Saudi arabia is set to unveil its plan to balance a countrys budget and maybe even run a surplus by 2020. Welcome to bloomberg daybreak europe colleaguede me as my yusuf in dubai. Lets talk about oil, its never far from your heart. I know you dream about it. There is somebody out there that believes in 100 oil next year. Im talking about the coal options that traded yesterday. What we saw yesterday was by the end of 2018, someone had taken a in terms ofle pump oil. About a million bucks yesterday. Really after seeing this momentum in the oil market, the hedge funds of the most bullish. Their call options are the longest since 2011. In the big skiing among things, is a million bucks option play out there that big . No, but it is a lovely round number for the market to hang its hat on. There is somebody out there that wants to add that amount by 2018. On the horizon. However at the same time youre seeing the rise in grant and the , what the rise in brent youre seeing is volatility drop to levels that weve not seen since november 2014. Yesterday stockpile in the United States of america and the expanded for the first time in five weeks. There is great debate about the rally in the u. S. Price, capping the bandwidth of oil at maybe 60 with a big push is the perennial issue with this market to deal with. Lets have a look at the risk radar. Fanf volume getting a big a bit thin and trade around the world. 10,ollaryen up interesting bloomberg analysis pointing out that according to one framework, suggesting that the dollar rally may have reached a crescendo. A quick look at the dow jones futures, down. 10 . 1 , wevecopper down seen copper inflows into the lme between december 1219. Some of that early copter optimism copper optimism was speculative. Inventory that really put Downside Pressure on crude after what came in as a built in supply. The expectation was about 2. 5 Million Barrels last week. Lets get to bloomberg first word news with heidi. The two largest u. S. Defense contractors, boeing and Lockheed Martin, have placed to control their cost after president elect donald trump summoned them and top pentagon officials to his maralago resort in florida to discuss military spending. He was concerned about the price tag for the new air force one. Mr. Drum were going to get the cost down. These are great people and amazing people. Im very impressed with them. And good negotiators, too. Meanwhile, donald trump has named carl icahn as a special advisor. Want him to help overhaul federal elections in ways the president elect says will promote business growth. The incoming president offense spoke admiringly of carl icahn during his Election Campaign and said hes an example of the type of business person he would want to take advice from if he wanted if he won. Bloomberg was told hes seen both business and cost benefits for jobs. The difference after the election especially has been in the business side, the the world isat their oyster or whatever phrase you want to use. Enthusiasm that the company feel that more will get done, they feel better about the prospects of the Regulatory Environment in their businesses, they feel better about the possibility of final demand. That will take time to come through, but instantaneously the consumer and Business Confidence shot up. New zealands economy expanded faster than forecast last quarter as construction boomed and Consumer Spending increased. Gdp grew 1. 1 from the previous period. However the economy expanded less than forecast from year earlier. The kiwi dollar traded near sixmonth low following that forecast. Continuesconomy come theway confederation of british industry said the index was held by Strong Performance in manufacturing, the best and more than two years. Retail activity slowed somewhat. The overall output measure was at 17 this month, up from five in july, just after the eu referendum. Global news, 24 hours a day in more than 120 countries. You can find more stories on the bloomberg. This is bloomberg. Lets check in on the markets, how are traders positioning themselves during the close of the year . We got a lovely piece on the bloomberg talking about positioning. Yen iss like the reaffirming short positions on the currency but little more enthusiastic on the equity side. Juliet maybe not to make, weve seen maybe not today, we see most markets weaker. A santa claus rally were seeing in some markets heading into the close of the year. The shanghai market in very late trade, the nikkei closing off today, lows down by. 10 . You did see a little bit of buying coming threeontwo that rally but remember the nikkei will be closed for the next few days. It has a long weekend ahead of the holiday break and the nikkei and topics trading at 26 day highs earlier this week. Australias market had a good session, hitting a fresh 26 day high. Bottoms low across all these markets and new zealand have a strong and is, up by. 7 . Those markets will close early tomorrow ahead of the christmas break. Quite a bit of weakness coming through in the equity markets in hong kong, down. 7 but theres been more of a pickup in some of the Development Stocks that have been under significant pressure. 18,000 newowing that flats were sold in hong kong in 2016, so some upside therefore Development Stocks. Most of Southeast Asia being sold off on the weakness in currency, philippines up by 1. 7 . A mixed day in equities and also in bonds. Thanks a lot for that update. Lets stay in asia with the story coming out of japan. A record budget for the next fiscal year. Rewarding companies that march to the economic strong. Also a record defense and procreation and rising tension with neighbors. Shery ahn has the details, break down the numbers for us. Were talking about a budget worth 825 billion. This is a number we have heard before, what we had not heard was where the government was. Oing to spend that money now we are hearing that, as you said, they are going to spend it on firms that boost the governments policy objectives. We are talking about firms that raise wages based on performance rather than seniority, as is common in japan. It turns their nonregular employees into permanent ones. The measures are the Prime Minister slaters latest efforts in trying to change the private sectors behavior, talking about trying to link better corporate performance with higher wages, higher spending. The government plans to curb new bond issues. Some people are saying that this depends very heavily on a weaker yen. Take a listen. Over couple of years the government japanese withnment was quite lucky, greater than expected corporate sector earnings. They could always get higher revenue which could be implemented to the budget. But this year is getting more difficult to do that. Quick she also says the governments past income estimate is waste on growth of 2. 5 . Real growth of 1. 5 , she doesnt see that happening. Also a much weaker yen could spur criticism from the new u. S. Trump administration, and she says that is a risk. At thei was looking allocations and what stood out was how much money was being put to work for next year in terms of defense spending. What is behind that and what is driving that . This is a record budget again for the Defense Budget. That would be more than 42. 5 billion. This is the best year we have seen spending in the military just increase, a trend that has continued since 2012. F35 fighterne, due to the rising geopolitical tensions with china and territorial disputes in the East China Sea, not to mention a more aggressive north korea. You very much for the latest on the japan budget. The question for the market is this isether you think reloaded, what will that do for your positioning in equities and dollaryen . Take a look at this, what we have done is taken u. S. 10 year yields, which is the white line, going all the way back to the clinton era. You sort of see one of two dynamics there. Thats when the real new differential was driving the view that you would see dollaryen move, you go back to 1993 and 1994. But in that time you had a trade gap and you had trade tension. Differential just did not carry through. Of the pieces we have this morning, the consensus to go to 115. Yen if you have trade wars for this protectionism, potentially that comes into the market, you may see this exponential move, youre seeing that ratchet higher on that. Can that continue . Can that be sustained if you have this protectionism that may just come into the market. Understand if the dollaryen can continue. Yusuf thats one of the points in the investment notes from this morning, that the markets are not really pricing in enough on the protectionism risk that could come with donald trump. As crossover over and get you some of the highlights for your day ahead. Have00 a. M. U. K. Time we the trade balance out of spain. Gdp andre is danish italian retail sales, an important one to watch. At 1 00 p. M. U. K. Time, data from the u. S. Including gdp, personal consumption. That will give us a hint. Still to come on the program, risky business. We hear exclusively from the bank of america Ceo Brian Moynihan and find out what hes expecting from the economy in 2017. And saudi arabia will look to rein in its budget deficit as it unveils its state budget for 2017. We look ahead to that announcement and break it down for you and see what it all means. We get the latest ahead of the looming deadline. Stay tuned for that and much more. This is bloomberg. Manus its just gone to 18 in the afternoon on a beautiful day. The hang seng not having such a beautiful session, down. 7 , struggling for any kind of a link to the equity markets. Expectation is growing that the bank may be bailed out by the Italian Government. People would knowledge of the matter say probably failed to move sufficient demand for up capital call by todays deadline. Yesterday the Italian Government got the green light for the rescue fund. New exclusive talks with Johnson Johnson about possible takeover. Last week Johnson Johnson said it had ended negotiations with the 22 billion swiss drugmaker and a swiss farmer giant was said to be advanced takeover talks. Saudi oil giant ramco will continue to for an ipo in japan according to a broadcaster citing the saudi oil minister. Looking at markets from hong kong to new york for what could be one of the one of the sharehares that sales in history. Texas,nts in germany in but apple says nokia is refusing to act on a fair basis and is attempt toactics to extort money from apple. Nintendo shares have fallen in tokyo yet again despite a record ron for super mario. The company said the new mobile games down wrote download rate is the fastest in app store history with 40 million downloads in four days. Its currently available only on apple devices and is initially free in 140 countries. Critics say the 10 fee to unlock new levels is too steep and some reviews have been less than glowing. Alibaba has again been labeled a haven for knockoffs. Its made an embarrassing return just four years after getting its name removed. The u. S. Office of the trade representative said the online retailer had unacceptably high level of reported counterfeiting and piracy. Alibaba suggested the decision could of been influenced by politics after president elect donald trump criticized u. S. China trade agreements. Buckley, a managing director at merrill lynch, has died. He was 62. He joined merrill just six months before bank of america acquired it during a financial crisis. Institutional investor named him to its allamerican research , including eight times as number one. That is your bloomberg is this flash. Over toets cross another story in the usp. U. S. President elect donald trump has made another appointment to his Economic Team as he feels up the different candidates for the cabinet. Hes named carl icahn as a special advisor to help them overall with federal regulations in an attempt to promote business growth. Meanwhile bank of america Ceo Brian Moynihan has told this will help business, at least in theory. He spoke exclusively to bloomberg. We have the number one Research Team in the row in the world for six years in a row. Has the u. S. Growing around 2 next year which will be an increase to 1. 7, somewhere in that range. This will be a step up. Their fundamental belief is not changed a lot since the election. In theeve the economy u. S. Will grow and in the world will grow and its a little more on the up swing. It picked up and fell off this year and we think it is back up. Part of the uncertainty we went through this year has been handled by the markets and by people predicting outcomes, which is pretty interesting. Tie in referendum, the French Elections, the u. S. Election, all that stuff, it just happens. There is going to be huge disruptions in the market for a few hours and then we came back and said life goes on. There is tremendous momentum incapability behind it. Question is, with trumps election, businesses are frisk year. Friskier. Ear its good for Capital Expenditures and it ought to help next year. We talked to our clients about the Regulatory Burden and that belief is it will come down in that will help them do things more quickly. They believe all that is good. There are other serious concerns. Labor is trickier than people think. Getting the right labor at the right place at the right time is tricky for people right now. Jobs inits the right the macro sense of wage pressure. We have to do a lot of work to make people make sure people are trained into it. The big difference to happen in the last six weeks is the enthusiasm. If that falls through, it will be interesting. Guy johnson bring into the conversation. Welcome. Good morning, early morning. List carl icahn is on the of the wealthiest billionaires that we track here at bloomberg. He is number 20. He is worth 20 billion. Excuse me, he is ranked at number 32. He has now been named as a special advisor to donald trump. What do you think, what message should we take from this . Heres the reason why i think this is interesting. Donald trump clearly is going to drive some sort of fiscal expansion that is likely to be inflationary. It goes back to the Larry Summers story. They need to up the growth rate of the United States. In, hesl icahn comes been targeting regulations. If they can reduce the friction in the economy and make the potential growth rate rise, maybe some of the fiscal stimulus does not become inflationary and maybe the fed doesnt have to raise rates. Heres a guy that knows his way around the regulatory structure story. Johnson cabinet went for the word. Theres a lot of wall street and business on this. One could say that is actually a good thing. Graseck you believe the u. S. Where its in a period is entering a phase where he can grow more strongly, then yes, they need to figure out a way to get potential growth rates up, and maybe some of these people have the ability and skills and knowledge and understanding to be able to deliver that. This is the challenge of the next four years. Larry summers needs to be proved wrong. Carl icahnys like coming in and a lot of wall street people coming in as well. Our markets abroad going to take this appointment . Youre saying theres a lot of wall street on this, but what does it mean in terms of possible sections policies across the board . The guy you need to look at is his other appointment, peter navarro, who is coming in to advise. , he is ancademic author, he is very antichina, and that is the more clear message directed at the international story, rather than what carl icahn is going to be coming in and doing. , the italianust in government may approve a decree pasci today. Te more to come. This is bloomberg. Manus breaking news coming , weugh on monte paschi understand from press reports that the rescue of monte paschi could be as early could be announced as early as today. The other breaking news coming in, press reports that the italian treasury sees tea ifing 50 of monte paschi that is the case that arrest is put forward tonight. Overnight, the latest up date monte paschi from monte paschi is that they have raised 2 billion euros. This is one of those lenders one failed to getjust a Cornerstone Investor for the 5 billion euro capitalization. There were a number of different strands to this recapitalization from a debt to equity swap to reducing are selling off bad loans. Where we are at the moment is monte paschi says theyve got about 2 billion overnight. Retail investors, how are they going to be compensated . That is the debate in the monte paschi debate. Are the markets underpricing the ramifications of bailing in or sorting out monte paschi, jeter depending on what term you choose to use . A lot of variables yet to be defined in that equation. The next story is a telly and ion. L lastly Johnson Johnson said it had ended negotiations with the 22 billion swiss drugmaker and the french form a giant said to be in advanced takeover talks. Manus and finally we focus on totale which is expanding in latin america. Woods, your neck of the yusuf. Its also said to be considering buying other assets from state owned petrobras. Oil assets on the move. This negative the woods as you said is mine. Lets get more on the action where expecting in the moment. Good morning, asian stocks following the drop in u. S. Stocks, the dow failing to reach 20,000. Chinese and japanese shares recouping some of the loss from earlier but the asiapacific index is in the red and most Industry Groups in the red. Some of the worst performers are energy stocks, no surprise given the weakness were seeing after the u. S. Stockpile data. The shanghai composite has been one of the worst performers this month globally and chinese doctor in in the year as they began, with losses lots of concern about surging money market rates. As you can see on this chart, the shanghai composite underperforming global equities. Before this decline it was back in an almost 11 monthsbefore thk in an almost 11 months high. Fund managers do see the index climbing to 3800 by the end of