Against all of the political changes were seeing today, first i want to show you the Market Action. Stoxx 600 is sitting roughly flat, but weve seen interesting trading session where the nikkei really surging to the up side again today. More on that in a bit. Take a look at whats happening across europe because after a couple of uglier days in the market, were seeing something of a comeback now led by technology, Retail Stocks are also in the green, food and beverages, autos among the sectors dragging on the indek. We can take a closer look at the bourses. Ibex is down. Ftse 100 sam thing, so well keep an eye on all these levels as the show progresses this morning. The bond space is where weve been focusing our attention with spain and greece on. Spain today seeing prices rise, yields coming down to 5. 78 . Italy seeing a bit of a rally, too. Selloff for britain and bund oigs boig benefitting. Quick look at information rek. 81. 02 is the left. Down another tenth of a percent. Eurodollar is lower by a quarter of a percent. Nymex and brent both adding to their levels as we see continued unrest across the gaza strip. Gold, though, is lower. Lets get out to asia. Its china, japan, which are dominating trade morning. Markets wrapped up the week on a mixed note. Nikkei ended at a two week high. Hopes of more policy easing. The yen trading around the 81 handle versus the greenback. Shares in china extended losses and down 2. 6 this week. No real policy cut list after china unveiled its new team of leaders. Oil leaders lost ground after beijing cut the retail fuel prices, but environmental plays bucked the downward trend yet again on hopes of more government support. The hang seng index managed to eek out modest gains. Walmart posted disappointing earnings. The htc shares surged nearly 5 on on news its market share has doubled in q3 from the previous quarter. A south korea automakers were morning the gainers with kia jumping 6 , but Technology Majors bell majors tumbled. And weak bank shares weighed on the asx 200. This is its biggest weekly fall since late may. Kelly, back to you. Thanks very much for that. Joining me treasurer of the Corporate Banking position. Welcome. Thank you. So what do you make of the Market Action . It really hasnt been friendly lately. No, theres a lot of uncertainty again as usual. Markets never like that. I know its a cliche, but very accurate. We have an escalation on top of the existing uncertainties. And then the japanese announcement. Friday afternoons in the 90s we just sat on our hands. So we think some of that on top of the uncertainties and strikes and riots, its not a time where you would think ill be optimistic for the next one to three years. Or even going into a weekend. Absolutely, yes. Coming up, well take a look at whats happening with the nikkei flying high on further easing. Well be live in tokyo with the latest at 10 30 cet. And well have analysis in washington where obama kicks off budget talks. Well also talk with russian markets and what stocks make a good investment as Angela Merkel heads out to moscow to meet putin. Thats at 10 30 cet. And 11 20 cet, well head out to connecticut to talk Holiday Shopping in the consumer electronic space. One analyst says trends are set to improve. Plus Christine Lagarde is saying eurozone leaders must Reach Agreement on greece at their summit next week, but when asked if the deal would happen, this was lagardes candid relay. Its not over until the fat lady sings as the saying goes. And i would not say anything else p. Its a question of working hard, putting our mind to it, making sure working on the objective that greece cannot operate on a sustainable basis. Ftc says expected to approve at a Party Gathering on december 5th, that the ecbs offer to buy debt must be temporary. Weve heard from lagarde there talking about how it aint over until the fat lady sings. At the same time. There isnt the equivalent of a fat lady in this scenario here, so im not sure before what did she mean by that . Precisely. I think she was trying to say it isnt ove over until weve all down and worked through every computation and see what we come up with. But of course as you quite relevantly pointed out, theres a general election next year, so they would probably try as much as possible to again inhe will gabt expression kick the can down the road with respects to greek sovereign debt. I dont imagine they will reach an agreement on on reductions just next week. If youre serious, you need to cancel its sovereign debt. Otherwise people will be laid off and they cant raise tax revenues. But would you propose that 23 you we if you were the german chanceler . Even if they come to the real sailgs that it will happen, is there any chance it it will happen before the next election next fall . Its unlikely. Its thanks to the ecb action that weve stepped back from the brink. So thats kind of kept it quiet. But it just simply postpones the ultimate fiscal Union Political solution that the eurozone needs if its going to stay viable in its current form. So youre right, i dont think there would be an ultimate solution ahead of next automatic tim. This wouldnt test bond prices as long as they think the ecb is standing there to assume the market. The eurozone must implement a credit market under a super vicery team. Speaking to cnbc, he also said rome still has a lot of work to do to turn its economy around. From agenda that we put in place, it doesnt end here. We have to keep pushing and progressing in our restructure of the italian economy. You can email us worldwide cnbc. Com and well show a little bit more of that interview with the italian he finance minister at 10 45 c event t. Everythings in cet. Central european time. Is that the market standard . Sgr i suppose. I cant even figure on out what time standard were on anymore. But in any case, were hearing from him there and thinking through you the dynamics of what each economy has to achieve while being hamstrung in this broader union. If youre in italy right now, what do you do, what can you do going into next year . You you are right to use the word hamstring. The global recession was bat, but in the eurozone, it was much worse because of the arrangement of the euro. And we are hamstring because they cant devalue competitively, theyre stuck with high Public Sector spending problems. So italy heal ras to look at the labor markets. Its one thing we should be targeting throughout which is trying to cent to create jobs. That means freezing payroll taxes, looking at the supply side, looking at the corporate sector to create jobs. Japan is going to the polls on november 16th. Just hours ago, noda signaled a possible end to his leadership of the worlds Third Largest economy. Japans opposition ldp party is widely expected to stage a comeback with former conservative Prime Minister at the helm. They promise to rufrp gentlemet growth to 3 . Strengthen relationships. But should we be at the point of sort of waving our hands and saying we cant did anything about Central Bank Independence or should we be at the point that we should have seen this kind of aggression two, three decades ago . The debate has actually moved on on. I do like the expression that they wanted to strengthen cooperation. Does that mean they take more government direction . The debates moved on. Central bank policy is still important, but there are other issues, as well. Its probably less relevant when the debate is no longer about just monetary policy. Japans had zero Interest Rate for a decade. Theyll say will is a dangerous game because you lose the publics confidence and youll ultimately end up down the road to suffer dom or whatever. And i dont disagree with any of that logic. Its who are to do with the labor market, with other policies and also with your structural budget problems. Government spending, Public Sector spending isnt sustainable in the western world and indeed i would say japan given aging population, growing young workforce. All these things means we cannot carry on spending the way we have been. And thats a painful thing. Cutting back Public Sector spending is very difficult to do. Central banks have acted correctly, but look at whats happening. Were still struggling to come out of recession most pointedly in the eu. Well bring you more analysis live from tokyo in a little bit. First, though, president obama will begin budget talks with top lawmakers today in hopes of avoiding the fiscal cliff. Hell meet with harry reid, mitch mcconnell, john boehner and nancy pelosi at quarter after 10 00 eastern time. Mcconnell says republicans wont raise tax rates. The white house says the president wont sign an extension of tax cuts for top earners. Chinese officials including the countrys vice minister are sounding alarm bells with external risks to growth. They hope the uts will come to an agreement on tax issues or warns the country could face a slide into deep recession. Eunice yoom is taking a closer look at the relationship between the two economic super powers and how theyre likely to proceed. Shes sitting down to her regular taste of americana. She and her coworkers dine out at their favorite fast food joint from the west twice a week, exactly the kind of middle income chinese American Companies hope will drive their future growth. Translator were used to eating rice, she says. Its convenient and nice to have fast food once in a while and have a change. American companies are hoping gnaw leadership will make it easier to sell to chinese consumers. The two countries are relied on each other for deck azs. Walk into any major Shopping Mall in beijing and you can see how important the relationship is between the u. S. And china. There are American Brands everywhere. Companies like mcdone olds are sinking their teeth into the china market. China is one of the biggest markets outside the u. S. In return mcdonalds hires thousands chinese. China is become abouting a major destination for american goods. But with the Global Economy struggling, tensions between the two Major Trading partners have been rising over everything from the u. S. s growing security presence in the region to chinas currency and trade. Im a little pessimistic because in the kind of world we live in where theres a struggle for global demand, that struggle will show up in the trade area. Reporter rhetoric about china flared on on the campaign trail with barack obama promising to stand up to china as he heads into his second term. I set up a trade task force to go after cheaters. Thats why we brought more cases than the Previous Administration in two terms. Reporter cases for example over auto parts and solar panels. On the sidelines of the congress, chinas commerce minister lashed out against washingtons decision to slap tariffs on panels warning the mauve could backfire it for the u. S. Someone asked me are you interestering a trade war with the United States. I said no. I hope we can ask you and try our best not to get involved in a trade ward. But when others tackle businesses in vad our business, i have to protect our businesses. Many fear the trade essentials could discourage further efforts to open china to outside competition. If you look at the last five years, there has not been major progress in that area. So we would like to see a resumption of the opening and reform process which would include widening. Reporter it depends if the leaders can see past their differences. Eunice yoon, cnbc, beijing. Well take a quick break. But stick around, still to come on the program, were going to get the very latest on the situation in gazaed according to the latest reports a three hour cease fire has failed to hold. I always wait until the last minute. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express r 22nd for christmas delivery. With features like scanning a barcode to get detailed stock quotes to voice recognition. Etrade leads the way in wherever, whenever investing. Download the ultimate in mobile investing apps, free, at etrade. Want to bring you news out of japan. Were hearing from Prime Minister noda about trade relations, he says hed like to join the tpp and set up a pretrade agreement. He says hes still pursuing the path towards no Nuclear Energy by 2030. He says big election issues will be energy and economy. We may hear more from him with regard to stimulus or the election. If we do, well bring you that news when we get it. Now to gaza. The Prime Minister has arrived following two days of air strikes in which 19 palestinians and three israelis have reportedly been killed so far. Joining us now from tel aviv where we know rockets landed nearby last night is Martin Fletcher. The fact that the rocket has the range capacity seems to be raising eyebrows. Reporter it handed pretty close. One landed in the sea and two more landed in other areas in open fields. Didnt do any damage. But the symbolism is great because one of israels key goals have been to destroy the long range capability of has mass. So the fact that after hundreds of israeli raids and strikes against those Rocket Centers hamas was able to launch rockets at tel aviv which nearly hit, thats a main success for hamas. You can talk about the visit by the Prime Minister and there was continued violence during the period . Reporter the egyptians coordinated the meeting with israel and hamas and they agreed on a ceasefire. Israel said that she would stop firing rockets during the Prime Ministers visit, but there was a condition that the palestinians should not fire rockets at israel and in fact the cease fire was broken first by the palestinians who did fire rockets in to israel so israel resumed their attacks on on gaza. And it was very heavy period. There were 85 separate israeli rocket attacks on gaza. The Prime Ministers visit was mostly about support, but also a feeling that there is a hope i guess that a period cease fire was on the agenda, too. Martin we hope hope to hear more from you you later in the program. Thanks very much. Meantime tony blair has told cnbc that egypts role in the crisis is pivotal. I think the efforts of egypt and others to create a situation in which we can deescalate and stop it is essential. Because if we dont assist israel retaliates, this will escalate and it could escalate in a very serious way indeed. Joining us for more is david hartwell. David, just heard there from tony blair with regard to egy egypts role. How has the rise of morsi transformed the issue compared where four years ago. Charlie in gar son compariso cant rely perhaps on wholeheartedly as it did on mubarak to rein in thhamas. Were not sure how morsi will deal with the situation. Egypt is under fresh frpressuree americans. But clearly were still in a situation where egyptian Foreign Policy is still evolving. So were not quite sure what the rule of the games are. Are you surprised there hasnt been more of a reaction in the markets . Not at this stage. Hartwell comment about how it will play out is accurate because we dont know with respect to the new administration. But there is potentially a chance it might direct Israeli Government thinking towards the idea that just constant cycle and recycle of violence doesnt solve the problem. There have baeen countless strikes since 1967. It doesnt solve anything and also doesnt make iz rally citizens any safe p. The idea that there are extare strategic installations, its shenksly a big refugee camp. It almost seems overplaying it. So the influence of the Egyptian Government could be potentially benign. It may have put more restrained response and the idea that there might be some peace initiative. David, do you agree the situation could be more benign . Good. It depends what sort of pressure on hamas. The military leadership of course of hamas has changed in the last two days. There may well be a replacement of leadership. So whether they listen really remains to be seen. Quully under what complains the israelis are prepared to end their attacks also remains to be seen. So i think were looking at a good few dayses yet of continued violence while they figure out the conditions. Were looking at live pictures of gaza. Earlier we saw smoke rising on t the who are rye sooiz. What are the prospects at this point of Ground Troops . I still think that that isnt an immediate prospect. I think they clearly have that as an option. I dont think they want to get involved in the ground incursion. It tends to become more difficult to extricate themselves. However, they seem to be relying on what strikes however you choose to define that air power, that type of thing, to as your correspondent said before, this hasnt worked in the past and so there will come a point whether they decide its worth deploying or you sit back and take stock. David, thank you very much for your time this morning. Still to come on the show, Angela Merkel arriving in loss cow for a meeting with putin. [ss me where i wanna go. Call or log on to hoveround. Com to find out where a hoveround can take you air strikes continue despite an agreed three hour cease fire as the egyptian Prime Minister visits the strip vowing to spare no effort to achieve a truth. Japan has dissolved its lower hoist and sets the stage for a possible comeback of the former Prime Minister. And president obama begins budget talks and both sides are digging in their heels on tax hikes an spending cuts. Extake down is down and just behind it are the