Stocks declining for a second day. A slump in chinese equities in a , which is why we might see exacerbated moves. More dovish than expected Federal Reserve. We had the minutes yesterday. We are getting pmi edit europe, better than expected. Better than expected if you look at services. Manufacturing also that are than expected. Manufacturing also better than expected. We are looking at a pretty strong economy. Au will get to europe in second. Eurodollar currently 118. 45. Coming up, we speak to alexander stubb. Brexit talk to him about and the eurozone. In the meantime, lets get to the bloomberg first word news. Democratsmany social are ready to start talks with Angela Merkel. Totin schulz is prepared offer her limited support for a full term. It is said he could back her in a minority government but not but would not offer another grand coalition. Philip hammonds budget has been welcomed by members of the conservative party, while stilla mays future is questionable. Some ball boy them ball boy incoming president took control of the armed forces. He is due to be sworn in tomorrow. Jamie dimon has said he doesnt think President Trump will win another term in office. Democrats long as the have a reasonable candidate, they will win in 2020. I think we should get rid of carried interest, deferrals for and if you want to raise my right, so be it, but whatever you do, do not have an uncompetitive tax system in a very competitive world that is a mistake for america. To confuse the two is a huge error. Nejra mark cuban has a question for donald trump, is the president aware of just how big an impact alibaba has had on the u. S. Stock market . He tweeted, did you realize 5 of the increase in stock market has gone to one Chinese Company . There has been no response from the white house. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im nejra cehic. This is bloomberg. Francine the u. S. Dollar weakened after the minutes from the fed meeting highlighted a dovish tilt. Confidentcials remain in the labor market and above trend Economic Growth, several of them are looking for stronger signs of gains. He market sees a december hike joining us is Holger Schmieding and guy stear. The fed, janet yellen told us one thing and the market told is another thing. Dont think we learned a lot from the fed minutes. Inis likely there will raise december. Next year, nobody knows. The fed is in the dark as much as everybody else. As to how strong the economy intos will translate Wage Inflation and core inflation, best guess is they , but note occasionally four times. Francine do you think they are in the dark . The fed message is they are on a upward hiking path. Holger i think they are. The transition from low levels of unemployment to higher levels of wages. If you look at data like the atlanta fed has lots of , but we aregnals not seeing it in terms of countrywide numbers. There is the second step, which is that even if we begin to see wage increases, is that going to translate into cpi increases in a world where you have amazon and alibaba . You have a lot of computers and on the retail side, which is Holding Prices down. I think that is one part of the equation, which is going to be difficult for anybody, including the fed to figure out. Is it the fact that technology, the sharing economy is automatically bring prices down . Do we need to measure inflation differently . Holger it is in just the retail side. It is a most everything. What is the consumer willing to pay . The impact here is that if you have higher costs in terms of higher wages but you dont have higher output costs in terms of prices, and what gets compressed is corporate margins. It is something we are beginning to see. Francine the fed seems to suggest inflation will be there, it is just liking. Do you not believe janet yellen . Holger we are in an unprecedented situation. We had an upswing for many years were some were nothing seemed to overheat. Were holding back on wages, credit growth, business investment. Now we are heading this course, getting back to the normal boom bust of the cycle, however, how long this transition will take when the normal things, including Wage Inflation, rising inflation will kick in, is something we dont know. We have to watch the data. Timeguess is it will take for the technological reasons. The fed will probably continue to do hikes cautiously. Francine do you think that would be be right decision . What do you do with the phillips curve . Do you forget it because it is broken or doesnt function like it used to . Holger we cant forget it. We have to watch it. Is it reappearing, no longer flat, steepening . We have to watch the data. The good thing for the fed end of their Central Banks is, in the absence of very serious inflationary pressures, the Central Banks can take their time in looking at the data. They are not forced by the data to be aggressive, and why not. Todoesnt hurt very much wait a little, watch the data, and then react. Francine do you agree the longer you wait the more distortions you can create . Guy the only thing i would disagree with is that as a house we are more competent at the lag will end fairly soon, and by that i mean 2018. That leads us to a fairly negative view of what u. S. Treasuries will do of a 1 rise in terms of 10year yields over the course of next year. Lag we are seeing now and past, ite saw in the seems to be getting bigger in terms of the data, but i think that is going to be were going to start seeing inflation and Wage Inflation picking up next year. Francine thank you so much. Holger schmieding and guy stear stay with us. Is said germanys spd to be considering supporting a merkel government. We are live in berlin with the latest. Britainse of Economic Outlook. We will discuss that next. This is bloomberg. Francine this is bloomberg surveillance. Lets get straight to the Bloomberg Business flash. Nejra centrica shares have slumped this morning by the most in 20 years. Adjusted earnings per share will fall will probably fall below market confesses after a market consensus. Uber is facing at least three probes in europe red light following revelations it kept quite on a hack of personal data. The right hailing from is in the crosshairs. Facebookinvestor in Company Stake in the for 29 million. Facebook stock has surged this year. That is the Bloomberg Business flash. Francine germanys social democrats are said to be ready to start talks with Angela Merkel. Martin schulz will discuss his plan with president Frankwalter Steinmeier later today. One official said he wont offer to help form another grand coalition. For more, our governor our reporter joins us. When will we get more clarity . From berlin, germans believe dont like chaos. We have like from berlin, germans dont like chaos. We have chaos right now. We will have word on which solution will be preferred, which is either a minority or a grand coalition again or new elections. It is all open. Francine would Angela Merkel be willing to lead a minority government, even though she has ruled it out . Arne i have talked to people yesterday from the cdu and there are people saying she want lead a minority government. She is very critical of it. Have single law that would had to be passed, she would have to look for a majority, and this is not what she wants to do. Is this government crisis the beginning of the end for the merkel era . Arne there are many commentators here who say that. I would argue since there is really nobody inside right now also within her own party to islace her, i would say she weakened, its a difficult phase, but i dont think it is over yet, because there is nobody to replace her. Francine thank you so much. Arne delfs there. How much the political situation and germany matters to the markets and when we get clarity. Our guests are still with us. Do you think this is the end of the merkel star . It is damaging for her reputation on the global scene and at home, but it is not probably the end of her chancellorship. Likely that she will get the fourth term either after new elections as the head of a minority government or possibly as the head of a new grand coalition. There simply is no a very there simply is nobody to replace her. She likely would stay on. Press arethe italian saying that schaeuble is to go for it. Is there any truth in that . It is not that i can claim any insight knowledge inside knowledge on any of this. I would be totally surprised if there was any kernel of truth in this italian allegation. Once again, there seems to be no obvious rival or successor to merkel from within her own ranks, and hence she will likely stay on. Francine when you look at the two options, french elections or minority government, fresh elections or minority government, which is the best for the economy . Holger it is not going to make much of a difference. The economy will stay stable even without clinical uncertainty. Is long run. Nority government it is due arguable that a coalition would possibly be the least bad for the economy. Francine what does it mean for the markets . To the margins impact ecb policy . Guy not too much. For markets there is an interesting comment by one of your commentators on the Previous Program saying the markets have been taking this in stride. They havent reacted much. The one thing we havent learned the one thing we have learned over the past year is that, in terms of markets, we care more about what the central bank is doing and what governments are doing. That applies to governments everywhere. It is more, yes, we would like a solution and that would make everybody feel more comfortable with the way things will evolve, but they are not terribly focused on it at the moment. Francine what is it mean for spreads . Guy what does it mean for spreads. Guy the bigger story is what is going on with european growth. It has been good this year. That has been something that has helped spreads, because strong growth lifts all boats. It supports the southern european economies, raffael economies. Peripheral economies. You were getting marginal growth, which has been dominated by northern europe, beginning to get better in southern europe. That is even better for spreads. That is one of the issues for the peripheral sovereign markets in europe, particularly in 2018. Francine i have the german 10year. Is that a good one . Guy you were looking at two different things. You are looking at what is going on francine this is fed policy. Guy it is probably more driven by the u. S. Fed market. Francine we will get back to the use and talk about gilts. Holger schmieding and guy stear stay with us. Up next, we will take a look at the latest production. This is bloomberg. Francine this is bloomberg surveillance. Lets get straight to the markets. Mark profit warning from centrica. Biggest decline in record. Wife wipedunds off the value. Adjusted earnings per share will probably fall below market consensus after a disappointing performance. In china, we saw a big selloff today. Unease rippling through the stock market. Large cap shares plummeting the most since june last year. Csi 300, as you can see, sinking 3 today. Losses deepening in the last hour of trading. Chart, justeat comparing the spanish 10year with the u. S. Six month. The yields have converged. What does it mean . Does it portend some sort of armageddon scenario . Probably not. This happened before the century starting in 2005. Another reminder of how divergent Central Bank Policies distort perception of risk and asset prices. Apparently, it is thanksgiving day today. Happy thanksgiving, everybody. The cost to feed 10 people is seen at nine dollars and . 12 this year. , no, costs for turkey rolls, green peas, and see potatoes. And sweet potatoes. Tot is costs going back 2012. Francine that is an amazing chart. Up next, the latest gdp data. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Francine this is bloomberg surveillance. Lets get straight to the bloomberg first word news. Nejra germanys social democrat leader is ready to start talks with Angela Merkel. Martin schulz is prepared to officer offer omitted support. A minorityck her in government that wont offer another grand coalition. They say he intends to tell president Frankwalter Steinmeier of this when they meet today. Federal reserve officials have signaled a december rate hike remains on the cards, despite ongoing debate in week price growth. Fok price growth. Incoming president has told supporters that the nation is witnessing a new unfolding democracy. , he thinkst speech sin armed forces for taking control of the government after he was fired. He is due to be sworn in tomorrow. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am nejra cehic. This is bloomberg. Francine were just getting some u. K. Gdp figures. The economy grew. 4 in the third quarter, matching the initial estimates. Baby it is a little bit more on the back of what we heard yesterday. I think it has more to do with we have seend what with Philip Hammond. We will get back to that in second to that in a second. Philip hammond appeared to have won over critics as he promised money for brexit and scrapped the majority of firsttime buyers. The productivity performance continues to disappoint. Now is our u. K. Politics reporter. Holgerith us, guy stear schmieding and still with us, guy stear and Holger Schmieding. How did the chancellor to yesterday . Reporter i think fairly well. He has a reputation for being quite boring and not really taking risks, and there were a few risks in this budget. That growth forecast. We can get away from those, but he did something about universal credit, more money for the nhs. Not as much as the in adjacent once, but there were some giveaways in there. As the nhst as much wants, but there were some giveaways in there. This was a totally political budget. Everything the tories want to claw back. It wouldve been a great budget last march, and now it is five months to a. One wonders if that will be enough to win them back. There is no significant change in overall significant fiscal policy. Said, it is a clever budget with small giveaways. He made some good headlines for himself, but that doesnt change the Economic Outlook. ,rancine the Economic Outlook we dont know what the brexit negotiations will be, what the future of the country exactly is, but i imagine your Economic Forecast will be different if it is a labor government been a conservative government. How much do you look at politically who was next and that be the basis of your Economic Forecast . Difficultat is a very one. If we knew Jeremy Corbyn would be in office with the state majority soon, we would have to rethink quite a few of our numbers. Assume time being, we that policies for now remain roughly as they are. We take as basis for our Economic Forecast, somewhat soft brexit scenario. On such a scenario, no major shift in policy, and in the end, the u. K. Gives in enough to the e. U. To secure a soft brexit. Francine what do you make of the budget . Saidi echoed what holger in that it is not terribly important and i would echoed the comment that the budget, if it had come five months earlier, it would have changed certain things in terms of brexit positioning, the giving a signal that they are suggesting backup plans, it mightve change things, but it is difficult to tell. How bad is growth going to be . That will have an impact in terms of the flip of the curve. The second issue the slope of the curve. The second issue, you can use the second issue, u. K. Yields and rates. Growth is quite poor if you have rising yields in the u. S. , in europe, probably guilty yields will be dragged down as well. That is one of the challenges the u. K. Faces. Im going to push back a little bit. There was so much speculation the chancellor could be fired. Does this budget cement his place . Reporter there was a lot of speculation he would be recalled in the shuffle along with boris johnson. I think his job is a safe. Is theresa mays government faith . No one knows. Not depend on the budget. It depends on brexit. Francine if the chancellor gets sacked and somebody else put in place, then do change or Economic Forecast . Doesntour forecast really rely on the person who was chancellor. Another chance of pursuing similar policies would really not have a Significant Impact on our forecasts. The budget is not bad, but it doesnt change the outlook in any significant am not economically. What a different chancellor be radically different . It depends not so much on the chancellor but the makeup of the government. I sometimes feel when i am looking at the u. K. That their future is not really in their hands, much more in the hands of the brexit negotiations. Francine that is fair. In december, we get a settlement on the divorce bill will we get a settlement on the divorce bill . Reporter we can save the u. K. Is prepared to pay more than their initial offer. We dont know how much. We heard 40 billion pounds, which has been pushed back on. It is now a sense of emergency it is now a sense of urgency. They want to get this settled as soon as possible, but again, it depends how it goes down in brussels. This is a Key Development over recent weeks. U. K. To getdate real about what it can achieve, and that seems to be happening over recent weeks with the u. K. Realizing that clock is ticking against the