Emirates. Angie it is just past noon, welcome to Bloomberg Markets middle east. Today it is a reversal of yesterday. There was a concern about the fallout over italy but when markets will help this morning here in asia, they are just following this global rally, a relief rally, you could say. Yousef it is a relief rally. Some of these moves are simply remarkable. I put up this chart which shows you some of the volatility. This is what you can pull out on your bloomberg, and we have also added what happened with the trunk win in november. Two lines, eurodollar one week implied volatility, the vix. You can see the spike ahead of the announcement of the u. S. Election, then look what happens in the runup to the italian referendum and how it abates. Bloomberg strategists making it clear there is little reason for the implied volatility. The markets want to focus on extension of qe in the eurozone, and the other one will be the decision from the fed. You are looking at later on in the curve, with the French Election in april of 2017. What are you looking at, angie . Angie we are looking at exactly that. Ecb decision on thursday, whether or not they are going to take in what italys decision is going to mean for stimulus, and the fed doing the counterbalance effect next week. Lets do a quick check of the markets right now because this really frilly is extending across the region. Mumbai just came online 20 minutes from now a sorry, 20 minutes ago. Right now it is gaining along with hang seng and the topix index. The broadest of the indexes in japan climbing as the yen maintained mondays losses. East, wen the middle are two hours away from the opening of the emirates markets. That happens at 10 00 a. M. Local time. Lets get you a run through some of what has happened yesterday. What you are looking at is due by and abu dhabi. That italian referendum gloom still feeding into it. Pmi figures give us a good indication as to where the economy stands. Financials in dubai driving a lot of those gains, utilities and telcos bucking the trend in saudi stocks. Lets check in on the first word headlines with ross. the parliamentary grilling of some of the biggest corporate names has taken a break for lunch. And others have been questioned about the influence peddling scandal around the president. Admittedchairman buying a horde worth more than 850 million, but he denied wanting favors in return. South korea is claiming the north may have had to spur the command. It says the military units intranet server has been contaminated with malware. An unidentified official says military documents have been compromised. Pyongyang sold blamed for robbing passwords. The italian Prime Minister matteo renzi has been asked to put his resignation on hold until parliament has approved a new budget. He says he will step down after voters overwhelmingly rejected his referendum on constitutional reform. The president has no asked him to stay on temporarily with the budget potentially going before the senate as early as friday. Asset fell to 78. 5 billion, according to bloomberg estimates. It shrunk 73 from april, 2013 under its former manager bill gross. The total return bond fund is now more than 79 billion in assets. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. Im Rosalind Chin. This is bloomberg. Angie the reserve bank of australia did as expected when it left the cash rate unchanged at a record low of 1. 5 . Lets get over to paul allen in sydney, where the decision was completely unsurprising. Statementnything in a to suggest that 2017 might be a different story . Paul well, a particularly. The rva did have some interesting thoughts on growth. It said in a statement that the decision to keep the cash rate on hold was consistent with sustainable growth, but also that there is some slowing in growth rate likely. Tomorrow, we will have a gdp read for the quarter, expected to show a contraction of. 1 . Earlier today, we have the balance of payments current account out, and that showed a. 2 drag. Perhaps growth will become the issue of 2017. The rest of the statement really did read like a laundry list of challenges that the us trillion economy is facing. The outlook for inflation remains weak. The rba has since indicated that they may be willing to tolerate it. They also noted that the labor market is next, and that there is concern about the number of parttime jobs and casual as asian of the workforce. The bank noted the housing markets, which are weak in parts of the country but very strong in areas like sydney. Obviously a cut to the cash rate. But overall, those apprise at all, the Australian Dollar did need a move didnt need a move. Rba seesaul, the inflation remaining low for quite some time. They seemed reluctant to ease any further, given the points you made. What is the chance of the government coming out with some extra stimulus . That has sort of been a bleak reference the rba has in making, but there are limits to Monetary Policy, which is about as explicit as a central bank will get in telling a government that it is time you look at stimulus. The government of the day in australia is more concerned with what repair, with budget repair and protecting its credit rating. Australia is on negative watch. One senior economist has been suggesting that the loss of the aaa rating might be a blessing in disguise, liberating the government, and allowing them to embark on Infrastructure Spending. We will get an update on that later this month, december 19. The treasure will give us a budget update, and if it is starting to blowout, that could be the catalyst for the ratings. They will be interesting to see if there are any changes in policy. Yousef paul allen, are men on the ground live from sydney. Latest on the markets. Jp has the details. Jp the mood we are seeing on the market is one of the bounceback after yesterdays selloff across all of asia. Right now we are seeing the gains, and the feeling that perhaps the selloff was overdone. Stocks from tokyo to thailand really rebounding, staying as the sort loser, who won the sore spot. Look at thehen you different asian markets, it is an again that between taiwan and korea, but overall, a big sigh of relief from these different markets. If you want to look at how the different sectors are doing at the moment in the asiapacific region let me grab this you can seal tentative energy is going up, oil and gas showed a little bit of a pullback earlier, but you can see the big pie of green across most of the major sectors. Finally, i dont want to set you guys up without a look at the currencies you are seeing a little bit of pullback, the Australian Dollar not really ot ofng a lon movement. You,res a story for interesting. Iran will be other top of the agenda when the Prime Minister meets donald trump. Benjamin then yahoo s opposition to the nuclear deal may gain traction with trump as his key. Were joined on the set great to have you. Just when weion, thought that the tides were relaxing. The question that we have right now is what can netanyahu do . Does he have the power to scuttle the deal . The question is, located, because it was a multilateral deal. The u. S. In itself doesnt have the power to put an end to this deal. However, when he can do is try to influence u. S. Policy. Election, with a congress led by the Republican Party, obviously we have now more of the Republican Party power, and we know generally that they have been more hawkish toward iran. Aeir view is that iran is rogue state and needs to have pressure on it. So like an happen is that for additional sanctions to be applied through congress, additional restrictions, that would reach a level that would undo any benefit that it may have gained from the deal. Yousef the benefits they have gained i pulled up the opec function, which beautifully lays out how much they are producing in terms of crude oil what kind of reaction can we expect from iran, if that tension continues to build . Slowly have seen so far is the president who started from the beginning of his term with the policy of engagement with the last, and that is how the nuclear deal came about. He really championed this policy of more engagement. However, with those signs in the te house, there is really first of all, he has changed his tone is a matter of caution, and he has called on the u. S. To stand by the commitment. And obviously, if that continues, and there is a more hawkish stance, rouhani will be under pressure from home to react. Angie how does the u. S. Stand to benefit from the iran deal . Well, thats interesting, because iran is not averse to buying u. S. Goods, despite the history of animosity. One of the first big deals we saw go through after the sanctions were lifted in january ofs year was a big order over 100 boeing planes. We are talking about a deal that is basically finalized, valued as much as tony 5 billion. As much as 25 billion. That can create jobs in the u. S. , but that deal is also in jeopardy, because a few weeks ago we had a vote in the u. S. Illgress in favor of a b that would stop the leasing or selling of planes to iran. If that deal doesnt go through, that will have an impact on both countries. Angie it was highly controversial politically, in the u. S. Lets see how it shakes out. Thank you. You can stay up to date on all of it and all the other major market moving news with the top live blog on the terminal. Pliv. Later in the show, saudi arabia trying to block a proposed payment. We will ask what it means for the companysdebt troubles. Yousef plus, from five years of pain, the insightful commodity bulls. All the details up next. You are looking at wti trading at 51. 26, a similar picture for a lot of the others. This is bloomberg. Yousef welcome back to Bloomberg Markets middle east, live on bloomberg tv and radio. Pain, after five years of relief finally in sight for theodity bulls, because bloomberg commodity indexes set for its first annual gain since 2010. To our asia over commodities managing editor, standing by for us. Whats behind the resurgence and commodities . Its sometime said about commodities that the best cure for low prices is low prices, and that is alluding to the cyclical nature of the market. That is all we are seeing now. Prices fall, producers cut back on investment, more spending on production. Supply tightens demand increases, and they read bank. After five years of declines we see the producer response from energy to metals, and this is leading to a rebalancing of the market. Floor undering a prices and we are seeing the rebound in oil, and metals across the commodities. Issef whats fascinating when you pull up one of the key functions, the commodity overview, yeartodate returns the amount of games we have seen are almost unprecedented in some cases. Which of these commodities have stood out . Thats right. The biggest gainer on the index is zinc, up 72 so far this year. That is part of a broader resurgence in industrial metals. You have had the producer response but you have also have signs of demand picking up in china, the worlds biggest commodity user, and china said it is going to spend billions on infrastructure, speculating that there will be demand increased. Oil had the highest and 60 months yesterday, down a bit today, but it shot up after that shock opec decision last week with other producers outside the group joining in the Production Cuts. Yousef we will leave it there. Our asia commodities managing editor in singapore. Lets cross over and stay with this story ecb holds its last fall as a decision of the year on thursday with the italian referendum sure to be on the agenda. Next week we are looking ahead with the rates rise with some meat on the bones in these big events. Crystal rule is the chief economist at the Abu Dhabi Investment authority great to have you. With the italian referendum out of the way, we talked about the volatility your topline thoughts on this rise of populism and has taken over the u. S. And is now still very strong in europe . Usi think it will be with for a while and what concerns me is the economic consequences. Its interesting what we see emerging now in the u. S. , the first ideas of what the president will be doing and how it is perceived by the markets. There is at least for the moment some optimism. My best guess is that governments will do what governments usually try to do, to go for fiscal stimulus, which will put pressure on the fiscal system. It happens in a situation which can be called as for the environment. The rate increases seem to follow. Well enough in the situation is multiplier tends to be small, very private and very fast. As you look at the yield curve yousef we have seen some very interesting moves and treasuries. How is fiscal stimulus playing into the fed . How do you expect the fed to move beyond december, as a lot of the Central Banks try at least to normalize Monetary Policy . About,hat stimulus comes and if Market Expectations have what iserm growth interesting also is the difference between the fed and the ecb. The question about whether we have longerterm divergence of Monetary Policy, with rates in the u. S. Ticking up. And how would that divergence of Economic Policy, which has prided itself that longterm industries how was i going to be collected . It will make life more interesting for people like us. Yousef all that thought. We will continue that conversation. Still plenty to come on the program. We will dig deeper into the commodities story and see where the road goes for oil producers. Is the opec deal going to hold . Stay tuned. This is bloomberg. Yousef welcome back. The chief economist head of research at the Abu Dhabi Investment authority is still with us. Oilre we get more into the price story, i want to get your closing thoughts on Central Banks. This chart lays it out on whats been happening with the Balance Sheets. Ecb Balance Sheet we put one of the boj up there as well, and the fed going up and up. The ecb has the secondhighest Balance Sheet on the gdp ratio of some of the major Central Banks. Looking ahead to the counseling meeting, how do you expect mario draghi to navigate these waters . He has oil prices and political populism to deal with. How do you make a decision with that . In the way they always do, you get the government together, you look at your mandate in the numbers. Its not there point to make political decisions about populism. Banks ast that central try to signalell a consensus and they will carry on. The interesting part comes with the data change, may be as a result of politics like in the pass in theu get a u. S. Which looks different from the path of your on Interest Rates of europe on Interest Rates. Diversions are sustainable and the longerterm, and then you come to issues like inflation differentials and you get a whole different ballgame. In the shortterm, we are quite happy to stick with the consensus. Of thewhat do you think u. S. At the end of the day, you still have people saying that the fed is not going to be able to keep up with inflation, nor expected inflation, as a result of trump fiscal policy. They already indicated that the way to increase will be very, very slow and miniscule. Thats the communications which have been given to the market so far, but what we also the seen recently is that term structure of Interest Rates have changed, and longer 10 terms are taking up higher. That clearly prices and expectations about growth in the u. S. , which may not materialize given what i said initially. The speed of the short duration of fiscal multipliers. In that case, we could see an inflationary impact and of course the data set would have changed it would have to react. Angie quickly, toys 17 what is on the risk horizon . 2017 the risk horizon . I think a lot of the elections in europe will have a potential i think the biggest economic risk is probably disappointed expectations about Economic Policy and performance in the u. S. This is not only about what a fiscal stimulus is, this is also about the potential for protectionism, both as far as the Free Movement of trade and the companies angie all right, we are going to leave it there. Running out of time. Angie 12 30 in hong kong. Im Rosalind Chin in these are the first word headlines from around the world. Japans lower house of parliament has just approved a bill to legalize casinos, the closest the country has ever come to pass a controversial a deflation. A poll last week that 57 support continuing a ban on casino gaming. One pachinko equipment maker more than doubled since june. Japans cash machine has also rallied. Asian stocks have joined a Global Relief rally as investors switch their focus back to the outlook for u. S. Monetary policy following the topeka of i following the defeat of italys constitutional referendum. The euro was near its strongest since midnovember after an initial slump following the italian premiers resignation. Oil is on the highest close in 16 months as opec prepares to meet independent producers to implement agreed curves on supply. 14 noncartel members, including mexico and on, have been invited to saturdays talks in vienna. U. S. Stockpiles are split for a third week, according to official data. Australias central bank kept Interest Rates unchanged amid a global commodity upswing, using the impact of Slower Growth at home. The government says they have left the cash flows at 1. 5 , as forecast by economists. They have already battled with record debt. The median estimate of economists is for a cut in the third quarter. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. Im Rosalind Chin. This is bloomberg. Si Financial Group has rejected a proposed payment freeze by a construction firm, effectively