Staying with commodities, my chart has to do with the most heavily traded brent spread. February versus march. Now it is unchanged. This is all about the pipeline that leaked. David we are back to oil and copper. Major turn. Time for the morning brief. We are going to get Consumer Price index numbers. Feds decision day for the at 2 00 this afternoon. The Federal Reserve is expected to hike its rate again with a janet yellen News Conference. At 3 00 this afternoon, President Trump will speak at the white house giving his final statement on tax overhaul urging congress to get a bill to him for signature. That is all coming up today. Last night, the news out of alabama really rocked the world as wanted a most republican states elected its first democratic senator in 25 years. Doug jones addressed supporters late last night. Crossroadshas been a. We have been a crossroads in the past. We have usually taken the wrong fork. Tonight, you took the right road. Welcome kevin cirilli. It really was an epic night. Put it in context for us. Kevin koke it was a historic night for the state of alabama which is not elected a republican to the senate in 20 years. Doug jones when he arrives in the senate before january 3, will really the and historic senator. Night. Ith roy moore last he did not concede. It is unlikely that he will be up to beat doug jones. All the precincts have been reported and got a two percentage point lead. A couple of takeaways, first and foremost, what this means for the president policies, this is a razor thin we poke and majority now. He said he could only afford to lose two votes. When doug jones gets to washington, he can only afford to lose one. That puts a lot of pressure on republicans to get tax pressure tax reform done by the end of year. Means andmoment represents for this cultural moment that we have seen. The politics of this, the steve bannon versus mitch mcconnell, that tension is going to be on full display over the next couple of days. You have the dichotomy between President Trump but he really asked roy moore and then senator shelby who really came up and said i am not voting for the man. His donald trump really wounded . Kevin koke david, senator shelby is really the one who drove the right in with just the right and with 2 of voters writing in a candidate. We were talking to republican voters, they were not excited to vote for roy moore. We talked to democrats, they were eager. They want to measure to get out and vote. President treat just President Trump tweeting, he says the reason i endorsed his i said roy moore will not be able to win the general election. The deck was stacked against him. A lot of republican strategist late last night said went to bed last night completely perplexed as to why worry more was even able to run in the first place. Allegations he denied but the voters deciding last night that they didnt want him. David great reporting from memory. That alabama election is one of the top three stories that were following. Doug jones upset republican roy 2 re by margin between 1 in. The other top stories include text as trump gets his Closing Argument and Houston Senate conferees move toward a compromise. The fed issues is final Rate Decision and janet yellen holter last News Conference. Marty, i want to put the numbers to show the margin. How close it really was. It was a victory, 1. 5 . Get to get down to. 5 to really have an automatic recount. Is any question that doug jones will be the center marty theres no question. Theres automatic recount that is triggered it would 5 . It doesnt look like it is even going to get close to that. He will be seated after the first of the year. They will be him to get a tax boat done before that. Looks like the tax bill is going to happen without doug jones. Alix can you go through the details for us. Marty one of the interesting things is this suddenly makes Susan Collins a very important person for the Republican Party. She had considerable leverage. She knows how to play that leverage and now with the margin razor then, what Susan Collins does on taxes and what she demands for her vote will be something you really have to watch. David lets turn to the text overall plan. We got conferees that are tried to reconcile the difference. Key compromise is the that appeared to be emerging. We are going to have a Corporate Tax rate of 21 now moving up from 20 . An individual rate of 37 down from 39. 5 . And it passed through compromise of 20 . Marty it seems like that is what is emerging out of the conference. These are all deals taking place behind closed doors. The cake will have been baked by then. With the gop is facing is a difficulty trying to convince the public that this is a middleclass tax cut. When youre cutting the top rate for top earners, 37 , that is going to help the most wealthiest people in america as opposed to people who are middleclass. David this is a question on how this will help the economy. Will any savings for texas be spent . Will it be saved and help Financial Assets . That is something that somebodys details will matter about because if you want up getting lower Corporate Taxes, does that spur more by back . Does it mean theres going to be more capital investment. Alix how do you look at the market over the last 24 hours. You had a dollar reaction there was a little bit negative but now we seem to be ignoring those. We have been in this low volatility environment. Almost every market at or very near record lows. The risk here is we are pushing on a string in that eventually the string is going to break and we are going to wind up having a massive ounce back in volatility. I suspect theres been a lot of volatility. As there is more volatility selling programs, at some point you get a little bit of a pullback in the next thing you know, volatility spikes more than anyone suspected. Janet yellen is going to announced this is her final decision onpullback in the nextu know, volatility rates come evey is forecasting an increase today. The real question is what is going to happen . What do the dots show in terms of 2018 . Alix it is kind of like your producer. Marty did i do that well . Alix we are looking at markets pricing, they are now pricing to rate hikes for next year. The first time in nine months that the rising you are seeing. What are we going to see today . Ira her press conference is going to be interesting, more academically than it will be for the outlook for rates. Some of the dots will matter. A lot of the people who are creating those dots are still going to be on the fed next year. Will be moreeserve hawkish because of who is going onto the fed. Because of that, too hikes will not be surprising but the doctor still saying there will be three. Does the market wanda pricing for little bit more little bit less . Alix 52 basis points are where we are. How much more selling can we see in the front end . Ira we are priced for too hikes next year. The question is, or the answer is you can see a lot more just based on the expectation with that. Youhe fed were to realize, would see another 25 basis point selloff into your notes and therefore you could get 25 basis points of flattening in the curve over the next 12 months. Alix if youre in, youre like, please d d d d d d d d d d d dee aspects of the tax cut. They were not willing to bake it in. Now looks like it is happening in by some measures 1. 5 trillion of tax cuts could have guessed could force the fed to accelerate the rates next year. Jerome powell will have that on his lap. David i love it. Marty schenker and ira jersey, great to have you here. The final time janet yellen will presser. The fomc more on what the investors will be watching for next. This is bloomberg. This is bloomberg daybreak. I am emma chandra. Toshiba have ended a lengthy legal baddie just legal battle that ended a deal. To auld derail this group led by bain capital. In return, toshiba will and claims against west digital that could cut the company off from his supply of products. Looks like airbus left to find a new chief executive. Will not renew his contract in may of 2019. This comes as airbus is struggling with a bribery investigation and falling demand with biggest plane. Di aramco is asking banks for the worlds biggest share sell. According to people familiar, the oil giant hasnt told banks where it plans to list this shares. That is your Bloomberg Business flash. Alix thank you so much, emma. If fed hike is seen as a done deal today the fed meets but the question will be what it means for 2018. Heres the chart we are good to show you all morning, dots. The white and purple line are the market expectations. Joining us now, Stephen Stanley who has worked at the richmond fed. Joining us from washington, tim duy. Tim died is it hawkish, is it dovish. You guys have opposing views. Stephen the dots are likely to drift up. I dont know the leading dots changes. I think my view is the physicals end up moving four times next year but im not sure that is going to be reflected medium. Just yet. It makes sense for the fed standpoint to hold the fire little bit as a move through this transition to a new chair. I certainly would expect to see a move upward and some of the individual dots versus september. If you look at some of the developments in the economy, strong growth, the unemployed rate dropping, tax bill probably passing and inflation seems to have bottomed out starting to creep higher. You within the margin the dots would be moving high. Alix what do you say echo tim what would you say . Tim i dont expect the median. To move higher. It is a little early and they will like a little more confidence on inflation. I think you have a problem with. He issue of the terminal dots if they start raising the nearterm dots for 2018, theyre going to moving up more quickly to neutral than they are comfortable with. Alix tim, you wrote a column that was really interesting. You said some parts are looking to slow the pace of rate hikes next year. Perhaps you should call off a december increase altogether before worrying about 2018. Walk us through what you are talking about. Tim what i was thinking about here is if you look at the forecast for this year, for 2017, we saw a significant decrease in the inflation forecast. If you look the way the fed has behaved in the past, you wouldve said, that decrease was sufficient to call off a rate hike for december. Then risk the possibility you might have to move more quickly in 2018 then you currently intend. The fed on this front, they would really like to maintain this gradual pace of rate hikes. They dont want to be stopping and starting, moving more quickly and slowly in this process. Mikio the are two puzzles and one of them is why were not getting more inflation. The other one is, the fed has hike rates, it is not tighten financial conditions. I wonder why that is. Stephen i will take the easy answer. I dont think they are getting were close in tims point about the terminal. Com i think that is not a battle we are going to face today. In my view, the fed is going to be moving a lot higher than that. The cook to make this clear, this blue line steps up david to make this clear, this blue line steps up. 2017uch of that is because which is that relevant period was a time of a weakening dollar . How much were financial conditions build out . Factor in thea financial conditions. I would note, weve seen this another tiny cycles where in several rate hikes, you will see easing financial conditions. That was a puzzle that some of those reserves worked with in the past tightening cycle. Stephen, what do you think it is . Stephen just to do the math. Betrend growth is likely to two or higher, the tax package by encouraging investment is going to push that up. 2 inflation, we are adding up pretty close to 4 . That is the neighborhood around which we think about neutral. The question is how far above neutral does the fed have to go to get things halted after years of super easy monetary policy. Alix how far . Stephen it is been 5200 basis 50 to above neutral 100 basis points above neutral. Alix it is the opposite of on the other hand. Stephen we do know that trend growth is lower than it was in past cycles. The terminal rate should be lower than it was before. In most cycles, if you go back over the last few cycles, the rate has gone into the fives or even the success. Desk even the sixes. Even the sixes. David if there is a difference stephen, i and wonder if that is reflected in the fomc itself. Do you wait until it happens . You say it is coming but not quite there. Stephen you got people like evan and some of the other doves were like into lucy 2 inflation, i am not going to believe it. We havent been there in a decade or close to it. You have others who are looking at not just they are looking at the on upon rate. Theyre looking at financial conditions being very easy, growth has picked up and they are saying, look, it is not here today, but it is coming. Even if we dont get it german this increase dont get a tremendous increase, the asset price is something the fed needs to think about. Alix guys, thank you so much. Well. Y, you as dont miss our special coverage of todays fed decision. We are going to hear from randy kroszner, all of that is coming up at 2 00 p. M. Eastern time. Some breaking news when it comes to oil. Opec has its monthly report out. It raised its outlook for nonopec supply by 300,000 barrels a day. It really is about shale and how much shale they actually expect coming into the market. The question, brent is not moving on the news. Brent really being led, although what is happening in the 40s pipeline in the u. K. And the leakage. We will talk about this later in the show, Digging Deeper into opecs monthly report. Coming up, the u. K. Loses the most jobs since 2015. We are going to find out what this means for the bank of england next. This is bloomberg. David Great Britain lost jobs at the fastest pace in almost 2. 5 years. Assigned to the labor market is slowing. Wage growth accelerated. It lagged well behind inflation. This is a continuing story with the economy in the u. K. And the struggles they are having. We heard from mr. Carney repeatedly. Alix it is interesting if you look at the Market Reaction it yet sterling rising against the dollar. You look at the amount of jobs lost, that is not good news. Wages went up. Markets like the snoozing through the data. Instead, looking at the overall trend of where we are and we are still lower. Remember when cable was what was at 135. David you have to factor in the political. They have a bill right now theresa may has a bill to enact brexit. Alix you cannot keep track. Take a look the bloomberg. What the u. K. Is up against structurally. The white line is pti inflation in the blue line is basic wage both going up but the gap still persists. Hat is what we are doing with that will be there no matter what will be happening with brexit. David we are going to hear from Governor Carney bit of this week. When he comes up, he talks about this problem. Alix we will see this tomorrow. In the market here, this is where we stack up. Two hours before the cash open in the u. S. S p futures a little bit flat on the day. The dow was up about six points but a softer tone. If you switch of the boards, take a look the currency market, overall, it is a mixed dollar picture. We did have a strong dollar rally. The eurodollar is flat, dollar spot is flat as well. Yields continuing to rise higher. Five days of hire 10year yields. Jim tisch. Ion with this is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Alix this is bloomberg daybreak. I am alix steele. Steady as she goes as we enter the decision day. But s p13 points futures completely steady. As well in europe, not movement happening. The bloomberg dollar spot index but now we are soft on the margin. Take a look at other Asset Classes. Up. 2 despite the fact that employment actually fell in the u. K. And real wages are still not up to par. The bond market, the big movers, what is happening in italy, will be have elections. That really percolating in a bond market yield. The spread, twos intense, guess twos and tens. Still getting a bit of brent outperforming the pti. Lets get an update with what is making headlines, emma chandra is here. Emma here is Election Results that shows President Trumps influence in the damage Sexual Misconduct allegations can do. Doug jones won the special elections for an open senate seat. He beat republican roy moore. The loss narrows the republican edge in the senate. President trump has backed moore, so had steve bannon. Secretary state Rex Tillerson says u. S. Is ready to negotiate with north korea without preconditions. He says before talks with kim jongun begin, the u. S. Wants a quiet rio without just quiet period without Nuclear Missile attacks. It is close to his goal of rebalancing the oil market. Mohammed barkindo tells bloomberg that the stock piles strike. It is a sign that opec and its allies are making progress in the efforts to curb Oil Production ensure a prices. And shore up prices. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am u. N. Charter. This is bloomberg. Await the we president speech on tax reform, the clock is taking for the republican to marry that to tax proposals. Joining us is mike mccain mike mccune. It feels like sort of splitting the difference, like mortgage deduction, they will split between 500 and one million, they will take 750. Individual tax rate comes down to 27 comes down to 37. Areael in many cases, they. The big news is dropping the tax rate to 37 . That is for the wealthier taxpayers wholl be heard the state and local Tax Deduction