5 things to start your day

[Bloomberg Markets] [Forward Guidance] [FOLLOW US [Facebook Share]][Twitter Share] [SEND TO A FRIEND [Share with a friend]] The Bank of Japan upgrades the outlook for the economy, as it holds policy unchanged. Terror attacks in Europe leave many dead and injured. President Obama is set to attempt to tie Trump's hands on offshore oil. Bank of Japan The yen was [trading at 118.12 to the dollar] at 5:09 a.m. ET, following the Bank of Japan's first meeting since Donald Trump's U.S. election victory, after the bank [upgraded its assessment of the economy] while keeping its policy stance unchanged. The Japanese currency has weakened by more than 10 percent against the greenback since Nov. 8, a move that should help lift inflation in the economy. Terror attacks German Chancellor Angela Merkel said this morning that her nation must assume that last night's [truck crash at a Berlin Christmas market], which killed 12 and injured 48, was a [terrorist attack]. The incident came within hours of a [shooting in an Islamic center in Zurich], which left three injured, and the [assassination of Russia's ambassador to Turkey] in Ankara. For Merkel, facing an election in Germany next year, the terror attack on her home soil is likely to [increase pressure from the right] on her immigration policies. Italy bank fund The Italian government has paved the way for a potential rescue of the country's troubled banks by seeking permission from parliament to [increase the nation's public debt] by as much as 20 billion euros ($21 billion). While the new prime minister has wasted no time in facing up to the problems in some parts of the Italian banking sector, analysts are not certain the [move will be successful]. Markets mixed Overnight, the MSCI Asia Pacific index [slid 0.3 percent], while Japan's Topix index closed 0.2 percent higher following the Bank of Japan decision. In Europe, the Stoxx 600 Index had gained [0.3 percent] by 5:23 a.m ET as deal activity pushed the index to its highest level in almost a year. S&P 500 futures [added 0.1 percent]. Obama to block oil rights President Barack Obama is set to use a provision in a 1953 law to [block the sale of new offshore drilling rights] in much of the U.S. Arctic, and parts of the Atlantic. The move, which could come as soon as today, is almost certain to be challenged in court as the law does not include a mechanism for a reversal of the decision by a new president. Meanwhile, Bridgewater Associates founder Ray Dalio has said changes under the Donald Trump administration may be more significant than those brought about by [Ronald Reagan and Margaret Thatcher]. Here's what you should read today Markets shake off [geopolitical risk]. The [best and worst performing] hedge funds of 2016. Brexit and European elections leave euro-pound analysts the [most divided on record]. Four years of living dangerously: CEOs brace for the [Trump era]. Cuba's [rum-for-debt] offer to the Czechs isn't as weird as it sounds. [Irrational despondency] is passé. The [Nightmare before Christmas]: Financial crises go global in 1857. And finally, here’s what Luke’s interested in this morning Monday was a bad session for Trump trades -- in other words, a good one for fixed income and bond proxies -- which affords us a chance to step back and examine what could upend the reflation trade that's accelerated since Nov. 8. Some -- like Bank of America's David Woo -- have zoomed out from Trump to focus on the effects of a unified government, which tends to produce larger deficits. Most of the focus has been on the opposition Trump could face from within his party if he pursues budget-busting measures, which could result in less fiscal stimulus than markets are pricing in. But Paul Krugman [reminds us] that the distributional effects of the new administration and Congress' plans matter. A deeper budget deficit doesn't necessarily mean a bigger fiscal impulse, or even a positive one! If policy changes disproportionately benefit upper-income Americans but result in smaller transfers to those who are worse off, this could well be a net drag on economic activity. That's something to keep in mind. The man who adopted "You Can't Always Get What You Want" as his theme song might have to echo Mick Jagger's words to his colleagues. You received this message because you are subscribed to the Bloomberg Markets newsletter. [Unsubscribe] | [Bloomberg.com] | [Contact Us] Bloomberg L.P. 731 Lexington, New York, NY, 10022