2017. anna this is bloomberg. Manus we have breaking news. This is in the retail sector. We have numbers from the worlds number one closing retailer. Clothing retailer. Ebit of 2. 9 9 billion. Those are some of the headlines coming through from in the tax. From inditex. Seeing earlyry fourth quarter, according to some of the analysts. Analysts will be weighing the continuing impact. Story thatting a they are seeking to sell some sores. Stores. In iberia. Is as a result of online sales taking a taking off in spain. Lets check on the risk radar. Program with the shock result in alabamas senate election. The had an impact on dollar. As of also down. The democrats won this seat. Trumpsoing to influence ability to get his legislative agenda for the senate . Maybe he tries to speed up tax plans to get this done before the change in the senate. The s p down on this news. We touched new alltime highs yesterday. It was back to the economic data. Though some of the headlines that we will be watching for an economic front. In terms of the asian equity session, we are up by. 2 . 3 . Fed, the ecb, the smb. We are getting some headlines through from adnoc. 60 16 . Rose we are seeing that valuation come through. It will be a good lesson for the whole region. Adknock business noc business is the petrol station business. Coming through, we blew up the spread. It looks like that 10 Million Dollar 10 billion valuation has been blown through. They are ringing the bell the Abu Dhabi Exchange as we speak. You mentioned the politics of the fed. The markets perception of what happens next year. Yellense of janet announcement. The alabama result means we need to rehandicap the trump agenda and that agenda is tax. What with the fed think now has to gop Senate Majority drops 51 . This is a spread between january 20 18 and january to a 19. It widened. Translates to two. 25 point increases. This is what the market believes. Is it too late to rewrite the Growth Numbers . Investors were not even pricing a single hike back in september. What a difference a day makes. Anna in terms of the fed question, as the market comes around to the feds way of thinking, we see the fed move even further . Coming up today we have some great conversations. Seeing theg to be conversation with the former wrench french president Francois Hollande. The loss of the talking to ceo. Upert lets get to first world news. Democrat doug jones has delivered a stunning defeat to roy moore. They projected him as the winner. Ith 49 point 5 the senate race in the strongly republican Southern State of the before with the gop even the nominee was accused of Inappropriate Conduct with teenage girls. Alabama has been at a crossroads. We have been a crossroads in the past and or we have usually taken the wrong fork. Tonight, you took the right road. Juliette the u. S. Secretary of state has reiterated that america is prepared to negotiate with north korea without preconditions. Rex tillerson said the Trump Administration would first want to have a quiet. Without Nuclear Tests for the discussions to begin. We are ready to talk anytime north korea would like to talk. We are ready to have the first meeting without precondition. And talk about the weather if you want. Talk about a square table or roundtable. Juliette the European Union has warned the u. K. Against going back on the agreement submitted last week. Alert of the goes britain trying to unpick deal. The eu is planning to hold the u. K. The carrots and future discussions. Former french president Francois Hollande sees the possibility for britain to strike a trade deal with the eu. Speaking to manus cranny, he said that there are certain lines. A trade agreement is always possible but it needs to be clear that it cant happen at any cost. There have been discussions held over the past year they have continued. There are some points to europe that remain truly absolute. Agriculture and cultural section cultural exception. Donald trumps position on trade agreements is not very encouraging going to discussions with europe. Juliette u. S. Stockpiles probably have dropped for a fourth week. Byentories may have declined 7. 8 nine barrels. Forecast supplies of shrunken. Major steps have been taken to support the market. There is significant progress that we have made together with friends. Pec trend to bring the market back to stability. We have seen massive the stock across all week regions. Global news 24 hours a day. Is bloomberg. Here in asia, the reaction from alabama ahead of all these key centralbank meetings has been seen in asia currencies. The dollar falls in the yen rises which means Japanese Equities have fallen. The hogs sank in late trade in lateng the trade up. Watching the 16 billion bid. Jpmorgan saying dont rule out the fact that another company could happen as well. 14 field closed down by was up by was 14 . Air china also strong. Look at this company. It is a game developer. This is on a wall street journal report that it will be working with nintendo to make some more games. Quite a few big movers. Westfield was the biggest in terms of market cap. Manus thank you very much. The westfield store in london is is the with the holiday season. Traditionally its a deep red state. But doug jones has delivered a stunning defeat to the republican roy moore in a Controversial Alabama Senate race. Even before more was accused of Inappropriate Conduct with teenage girls, it was contentious. Markets moved. Genesis victory is beginning to irk markets. Lets bring in our strategist. Garfield reynolds. It was almost immediate. Repricing or rehandicapping the trump trade. Yes. There is a fair bit of that behind. I think the immediate moves are going to evaporate fairly quick the once again into the u. S. Session. The fed is going to dictate waters matters. , andmmediacy of the shift the result was a big surprise, that underscores that there is going to have to be a rehandicapping of what trump can achieve. Its not so much about tax reform because the gop can still get that passed before jones takes office. They will probably have to rush it a bit more and the raises the risk of a misapplication. It also makes it that much harder for them to go back next say, whats, we dont like this line, we have to exit. Then they will be down to that one person majority. Anna thats the implications it has for the tax lori. Perhaps they are story. Perhaps their limited. As we see trumps a little more hamstrung that it was. Potentially, yes. We have to see how it develops. It is potentially a great shock to trumps aura. Investors need to be asking themselves, how much to my calculations as to where the s p 500, where the yen, where the dollar, where treasury yields will be, how much of that was on expectation that trump would achieve some percent of what he has stated. Its going to be harder for him. Not just goes of that razor thin majority but also because he could not rescue roy moore. He campaigned for him. The republicans have not been particularly disciplined over the last six months. Its hard to see how result like this makes them anymore disciplined. Thats a potentially serious Downside Risk for a lot of trades. Anna interesting to see to what tell us aboutes the wider republican party. You very much for joining us. The latest on the Market Reaction to the Alabama Senate race. Markets are gearing up for the last fed Rate Decision of 2017. They are widely expected to raise rates. Janet yellen also deliver whats expected to be her last News Conference before handing over the reins to jerome powell. Oining us now is dean turner he is with ubs wealth management. Good to have you. Our focus is on alabama and the trump agenda. More broadly, the story you have been focusing on, around the fed. Expecting for next year and what you expect to hear today . Think the more its an aspect of today will not be the policy decision. I think markets are fully expecting a hike. Its been our base case for some time. Statement,tonight one thing that might become apparent tonight is that all of the fed members will start to factor in the impact of tax cuts next year. Its likely we could see Growth Numbers increase for next year in terms of stocks. Risk toalso some upside break projections as well. The market still seems to be on the other side of that. Our senses the fed will look to push to hikes next year. One in q2 what a q4. The market seems to have caught up with that thinking. Manus dean, i caught up with a Nobel Laureate yesterday and he said this is going to be one of the worst tax bills that he has ever seen in the history of tax. Scathing inutely terms of any momentum that this was going to really add to the u. S. Growth trajectory. I dont know if that was politically driven or whether it was pure economics, that he was utterly skating that this tax cannot drive u. S. Growth. Is that a fair unfair assessment . Fiscal easing should have a positive affect. What is the multiplier that any tax cut should have . Is less than one. Have a clear idea in terms of the specifics of the tax bill. We also dont have the timing of some of the measures. From 0. 25t anywhere and 0. 5 to gdp growth over 2018 2019 thats dependent on the specifics of the timing. Anna what is that disney bond market . What does that do to the bond market . Doesnt push the short end up, the twoyear, and not to budge the 10 year . Does that worry the fed . Dean i dont think that worries the fed. Thats probably the most likely outcome. Our senses at the longer end, yields are closer to fair value. Certainly, most of the work is likely to be done of the short end of the curve. Clearly, inversions of the yield concerning quite signal. In a new worldre of low interest rates, i dont think that same immediate concern right now. The changing complexion of the fed. Exiting a pair of doves. The complexion of the fed will demonstrably change. We dont know the new deputies going to be. Youre going to have a more hawkish fed. I dont think thats the immediate takeaway. We have to see what comes through from the new members. I think what we are expecting to see, in the shortterm, is a continuation of what we have seen. We think the path of fed rate hikes will be pretty cautious and steady. We are not expecting to see a dramatic shift. Where are we in the cycle . Bloomberg economics, i have another chart for you. Btv 4896. This compares growth in the 1990s to what we are seeing now. If we extend into the second half of 2019, we will exceed that record 40 quarter cycle. That is Bloomberg Economics best case. Is that your best case as well . U. S. Ep expanding in the and we have this record expansion. Youre right. If we get to 2019 it will have proved to be the longest postwar expansion. One of the things to note is the rate of growth has been significant a slower. Average, the real growth in gdp has been much lower. Anna inflation must lower. Dean exactly. Our assessment is one where looking at some of the traditional factors that we , were just to see not seen them. We have to be sensitive to the fact that the rate of unemployment is very low and the labor market is very strong. Thats a potential source of risk. If he were to see inflation , that coulde encourage to take action. Our senses at the moment that we are still somewhere away from the end of the cycle. Thank you very much. Dean turner stays with us. Hes an economist at ubs wealth management. Up next, we have the fed. They will deliver their decision at 7 00 p. M. London time. We will bring you that here. The former Donald Trump White House comedic asians director Anthony Scaramucci joins us at 1 30 u. K. Time. Anna . Anna lets go to the Bloomberg Business flash. Initex has declared a growth. The words largest clothing retailer raised their operating profit to 3 billion euros. Revenue advanced 13 . Toshiba and Western Digital have ended a monthlong legal battle. Western digital is dropping arbitration claims in the u. S. That were aimed at stopping the sale to Consortium Led by bank capital. In return, the Japanese Company will in its legal claims against Western Digital. Ceo tom enders has reportedly decided not to stand for his third term. Figaro says he wont renew his mandate for airbus. This is just as the plane maker grapples with a bribery probe and slack demand. I never bust spokesman told the report pure immediate and said no decision had been made. Thats your business flash. Anna thank you very much. The ecb gives its next policy tomorrow. The market is still position for a stronger euro but he likes of Deutsche Bank are warning that investors arent fully pricing the risk of a less dovish measures. Dean turner is still with us. That shows thert expectation for when we start to see a hike. Economists are not putting this is something that will happen next year. There are couple of outliers. Assume 2019. T if we were to see an earlier hike would be because theres a risk that inflation bills faster than previously expected . Dean thats clearly the risk. One of the things for the euro zone economy is its performing very well at the moment. Twice its trend right. Theres still a lot of slack in the eurozone, in particular in the labor markets. Inflation pressures, while building, are unlikely to force a much more hawkish decision. In terms of the currency, week seemed to be moderately cap. We have this momentum. Economy is literally barnstorming ahead. How strong would you define this european recovery. Can it withstand the withdrawal of the ecb from the center. Dean we are seeing extraordinary trend of growth. We are expecting to see over 2 expansion. Its a strong expansion. Our feeling is we are expecting to see the euro higher. Clubs it easing is likely to come to an end as of september. Those couple of headwinds are likely to affect eurozone growth. Were not pessimistic but its likely that slip growth slips below the 2 level. Is stubborn. On even in germany, where the growth story is, we have inflation persistently below 2 and forecast to stay there. Dean thats a valid point. One of the things to watch over the next few months is what to having a number of key union negotiations. They are pushing for stronger wage settlements. Said, if we start getting signs manus we have a little bit more to come. Next, we hear from Francois Hollande. Brexit is a reversible. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Anna this is bloomberg. The yen, 113. Inst moving around. We see the tokyo stock market outperforming the rest of asia. Plenty of central bank to get her head around. Lets check on the Broader Market action. Heres nejra cehic. Japan close lower but elsewhere you are seeing quite a lot of green in the asian equity session. Shanghai higher. Hang seng higher. Many rebounding from yesterdays losses. Looking at the dollar, we are seeing a touch of weakness come through. We can bring the dollar chart coming up. This seems to be moving on politics. Democrat doug jones beating roy moore the senate race. The bloomberg dollar index is dropping for the first time in eight days. It had its longest winning streak since january 2016. It is dropping towards its 50 day moving average. When it comes to the dollar, but also to treasury, the focus is on the fed decision about a rate hike. Next year ist to the spread between january 2018 and 2019, yields are actually rising. This suggests for the first time in many months, trade is pricing in two fed rate hikes. The 10es that mean for year yield . Its unchanged today but its at the higher end of the range. We are at 2. 39 . Our trade is to stop fighting the fed . Political shakedown changes the bond market. Francois hollande was speaking out the topic of brexit. He says the u. K. Cant expect to keep the same trade deal. I spoke to him at the Arab Strategy Forum in dubai. I have said that the United Kingdom would have to pay and the deal that has been found, what referred to as phase one, did indeed lead to a general contribution by the british. Anwere able to find agreement on the question of european citizens. The second phase will do with the place of the United Kingdom within the internal market or outside the internal market if a trade agreement is made. Europes attitude is one of respect but there are also certain demands. Protect aw have to europe of 27. Brexit is irreversible. Aiming to punish the british but clarify future relations. With france, i was always determined to keep a special relationship with the u. K. Especially on defense. This will be up cap. Said we hopemm fox for a virtually identical call identical trade agreement. Is this realistic . A trade agreement is always possible but it needs to be clear that it cant happen at any cost. Discussions have continued and there are certain points with absolute likemain agriculture and cultural exception. These are important issues. Donald trumps position is not very encouraging going into discussions with europe. Manus services are incredibly important. Agreement. S, plus Services Must be included. Generalance tolerate a generous Financial Services components . It will necessarily need to differ from the conditions of the internal market. The internal market there is Free Movement of trade and past 14, which also applies to british activities today. If theres no way of accepting the Free Movement of goods and services,