee. Sensitive as we seem to be . Chris it is important who ends up in that chair. John will have a different approach to Monetary Policy than janet yellen. The combination is critical. If we get taylor and, we get tightening. Probably a different modus operandi. Curve. Believes in the they are not sure how inflation plays out. John taylor believes in a rulesbased fed. That implies notably higher Interest Rates. Markets are about liquidity, who runs the fed is critical and key. David you can tune in to tom keene on the radio. Boston, theard in bay area, and across the United States on sirius xm radio. This is bloomberg. Taylor the Hewlett Packard enterprise green room. Coming up, Ellen Zentner. This is bloomberg. Now to your business flash. Halliburton boosted profits thanks to fracking operations. Mhe company has benefited fro rising orders. Explorers have cut back in order of operating wells that have been drilled but not frack. An overhaul of Financial Services rules takes effect in january. The head of currency trading warrants it could ruin some peoples christmas. In fang rally next year stocks. Theyding to thomas lee, outperform the s p 500, in all years ending in odd numbers. Late calls it a mystery similar to stonehenge. Jon thank you. Alexs i think i have better years in even years. I related to that. David we call a numerology. Jon very complex, isnt she . Another thing that is complex, deciding who is going to be a fed chair. Not one, but three people for the position. Most people are saying it is down to two. Jon he is considering a combination of powell and taylor may be. Chris the question is, if taylor is in charge, how much does he counterbalance . A lot of the committee is dovish. It depends on the other seats that get filled over the next few months. Think as a counterweight would be a more dramatic statement. It doesnt sound like it would be coming that way. Up, treasury yields are would you be fading the move because it would be difficult for him to do the things he might want to do. There may be a case for that if you feel his actions will be contained. It is a tough call. It is easy to view this through our prasm at bloomberg. What is the reality . Is it about who was going to get the s p 500 juiced up . Seeing thep likes stock market go up. It is important. Behind the scenes, he has been more conventional. We dont see tariffs on mexico and china. China is not a currency manipulator. Is going through a renegotiation process and has initiated rounds 4, 5, and six. We have not seen that bombastic attitude we have seen elsewhere. Be a bit morehis going through the mechanical process. Wantsms like something he to follow through on a plan. He has a handful of people left. His staff can come up with the pros and cons for each candidate. Is not watching bloomberg tick by tic . Come on. What if we get someone pro deregulation . We have differing views on the fed. What does it mean for consensus and volatility . Chris it is a bit of they many regime shift, or major aid or maybe a dramatic one. Markets will have to digest. That will bring volatility back. We have known for the last few years how they operate markets. Volatility is addressed by the fed every time. It is a different environment for volatility. Uncertainty will pick up to respond to that. Jon what is the argument that whoever takes over the fed will have to be hawkish . What is about to happen in d. C. Given the stimulus could get interesting. Chris that is another thing to add in. Also, who else they put in the other empty seats. It will be an interesting couple of weeks. The markets are complacently priced. There is no volatility. Major have a minor or regime shift at the Federal Reserve coming up. It is going to be interesting. Chris watling and shawn golhar, thank you for joining us. It is confusing. Lets use ai. You can watch us online. Click on our charts and graphics. On your terminal. This is bloomberg. David the situation in venezuela continues to deteriorate. There oil company has a bond payment coming due of almost 1 billion. This comes on the heels of elections a week ago that many thought were fraudulent, many access is aegime quote authoritarian dictatorship. Welcome back to the program, katia. Where are they going to come up with this money . Katia you would not think it is a lot of money, but they havent made about 500 million of payments that were due earlier this month. Is have they been saving the money . The thing that is important is there is no grace. Others had a grace period. They have been using them for the other payments, but they dont have that with this one. There is speculation about what is holding up the payments. Holdingcause they are up the money . There is a delay in the Banking System, they have to convert the money into dollars. Whatever it is, everyone is hoping they have to figure it out for these payments. If they have not, they can trip the wire for credit default swaps. It can trigger a serious crisi