On Economic Optimism around tax reform. This is an appropriate week for that last one. Basically inline, isn manufacturing index, month of november. Major averages, not much of an influence. We are looking at a small decline. In recordt putting highs. We have had several record highs in a row for the dow, but this is the first down day in six for the dow, at least right now. The tech heavy nasdaq down nearly half a percent. This week has been about a lot of volatility. As you look at the fiveday chart of the nasdaq 100, monday and tuesday flat, and a big on wednesday, a tech selloff. A bit of a rebound yesterday. Now, we are looking at a drop again. The nasdaq down about 1 . The dow one pays for its best week of the year. A do in terms of volatility. About 15, closer to 16. The s p 500 vix closer to 11. Interesting to see how all of this plays out. Volatility tends to breed volatility. There may be more intraday and closing day moves ahead. We do have november auto sales out. A bit of a mixed bag. The stocks down 1 . The actual numbers came in down 2. 9 . Both ford and Fiat Chrysler beat. However, ford is creating excuse me. Fiat chrysler is trading lower. Overall, the expectation is for november to be helped by incentives and early black friday, and even perhaps continued hurricane activity. A mixed bag right now in terms of how these stocks are trading in the u. S. , mark. Mark 90 minutes left of the weekly session. Oil and gas, our biggest decline ors. Technology on track for a third weekly drop, down by a fifth of 1 today. Retail, the best performing industry group. The pile, bottom of down by 4. 8 this week. The stock the stoxx fell. Datais a great piece of from the u. K. Today. Factories reporting their strongest growth in more than four years in november. Firms reporting strong domestic and export demand. The picture in ihs marketss latest manufacturing, a similar upbeat. This is at the highest level since 1998. A positive sign, investment goods rose at the fastest pace in more than two decades. Sterling is lower today. It is still on track for the biggest weekly gain since october, fourth weekly gain in a against thea row dollar, the best trend since september. The bloomberg pound index rose for the third month in november, best since may 2016. Near the top end, meaning the premium for Downside Protection is limited. Mediumterm Downside Risks are underpriced. Keep an eye on sterling in coming weeks, given the brexit situation, which we will come to later on in bloomberg markets. This is a stock we talked a lot about in recent months, today 1. 4 lower, selling swiss operations in a deal valued at more than 200 million, starting the asset disposal process based at based on concerns about the debt load. Billionaire Patrick Draghi is moving quickly with these disposals he has pledged to appease shareholders, who have in theendure a 59 drop stock price in the last month. Falling further, down by 1. 4 . Innie mark, we have a twist special counsel Robert Muellers russia investigation. Warmer National Security adviser Michael Flynn expected to plead guilty to lying to federal agents about communicating with russias ambassador. Bloombergs chief washington correspondent for bloomberg news, joins us now. Kevin, Michael Flynn due to appear in court in less than a halfhour. We anticipate he will plead guilty. How does this change the narrative and washington, d. C. . Kevin the latest development says general Michael Flynn, the president s National Security adviser, spoke with fbi officials in january of this year. He lied. In just over a half hour, he will face a court where he is expected to plead guilty to those charges. It means he is essentially saying bob mueller investigation. There was a sense that flynn was cooperating with white house officials and attorneys tied to President Trump. All of that is out the window now in this latest plea deal. It is really being looked at as a mechanism. Bob mueller expands beyond the first round of indictments we saw several weeks ago. The first round issuing charges against former Trump Campaign chairman paul manafort, deputy rick gates, and george papadopoulos. Vonnie remind us why exactly flynn resigned in the first place. He was only in the job a dozen or 13 days. Jobn he was only in the about 13 days, but before that played a key role in the Trump Campaign as the National Security advisor to thencandidate donald trump. He has been under investigation in pencil he, and faced much scrutiny for his ties and financial dealings with ukraine, as well as prorussian forces in ukraine. Andy facet of communication communique he had with those withials, and meetings russian and ukrainian officials, coming under scrutiny. What does all this mean for investors and as they are watching . I think the culture here in washington is going to shift, when all of this is said and done. I will be blunt. This is going to drag on for several months at least. The disclosures, and who lobbyists are representing, and which Foreign Countries they are representing expect that to be a dramatic shift. In the to one source last hour who works closely with the white house, who told me that there is a grip, not just around the president s inner circle, but the outer circle folks who work with the white house and the lobbying shots they are all carefully watching and anticipating more indictments to come, whether you are a lower level staffer or a seniorlevel official. Vonnie kevin cirilli, bloombergs chief washington correspondent. Thank you. Atwill keep an eye on this 10 30 eastern. We are also watching the tasks the textbook. Lets bring in the former director of the congressional budget office, currently president of the American Action forum at conservative growth. Formerly worked for senator john mccain, and now supports the bill. Doug, talk to us about this bill. Does not make sense in the form it is in now, which includes a 23 passthrough rate, which was sort of a special concession to one senator. Its scoredea that is now at a trillion dollars of a deficit blowout. The core elements still make sense, if you step back. The fundamental problems facing the United States are on the labor front. Corporate growth is translated into essentially no real wage growth. Households16 that worked fulltime for the full year got zero increase in real income. That is just unacceptable. On the corporate front, we have seen the tax incentives to push ip overseas, push reduction overseas, keep earnings overseas, and in many cases move the headquarters overseas. Those are the core issues that have to be dealt with. The bill addresses those and gives incentives to innovate and hire people in the United States. If you do that for the c corporations, you have to do something for the passthroughs, because more than half of this is not going to get to the taxpayer. A 20 corporate rate based on a tax of a quarter of corporate earnings translates to roughly a 25 right. Rough justice. The house and senate have that set up. There is a lot else in the bill and not everyone is going to like that provision. Sorry . Mark doug, is that the whole thing . Is there too much focus on specific provisions for the middle class . There should be more of a focus on the progrowth incentives within. Believe so. I think the single best thing you can do for the middle class in the United States is to give them the opportunity to have a higher standard of living, and that swamps any specific tax provision, whether it is a child credit or the standard deduction. I think the focus should be on the core elements of the bill. Of taxn the nature reform to have things people do not like. That comes with the turf. I think one of the things vonnie raised which is important is the deficit. No one think that is a good idea for the u. S. To have a larger deficit. The cortex relation to make is, is it worth incurring more in order to get better progrowth policy . That is the calculation you have to make. Vonnie what is the answer . At the moment, bob corker is taking a lot of flak for standing his ground. Does he deserve that . A principled it is stand, and he cares deeply about the outlook for the federal government. Many people do. You can come down on either side of that. I would come down in favor of the bill. It is better than the status quo. The status quo is dangerous to america no growth, losing companies. But other people make a difference regulation, and you have to respect that. , is it to get it passed worth satisfying Susan Collins and not repealing the individual mandate and making concessions on salt . Does this need to get past in whatever hodgepodge form it does get past in passed in . Doug passing big legislation is a sausage making process. Senators making demands comes with the turf, as we know. The key thing is to hold on to progrowth elements, to keep them permanent, and to not really give up on those, and see if you can get it through the senate. You have to go back and have a conference with the house. We are far from seeing the final form of the bill. Mark if it waters down those cuts for businesses and ofividuals, what sort roadblock or stalemate do you think we are going to see in the house . Doug it is hard to say. Cares deeplyouse about the elimination of the deduction for state and local taxes. Ap really nation of that, as in the senate bill, is not going to fly. A pureew are s abolition of that, as in the senate bill, is not going to fly. Will they be able to coalesce around the final product . Vonnie this is not what lawmakers promised the American People in terms of growth paying for these tax cuts. This is not what treasury secretary Steven Mnuchin promised. Why are you so positive about it . I dont think the treasury secretary should have promised that. Tax cuts dont pay for themselves. Of 1. 5a static loss trillion. That is what the rules allow them. In any event, you are going to get 1. 5 trillion back. As a realistic manner, there might be more deficits as a result of this. We have to decide if we can tolerate that, and that is a tough call, in some cases. Does this save the midterms for the gop . Doug the key is not just passing the bill. The terms are going to depend on the actual performance of the economy in the first and Second Quarter of 2018. Do they go into the midterms with an economic tailwind . As was reported earlier, we have seen a modest uptick in the core readings on the economy since the election. If they got a big boost out of the tax bill, i think that would be tremendous the beneficial. Vonnie that is the president of the American Action forum. Thank you for joining us today. Bloombergg up on markets, the opec meeting is in the books. Can oil sustain the momentum . This is bloomberg. Nymex crude up by 2. 2 today. Mark live from bloombergs European Headquarters in the city of london, i am mark barton. I ame from new york, vonnie quinn. This is bloomberg markets. Time for futures. Oil higher today after opec extended its production cuts to the end of next year, at least for now. We are joined by bob of past trading partners. Why would this send oil higher . I thought it was priced in. Bob it was interesting. That whole thing was like a self rumor. Sell the fact, by the fact, sell place it was all over the in terms of whether this was priced in or not. For me, this is an extension of the range. Right now, it is all about shale versus demand. Which can outstrip the other . Opec was right in pointing out that inventories have been rebalancing, that we are still 13. 2 percent above the seasonal fiveyear average in terms of crude inventories. A newsletter pointed out something i had not noticed. Only 0. 8 above gasoline. The crash spread has been coming in. That could reduce demand for refineries. You could see a price spike. That opec meeting what is the next thing you are watching for . What will be the next catalyst . Bob in order to get crude where opec would like to see it, you have to have an actual supply event. I think of more of the more unstable governments. That is what i have been hedging for, medium to long term. I do not see an upside for crude oil past 65 fund of uti. Unstable see governments nigeria, venezuela, potentially iran with more sanctions, even libya. If there are political in events, you could see directions. Other than that, you are looking at shale at 9. 6, 9. 6 Million Barrels a day. That is a 46 year high in u. S. Production. That is just rising in the face of flattening rate counts, lower flattening rate counts. That could really accelerate. Whatration in the curve is investors want to see. Taxie on everybodys mind, or form. What are you at the cme talking about in relation to this . How will it impact you . Bob everyone pretty much assumes this is going to get done one way or the other. It comes down to the details. When you look at the particular tax plan, it looks i get shortterm victory, however you slice it. Whether it is increases in the in middleclass taxes two or three years from now, whether we get the trigger thing bob corker wants, which seems silly to me you could be in a recession caused by other factors and that could potentially trigger higher taxes in the middle of a recession. That seems like a nonstarter. Either way, it looks like a shortterm victory. The dow rallied. That is why we are not off that much. Vonnie always great to speak with you. Thanks for joining from the cme today. Mark still ahead, washington politics has again been thrust into the spotlight. The former National Security adviser Michael Flynn is scheduled to plead guilty to making false statements to the fbi. We are live in washington. Some big moments coming up in the next few minutes. Theie we are outside courthouse where Michael Flynn will be appearing, essentially to give a guilty verdict. At this point, were not sure what leverage that will give to the special counsel. But we are going to keep an eye on that. I am sure that will come out. Stay tuned. Vonnie breaking news. We are awaiting Michael Flynn, the former National Security adviser who resigned after 24 days in his job. We know he is expected to plead guilty to lying to the fbi. This is the first charge in special counsel Robert Muellers investigation. Fact, we are in watching Michael Flynn interthe washington, d. C. Courthouse. ,t is a district courthouse federal court. We will keep you apprised of what actually happens, as soon as Michael Flynn emerges from that courtroom. But as we understand it, he will plead guilty. I want to also mention we are now hearing that senator hatch is saying that Susan Collins and lankford are expected to vote for the tax bill. If that is the case, there are only two holdouts. We will also keep an eye on that. Time now for etf friday with abigail doolittle. Etfs are any guide, investors are excited and hopeful about the prospect of tax reform getting past. Here to explain what etf investors are using is a Senior Analyst as at Bloomberg Intelligence. Happy friday. What do etf flows tell you about optimism around tax reform . Traders,t money institutions are very excited. All year, we have seen flows going into cheap stuff, vanguard. The past two days, we have seen this torrent of flows into the am like like iw small caps and junk bonds. When you see highly liquid ones get hit that high, it tells you institutions and the trader crowd is excited. This is a really important point, because this whole year we have seen advisers go for the really cheap etfs. This could really make december a big month. Abigail can you put that into perspective, macro wise . Eric 427 billion dollars this year in etfs, the record. It is possible to get to 500 billion, and have a trillion in assets. If the hot money gets excited, this could be a banner year for etfs. There is a tax reform etf that is not one of the big ones. It is taxr. It is the tax reform etf. It surged way past the ticker on tax reform optimism. Abigail one of the big stories this entire year, but certainly this week we have to move to bitcoin. U. S. Regulators have approved bitcoin will be trading on the cme starting december 18. What does this mean for etfs . Eric a couple things. There is a lot of etfs currently in registration with approval. , awaiting it is like a race. Whoever gets up first will get the lions share of assets. First to market is crucial. I think it will be the winkle twins. Ins winkelvoss he think it will be rex or van ek. Abigail this is digitally back . Eric he thinks the s. E. C. Might approve one that track futures first. Which everyone gets out first could be a billiondollar product within a couple weeks. Abigail within a couple weeks, you think that will happen. Eric there is an etn in sweden that is almost at a billion dollars. 1 billion in sweden, you could get five or 10 in the u. S. Pretty easily. Abigail we will be watching those for certain, with bated breath. It will be a hot market, for sure. Senior Bloomberg Intelligence analyst on etfs. Back to you. Fu on at 12 30. We are following major stories out of washington. Former National Security adviser Michael Flynn has just entered the d. C. Courthouse. His hearing is scheduled for 10 30 eastern. We will be keeping you apprised on taxes. We know Susan Collins and lankford are expected to vote for the tax bill. Stay tuned. Vonnie live from bloomberg World Headquarters in new york city, i am vonnie quinn. Mark and from the new headquarters in the city of london, i am mark barton. This is bloomberg markets. Lets check with emma chandra. More from new york. Emma a new twist in special counsel Robert Muellers russia investigation. Former National Security adviser Michael Flynn is expected to plead guilty moments from now to lying to federal agents about communicating with russian ambassadors. He was fired after resolutions he lied to the Vice President mike pence about this contacts. Putting guilty to a single count suggests plan has agreed to cooperate with the investigation. On capitol hill, the second Ranking Senate republican says there are enough votes to pass the tax bill. Senator john cornyn and other Party Leaders have been working since last night. Earlier today, senator ron johnson agreed to back the measure, as has oklahoma senator james lankford. There is a report that President Trump may take a stab at tensions across the middle east. The president is considering recognizing jerusalem as the capital of israel. An announcement is expected next week. That could anger palestinians who claim half of jerusalem, that it would allow the president to pull off a promise to move the u. S. Embassy there. And prosecutors have told Martin Shkreli to forfeit assets for his fourth conviction. That could include a oneofakind album from the wutang clan and a german coding machine from a war two. He will be sentenced next month for defrauding investors in hedge funds and scheming to control shares in a biotech company. Thanl news powered by more 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. Vonnie emma, thank you. Breaking news now. We know that the gop likely. Lmost has 50 votes to pass john cornyn believes the gop has the votes to pass the tax bill in the senate. Tearama isma vo due to resume. Tims langford has said officially he will vote for the tax bill. That just leaves senators corker flake, it seems to me. Lets go to Marty Shanker in our washington, d. C. Bureau for more. , collins,nator hatch and langford scheduled to vote for the tax bill. Is collins a definite yes . Marty no, i dont think we have heard from Susan Collins that she is yes. She has made indications in some of her comments that she is leaning in that direction. Of course, once they get to 50 they always have Vice President mike pence in the background to break any type. Republican leadership is pretty optimistic this is going to finally get done. Vonnie they would effectively do it without corker and flake, correct . To be thet would seem situation as it stands. In this kind of debate, corker has made his trigger and his concerns about the deficit front and center. And he is not running for reelection, nor is senator flake. They have no Political Risk in holding out as nos. If they add the rest of them, plus pants, they get the bill through. Vonnie marty, the way the hour has panned out, it seems we might have a once in 30 year event, possibly by midday. Possible, butuite dont forget, there is a conference. This bill has things in it that are very upsetting to house there ares, and portions of the house bill that the senate does not like. They will have to have a reconciliation in the form of a Conference Committee that could be extremely difficult, unless go ahead. Vonnie to your point, representative after representative this week said it would go to congress conference. They have to choose who will be in the Conference Committee by monday. Is it important who is in there . Marty it is important who is in there. There are it is still possible that they can have a conference and sort of jews who is in that conference on the fly. Thatrt of choose who is in conference on the fly. It will be discussions on monday on how they are going to approach the passage of the tax reform bill. It is possible, though a remote possibility, that the house could accept the Senate Version, or that the house could supersede the senate vote with their own bill, and with the senates approval, to get it done quickly and avoid this contentious conference, which i doubt, but it is a remote possibility. Vonnie marty, whether there is conference or whether they go with that remote possibility and accept, we will see deficit blowouts. At what point does the conversation turned to deficit blowouts and maybe entitlement reform or Something Else to address that . Ty i think once this hits a tax reform along the lines of the house or Senate Version is approved it will by all accounts, including the cbos, balloon the deficit. If there is some sort of language in this bill that triggers tax increases in the event that happens, it really does away with all semblance of is somethinghich everybody wants. They want permanent tax cuts so that businesses can plan and households can plan. It will be something the democrats will hit hard on at midterms. Vonnie on that point, doug holtzeakin earlier was saying that if this does pass, it will really help the gop in the midterms. Is it possible the gop will hold on to its majority because of this, as opposed to in spite of this legislation . Marty well, this is the big question. In my view, the Midterm Campaign season has already begun. As you can see in the alabama election coming up in just a few holidayssoon as the are over, everybody is going to be focused on, does donald trump as president become the issue front and center at the midterms . Not just tax reform, but the conduct of this administration. And i think everybody is going to be focused on whether the democrats can capture the house. It is not certain they can, but everybody will want to see whether that is possible. Vonnie we are going to learn a lot more about what you were just mentioning in terms of the president. Also with us, greg farrell, Investigative Reporter for bloomberg news. He has been reporting on the mueller investigation. But i want to get to what is going on as we speak in washington, d. C. , a courthouse where Michael Flynn, former National Security advisor, is likely pleading guilty to lying to the fbi. How does that change the president s position in washington . Much biggers a threat to the president been muellers actions four weeks ago, because there is one guilty plea already, but that was a lowlevel guy who may or may not have had several conversations with midlevel people in the campaign. This is Michael Flynn who is , anding guilty now cooperating, who was at the center of trumps campaign, who is the lead contact with russia in december last year, during the transition. This is a very significant event. Could be the unwinding of some twine. Does it lead to the office of the president . And even if it does, it happened during campaign season, not while he was holder of high office. Greg the conduct at issue happened during the transition after the election, when trump was the president elect, but before he took office. There is the underlying conduct what general flynn told the russian ambassador. More importantly, it is lying to the fbi. It is twopronged here. The investigation goes into contacts between russia and the trump team, but also obstruction. This is a Significant Development in terms of obstruction. Vonnie marty, the president and his immediate coterie will they be dragged into this . Could it spell the downfall for some . Marty well, this is the big question. Michael flynn, by all indications, is cooperating. Or this one count suggests he is. What is he cooperating about . Implicating in those conversations . We dont really know. And this is going to probably put pressure on people to come forward, if they have not already. It will compel people to make sure they are honest and forthright with the fbi. Mueller has talked to various people in the white house already. This basically shoots a shot across the bow of the white house, and everybody who was involved in the campaign. And the transition. Including the president. Farrell, what happens after todays hearing . Olivier short hearing . And then what . Of thise aftershocks will be felt in who was talking to flynn, when. He was wellliked by the trump much more than manafort, who was charged a month ago. Flynn was considered someone they really were comfortable with. Flynn had a lot of contact with the president s family, including his son, a lot of contact with jared kushner. Of intereste a lot in following up on this, as to what contacts those were, and whether or not flynn actually has anything of interest to still to tell the special counsel about the family. Vonnie our thanks. And Marty Shanker, bloombergs chief contact officer, joining us from washington, d. C. A headline has just popped into bloomberg. And after collins says she is not announcing her support yet for the tax bill. Still a little anticipation. Mark we will keep track of the numbers. U. K. Prime minister theresa may is in the news, pushing back against new demands to make a better offer on brexit. The latest on where the brexit battle is headed, next. Vonnie in new york, i am vonnie quinn. Mark and live from bloombergs new European Headquarters in the city of london, i am mark artan. This is bloomberg markets. Lets get to brexit. The u. K. Pushing back against new demands to make a better offer on brexit divorce terms. The sites need to agree on more on how much money britain will pay, as well as protecting the rights of e. U. Citizens and finding a solution to the irish border question. December 4, it was a deadline. Now it is less of a deadline. Going off toy was brussels. Going to have lunch with john paul juncker. She was going to come with the offer that was going to break the deadlock. Officials on both sides are telling us to die ill back those expectations. What does that tell us . That means negotiations are going to the wire. They still do not have a solution to the irish border question. It seems we have a rough agreement on money. It seems this is going the right direction. A lot of strong words over the last couple of days from both sides. Mark in august, threatened to walk away. They said if you do anything to weaken the union, we will withdraw our vote. That means mrs. Mays government falls. It does not get more serious than that. A report saying a solution isnt possible given the governments plan to leave the single market. If they are saying it is impossible, what hope is there to strike a deal by wednesday . That is when an assessment is made by the e. U. They need enough time before the december 14 summit to agree among the 27 e. U. Countries. This is a very difficult problem, a catch22. They are saying we dont want a border, but we do want a customs union. There has to be a border somewhere. Luncheon, famous jokes were made this is going to be the most expensive lunch in history. It might not even happen. Say it is10 antie. U. Going to happen. It is a 50 billion pound lunch. But is miss may going to turn up with the offer . That is the question. To our londonu bureau chief with the latest on brexit. And coming when governor mark carney said the e. U. Will review a cap on banker bonuses after britain leaves the e. U. Governor carney and andrew the limit oncs of bonuses in european law. I asked bailey if the rules should be scrapped postbrexit. Andrew looking at the bonus rule and the bonus cap rule in its own right we have criticized it in the past. And i do not think either of us has changed our view. It is not a sensible way to address or mean duration. We put far more emphasis on deferral of human action of remuneration, which could be taken away as subsequent events evolve. Inhing, i would emphasize the context of brexit, is more important than what particular e the overall fragment framework of rules. That depends on the brexit negotiation, and the future relationship with the e. U. We have to see all of these rules in the round rather than individually. Realistic, given the application for any future determination of u. K. Equivalents with the new law . You can see a number of ways in which the u. K. Relationship would evolve. I think you could have one that is based on open markets, on strong proponents of open Financial Markets and free trade. That could come with very close coordination of rulemaking and regulation, in which case, it warrants some of the things we perhaps like less. We would have to accept they may remain in place. That is one outcome. And we have to address what i call the taper issue for the u. K. The second, i think better outcome would be to turn brought equivalents in terms of outcomes. We have a sort of mutual recognition regime. The u. K. In there would be real strength in terms of the benefits that come under the law. We say we think we have a remuneration policy without having to use the bonus cap. But that would be a debate we would have to have within the framework. It would be better to go with open markets. Mark on the subject of brexit transition, you have been calling for it. Other companies are calling for it. Is the noise getting louder as we approach this crucial meeting on december 14, when the hope is that we could move on to the next stage of discussions . As you say, there is sort of a there is a very clear marker in terms of what might happen. I do think it is important. As many of us have said, a transitional arrangement the value of it will decline with time as firms have to take positions, and they will, rightly so. I think it would help to have a transition arrangement put in place. What we need to do in the next few weeks is to give it the necessary underpinning of Legal Certainty that confirms that we as authorities can say, and government can say, you can rely on it. You can plan for it. Whatever the outcome of the final negotiation with the e. U. And the future relationship, you can plan on the transition. That takes the tension out of the socalled cliff edge effects we have to deal with, and allows for us to say we will take the decisions on our future Business Model and location. Of legalthe subject certainty, one of the mostread stories on the bloomberg today is brexit backers on hook for possible contracts. Of thed it at the top piece, it is all about contract continuity. How big a disruption will contract continuity be, if we have a hard brexit . It ishas the eminent eminently solvable, but it has to be solved, and that is the point. If it is not solved, it is a big issue. As i have said before, let me stress, it is a symmetric the issue. U affects both the u k and e the u. K. And e. U. If the passporting falls away without replacement, that is where the continuity issue bites, because there are things in terms of maintaining contracts which depend upon regulatory permission authorization. If not, you cannot do them. That is critical to these contracts, for instance. We needed to be solved. It can be solved. It is not that it cant be solved, but it needs to be done. Mark bitcoin is it a bubble . What is your view . First of all, bitcoin is a commodity, in my view. It is not a fiat currency. It is a commodity. Prices go up and down. Bitcoin obviously is enjoying a sharp rise in its price. The history of bitcoin is volatile. Is, whereo come in instruments are being priced and contracts you take which we have already regulated, Binary Options we will regulate next year whether they are being marketed to retail investors, that is a concern. We hadht have seen that initial corn offerings. There are areas. But we are not regulate in cryptocurrencies in their own right. Mark that was the financial conduct chief executive officer, andrew bailey. Vonnie still ahead, spikes in the overnight between european banks. Is it spreading . The reasons for the move. We try to solve the helium mystery, next. Just hop on to the bloomberg for one of our top charts. Look at that spike. This shows europes overnight Bank Lending Rate has jumped for a second day, despite widespread speculation amongst traders about the trigger. More, on what is worrying traders, lets bring in richard jones, fx rate strategist for bloomberg markets. Right to see you. There is big uncertainty, a big mystery why this is taking place, the trigger. What are you hearing . Richard everybody is scratching their heads a bit. They are not really sure what is driving this. I think the widespread belief amongst traders at the short end curve is that this is something idiosyncratic, something temporary, and over the coming days, we should see a normalization of the rate. Era, we haveecb qe not really seen these types of spikes. We saw them before the ecb went negative on rates, and then introduced qe, especially around monthend and quarter end periods. But we have not seen that for quite some time. That is causing consternation among market participants. There is a believe it is idiosyncratic, a onetime shock, and we should be back to normal sometime, if not today, sometime next week. Vonnie richard, what if this does not normalize . Is the big thing, vonnie. If it does not normalize and this is something where we have a broader read across. It is not shortterm. I think it has the scope to really shake up the short end of the zero Interest Rate curve. He could see a lot of positioning shift. We could see yields move higher. I think one of the things that another market that could be impacted is, it could provide support for the euro currency, because those Short Interest differentials will move in favor of the euro over the dollar and other currencies. This underscore the shortfalls, richard, of the current methodology . Does the ecb need to develop a new reference . Richard well, that is one of the things i think has gotten peoples attention over the past day or so. I think it is one of those things that, when you do see this sort of spike even if it is just idiosyncratic, it does open broader issues. It is a topic of discussion among market participants. If this episode has told us one thing, it is the Current System moves smoothly most of the time, but it is imperfect. Mark richard, great job. Things for joining us. Follow richards commentary on the bloomberg. Close,up on the european we are less than 35 minutes away from the end of the friday session. What a week it has been. Look at that wonderful new clock in our wonderful new set, in our wonderful building. This is bloomberg. Mark it is 11 00 a. M. In new york and 4 00 p. M. In london. 30 minutes left in the trading day in europe. From our brandnew European Headquarters in london, i am and mark barton. Vonnie in new york, i am vonnie quinn. This is bloomberg markets. Mark here are the top stories were covering from the bloomberg and around the world. U. S. Senate republicans trying to smooth out differences over tax reform and the vote cast changing quickly, will they get a deal done . Of the u. K. , how much ongoing uncertainty over brexit harming the u. K. Economy and what about impacting the boe . Our guest is charles bean. Foroin gets approval future trading which sends it higher today and regulators we will explore why