Anna a very warm welcome to bloomberg daybreak. From here in the city of london, i am anna edwards. Manus i am manus cranny. Brace for volatility. The euro has [inaudible] against currencies. Iscks are up 2 but this volatility in the fx market and we are getting back to the levels we saw in brexit. Anna this is the volatility we saw spiking ahead of the ecb meeting. The expectation is there will be an extension to quantitative easing but by extending it, you invite the conversation about when it ends. Manus is it longer and thinner . Eurodollar according to ubs, they say the dollar rally is going to peter out next year. They want to be long the euro, they favor being overvalued the euro against the dollar. 112 in the next three months or you anna [inaudible] journalists are mentioning it. Will mario draghi use that word . Here is where we are. 1. 0772. They are likely done with rate cuts. Manus in the past month, a great number, go to your search for trump on your bloomberg and 2 trillion comes up. That is what has been added to Global Equities. And 2iapacific up trillion lost in the bond markets. That is the biggest loss ever on record for a month in the bond markets and you have got that, they are gathering again. 49. 90. Thesewe are stronger on asian equity markets. And touching new records. State seeing a euphoric and that seems to describe what is going on in markets since trumps victory. Angie perhaps this is what is supporting it. Angie lau here with your headlines. Chinas exports rose last month, sapping snapping a losing streak. Shipments increased euro. 1 from a year earlier compared with estimates. Rose 6. 7 versus a projected 1. 9 decrease. That is the biggest rise in two years. 44. 06 dollars billion, 44. 6 billion. Unexpectedly cut its rating of thirdquarter growth to 1. 2 , down from a preliminary estimate of 2. 2. The revision was driven by drops in business spending and private inventories. The governments projections to the overall size of the economy rose thanks to changes in the way gdp is calculated. Matteo renzi formally resigned late yesterday. The countrys president still will not let him leave. He said he will delay accepting the resignation as he begins italys main political parties. Randy is stepping down after suffering defeat in sundays referendum on constitutional reform. Obviously have to go through an internal transition which i think will be hard. It will be very hard as we have to be transparent which is needed for Great Democratic Party to stand out but that, in my opinion, that will need to come after we tackle the process of government that is about to formally begin. Michael jordan has won a partial victory over usage of his name in china. The countries he has the right to the characters that translate his name into chinese and he is a well recognized person. The court denied his claim to the company word, selling sportswear under that title. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg. I am angie lau. This is bloomberg. Manus breaking news for you. The whole china story, the retail auto sales. This is according to pca. Into,oes that translate 21. 21 million units. This is january november. By november, it was up. That is china for the Global Markets. Anna just as donald trump has been putting the chinau. S. Relationship front and center politically, we get weakness in the yuan and boosts in chinese exports. Lets check in on the Market Action in asia. Are seeing a rally once again across asia up for a third consecutive session. The regional Index Holding at a onemonth high. Seeing australian stocks close up at 1. 2 . That Index Holding and highs not seen since august. Also another strong rally on the nikkei closing up by 1. 5 . A lot of these buyings we are seeing an asian equities and bonds has to do with your part of the world. A lot of expectation on Mario Draghis shoulders that the ecb will push out that Bond Buying Program asked the march deadline. We know mario draghi has disappointed markets before. It has been a very solid day of buying. Apart from in china in late trade, we seeing pretty flat on the shanghai composite grade despite the fact we had that very strong import number that angie was just talking about. If you have a look at the bond market, particularly in australia, yields on the 10year note down by almost seven basis points. At the lowest levels of yields in a month. You seeing a lot of money coming into not only stocks but also bonds today. You. thank the latest on the markets. That is decision day for mario draghi. Investors are widely anticipating that he will extend the asset purchases at the current pace of 80 billion euros a month. Anna the big thing to watch out for is whether mario draghi gives any signal as to whether qe will and. When qe will and. End. Acts a difficult balancing perhaps ahead for mario draghi. Matt difficult because he has to decide how much to tell markets, convey to them that he is going to continue this qe and maybe tapering will not happen so quickly. On the other hand, he has to say as little as possible because he is not exactly sure how much support he is going to get from euro area governments. The most important thing is going to be how the tapering, that trajectory of that tapering is going to look. Most economists we surveyed expect an extension of the qa program for six months at the current run rate of 80 billion euros. Euros a month. The question is when that and, how quickly will he have to bring it down . Manus that is going to be the debate. It will be a hugely watched nuance, every word he uses will be nuanced. How are events in italy, his home country and the referendum is going to play in two Mario Draghis strategy. There is one story, it is a massive risk in italy, isnt it . Matt yeah, he had said in the last week that he depends on, the ecb depends on the extraordinary support of governments for his monetary policy. What you saw happen in italy is very bad for mario draghi as the head of the ecb. Another question is going to be much they are going to be able to buy. As you know, in a lot of countries they have already bought as many ons as they can buy. Portugal has reached a limit. There are a lot of bonds that are offlimits because of other selfimposed rules. Those changes are also going to be key to analysts and economists and investors watching todays ecb meeting at 1 45 p. M. Local time. Anna thank you very much, matt miller braving the cold in frankfurt. We will have full coverage of the events that matt was referring to. 1245 p. M. London time. You can follow the meeting on the bloomberg. Now with us in the studio, the chief global economist at [inaudible] lets talk about the ecb and how they managed this balancing act. On the one hand expectation in the market is that we will see an extension to the program but if you extend it, that invites a conversation about for how long and the end date looks large. Guest it certainly does. I would be along with the market consensus to think they will add another six months. I do not know if they would say anything about tapering. I am guessing they will add something to it. Linend prices get out of in italy although i doubt they will mention the name. They may say that the European Central bank will do kind of whatever it takes in order to keep spreads in line. Likemight make a comment that. As you were saying a little bit ago, the european economy is doing pretty well. I think mario draghi can feel he has done his job. Manus lets talk about some of the benchmarks. We were looking at this this morning am a that is the inflation in blue. If you look at the trend, the data is outperforming by the most in a year. The report card that he has in his pocket going in here is really quite strong. Guest it is very good. You look at is the surveys, they are the highest in several years. Business and Consumer Confidence is coming up. European commissions Economic Sentiment showed confidence continues to rise him we have on employment in total still pretty high but below 10 . That is as good as mario draghi could have expected. Anna we will get new forecasts around grace growth and inflation. Not deliver would be a big shock. Why do we need an extension of the program, why not just carry on until the date that is penciled in and then stop . Guest i think draghi feels they have to do a bit more to make sure the nice economy that is coming on now just has some lasting ability. A gets into a sustainable expansion. That is kind of the problem. You get a nice recovery but you have to, in order to have the expansion continue, it needs to be sustainable. Anna he wants the governments to do more. Monetary policy has to setback at some point. Guest that is true. That is what is going on in the u. S. Have done thethat best, ireland and spain, have done some fairly dramatic economic restructuring. That would be helpful throughout the eurozone. Manus when we talk, i [inaudible] all you have to do is go outside wonderful these paradigm shifts are not as real for people on the street. Lets talk about italy. They have been moved from stable to negative. We will see the bond market open today but one of the things about moodys focus is on is the debt load. This is the critical point. Gdp is 130 for italy. The last thing they need is a prolonged political impact. Guest that is true. I am not sure theyre going to have that long impasse. I am guessing there will be a technocrat government. In which they will change the election the way they elect so that the winner of the plurality does not get that big bonus amount of seats in the parliament. That will keep the fivestar movement under control a little bit. I think things are moving in somewhat as good a direction as maybe as can be expected. Anna thank you very much. Some highlights of the day ahead. Electiond the buy takes place today. We get the u. S. Initial jobless claims at 1 30 p. M. A speech ine preferred on how to make the euro a lasting success. Coming up on daybreak. Under water down under. Reporting the worst Economic Contraction since 2008. We speak to the countrys finance minister. Ona with investors focused the central bank as it meets for the final time this year, we discussed the prospects for druggies qe program with the chief economist. Manus chinas trade revised as the imports and exports rise. We are live in beijing with the latest on the worlds secondbiggest economy. This is bloomberg. Anna welcome back. This is bloomberg daybreak. 51 . Seng is up ive the global stock rally continuing. Lets get the Bloomberg Business flash. Documents disclosed by Deutsche Bank provide smoking gun proof that lenders including ubs, hsbc, and bank of nova scotia [inaudible] the market. After the german bank settled a lawsuit over claims it manipulated gold and silver prices. Representatives of ubs, hsbc, and Nova Scotia Bank did not immediately respond to emails. Russia has sold an 11 billion dollars stake in its largest oil uce it to glencore [inaudible] they will share a 19. 5 percent stake. The sale is a triumph for president by mayor potent who announced the deal on state television personally. Deutsche Bank Employees may have manipulated internal indexes as part of an allegedly fraudulent losses. O help conceal to comment declined beyond an october statement that said the lender intended to [indiscernible] [indiscernible] accepting wechat pay. Customers will be able to complete purchases with a scan of their phone. It is embracing the cashless mobile payments. Manus thank you. Australias thirdquarter gdp did not make a great reading for investors. With the economy shrinking pie. 5 of percent. The biggest contraction since 2008. This comes after the rba left the cash rate [inaudible] for more, we are joined by the finance minister joining us from berlin where he is visiting. Isnk you for joining us, great to have you on the program. To what extent do you think the us trillion economy will be safe from route saved from recession by the Mining Industry . Guest we have had a bad quarter but if you look at the growth over the last year, 1. 8 , it that is still the strongest, one of the strongest growth rates in the world. It is stronger than any of the g7 economies except for the u. K. It shows we have to continue to work hard so we cannot take growth for granted. The us trillion economy is a economy and transition beyond relying on record levels of mining investment. Into a more stronger, more diverse base. That is where we have to continue to work to make our tax system more growth friendly. Also ensure that our exporting businesses across the board have the best possible access toarkets key markets in our region around the world. Word you used the magical for the whole world, infrastructure. The u. S. Is promising to do it, the u. K. Has [inaudible] your administration going to do question mark we hear the story about the rebalancing of your economy. What are you supposed to do in terms of infrastructure spending, should it continue to rebalance. Would you give up the balanced budget in the near term . Guest we have got a very significant Infrastructure Investment program in place. To the tune of 50 billion. We are focused on significant investing and enhancing economic structure. These are always under review and we can were looking at investorn bid our investment by partnering with the private sector. Remains on getting the budget back into balance as soon a sensible time cable and certainly that has not changed. Anna your budget could look you fiscally constrained if factor in Commodity Prices whether it is coal or iron or. Are you about to factor those into your budget to give your government a little bit more room to maneuver . Have a budget update in the week before christmas. All of these decisions are being made by the government in that context. We were waiting for the National Data to feed that into our economic [inaudible] underpinning our budget forecast. Very important to add that even though there has been some forvery in Commodity Prices commodities like iron ore and the like, those prices are below their peaks. Of lowlook at the impact Wage Inflation and low profit growth, that is more significant than the beneficial impact to date. Although somewhat of a recovery in Commodity Prices. All of this will be reflected in our budget update on the summer 19. December 19. Manus lets talk about the coveted mental you still have, it is the triplea credit rating. S p has warned it is under threat. John houston said it is a matter of time. Do you accept that it is just a matter of time given the constraint that you have the rebalancing act you have to do, is it just a matter of time before you give up the aaa and is it worth that much in this world to have a aaa . These are forly, the credit agencies. We work hard to put ourselves in the strongest possible position for our economy and the foundation for our budget on the strongest possible Fiscal Foundation for the future. All told he is nothing new. All thesed on things we control, the decisions on spending and the revenue side of the budget, the policy decisions that all of the policy decisions taking together continue to improve our budget pigot position. There are always and for any government, always external factors beyond your control. That will have an impact on your overall fiscal outcomes. Anna austria has benefited from its links to china. A lot of investors are asking questions about how much opportunity there might be in the United States, the infrastructure story around donald trump, for example. And extend to try the definition of the lucky country and try and reorient that away from china toward the u. S. . Guest we have a strong and longstanding friendship and alliance with the u. S. And we look forward to working with the Incoming Trump administration. To the Mutual Benefit of both our countries and our prime to ther has spoken president elect trump. There are as you would expect contacts between yesterday and government and the incoming administration. We are very optimistic about our relationship. It is a relationship that has withstrong and very good the governments of both political persuasions on the american and australian side. Our trade relationship with china is also very important. We continue to be an important relationship, it is our most important twoway trade relationship that we have. China is going through a transition and all of these , will will have to be have to continue to be worked through. Manus thank you for joining us this morning. The us trillion finance minister ning us live from germany australian finance minister joining us live from germany. Anna decision day for druggie. We are back in front for to talk about the ecb. Mario draghi. We are back to talk about the ecb. This is bloomberg. Guy just after 6 30 in london and 3 30 in tokyo. The dollaryen is down 0. 25 . It is daybreak. It is available on your terminal and mobile. Lets take a look at the top stories. In our editorial meeting on a daily basis, this is like me. It is a cover story. It is of course, ecb day. The consensus of the meeting is for the sixmonth extension for the qe Program Beyond the current expression date in current expiration dtaate in march. Volatility suggests hedging could be the name of the game. Anna the nextdoor is italys credit outlook. The next story is italys credit outlook. Movieodys slow and halting progress. The countrys rate stands at two sets above junk. Manus exports supported a surprise gain, snapping a sevenmonth losing streak in dollar terms. This is imported. This could be turnaround from exporting deflation to exporting inflation. Imports rising 6. 7 , the most in two years. And that was against a projection of the decline of nearly 2 . Anna absolutely. Lets get a look at the markets with nejra. Nejra yes, fresh records on the s p 500 and dow jones have lit a fire under the asian session. The msci asianpacific, up almost 4 . This chart shows u. S. Stocks were lagging asian stocks before the u. S. Election and now they are int e the driving seat. U. S. Future sare is are in the. Were still trading u