Fed Showdown, Trump Weaponizes Uncertainty, ECB Errors: Eco Day

(Bloomberg) -- Happy Friday, Asia. Here's the latest news and analysis from Bloomberg Economics to help get your day started:

• While Wall Street traders are betting against the Fed raising interest rates in 2019, economists are still debating two, three or four hikes. Meanwhile, two regional Fed presidents urged policy caution amid mounting economic uncertainties and recent volatility in markets
• Donald Trump is losing his war on the U.S. trade deficit amid mounting evidence his own tariffs are part of the reason why. The president has used tariffs as one of his most powerful tools for fighting trade wars, but he's also wielding leverage with another weapon: uncertainty. Reflecting this, IMF chief Christine Lagarde warned against reacting to every twist and turn, saying a U.S.-China deal will take a “long time”
• The European Central Bank's economic forecasts have had big errors over the past five years, raising doubts on its assessment now as policy makers prepare to cap asset purchases, a Bruegel researcher says
• U.S. employers probably kept up a robust pace of hiring in November that was closer to the 2018 trend rate after hurricanes distorted data for the prior two months. Yelena Shulyatyeva says the composition of job gains will provide clues on which sectors will drive hiring in 2019
• India's economic growth may become a casualty of the tug-of-war between the government and central bank. Over in Indonesia, the Asian financial crisis's legacy still lingers over the economy, with one key policy restriction acting as a handbrake on growth
• Australian banks' nervousness about lending at a time of falling house prices risks exacerbating the slump, Reserve Bank No. 2 Guy Debelle said, while noting rate cuts and QE remain in the policy armory. Up in Canada, there's a growing chance the central bank is done hiking
• This chart shows U.S. household net worth jumped to a fresh record of $109 trillion in the third quarter

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Chris Bourke

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