The dlp to power. Get a little, give a little, House Speaker john boehner may be willing to raise taxes on the wealthy if president obama allows entitlement cuts in return. And Corporate News weighs on sentiment across europe. Kpn shares fall after dividend and greco stocks plunges as analysts cut their outlook for the uk power group. Okay. Welcome. Its the start of a brand new week here on worldwide exchange. And dont adjust your set, kelly and i are together. For once, for a day. But make the most of it because it wont be lasting. If only there were a slomo. Im going to enjoy as much as i can of today. And likewise. And then were going to have to get all of our u. S. Voouers to find cnbc world because they could get three hours of you, carol and carolin for the rest of the week. Whatever they can do. Record it and fast forward to the good bits. Yeah. It will be 2 00, 3 00 in the morning or whatever. On todays show, plenty to come on. Yes. The south American Union faces ejection from the imf for allegedly cooking its books about the innation rate. Well head out to europe where the Swiss Banking giants could be facing 1. 6 billion over libor rate rigging allegations. And well be on the floor in beijing where chinas leaders just wrapped up a major conference. And japans Prime Minister election is calling on the bank of japan to heed the call of the masses. Abe is beating the heat on the boj just one day after his partys huge win and two days after the banks next rate setting meeting. Kaori enjoji has the latest for us. How much of a game changer is all this . This is a serious game changer. Its a comeback for the dlp and shinzo abe. He has made it clear that the economy and economic recovery is going to be one of the pillars and hallmarks of his second time in office and hes wasting no time in piling on pressure on to the bank of japan who holds, of course, their twoday policy Board Meeting later on this week. Here is what he had to say. I have constantly stressed our desire to present a policy accord in raising the inflation target to 2 . I do think it is unusual for monetary policies to come to the forefront during elections, but we have been able to gain much support for this. I hope the bank of japan will take this result intoious consideration. Shinzo abe has led the party to whats called a super majority. Effectively, more than twothirds of the 480 seat house that were up for grabs over the weekend. Theyve garnered those ballots. As a result, they can override any decision in the chamber of parliament. Technically, this political inertia has claimed so many victims in terms of Prime Ministers in recent years, it has been removed. However, most political watchers i speak to say it would be foolish of the Prime Minister and the party to try to do too much too soon because already the politicians are looking ahead to the next election, which is going to be happening next summer. In about six months time. Solo there is a lot on the agenda, for example, territorial disputes, a huge deficit, as well, most political analysts say it would be wise for the team abe camp to focus on economic recovery. But as far as this damaging territorial sfut is concerned, here is what mr. Abe had to say. The island res part of japans territory. It is backed by international law. There is no room for negotiation on this issue. A lot has been made ahead of this result about mr. Abes hawkish stance. And there was some notice the last time he was Prime Minister his first foreign trip was to beijing to try and mend fences. But this afternoon, he said that will not be the case and instead, his first foreign trip will be to the United States possibly at the end of january or early february to try and mend this u. S. Japan Security Alliance which forms the framework, in his words, to the relationship with china. So those are some of the initial remarks coming from shinzo abe. His new government will be in place by december 25th. What are you hearing from voters, as well . Some of the things going around the market today is this verdict is not so much whats the sense, is it excitement about this new party and what they might accomplish or is it frankly just frustration . How much of a mandate will this new coalition have . I would highlight the voter turnout rate. It was below 60 . This is a record low in the post war period. Although this was a general election and First National ballot since the march disaster, only about half of the population decided to vote. You can interpret that in many ways. Interpret it as so many parties coming, new parties being born right before the election, there were 12 parties to choose from. It was a hastily called election and 40 of the population even before this vote was saying they were undecided. And its possible to interpret those who were undecided decided to skip the election altogether. So i think the numbers are pretty much you know, the people who decided to vote voted in favor of the ldp. That is absolutely undeniable. But you have to also remember the voter turnout was exceptionally low even though there are many Critical Issues facing japan at this moment. Thank you so much. Lets get more from brad williams, visiting assistant professor at the university of hong kong and nafumi yamamoto. If we could first, masafumi, go straight to the reaction were seeing, does that suggest its the super majority in parliament that was a surprise here . By the potential, the aggressive monetary and fiscal policy and it realized and it seems that the market has other priced fully about the such super majority of the ldp and interreaction was forward to show that and got the value he wanted. So i think we also think that the administration, aggressive policy and higher inflation for expectations will weaken the yen dramatically. And just how dramatically . There has been some suggestion we could see a disjointed move into triple digits next year. How likely is that, in your view . Triple digits . I think its unlikely, but still, think the dollar yen has been falling down because of the weak u. S. Economy and weak treasury yields. However, i think this year the function has been changing and it seems that the market is more sensitive to the japanese buffers. For example, the risk Monetary Policy which is not necessarily reflected in the japanese rates or the u. S. Japan Interest Rates. Going forward, i think the japanese policy initiative will push down the yen farther. And we expect the yen to rise to 86 in three months and eventually into 90, about 90 in one year time. Brad, that yen weakness is, because as we heard there, is because of the Aggressive Bank of japans Monetary Policy. Now, the question is whether abe and he had this Strong Majority n lower house, whether he will use that to vote down overall the upper house if they want to change the mandates or anything else for the bank of japan. Is he going to do that or not . I think abe needs to be very careful. The election was more an attempt to punish the dpj rather than a ringing endorsement of the ldp. Abe is not particularly popular and i think hes aware of this. I think initially he would be very careful in trying to do this. So what will are you saying expectations, he will lean on the bank of japan early are wrong . Possibly, yes. Why wouldnt he act . Would he wait until we have upper house elections in the summer . Well, i think, yeah, turn house elections in the upcoming summer are going to be very important. Stimulating the economy is something he will do to help him enact controversial Security Policy changes. Having been at the boj yours, would you agree what youre hearing there from brad . I think yes, politically, they worked be careful how they form the majority, the upper house, as well. In order to get the majority and the upper house election in the coming summer, they should show some success in terms of market policy or the fiscal policy. The first thing i think they should spawn separate budgets and this will give the way for the more popularity. And they dont necessarily need to use the majority. Rather, i think they especially about the recognized policy. There is a kind of agreement among the political parties. So in order to use that carefully about the strength at the lower house, then i think they could as it leads to the strength of the upper house election, as well. Yeah, brad, all this focus is on Monetary Policy. I mentioned here we get a supplementary budget. What can they do fiscally . Weve had a lot of concrete generating programs over the last decade and a half. We dont need to be slightly more out of the box thinking. Youre right. There has been a lot of spending in the past on wasteful public works projects. I dont think public works projects per se are such a bad thing, but the money needs to be channeled into projects that are going to benefit these communities. And hopefully kick start the economy rather than local contractors and the ldps traditional supporters. And well leave it there. Brad williams from the visiting professor at the university of hong kong and mr. Yashi yamomoto. Nice speaking with you, gentlemen. Just over an hour into the trade dag here, you can see advancers being outpaced by decliners. Weve been up for four weeks in a row for european equities, the ftse and the dax. The ftse up around 7 points last week. Today its down about. 3 . The xetra dax, trading up nearly 29 for the year. It was up 1 last week, 2. 5 on the month. The ibex is down slightly and the ftse mib, fairly flat at the moment. We keep our eyes, of course, with whats going on with fiscal cliff discussions in the United States. Reminding you of some of the individual stocks, hms, up 2 on better than expected samestore sales. Kpn has its target cut, the stock down 17. 3. And aggreko, down 16 , as well, warning on its outlook for next year because of reduced military revenues and uncertainty about japanese contracts. Thats the stock news. Lets show you where we stand with treasuries. Friday, we had a high yielded month. 1. 7964. Below that e at the moment. Tenyear spanish yields, 5. 4. We might hear from aaron monti as to whether he intends to run as a candidate, although hes going to step aside as sort of the incumbent Prime Minister. Tenyear spanish yields, slightly allow at 1. 372 . We go to 84. 48, the lowest against the dollar since april 20111. Euro dollar, 1. 3159. Kind of where we were at new york levels. Thats where we stand right now in this european session. Lets recap the trading week so far in asia. Deidre has more for us in singapore. Dei. Ross, you were just talking about the yen. Let me start there. It did hit a 20month low against the u. S. Dollar. That helped out u. S. Equities. They hit an 8 1 2 month high after shinzo abe won the election. Japanese equities, they moved inversely. The korean won is strengthening against the yen and this is putting it head to head with some of the japanese carmakers. Its causing concern about the korean carmakers because their vehicle res now becoming more expensive. So we did see some weakness there. Moving on the tote greater Chinese Markets, the shanghai comp continued to gain. It has been on quite the rally throughout december rising about 9 . Keep in mind, though, that this is a government orchestrated rally. We saw that huge surge on friday, more than 4 . It continued today gaining more than. 5 and it has cut down the losses that mainland equities have seen this year. However, i wouldnt hold my breath. We have seen this many times in the past. And it has not losted. Meanwhile, we did have the hang se seng, though, the shanghai comp failed to lift this index up, down about. 4 . In this market, we had chinese sportsmaker li ning in focus. This is the chinese version of nike of adidas. It warned it would take a hit in 2012. The asx the 200 was easing from a fiscal high. Finishing at 4,573. The sensex in india saved off about. 4 . We have an Interest Rate decision from the reserve bank of india tomorrow. Abdomen lists are expecting that they will hold, though some believe that it may cut the cash rate. All in all, ross, a subdued day out in asia, but a few outperformers in japan and perhaps more surprisingly shanghai. Back to you. An eightmonth high for the nikkei there. Cnbc is taking a closer look at how the new war ondy flagz is playing out in tokyo. Head over to our website, krn. Ckrn cnbc. Com for more information there. If dwrur wondering what is in store for 2013, contributors and analysts are delivering their boldest calls for the trading year ahead. If youre looking for more clues on the european outlook for next year, david jones will be here to take a look in his very own crystal ball coming up in just a few moments. Shares of the worlds biggest cementmaker dipped to restructure its european operations. They could put charges of over 500 million francs. Carolin has more out for us out of europe. Hey, ross. Lets take a look at the market reaction. Initially, the reaction on the markets is quite subdued. Now accelerating its declines, off by 7. 1 , the second worst decliner on the market. Lets come back to holcim. It is responding to the sluggish construction environment in europe and that is why its restructuring its european operations. It is taking a 440 charge on writeoffs for property plan and equipment. On top of that, it sees an additional 1100 million swiss francs in costs for the Fourth Quarter. So the overall hit to the Fourth Quarter will be 500 million swiss francs. It does say that the rebound will save around 120 million swiss francs annually. But overall, analysts are surprised about the size of the additional writeoffs that will be booked in the Fourth Quarter. But holcim is trying to reassure investors this morning, saying there is still potential for a dividend payout for 2012 but that decision will be taken at the end of february 2013. Also, it is flagging some Management Changes on the european leader but at this point, it was quite mum about the details of that. Overall, holcim down by about 9 the . Italian center right leaders have stepped up the pressure on mario monti to run for a second term. The Freedom Rights Party said monti should believe in the rights of moderates in order to prevent the center left from taking power next year the polls show 44 of the run would be positive compared to 50 who thought it would be a bad thing. Now, the 76yearold berlusconi has announced an engagement to his 27yearold girlfriend live on italian television. The billionaire revealed that he finally felt, quote, less lonely thanks to his relationship. It will be mr. Berlusconis third marriage provided he can reach divorce arrangements from his current wife. Now as investors prepared to head home for the long christmas holiday, were taking a look at what is in store. A slow grind to recession, that man is david evans, chief financial economist at jeffries. Thanks for joining us. When do we come out of recession in europe . The uk at the moment is showing clear signs of recovery. I think if we can through the First Quarter of nkts year, it all will be recovering. I dont care expect this to be a real turn until the second half. As we go into the second half of next year, it will become clearer. Even the eurozone is recovering. Within that, youll have very much the laggards. France wont do particularly well, but germany and italy maybe next year have a potential surprise on the upside. How much of a surprise . It will not be a fast recovery. The ecb will be forced to do more, but theyll be drald dragged into it. So things will have to get worse before they act. So i dont really think what more actions . They have a t program waiting to go. What more actions are you talking about . The key policy rate for the ecb is likely indeed in the First Quarter. They can take dpopt deposit rate negative. By the middle of next year, theyll be doing outright qe. Ive been talking about this for ages. They havent done it so maybe they wont do it. But im assuming that the outlook for inflation for the eurozone is how are they going to get around look, i know the bundes bank has a fear of hyper inflation. I just dont are they going to get around all the because even if they do it on the inflation mandate, are they going to get around the objections about outright money printing . Germans would see it as that. They would see it as outright money printing. We have done qe. Its not an issue on the legality of it as long as you justify it in the inflation mandate at the zero policy bound. But the question is, you know, how low is inflation in the eurozone going to go . You have core inflation in the eurozone below 1. 5 . If you strip away indirect taxes, thats adding about 60 basis points in inflation rates. I think Wage Inflation is very low. Inflation will be trending towards 1 . At that point, they have to do something more. At that point, the dax keeps going up. Thats interesting. Youre seeing the response in germany which is the one strong area if that across the eurozone. Its funny, to the extent that germany weakens, it makes it easier for the ecb to act. But the more they hang in there, while it might be good for the eurozone in terms of growth, it might complicate the policy response. Absolutely right. If germany was in deep recession right now, that will force their hand. But at the end of the day, the Housing Market has recovery, you know, you can build a convincing case that germany at some point will see reasonably strong growth. But i think the markets look forward. I think if we get a recovery occurring in the eurozone, nkts look forward to 2014 and beyond. Spain . For sure. When . Probably in the Second Quarter. Thats an interesting idea, all at once. David owens from jeffries, thank you so much for stopping by. Straight ahead, economic policies for next year and what is in store for markets if it mean slower, shortterm growth . Can i help you . I heard you guys can ship ground for less than the ups