>> good morning. this is bloomberg daybreak. i'm tom mckenzie in london. these are the stories that set your agenda. direction ahead of the fed's final rate decision of the year. traders expecting a 25 point cut

later today. taking on toyota. nissan shares soar on a report of merger talks with honda potentially creating a new japanese car giant. in germany, volkswagen and union leaders are deadlocked on layoffs and factories. israel raises hopes of a cease-fire with hamas and gaza. working to reestablish relations with mediators. happy wednesday. it is of course fed day. all about the fed with a side helping of u.k. inflation. 7:00 a.m. u.k. time. an eye on the market crisis as well. some have characterized it in

brazil. european futures currently flat after four days of losses. s&p futures in similar territory looking for guidance from jay powell and the forecast and the doc plots. will they revise lower? rate cuts of .25. s&p futures just pointing a little higher. up 10/10 of 1%. losses of 4/10 of a percent for the s&p and nasdaq yesterday. you could be looking at 6% yields on the 10-year next year depending of course on the fiscal challenges of that u.s. government. the bench mark state side. the pound in focus. at 7:00 a.m. u.k. time. the bank of england expected to cut two times next year.

50 basis points between now and november next year. keeping the pound supportive as markets pull back expectationors rate cuts. $73 a barrel for brent and bit cone. taking a breather. let's get to a major corporate story now in asia with global ramifications because shares in nissan surging the most in at least five decades. take yourself back to 1974 as bloomberg learns the japanese automaker is in talks to merge with honda. what are the implications for japan's car industry? >> well, depending on how this shakes out, this could be a threshold moment for the japanese car industry. a tie-up between nissan and honda and possibly military

beneficiaryi. they would pit themselves against toyota's alines morales disa and suzuki. the honda alliance on one side. this would make for an interesting situation. this would lead to competition between the two groups and hopefully allow them to pull res and compete abroad between u.s. and china as well. thom: china is a key competitive threat. a number of these brands struggling around the competitive threat. what are you watching for next, nicholas? >> we're still waiting on details for how the partnership will shake out. it is an interesting bit of information also. a company approached nissan for

a buyout of the company. honda and nissan await their announcement hopefully next week. but in terms of how this might shake out, we're still seeing the details emerge but on honda's end the benefits are not as clear as they might be for nissan. where nissan, the financial troubles could be sort of the partnership could act as a tourniquet for tom: thank you for joining us from tokyo. let's get a market reaction. broader markets in asia. ahead of the fed and the boj. that decision from the bam bank

of japan. ava hong standing by. >> yeah. we're seeing most of them jumping today. not just keeping a focus on nissan and honda. there is speculation given this potential merger report. what is it going to mean for wide auto space? as you talked about a short while ago, nissan jumping by the record, the limit of 24%. this is the sense you get where this company's sales to the u.s. and china have been weak. they have been slumping. a boost it looks like it could be for the automaker. honda is being weighed down by concerns it essentially would be bailing out nissan. that's why you're seeing this mixed reaction in the share prices. let's take you through the rest of the region in the broader benchmarks because it is after all the countdown fed and the

boj. it is a mixed bag, trading volumes are lower than upper, this time in the session. just wanted to recap as well what we are expecting for the bomg and keeping a close eye on dollar-yen. started the month below the 150 handle. i look at where it is now. really the central banks, messaging that makes it sound like it is not in a rush to hike so the pricing has gone down for possibility of tightening from the bank of japan tomorrow and now markets are not sure we'll see one in january. we're going to be keeping a really close watch on what they have to say. tom: maybe a bit reluctant to go again for the bank of japan, at least in the near term. let's get back to the central bank action with the focus on the fed. that rate decision later today. let's get a preview. what are you watching for? expectations clear, they are going to go again with 25 basis

points. >> a lot of market focus is going to be on those projections and how cautious powell sounds about the rate path cuts ahead. widely expected to lower interest rates the third time this psych toll 4.5%. taking it to 100 basis points since they started reducing rates earlier this year. they are due to signal they see less cuts needed in the path ahead, especially when it comes to 2025. they have penciled in four rate reductions for 2025. the market consensus is to signal there might only be three. the hawkish surprise that there is only two. in the press conference the market will be listening to powell's tone on how cautious he wants to move on the rate path ahead. we had the loomg trump presidency and perhaps a change of economic policies when it

comes to tariffs and deregulation. perhaps muddying the clear picture for the fed when it comes to their economic projections next year. let's look at how the infame us a dot plot should shift. alongside the rate decision at 7:00 p.m. tonight. focus again is going to be tonight on this 2025 dot. how much higher will it shift? a hawkish enterprise will be pen silg two cuts. another surprise is the dispersion widening showing there are some who are very concerned about the reinsurgence of inflation next year. keep an eye on the dollar. let's talk a little bit about that. the dollar is close to hitting all-time highs just under a half a percent away from being at the strongest level this year. a resurgence could dent the equity rally. keep an eye on the bloomberg

dollar as the fed releases their rate decision at 7:00 p.m. tonight. tom: prepare yourself for a hawkish surprise. the big question mark as to the trump policy agenda. thank you very much indeed. setting us up for the fed on a big day. its final decision of the year. switching focus to geo politics. israel and officials in that nation say a cease-fire in gaza is more realistic now than at any anytime the past year. a working group from israel is in doha this week to reestablish relations with mediators if there is a break through in negotiations are ham eas. let's bring in paul wallace from istanbul. what do we know about this point? what has given israeli officials at least modest optimism at this point?

>> hi, tom. i think a lot of it is to do with e have got to a point now where both sides really want a deal. hamassent out optimistic messages saying a deal can get done if israel doesn't add any more demands to those on the table at this point. after about 14 months of war with israel in the gaza strip, it it is being designated as a -- organization. it seems to have weakened some of its earlier demands. one being israeli forces leave the gaza strip as soon as there is a cease-fire. it now seems as if it is willing to accept that israeli troop also remain the gaza strip.

donald trump wants a deal before he gets to office on january 20. he doesn't want to have to be dealing with war in gaza in his early days when he returns to the white house. so all those things are coming together. there are still lots of obstacles to overcome. there is no guarantee of a cease-fire. we have been in this position ah as you well know many times before in the last six months but it does seem as if we are potentially very close to a deal. tom: it has been something of a grim groundhog day, hasn't it? the needle is being moved in the right direction. meanwhile paul, the israeli prime minister netanyahu has said that israeli troops will be in this what they describe as a buffer zone inside syria for the foreseeable future.

how significant is this? >> i think it confirms what a lot of people in israel and beyond already thought would be the case. soon after bashar al-assad's downfall in syria earlier this month, israeli troops moved into the syrian side of a military buffer zone. they said they needed to do that because they didn't know about what intentions of the group that took damascus, the organization hts were and they were worried that chemical weapon stockpiles of the asad regime would fall into the hands of extremist groups and be used against israel. israel went further and carried out mass strikes across syria damaging the syrian military. these comments by netanyahu, on the one hand from israel's point

of view, you could say well, they need to say they will be there potentially for the long-term because syria's political situation is still so fluid. it is very unclear what exactly is going to emerge in syria in terms of the government and how friendly or unfriendly it will be towards israel. on the other hand i think these comments will be controversial within syria and the arab world and perhaps many western countries. there is a feeling that israel does not need to send troops into syrian territory like it has and it would be perfectly safe if those troops were still within the israeli controlled parts of the golan heights. tom: paul wallace. thank you very much indeed for an update from that region. we're going to be speaking beth way with u.s. secretary of state antony blinken about the middle east as well as ukraine and the foreign policy transition under

a second trump administration. do not miss that interview tomorrow 1:15 p.m. london time. 7:00 a.m. u.k. time, we will get inflation data out of the u.k. traders phase out bets that the boe will go aggressively next year. just two cuts phased in. we'll break in live for you. euro inflation, we will bring that for you as well. at 7:00 p.m. u.k. time it is the big one, drumroll. the final rate decision of the year. all about the projections forecast and the press conference from jay powell given that he is expected to cut again by 25 basis points. coming up, the man leading polls out of germany's election features cuts to migration and

social spending. more on his plans next. we bring you an update as that election campaign get into full gear in germany. stay with us. this is bloomberg. ♪

tom: welcome back now. germany's conservative friedrich merz, spending money in social aid to fix the country. let's get more from christoph. what do we know about his plans when it comes to the economy? >> well, he mapped out some

initial details about proposals one of which you just mentioned tom that was the pretty significant cutbacks in social welfare spending and costs for basically accommodating immigrants. he also talked about the potential reduction of taxation for companies. a reduction from what he mentioned yesterday but still i think it is worth to know this is pretty early days. still these are merely proposals. whole concept is not very detailed at this point in time but it definitely goes to show that the election campaign is really kicking off right now and we're going to see a lot more commentary basically on the proposals and how he wants to finance for some of the significant investments that he mentioned yesterday to modernize germany's crumbling infrastructure. tom: talk to us about more of the dividing lines between merz

and schultz? the current chancellor? of course it appears to me he seems to be one of the few talking researching this controversial debt in germany. >> that is one of the main differences between the two candidates. sort of a couple of weeks ago actually indicated intentionally or not that he might be willing to reform or modernize the debt break like the limit on net borrowing that germany has baked into its constitution where they will need to address that and take a closer look at this because there are all of these enormous financing needs for infrastructure, for reto go the economy, from a less, old style industry foot point are more like sophisticated state of the art technology footprint and that is something where the two sort of fuse from the

conservative candidate and schultz are diverge. the debt break will be one of the most contested talking opponents in coming weeks. tom: what do the polls tell us in terms of who is leading and the coalition makeup may be? the parties are likely to be in some form of coalition. >> that is exactly right. at the moment the conservatives are leading in the polls just over 30%. the social democrats are currently in the third place just below 20%. and you're right. that is one of the really good points we're seeing in the coming weeks as well. the main two would be for the conservatives to team up with the social democrat or the greens party. that could however be pretty complicated because part of the conservatives have pushed back very strongly against some of the energy policies in

particular that the greens have floated. there is a pretty strong chance there from a current point of view telling from what the polls are showing now, the conservatives and the social democrats will have to come to some sort of agreement at some point in coming month if they were to form the new government. tom: ok. the update in terms of this election campaign which is well underway in germanyle joining us from berlin. thank you for the update. staying in germany with the continue sector. v.w.'s management and labour leaders are yet to reach a deal over proposed layoffs and factory closures. the union said it is prepared to vote at the end of the week potentially paving the way for 24-hour walkouts across v.w. factories in january. they have already walked out on

two occasions this month. sell theant us furnishing its -- stellantus, part of a push to repair relations with the government and union leaders infuriated with dramatic declines in production. coming up, investors will be paying close attention to fed's guidance on the policy and look for 2025. we discuss that and more with a fixed income fund manager at invesco about how to position into 2025. that christmas conversation is coming up alert in the show. stay with us. this is bloomberg.

tom: welcome back to bloomberg daybreak. happy wednesday. now some other stories making the news today. luigi mangione has been indicted for murder charges for shooting united healthcare exec brian thompson. a charge for the most abhorrent conduct such as killing a police officer or terrorism. prosecutors say there are end indications he may drop his objection to extradition from

pennsylvania. he faces life in prison without parole if convicted. >> this was a frightening, well-planned targeted murder. that was intended to cause shock and attention and intimidation. it incurred in one of the most bustling parts of our city threatening the safety of local residents and tourists alike, commuters and business people just starting out on their day. tom: focus on president-elect donald trump who would be open to meetings in moscow if invited. also plans to traveled to london, pair and rome. the trip will be focused on gathering information rather than implementing any specific policy goal. u.s. congressional leaders have unveiled a stopgap spending bill to keep funding the government

until march and prevent a partial shutdown after friday. it provides $100 billion for natural disaster leaf and another $10 billion for farmers. some conservative republicans say add-ons are unnecessary. coming up, panic sweeps brazilian markets. afiscal woes. we bring you the latest in the turmoil in brazil. this is bloomberg. this is bloomberg. ♪ (♪♪) hello, oh.... it'll be there in a couple of years. honey, they're here. how much longer? uh, it's going to be a while. wait. ah, wait. (music dies down) (clock ticking)

(clock ticking) wait. (♪♪)

tim: good morning, this is bloomberg daybreak. nissan shares soar, creating a new japanese giant. volkswagen and union leaders are deadlocked on closures. futures struggle ahead of the fed rate decision, plus israel again says there may be a cease fire as a working group tries to establish one with mediators. whether or not they revise lower expectations, there is a view

that they pull those in in 2025. european stocks are flat, ftse futures are similar. looking to add 1/10 of a percent. let's flip the board. 6% on the 10-year depending on the gender of the administration. inflation data is expected to

lock in, cautiously indeed. bitcoin taking a breather, dropping but let's not forget about market chaos with traders piling in as the lower house approved presidential plans with changes that water down investor concerns. let's bring in mark grant yield. does not seem to be doing much, what is happening? mark: classic case of investors thinking authorities are behind the curve.

the deficit has gotten too big, they need to rein in spending. still a huge deficit, people lost confidence and central bank is trying to stabilize markets. traders are looking for an increase, smelling like the turkish lira which almost became untreatable. brazil is a huge market so assets will look cheap compared to the rest of the world.

it needs a trigger and it's just the wrong time of year. people don't want to carry over that exposure. markets are in freefall and no one wants to be in the bond market so do you want to wait until january? fresh ammunition, and people more calm. tom: the wiff of the turkish lira, what could the trigger be? mark: with ease big nut markets

it's the equity market that turns first looking for the year ahead. brazil will be near the top of the list. equity guys put money to work so beginning of next year some wealth brazil has to have attentional but currency is undervalued. there could be improvement, equity underperformed and it is cheap. you would think the government could improve and there will be improvements in the whole situation.

it can stay bad like turkey. turkish lira underperformed and still is but brazil is too big to ignore. the emerging-market cannot stand back much longer. it would not be apprised if funds moved back to brazil. tom: ri is on the equity markets indeed. is the banking space credit agricole appointed olivia as the new ceo responding to bank deals to reshape its biggest market.

let's bring in cloudy cohen. some details about what the biggest challenges are. claudia: kind of a really ridiculous choice -- ridiculous, deputy ceo, and a lot of experience in regional banks. the structure is complicated and main challenge will be elaborating a strategy plan in a complicated moment for france and also defend credit agricole

facing the ceo. tom: downgrade on -- on this bank. now the banking space has been hit, what impact is that likely to have for the downgrade? >> we will see when the markets open in france. the rate was quite predictable. political turmoil have been quite integrated already in the bank stock so we will see. the main concern is if the turmoil will have consequences

on the economy, freeing investment in france. french banks are so lead -- sullied, so we see how the market reacts. tom: indeed. indeed. as investors await the fed, bank of america ce l is warning the u.s. economy may not need stimulus. strength in the economy and the consumer sector. >> our team had a soft landing

and people said ofcom a that's very optimistic. we have moved up from positive but low to higher than average. economy is on a normal trend, i think the policies have yet to come, our team say if tariffs are offset by regulation they will even out. they're predicting 2.5% gdp growth, not a bad place to be. >> trump is talking about tax

cuts. given that we are close to employment do we need stimulus? >> i'm not sure. the question is if you lower taxes the question is how stimulative that will be. he knows if it gets too far, we just ran a deficit of 1.8 trillion equal to the gdp of australia so the impact we have, everything has to be governed and offset. economy is moving, consumers are spending around the holidays.

this summer i was nervous, so between the enthusiasm, consumers are spending more, that's good for the economy. we've got to get a core economy going with good deregulation activities, these are hard things but they're working on. tom: brian moynihan speaking to bloomberg. coming up fixed income fund manager at invesco's view on where to be positioned above cause, stay with us.

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tom: welcome back. the fed's policy decision with the central bank cutting and outlook as donald trump heads for the white house. i'm joined by alexandra. looking into 2025, what is -- what is your expectation? guest: probably dial back. three makes sense. market will be to hawkish but

fed has tendency to surprise to be bullish my expectation is they will recalibrate the final. and taking out a few cuts from the dot plots next year just one makes sense. tom: ok. there is some -- there is some uncertainty. do -- do the projections hold up given uncertainty? alexandra: i tell clients given the range upside and downside

uncertainty is very high and we ought to be humble because as you have seen we have ping-pong and then putting that back in in terms of what this means, very uncertain, but not bad for investors. we have been active coming into elections quite light on duration. carry is important, level of rates is good enough. tom: mmm. >> i do like the front end, 5-7

years. tom: ok. ok. yields on the 10 year could hit 6%, do we need to brace for a selloff? alexandra: i don't think so. quite outrageous of course, deadline grabbing, but i don't think we will get there, very different environment and risk market is not going to like it and fed will have to cut more so gradual is bearable but quickly

is a risk. >> where -- where are you finding value? >> credit looks attractive and quality of credit indices in europe tend better. great place to be where you can put your money to work, we have ecb into next year. we are focusing on spread but if

you are investing i think the yields looks attractive. tom: that -- and -- that -- that is the case for u.k. credit. alexandra: credit trades with some premium so i don't think it will make a big difference. sterling is the market where having lower expectations and sticky inflation is great because you can clip your coupons, do your analysis.

being selective means avoiding places where there are problems and that is the way to outperform the market because you might see credit markets look expensive. tom: indeed. do your homework when it comes to the market. three cuts would be appropriate. the breakdown of the fed in a preview of inflation date or an eight minutes out of the u.k.. stay with us indeed. this is bloomberg. ♪

tom: bring it down, the economy is stronger but still has weaknesses. what happened in the middle east, korea, germany? this could impact the united states. tom: bank of america ceo on risks facing the economy. we lead up to the fed decision.

revisions to the folk asks and inflation in the dot plots. will they be pulled back? fewer than three christ in. fewer than three priced in. do they pause? 70 basis points between now and october. to what extent are they valid? for how long will they hold water? the fed cutting today in a pause in january. let's flip the board,

adjustments and to cuts between now and november for the bank of england on strong data, keep your eyes on services, that is stubborn and lifting the headline number up. services are sticky, we will be breaking that dater in the next couple of minutes. then we will speak to thomas verbal and coming up is the opening trade. this is blue bug -- this is bloomberg. ♪

>> i'm anner edwards, alongside guy johnson and kriti gupter. we are an hour away from the opening trade. traders price in a rate