Probe makingrussia itself felt across the world. Have a look at gold. This is chart 6129. Fridayback into gold when the news came out that thatel flynn will testify President Donald Trump instructed him to reach out to the russians. We are under 30 minutes away from the open. Lets find out more from sophie. Could berustrating , today looking like. Afternoon,ndia this but looking at the moves in singapore, taipei, lets take a look at the open. A fairly mixed a session so far. For singapore, but some pressure for stocks. I want to show you this chart. This is one of the big moves so far this morning. Chart 6173, tax concerns outweighing the Michael Flynn drama. The 10 year treasury yield is climbing up of 2. 4 this morning. Even as the dollar is rising, we are seeing bearish dollar positions rising again despite the positive economic actual for the united states. Holding a the kospi threeday drop with the korean won under pressure. ,his is the yen is slipping 112. 78, and the aussie under pressure ahead of the rba decision. Shares in sydney looking flat. A mix the session so far today. Rishaad mixed so far. China may limit some flows into hong kong. Are they expecting more pain when things get underway here . Was the worsteek week for hong kong share so far this year. Lot to dog to be a with concerns around china, regulators limiting investor flows into the city. We did get more reports that toulators are looking provide more guidelines, although details have not been fleshed out just yet. The Hong Kong Economic journal said regulators may decide to lift a ban on lockup share. Rading so there are quite a few factors that could add to the bearish move for hong kong stocks. On this chart we have seen southbound flows from the mainland to hong kong, under pressure with the hang seng on the decline. Rishaad thank you. ,ews of a merger on main street a huge merger on main street. Its get the first word news. Cvs health is buying 67 billion dollars, creating a health care and retail giant that will have input in everything from interest to the corner pharmacy. Cbs will pay two thirds in cash and the rest of stock, at a 29 share premium on the date the two were said to be negotiations. Hna Group Fundraising and soaring costs are stoking concerns about its of debt burden. Airlines sold bonds to yield 8. 2 last week, the highest coupon rate ever for the operation. Last month, another Airline Subsidiary issued similar maturity notes of the highest coupon rate in five years. Hyundai and ford does prove the rule black friday and cyber monday dont drive traffic to brickandmortar outlets. Both reported sales ahead of expectations last month as discounts and cutrate financing leeward drivers into the showroom. Financing brought drivers into the showrooms. The Auto Industry is facing its first year of thinking sale since the financial crisis. North korea says mondays a real by u. S. And Southern Forces are a great provocation that pushes the peninsula even closer to nuclear war. State news says the north would seriously consider hardline countermeasures in response to would have toand accept responsibility for any outbreak of violence. Pyongyang says the u. S. Wants an excuse to declare war. Tim cook called for future technology to be infused with privacy, security, and humanity. He spoke at the Opening Ceremony at an event designed promote chinas vision of a more censored and controlled internet. Apple has been criticized for cooperating with china by removing apps that gives users uncensored communication. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad a look at the top senatets on the judiciary Diane Feinstein say a potential absorption justice cases developing against michael trump after Michael Flynn pleaded guilty to lying to the fbi. Trump defended Michael Flynn saying there was nothing to hide. Lets get the latest from jodi schneider. Feinstein says she thinks there may have been obstruction of justice come which is a big allegation justice, which is a big allegation starting with the that the president defended Michael Flynn and had to fire him because he lied to the Vice President and fbi. Feinstein says this shows he had knowledge of lawbreaking. Firing of james comey, the firing of the fbi later, that that was obstructing the investigation into russian collusion into last years election, something she was saying on talk shows this weekend. Being the top democrat on the Senate Judiciary committee, the next question is she going to ask for hearings, which would be another Interesting Development . Rishaad what are the next the steps and where are we with this. It is still a nascent investigation. Had subpoenas, grand hades ongoing, and we have several guilty please come at some other charges, so it is moving forward guilty pl eas, and some other charges, so it is moving forward. Some saying Robert Muellers probe is politically motivated. Theres a resolution that might come out of this. The republicans are saying they did not get some documents from the Justice Department they had asked for in august, and therefore if they dont get these, they will go ahead and offer a attempt of congress citation. The timing does seem interesting then this came out after news about Michael Flynn and this tweet from the president. The Senate Passed a version of the tax bill as well. That was his big win. He is suggesting this 20 Corporate Tax could be a little higher than that. Weekende said over the in response to a question about this tax win. He was very excited. This is a big win for the president if they can get it over the finish line. 22 does seem perplexing. 20 has been in both bills. At one point the president said he thought maybe it could be 15 . One doesnt quite know where the 22 number is coming from. What perhaps he is referring to is that there will need to be some changes in the bill so that the house and the senate and pass the same bill. Rishaad thank you very much indeed. Still ahead, we speak to the head of the french Financial Market regulator about the risks and opportunities of brexit. But next, Principal Global Investors joining us with the outlook for Global Markets in 2018. This is bloomberg. Rishaad sid these groups is commodities will start 2018 with a bank and suggest investors go long on iron ore has steel supply tightens. Citibank expecting sustained high commodities demand growth next year. Warned of huge uncertainties around chinese policy and downward pressure on oil prices in the second half of next year and into 2019. Fee chrysler in talks with hyundai about developing hydrogen engines. Hyundai initially led the drive towards fuelcell vehicles, though it has fallen behind toyota. Fiat backed away from Hydrogen Power earlier this decade, but says there is potential in the technology. To exchanges racing to embrace bitcoin, dragging federal regulators into rome that has been called fraud. Cboe both have been approved and sent bitcoin higher. The exchanges do help to monitor the market. And,ics being alpha washington grouping the attention with Michael Flynns dutyfree play, sending investors running to the safety in the success of a gop tax plan. What are you making of all this . It is interesting. It is clearly a tail risk, but i think that will disappear. The key issue is what happens on tax reform. We are likely to see that go stimulus,me but it is so for it to be effective it has deepeningt in capital and productivity moves, so we can only hope for that. Rishaad it has been totally eclipsed by what else is going on. Absolutely. That will play out over the next several days. What does he know and what is he willing to share is what we all want to know. At the moment we are just all in the audience waiting to hear. Win,ad it is his only big but there will be arguments about this because its not a done deal and we have to get both the house and the senate to agree. What was interesting was his comment over the weekend of talking about 22 Corporate Tax. The issue is that it is not much of a reform or cut at the individual level. Will bethere discussions behind closed doors there, particularly in terms of the deductibility of state taxes. Ofhaad the other part washington is the looming takeover of the fed chair by jerome powell. People have been quite sanguine saying more of the same, but there is another element. More openminded on deregulation. I think he will be compared to see some winding back of regulation. I think what will be interesting over the next few months is we will get a new appointment, and particularly the vice chair. That will give us greater insight in terms of what happens on the regulation site as well. Rishaad do you have anybody whose name has been thrown into the ring on that one . The candidates to date suggest it will be more of an academic persuasion. Rishaad with so many people being replaced on the fomc, he, donald trump, has the chance to fed decisionmaking body in his own image, what ever that is. You are right. The fed will be less aggressive on regulation and a little bit more patient when it comes to the raising of Interest Rates. If that reflects trump, which it probably does, thats probably where we are going. Dont forget our Interactive Television function tv. You can dive into any of the securities are bloomberg functions we mentioned. You can become part of the conversation by sending us messages during our programming. This is for bloomberg subscribers only. Check it out at tv. Counting down to the start of the session in hong kong, shanghai, shenzhen, down. 3 after the worst week so far this year for the hang seng last more of theg like same at the start there. Lets find out more and get the views of our guest still with us. Lets start off with the u. S. , what happens there in everett of inevitably happens here. There is a move of Growth Stocks towards value stocks. That tells you the end of the equity bulls cycle. Do go along with that, and if is so, you have to be one step ahead of that. 2018 will be kind to growth assets, equities in particular, and the earnings yields are still close to 5 compared to bonds, so we are still fully weighted to equities. We have been rotating into value of away from growth, but that has been on a more valuation perspective, so 2018 still has the opportunity to deliver high singledigit returns, but it will be more of a rotation aspect to it. Intoad you see movement emerging markets as opposed to develop markets has people move towards the value side of the equation . I think all equity markets would do reasonably well, including emerging markets. You have synchronized Global Growth, emerging markets that have undertaken painful reform and sustain commodities prices. Emerging markets, we would be fully weighted at the moment. Rishaad that also begs the question as to what happens with the bond market, the fed, and what are we seeing a global bond markets . We had been overweight credit versus duration and will continue that. See a flattening yield curve over 2018, ultimately we will start to see the long pickup towards that 3 level. Credit. Still in keep away from longduration. Rishaad we will talk about the Securities Regulatory Commission issuing new rules following last week selloff, and that was on reports of suspending approvals for some funds and planning large allocations to hong kong traded stocks. M the oh brian is in beijing. New rules and tell in tail, and do they clean up the mess in regulation. They are trying to solve a problem, but what problem is it . Onit is a problem depending which side of the argument you are on. Into thee been flows Hong Kong Markets from the mainland this year. They have gone to record levels equal to of 11 billion. There is some speculation that beijing is not happy with that in it is a way to circumvent the capital controls in place since last year. They announced late on friday in beijing that they had issued rules and guidelines to mutual funds that invest in hong kong stocks via the stock connect. As is quite typical, they did not give any details on what are, rules or guidelines but as you said, we are being told behind the scenes that those mutual funds that allocate more than 80 of the portfolio notong kong stocks are seeing approval from the regulators that they require in order to do that fire the stock connect. Wordad lets have a quick on what was being called a White Elephant by some, but seemingly got its act together. The stock connect, how is it working broadly speaking . Connecthenzhen stock has been going for a couple of years now, shanghai and shenzhen, and if you are a mainland investor, it is going. Angbusters i suppose record flows from the north into , the main supporting key source of investment for the hong kong equity market, so you can understand why there was a horrible in the stock market last week when this news did beijing may be cracking down on these flows. This is the key source of investment for the hong kong equity market this year. Rishaad good stuff. We could see this gradual cutting off of flows from the mainland into hong kong, maybe a good thing in the shortterm and in the longer term plays out even better. There continues to be an insatiable demand for offshore estment i mainland chinese by mainland chinese. The stock connect was one of the few programs they were able to surprising its not the flows you have seen of the last 23 years. In terms of the controls here. , the regulators were concerned that given significant outperformance of the hang seng this year that maybe we were starting to touch on a potential bubble problem. Rishaad maybe it was a good idea . I am always worried that when regulators interfere with markets, but in this case, i would not be too concerned. The last word on bitcoin. Rishaad money tries to find a home for it self, of love and thousand dollars plus at the 11,000 plus at the moment. We are a big believer in the Underlying Technology of block chain as a game changer. Bitcoin, i bloc would not be surprised if the regulators started to intervene there to protect. Come. D more to Hong Kong Market reopened there. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. The trading day just starting off in hong kong in less than a minute. Investors are really concentrating on politics, the alpha currently. Tax reform has been eclipsed to some extent by this investigation into donald trump and russia. On top of that, European Union finance ministers meeting to review what is going on and vote for a new president and the recent bailout review in brussels. We have brexit discussions continuing. Arguably the most important data point of the month, nonfarm payrolls out on friday, expecting a robust pace last month with unemployment near 17 year lows. When it comes to Interest Rates and Monetary Policy, that has been dictated to with decisions out of australia, brazil, canada , as well as india. We have this story about fund flows being limited into the territory. Sophie it looks risk off in asia. You have chinese large caps falling after the worst week of this year on friday. Set to abate with the chinext index under pressure. Irrationalurbs on overseas investment is over with companies encouraged to join International Competition incorporation. Hong kong shares, the hang seng and the hshare gauge sliding with sixth session property stocks wing the most on the hshare gauge. Geely auto on the back foot in hong kong. Coolant energy also under pressure. Jumping the most since september 9. September Merchants Bank gaining. 5 , upgraded to hold at morningstar. Ultimately pressure through the tech sliding 2. 7 . This brewery has risen to a may i and hong kong come hshares upgraded to buy at ubs with a price target of 45 hong kong dollars. Alas look at whats moving the dial in shanghai. Financials dragging as well as real estate players. There is concern about china anxiety and financial risks, but one asset manager says all this nervousness creates a great opportunity for a stock picker to buy very high quality companies. Service and consumption driven plays, while avoiding the commodity sector and stateowned banks. Rules ons are drafting Bank Ownership disclosure. Chinese steel producers. Credit suisse says they are expected to maintain their profitability on improving supply demand dynamics. Keep an eye on electric vehicle players as regulators approved licenses after halting approvals earlier this year. That makes 18 approved licenses so far. Washington is making itself felt cross Global Markets. Lets get to first word news with haslinda amin. Dianne feinstein says i the case ofs and obstruction of justice is developing against the president. She is talking about the indictments and please involving trumps former aide Michael Flynn. President trump has celebrated the tax vote in the senate by saying it makes him unbeatable for reelection in 2020. He also says the Corporate Tax rate could be 22 in the end, having said 20 was the level at which he would support the republican proposal. Every percentage point change in the corporate rate equals 100 revenue over 10 years. Rio tinto has named Simon Thompson as its new chairman. He has been a real director since 2014. Thompson will replace the current chairman from march 5. Rio tinto is optimistic about china longterm come up but with a slowdown over the next six months. Singapore priced itself prides itself on law and order, but has been called a haven for piracy instead. Costs theand movie industry 32 billion in global revenue this year, topping 50 billion by 2020. Greece and international to bring itsks bailout to an end. A call came after the two sides reach Common Ground in energy, public administration, Financial System, and social programs. He would not only release fresh loans come up but will help athens regain the trust of investors. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad units of each in a are stepping up efforts of fundraising, stoking fears about the overall debt burden. Selling high yield bonds as of the companies cancel offerings. What are conditions like here at the moment in these local credit markets . November was a very bad month. That is the first thing to say, any Company Looking to raise weeks hadhe past 45 to face higher borrowing costs and they would have before that, whatding hna, but compounded things for hna are concerned specific to the company about its debt levels and the scrutiny it has been getting from chinese regulators overseas and where the money is coming from in the first place as well. What does the recent pattern tell us . Thing that is most striking about the flurry of issuance is that several months before that there wasnt much, so the units that we saw most recently were an airline, a unit of the hna flagship carrier, a unit of that, that issued bonds in the local market at 8. 2 percent, which was a record high do and acompany, bonds relative shortterm, and another unit of the airlines also issued in the past several weeks the highest coupon rate in five years for that company. The hna group ceo made some comments last week to the effect of that each business Flow Management and that the Group Overall is considering asset sales, which suggests they will start to rein in some of the acquisitions and that. That fueled at the same time what some people in the bond market are saying is if you are selling at a time like this when you have to cough up so much more for the money, it shows you really need that money. In fact, in november, a lot of companies canceled bond sales they had planned. Rishaad because they didnt need the money. Or they could afford to wait a little bit and not pay such high yields. At the end of last week, the bond market rallies a little bit , but the issuances we sell for the most part were before that. Have the various ratings agencies been doing their job here . Have the alarm bells gone off their . I think they are looking closely at hna and any company like it with high debt levels. S p, which does not have an official it rating on hna group, but has what it calls a Credit Profile, said last week it was lowering the profile by one step which iscut it to b, the equivalent of five steps below investment grade, so that is a juncker equivalent. From some of that junk equivalent. We have seen from local sales in the local bond markets, despite top ratings on the company, the yield was the equivalent of a juncker bond yield junk bond yield in the local market. Rishaad thank you for that. Cook making a first visit to chinas world internet commerce, pleading for privacy, security, humanity, and tech. Lets bring an hour managing editor for Technology Emma obrien peter elstrom. How significant are their appearances here . Bring someo ceos did star power to the internet tethering. Historically this has been a domestic affair. You have seen the heads of alibaba, tencent, and local players, but this is the first time you have seen apple and google show up in this kind of force. This is an important market for them. Tim cook gave a surprise keynote on sunday. He talked about an internet that. As more humanity to it also, not just the technology but the human implications of these technologies. Rishaad a question i want to ask is how is apple doing in china anyway . China is notle, just the Biggest Country by. Opulation it has lost ground to local andetitors including Xiaomi Huawei and others. It just came out with the iphone x, the 10th Anniversary Edition which did meet Strong Demand in many markets, including china. It remains to be seen if they can clawback some of that market share after falling against some of these local players. Certainly tim cook has been coming back to the country regularly. He was just in china a month ago to talk to president xi jinping. Differentpear at a conference later this week, so he is making the effort. Rishaad what was the main message that tim cook delivered . About thetalk importance of has we explore these new technologies from smartphones to Artificial Intelligence that we need to look at the on the technologies themselves to how they are affecting people. This is a message that resonates in china. You had a member of the politburo talk about internet controls. This number called for more International Cooperation when it comes to fighting criminal activity and terrorist activity online and was to push that control beyond china to where it is now in some kind of Global Task Force to address some of these issues. It is not clear whether he will get an empathetic audience, but they are seeking to have that kind of influence. Rishaad thank you very much indeed. Peter elstrom joining us from tokyo. The heade talking to of frances Financial Market regulator about the challenges and opportunities on the way. This is bloomberg. Rishaad theresa may is preparing for a crucial meeting in brussels that she hopes will into the deadlock. She has a deadline to make a better offer on the terms of the divorce. Lets discuss this with the head chairman of the french Financial Markets of 30 in tokyo today. Thank you for joining us today. You with fiscal Brexit Debate currently from a regulators point of view in particular . Say we are just waiting and expect that these political deadlocks you mentioned will be solved in a couple of days in order to begin the real discussion on the Financial Sector issues. We have a bit more than one year in order to find something. Rishaad it is a very complicated divorce proceeding. One would be passporting, the other thing would be euro clearing, something the europeans were gung ho about bringing on to the mainland, but people are having second thoughts about euro clearing. Tell me about this. I think euro clearing has a lot of attention because as a sensitive Market Infrastructure you cant move it from one day to another. You need to move her very carefully and to take all the risk into account before moving yearhing, but it is clear eu 27 would have to have something about its clearing operation. Rishaad why is it proving to the something of a poisoned chalice . Everybody was cheering about having clearing brought back to mainland europe, but there is now a sense of be careful what you wish for. You should make a distinction depending on the product you are clearing. Swaps orinterestrate repos. Moving the clearing from the u. K. To eu 27 would only be positive if it is done on the marketway with the whole moving, not part of it, because we need liquidity and we need to avoid fragmentation of this type of market. That is the inherent danger you are talking about. If you want the liquidity, isnt it better to strike a deal with london having it and the European Union having some ty over the city . That is a possibility, but not the single one. We need to have another solution to be proposed to the industry inside the eu 27. We need to have that to substitute the clearing which takes place now in london. Lets move also to another head scratching ifid. Opment, m dow are things going with mifi and will these corporate entities be ready at the beginning of january . I think they will be ready. I see it after discussing the issue with corporations and industry. It is clear it is a huge regulatory step. To help the industry to implement that. We need to monitor the implementation and track any unintended consequences, which could be possible with a specific focus on the research, financial research, and execution could be detrimental, and we needentities to monitor that very precisely in order to react promptly in case of need. Mifid rishaad lets move on to bitcoin. 11,406, up 500 today, 4. 6 higher. Nd . Re does it all e how do you regulate a market like this . I am not sure i want to regulate it. It is an unregulated market. I should say it is a dangerous illusion. It is a challenge for central bankers and financial supervisors, but because it is a dream of implementing a universal currency facilitating transfer of money, but at the end of the day it is a way to purchase illicit goods. It is a way to launder illicit incomes. Develop and pay for cyber crimes. Commodityre empty without any link to the real economy. , if it were ag a very badt would be , let us an impact imagine somebody borrows in bitcoin one year ago and has to reimburse it right now. No, we need to invest in infrastructure. We need to invest in innovation. People put money in that type of asset it is losing the possibility to develop the real economy, so i do not want might Life Insurance invested in bitcoin. Yes. That is something which is very negative. Athaad how you described it the beginning is Something Back by nothing and how it was being used, or claim that it is used in those ways come it sounds a bit like gold, doesnt it . Yes, some similarities. You are right, that you should could becate the gold used for jewelry, and industry, so there is some limits to the parallel with gold, but there is also many reasons why gold is no longer used as a currency. To leave things there. Thank you so much for joining us. The chairman of the french Financial Markets authority looking at what is going on market wise and beyond. That is on the way next. Rishaad the australian prime winning with his deputy a special election over Malcolm Turnbull, now facing a test next week. Yes, as you say, Barnaby Joyce reclaimed his seat in parliament in saturdays election. Comfortable he declared his win with 30 of the vote counted. It was a shoe in for Barnaby Joyce. The test will come on december 16 when John Alexander must recontest his seat in a sydney suburb, and that is looking like a tighter contest. Joyce wasnt the only one to be caught out by the constitution . Know, this citizenship fiasco that has then gripping australia ,as netted nine lawmakers mostly in the upper housesenate. It is in the lower house where it has been causing problems for Prime MinisterMalcolm Turnbull with his razorthin majority turning to a minority government with the temporary loss of joyce and alexander, who will we contest his seat. Anticipate more news to calm. Malcolm turnbull has given lawmakers until tomorrow to declare their heritage and prove that they are australian citizens, and we could have another clutch or when it comes to the high court. Rishaad ed johnson joining us there. Ashaad the russia inquiry step closer to the white house. Lunch andy heads to it could be the most expensive meal in history. Two of the worlds Biggest Car Companies place a bet on hydrogenpowered vehicles. I am rishaad salamat. This is Bloomberg Markets asia. Rishaad this chart about tax reform in the united states, the bill getting through the senate. We had seen treasury yields to 2. 4 or thereabouts. This is a bloomberg dollar index. Today as people bet this reform process will get going and the tax reform plan may well be signed before christmas by donald trump, so there we have it at the moment. Lets have a look at what else is going and the market action. Sophie, what is grabbing your attention . Sophie a mixed session. Indonesia with a gain of 1 . Manilain china and leading the drop, but the hang the morningss losses as energy and Consumer Staples climb. Mood, seeing a risk off but that is not translating into safe haven gains. The gold and yen on the back foot. Pushing the yields above 2. 4 , boosting japanese lenders. The top bank index is headed for a fourday gain, the longest streak in five weeks for that index. Drop in electronic makers outweighing financial gains in tokyo this morning. Day wearsetter as the on, set to snap a sixtake decline. Insurers and Energy Players leading in terms of index points. The stock jumped over 11 . Credit suisse says watch chinese steel producers with high profitability over the next 612 months. Property extending that rise, so property players looking decent today. Rishaad lets move it along now. Lets go to paul allen in sydney. Cvs Health Buying at the, creating a health care and retail giant. Cvs will pay 207 a share, two thirds in cash, the rest in stock, a 29 premium to the share price on october 25. Chinas once acquisitive hna group is stoking concern about its debt burden. Sold 270 day bonds to yield 2. 8 , the highest coupon rate ever. Subsidiary another issued similar notes at the highest coupon rate in five years. Honda and ford does proved black friday and cyber monday dont drive traffic. They both reported sales ahead of expectations as discounts and cutrate financing brought drivers into the showroom. Total deliveries fell, but both said retail demand was strong. Industry is facing its first year of shrinking so since the financial crisis. North korea says mondays drills are aean and u. S. Forces grave provocation that pushes the peninsula closer to nuclear war. The north would consider hardline countermeasures in response and washington would have to accept responsibility for any outbreak of violence. Pyongyang said the u. S. Wants an excuse to declare war. Visit in chinais to call for future technology to be confused with privacy comes security, and humanity. He spoke at an event designed to promote chinas vision of a more censored and controlled internet. Apple has been criticized for removing apps that give users uncensored communications. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad the u. S. Government bond markets rally after Michael Flynn pled guilty has reversed as asian trading gets underway. Hays has a look at what is likely to drive markets this week. Of on marketot participants to be occupied with. Boy, oh, boy, look out for whiplash. That is what we saw on friday. This is 7824, the yield on the benchmark 10year note. 2. 34es into the week down more liken looks republicans get a tax bill through that would cut taxes and boost the stock market, you see this bike to 2. 43. That big sharp down is friday when the headlines on Michael Flynn sharp drop down friday when the headlines on Michael Flynn broke. Tradersar right, bond think it may just be one day, but that will depend on news this week. The senate and house have to ofoncile and do some kind resolution of their two versions of the tax bill. If they succeed, that could be more bearish for bonds, but if they have trouble, that could help bond bulls. J. P. Morgan Asset Management cutsg friday that as tax for the economy when it comes to the fed hiking rates, threefour may not be enough in 2018. They could see four or more, a bearish call. Forarm payrolls friday november, that tall line on the far right is the jump posthurricane. The bar before his when the jobs disappeared for a month or so. Is supposed to be 199,000 new jobs. On more thing to point out friday after seeing this on thursday, jim bullard on the fed keeps warning this flat yield curve in the u. S. Government bond market is a red flag for the fed, investors, and could be negative on the economy. If the fed keeps hiking rates, the yield curve will keep getting even flatter. Rishaad lets have a look at this part of the world. Two big meetings this week it, the boj also about to talk. Governor kuroda is speaking at an International Financial forum. We will be listening to what he about inflation, yield curve control, etc. Rba seen holding their key rate steady again. This is chart 8076, a lot of cross currents, but one of the main things is that key rate steady, but inflation fading a bit, and that is one reason why they will be able to not make a move for a for the 15th meeting in a row, along stretch, and most investors are looking for a rate increase someTime Next Year. I think the star of the show will be the reserve bank of india. They are seen holding their key rate steady and inclining themselves towards a rate hike next year. Lets look at 6128. You have got the white line which is the 10 year indian bond yield over 7 . The blue line is the one year swap, and it is 6. 31. Our Bloomberg Economics team has a different view. They say inflation is ebbing enough in india that the next move this we could be a rate cut. Imaginehappens, you can what it will do to indian bond traders, but the consensus is looking at the fact that gdp rebounded up to 6. 3 last week after coming down steadily for five quarters, so it could be an , probablyg meeting more than the rba, but the rba statement is something we will watch closely. Nice one. Kathleen hays. Still to come, invesco underweight on chinese property highyielding bonds. We will hear from the chief Investment Officer later on. Next, could the dollar recovery be this weeks currency theme . Outlookat the global fx with Commonwealth Bank of australia. This is bloomberg. The latest business flash headlines. Citigroup suggesting investors go long on commodities and iron ore at as china steel supply tightens, expecting to see sustained demand next year, but warning around chinese policy and the economy has downward pressure on oil prices next year and into 2019 come into play. Fiat chrysler talking with hyundai about the development of hydrogen engines. Initially lead the drive towards fuelcell vehicles, though it has fallen behind toyota. Away earlier from Hydrogen Power, but says there is potential in the technology. Exchanges embracing bitcoin, dragging federal regulators into a realm called fad and fraud. Debutn contracts will cboe. E and both had been approved and sent bitcoin higher. Cft tooping to help the monitor the market. Weekrtainly had its best on reports of a brexit breakthrough, but might struggle to push higher if talks stumble. Lets look at the crucial meetings ahead in brussels with the senior currency strategist at the Commonwealth Bank of australia. What gives here, tell me. From 118 has gone 135, brexit to just shy of breaking through 135. Is the path of least resistance for sterling to the upside now . There is scope for the pound to edge higher, not just against the dollar, but more on the cross as well. There is some optimism regarding brexit talk. Theresa may will probably the uks proposal regarding the three major pillars of negotiation, mainly how the u. K. Will deal with the border situation between the fate andand, future of eu citizens in britain, and the financial. Greement we will know today if those three big issues will have likelihood of being approved by the European Commission. On the super 14, we expect the European Commission they brexit that negotiations are moving along favorably and they will be theng along to phase two of brexit talks, the trade talk, the big focus for the pound early next year. What is sterling pricing in at this level of 134135 . Has not fully priced in that phase one of brexit talks will be approved by the European Commission. Been some stumbling block so, so it has not been fully priced in. So the meeting will be critical as a measure of whether the brexit talks move on to phase two. Base Case Scenario in our view is that brexit talks will move on to trade talk early next year. That should be supportive for the british currency. Rishaad it can also affect the thers, what happens with dollar, with tax reform getting a shot in the arm and something , so what christmas does that mean for the dollar it so . The dollar it self . It is looking constructive in the near term, especially because as you pointed out it looks as though the u. S. Government will be able to pass some form of progrowth tax reform before year end. The Senate Approved their own version of the tax bill and it has to be reconciled with the house version, so the house either approved outright the u. S. Senate tax bill and fast tracks the process of tax reform being signed into law by President Trump, but the most likely scenario is the committee will be formed and the house and senate will try to compromise and agree on one final tax bill to send it to President Trump before year end, and that is supportive for the u. S. Dollar because it could lead to an upward revision of longerterm use Interest Rate expectations. Rishaad that is just the thing, isnt it . You can see how the dollar index 103 toe from 1032 93 93 or thereabouts. If we get some clarity, do we see further upside for the dollar . On top of that, why do think the dollar has gone down so far this year . Big reasonse weighing on the u. S. Dollar is that inflation in the u. S. Remains muted, waiting on a longterm u. S. Interest rate expectations and curtailed significant strengthen the dollar am a but another reason why the dollar has underperformed is Global Growth is encouraging and supporting of the commoditysensitive currencies. Another reason that has undermined the u. S. Dollar is other major Central Banks are moving to a less accommodative Monetary Policy stance, and these three factors would limit upside potential for the u. S. With the 2018, even tax reform being progrowth. Upside will be limited in our view. Will nonfarm payrolls . Eport this off the charts that is something you need if you are a dollar bull. We are dollar constructed in the near term. Beyond that the near term, we still look for the dollar to trend modestly lower. Support forar of the u. S. Dollar is nonfarm payrolls on friday. Initial jobless claims are pointing to fairly decent increases around 200,000, but ,he u. S. Economy is well below at least the u. S. Unemployment rate, below the level considered by the fomc to be the rate of four employment, which is roughly 4. 6 . We have been below that level for several months now, so the big driver of dollar and Interest Rate expectations will not be job gains, but the pace of u. S. Average Hourly Earnings growth. If we do have a significant hourlyin u. S. Average earnings growth, we could see the u. S. Dollar k more upside momentum in the new term. Rishaad one to of the things that reflects what is going on with the dollar is the price of gold. Gold has been steady, has it not . Oil prices tended to be steady even that opec decision to extend the curbs they put in place seemingly was like water off a ducks back for the oil market. For Commodity Prices particularly crude oil prices what is a big factor of support for these prices, not only opec extending production cuts, but Global Growth, the Global Economic expansion is broad based. It has never been this broadbased since 2007, and that is significant support for Commodity Prices. Chinese Economic Activity is encouraging has was highlighted by the latest manufacturing pmi and will continue to give Commodity Prices like crude oil, Important Pillar of support, which is why we remain constructive on the aussie, the kiwi, and the canadian dollar. Rishaad thank you so much for joining us. Up, after a bungled search, rio tinto names Simon Thompson as its chairman. More on that and what he is expected to bring to the company. This is bloomberg. Rio tinto has named Simon Thompson as its next chairman as shareholders were said to have rejected an earlier candidate. Andrew, who is he and what does he bring to the post . Simon is a 58yearold veteran mining executive and has had a lot of experience in andnce working at rothchild others. He has been on the board of the Newmont Mining and as senior director at rio tinto since 2014. Apparently there was an attempt to name mick davis, but investors said no. Is, likely to face similar opposition or is he seen as a conservative pair of hands . Thompson is a different candidate about continuity and capital discipline. When hishat today appointment was announced. Polarizing far more executive. He was about acquisitions, and many acquisitions have been questioned recently because they did not work out so well and rio was a casualty of that. Rishaad absolutely. Supposing simon does get in, what are the challenges he will face as chairman . Does he have a big laundry list . Is thebig challenge challenges facing rio at the moment here it a have a probe moment. They have a probe over the mozambique acquisition. Mozambique coal acquisition. Beyond that, chinas growth is a key factor. Rio said theres a likely to be a slowdown in the next six months come a which could be an issue for them. Rishaad andrew, thank you for joining us. Rio tinto share price moving to the upside, and the aussie ,arket a bit flat at the moment perhaps stopped from falling back by that. The market across the asiapacific mixed. This is the equitys position at the moment. Hang seng decided to go to the upside. Futures areeaking rallying, and that is not making too much in this part of the world. Legislation, if the Senate Passes that, focusing away from the continuing investigation between Donald Trumps aid and russia. Asian stocks mixed and steady. The beginning of the in for ultraeasy money as Central Banks either funding costs rise. This is bloomberg. I am paul allen with first word headlines. The top democrat on the Senate JudiciaryCommittee Says investigations of links between the trump cam main and russia suggests a potential obstruction of justice cases developing. She is talkingn about indictments of former trump aids, including Michael Flynn. President has celebrated the tax vote in the senate i sang it makes him unbeatable for reelection in 2020. He says the Corporate Tax rate could be 22 , having said 20 was the level he could support the republican proposal. Every percentage point change in equals 100 billion in revenue over 10 years. Prides itself on law and order, but is being called a haven for piracy. Top boxes allow unauthorized streaming of movies, tv shows, and sporting events from around the world. 32ine piracy will cost billion in global revenue this byr, topping 50 billion 2022. Grease and International Creditors have agreed new reforms must be undertaken in exchange for new loans. The accord came after the two sides reach Common Ground. Conclusion would not only released fresh loans, but Health Athens to regain the trust of investors. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad right, market wise, tokyo closing out for the lunch break. Also chinese bonds in focus. A few gyrations as the pboc withdrawals funds, holding off repo rate updates for a second day, so chinese lawns falling, bonds falling. We are seeing chinese large caps reversing losses, gaining. 2 . The hang seng set to snap a five day drop. Elsewhere, malaysian assets, stocks sliding while the Malaysian Ringgit is rebounding from its steepest drop in a delayed reaction to the opec output curb deal on friday. New york crude is slipping below 58. The philippine peso under pressure, falling with shares in manila as the congress and philippines aims to pass a Tax Reform Program this month, a key theme this tax overhaul idea. The yen at a twoyear low is dragging on Electronics Makers in tokyo. Telcos also dragging on the benchmark. Apartment store operators are bright spot, rising on stronger samestore sales and november. Cosmetic sales were particularly robust. Cosmetic stocks also the hero in seoul, korea, leading gains up 6 , rising after a jump in november. Exports jumping. Pictures under pressure and carmakers on the back foot. Developer sales slumped and exports decline. Rishaad thank you. New Bloomberg Survey finding some banks in the region turning down low margin loans. Andy lee joins us. Are these funding costs rising . The Banking Sector in general is becoming more competitive. Pressure on the varies on a country by country basis. In asia there is more significant cost of funding. Rishaad doesnt mean that loan prices are on the rise . It may not be the case, but a sign there could be an opening. Sayingrespondents are they need to hire pricing for the loans. A certain percentage of them has been saying they would not participate because the margin is not high enough. So it may be the case that the loan prices may be bottoming. Rishaad this begs the question about outlook for loan margins and is part of the world. Ex are seeing taobao downex japan have been this year. Year we will see if the volume is going up again. There may be less pressure. Generalof this, in seeking Higher Quality credit, which means those of the names that will have lower margins. Rishaad thank you very much indeed. Lee looking at pressure on loans in the asiapacific. One sector to feel that will be chinese banks. Maligned as as much admired for their stellar growth. Forecast for china banks for 2018, what gives here . Think 2018 that the chinese banks may report mostly single digit earnings growth. That may not be living up to the expectations of the investor. Rishaad that may be reality sinking in. Many of the banks are still facing hurdles, especially the joint stock banks in china. At the same time, even their margin recovery is within 10 basis points sequentially , those trends7 could be carried forward into 2018. Most importantly is the credit quality improved, but earnings did not improve in tandem because pressures still remain in the coverage ratio. They want to raise the coverage ratio and may need to make more credit costs. The banksell me about over they all. Will they be able to maintain the dividends . Other pressures . They remain stable in 2018 as compared to 2017. That helps them to maintain their dividend payout ratio. If you are looking for expansion and payout, it may not be realistic. Our share price is likely to bounce up at any stage, return on equity, the key measures of profitability . If you talk about share prices, so far the chinese Banking Sector listed in hong 16 , butbeen going up the problem is the hang seng index has been going up more than 30 so far the sheer, even after last weeks correction, so about thesells you investors and banks. Rishaad we will see what we can expect in 2018 during our coverage of the your head on wednesday right here on bloomberg. Eu coming up next, we hunt for real yields. This is bloomberg. Rishaad the chief economic governor the should visor to the governor of india says numbers should notging, but have policymakers jumping for joy just yet over gdp growth returns. I think the first of all on the face of it what is encouraging about this is that there were five quarters of deceleration. Remember especially at a time ,hen the world was accelerating especially the last twothree quarters, so that was the worry part. This seems to have arrested that the celebration come but one swallow does not a summer make. We have to be watchful going forward. We have to see what the manufacturing numbers are indicating. Actually what did the numbers mean is that formal manufacturing is apparently growing at 9 , so we have to see whether this will persist, whether it reflects the fact that we have gone past the twin policy experiments and whatnot. , think we have to be watchful cautiously hopeful these trends will continue going forward. Rishaad the chief Economic Advisor to the governor of india speaking to bloomberg. Rishaad our next guest says he is long, especially in local currency bonds. The chief Investment Officer for. Ixed Income Investment asia give us your thesis. Will remain a positive country has this country has a strong economic reform momentum. The capital will continue to propel strong fundamental economic momentum going forward. The real Interest Rate is more than 3 . There is strong reform momentum in the country. By thelook upgrading ernational asians come all agencies, all is good for this country. We have to look at the real Interest Rates, whether they will be cut or hiked. Talking about india, five year bonds around 7 . So realaround 3. 7 , Interest Rates of more than 3 . Economic reform momentum will continue to improve the productivity of the country. That means the current account balance and the currency will continue to improve. That is one thing, but you are also saying local currency, so rupeedenominated, not dollardenominated, but you are building in currency risk here. This currency risk is good and will give you additional returns from the alpha. Rishaad isnt that an Interest Rate cut . Yes, but if you look at real Interest Rates in local currency terms, you still get more than 3 . Rishaad but this is at the expense of just looking at chinese corporate debt, in particular Housing Developers bonds, your sanko underweight on these . You are saying go underweight on these . Are highhe yields itld, now only 4 or 5 , but is getting tighter and china and authorities are tightening the shadow banking, having a direct impact on the property developers, especially the weaker ones come the smaller ones. We have to be more cautious. Rishaad you are looking at some of these Companies Moving away from highyielding bonds to companies who have been spending a lot of money in recent years abroad buying various things to put into a portfolio, and they are saying some serious funding pressures, are they not . We will see more consolidation in the property sector. Otherd im talking about Industry Groups as well where people have been out shopping for things. You are absolutely right. The funding costs of investors on the retail and institutional site are leveraging up. We continue to hike Interest Rates and it will create higher and higher funding costs, so some Time Next Year we will see an unwind of bond trades. I would say avoid those crowded areas. Rishaad how is bond connect playing out for you . It is a longterm positive. Rishaad i feel like a bumpy start come up but is proving showing its metal now. The bond connect will allow us to access to the Third Largest bond market in the world. That will give us a lot of alpha. Out for as a firm we are positive on the bond connect. Rishaad ok, looking at these youtier markets, where are finding value and are you concerned about them being Frontier Markets in the first place and what sort of yields and where . We are seeing Investment Opportunities from the frontier ,. S. Softened dollar bond mongolia, sri lanka, pakistan. From theme switching highyield property sector to this area. One, we will get a higher yields from the sovereign bonds in the Frontier Markets. Two, we have less specific credit risks. And third, when china will continue to put more money into investments in frontier countries like those countries, this frontier countries will improve. Rishaad thats all we have time for. Thank you very much. Our thanks go to him. The u. K. Ambassador to has told bloomberg the special relationship between washington and london will not the harmed by brexit. Thepoke to bloomberg about chemistry between President Trump and theresa may and about twoway trade. The Prime Minister was the first visitor to the u. S. After the inauguration of the president. The president and the Prime Minister have a very good relationship. I know the president admires and respects the Prime Minister greatly. My jobok down the road and the president s job is to protect americans, and he is doing that the best he can. If you are going to have stumbles, absolutely, things happen, but the intent is genuine and it will happen. The nextat in terms of anye, a rapprochement, diplomatic side to this at all . If we concentrate on the job at hand and focus on that our special relationship with the and hascenturiesold been well tested through thick and thin, but it is based on trust, and trust is something you earn over eight long time, and trust is 100 there, so we will get past all these things and onto our main job as leadership in the world, which needs leadership. I suppose one of the main areas, which is brexit and with attending complications, there is talk about a u. S. U. K. Trade deal, has that begun . Not a deal, but discussion certainly. Over toe groups coming look at the parameters and try to lay it out, not a negotiation, but looking at the environment and seeing what it will look like to put a deal in place if and when that occurs. Have you spoken to the president in the last couple of days . Any indication about when hes coming to the u. K. . Know, the queen invited him for a state visit. He accepted that information. That date has not been set. , youve hadall you a couple of difficulties in parliament talking about the president. I think the president is excited to come over here and do that. I think he would be very excited to do it. Yeah, we would obviously coordinate with them. You are waiting for the details. When we get the details, we will pass it along to bloomberg for sure. Thank you. When you talk about security, how about intelligence sharing . We had a little blip between the eu, nato, and the u. S. , are we now on track . The intelligence sharing and cooperation on security and defense is at the highest. Our relationships here are the best in the world, relationship, trust, capability, all of your organization and hours are coordinating. In each ofs embedded ours and we work extremely well together once again based on , and i think our intelligence and counterintelligence people really respect what you are doing over here. Interviewur exclusive with woody johnson, the u. S. Ambassador to the u. K. This is bloomberg. An app called cash is making a splash. Like an instant flea market where people post use goods over the internet and are paid a nonnegotiable fee. At 62 million. Lets get more on this. Lets get to tokyo and join our technology reporter. Users are getting paid before they deliver their secondhand wears, something sounds too good to be true, so it quite often is. That was my first question to the founder of the company. Said the Service Started as a social experiment. He had this hunch that in the world the good people outnumber the bad, but the question is by how many. In june he launched the test service to test the hypothesis, and people rushed to the service forcingpent 3 million, him to put a halt on the business. Trucks ofext day, packages started to arrive. In the end, one in 10 people took the money and ran. Ar him that seemed like reasonable basis for a business. He has been proven right since then. He ended up selling the company for 60 million and still runs the service. Last week, japans biggest fleamarket up launched an identical service to cash. Rishaad we often talk about the lack of innovation coming out of japan did this is quite good. Out of japan. This quite good. It is not often you hear something as innovative as this. If you google quiet japan can innovate you will get articles about the topic. It does seem to be true when you look at the internet space. A lot of the Major Players here are built on this geographical arbitrage. A japanesemade version of shop a five, but he ify, represent shop a he spent his entire career outside the text fear. Sphere. On one handonset you have a lot of pricing data out of secondary markets and you have all these people who would like to sell their stuff, but could not be bothered. You have a viable business on your hands. I didnt get to ask you whether you can use this outside of japan. Anyway. Bloomberg markets continues right after this. It is almost 11 00 here in hong kong. We are just Getting Started here. The first trading day of your week. Welcome to Bloomberg Markets asia. The drama in washington turns another page. Flynns ep it standsis proud of of law and order but critics say it is a haven of media piracy. Justin trudeau looks to trade up in china. We will discuss his chats in beijing coming up in a few minutes. Before that we will have a look at markets. The best week for equities last week monday through friday. Not very exciting at the moment. We are looking at your 10 year yield. Strengthing some coming through against the u. S. Dollar. Of course we are also looking look at that. ,ast week was not good especially when you go up the risk spectrum. Look at where we are now four em. Lots of things to watch here for emergingmarket equities. When you look at a chart, top panel, we are right below the 50 day moving average. That has so far held. Does it continue to hold . The other thing i want to point out is at the bottom is your momentum indicator. So far we have only did below the 40 dipped below 40. So far it has been holding well. Trade numbers out of china coming up. Brazil will also be key. They vote on the pension bill in the country. Also looking at bond markets pricing in a 50 point cut out of the central bank in brazil. The question is whether or not we are we are near the end of this very aggressive cycle. A few things to come up here a big show coming up. Two guests. A chief economist joins us in about 10 minutes to talk about Monetary Policy and Justin Trudeau in china. And a ceo joins us at 11 50 out of tokyo. A lot to look out for. Lets get you an update of your first word news. Rio tinto has named a mining veteran as its new chairman. He has been director since 2014 and was previously a Senior Executive at anglo american. He will replace he says it is optimistic about china longterm but a slowdown over six months. Cbs health is buying aetna for about 67 billion creating a health care and retail giant which will have an interest in everything. Cbs will pay cvs, a 29 premium to aetna is a share price the day before they were said to be in negotiations. A group and china is fundraising a local bond market and soaring borrowing costs are stoking concern. 270 day bond yuan last week, the highest coupon rate ever for the operation. Last month another Airline Subsidiary also had the highest coupon rate in five years. Greece and International Creditors have agreed new reforms must take in exchange for s that seeks to the accord came after they reached Common Ground on energy, the Financial System and social programs. Be Successful Program will release fresh roans loans. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im paul allen. This is bloomberg. All right. A busy week ahead in washington. Busy weekend, grabbing the attention of markets. Treasuriesunning to and the dollar rising on the back of the gop tax plan. Set byjoined here on bloomberg editor. I guess we have to get started with a why. That brings me to you. What do we start with . Taxes . Or do we start with the political hullabaloo . They are both important. Lets start with taxes. They did pass a tax bill out of the senate very narrowly. The president in congratulating them said he thought the tax break could go to 22 , which is perplexing because it is in the bill at 20 . Nobody knows why he would want to raise it to 22 . Perhaps what he is talking about is there will have to be some changes in the bill as it is reconcile between the house and senate because they have to pass the same thing. We could expect some changes and that. They want to do this weekly but reconciling it will not be easy because they contain different things. As we talked about before it does make its way to the president s desk, it has to be one version. What the seat see as major sticking points to have to work through . The senate bill contains the repeal of the individual mandate that was at the that is at the core of obamacare. The house has already repealed all of obamacare so it will be interesting to see whether they stay with that in the senate. Majorher thing that is a divergence in terms of actual tax breaks is that the exemption for state and local taxes, which is very important to high earners in high tax states like new york, your jersey and california, is eliminated in the senate bill. That could be part for House Republicans who have to face voters next year. We just talked about stumbling block still ahead. At least what i gathered when looking at the 10 year yields, it does seem are happy investors they finally have something they can get their teeth into. Very close tois being done finally after a lot of backandforth. They can finally make projections for next year. Goldman sachs said it will add to american gdp. Less than 1 but it will be a kick up to gdp next year. Once that starts to happen the fed can be more confident they can raise Interest Rates. The three hikes for next year maybe they become a reality now. Its reasonable treasury yields should go higher. Its an increment. To a lot of people were talking about whether we were getting it and if we did, when we would see an increment growth. Markets are always forwardlooking. Always pricing things in advance. If you told him something will affect the economy positively in 2019 they will start to discount that today. The we have not seen treasury yields breakdown in the range. We probably need a 10 year to be above 2. 5 that people get really excited. Let me bring it back to you. Mike flynn. We have seen two major developments come out of that. The first is the guilty plea. Talking about this obstruction of justice. Whats that about . Over the weekend senator dianne feinstein, the leading democrat on the house the Senate Judiciary committee, she basically says she sees theyre possibly being a case for instruction of justice. While the president on one hand was excited about the tax bill, another thing he was tweeting about was mr. Flynns plea saying it was too bad because he should have just told the truth that he had not done anything wrong. But the president had to fire him because he lied to the Vice President and the fbi. We didnttein said, know that he said he knew the law was broken. That combined with the firing of the fbi director james comey, starts to make a case for instruction of justice. Will she call for hearings on capitol hill . Will we start to see hearings in a in addition to the rush of rope . Russian probe . Is there a case to be made . On the heels of her comments republicans are saying they have not received all the documents they asked for. The assistantg attorney general and the fbi should be held in contempt of congress if they do not provide those. We will see what happens there. The fbi has said they are cooperating. It seems the rhetoric certainly is being heated up on capitol hill. Wonders if we are going to see hearings. If you look at the 10 year that real yield essentially led to a bid across treasuries. Than a reversal this morning. What is your sense of where we go . Does rain hold until we get a resolution in washington . We are close to year end and ranges usually hold. It would take someone really dramatic to kick us out of the range. Thats partly why we are seeing dollaryen hesitating. They are also worried about the mike flynn situation. Are more probably optimistic but they really want to see more before they can really go for it. Dollaryen or the yield . Both. 2. 5 on the 10 year yield. If the dollar yen jumped before 1. 14 that would be significant. What do we watch out for this week . Trying to reconcile the two bills. They also have to come up with a new budget deal in congress. They have some things expire this week. If that doesnt happen there could be a shutdown. Everyone thinks they will not be. But thats a day coming up soon. Certainly want to watch. I have a feeling both of you are going to be very busy this week. Joining us live in hong kong. How paris is positioning itself to capture the postbrexit love and business from london. And Justin Trudeau is in china. Can that jeopardized janets ties to the u. S. In japan . Stay with us. This is bloomberg. Welcome back. Youre watching Bloomberg Markets asia. Lets have a quick check of your latest business flash headlines. The bank says commodities will start 2018 with a bang suggesting investors go long on iron ore. Supply continues to tighten. Citi says it expects sustained high commodity demands into next year. It warns of huge uncertainties around chinese policies and the dollar pressure on oil prices in the second half of next year and into the year after that. Lets have a look at cars. Fiat chrysler is in talks about making hydrogen engines. They established themselves as the were drivingy force that area but they have fallen behind. Fiat backed away from Hydrogen Power earlier this decade but says there is potential in the technology. Lets have a look at these reports out of japan, saying jarrett is finalizing negotiations to buy says the cost of the deal is yet to be decided by an announcement is expected by the end of next year. Jera agreed to buy edf whole. Here. Justin trudeau is in beijing on a trip. Free trade and it lets discuss all this with peter all. Hall. Pleasure to have you. Viewers,ground for our give us a sense of what you do and whether or not you are busy recently. We are very busy right now. We have very Aggressive Growth targets as we go forward. We are candidates export credit agency. Most developed nations in the world have an export credit agency. We provide financing and insurance solution for Canadian Companies going abroad and create opportunities for them in many markets of the world. 20 International Offices would facilitate that through. Is there a sense before this trip by fry minister judo that there was Prime Minister trudeau that he could come back with some big wins . There was a lot of speculation. There was not a lot of concrete information about this happening in the first place and what was the objective of the trip. We are still waiting to see what it is that will come out of this. The minister of International Trade seemed to be cleared indicating this was part of canadas diversification strategy. An interesting time to make a comment like that. In times like this its important to make a distinction between what politics are and what the underlying economic benefits are. The reason i bring it up is there has been some reluctance from canadian officials to sort of frame any free trade negotiations that might come under way in china. Is there a concern back home in with china an fta might be counterproductive to Economic Growth or is that more political bolstering . We have to keep very much in mind that china is can number two customer. Thats a fact that is lost on many. Chinas ascendance and the picture of canadian trade if anything has been meteoric over the last while. There are some industries in the china will be the number one custom ear customer inside those industries. This is an inescapable fact about canadian trade. , the not for ourselves u. S. Is a dominant partner at the moment accounting for three quarters of canadas merchandise trade. So its a long time before anybody becomes a very substantial number two. But this is a very important relationship for canada and clearly canada believes in free trade. Your expertise is in trade. Their cisco conversation over these bulkyot multiparty trade deals like the tpp might actually be worse in terms of the net benefit compared to a bilateral trade deal. What is your sense of what is better . If you are a small, open economy, a bilateral deal can be very onesided. Thats the way they can work out. Myself, thenking to acrimony particularly from the u. S. Against multilateral deals is a head scratcher. When you are a large economy, the largest in the world, you have a lot of strength when youre negotiating a multilateral deal. Its the smaller economies that might be harder done by in these deals. So inside the tpp discussions at the moment there are four big differentfour countries now on the table for renegotiation as a result of the u. S. Not actually being there. Multilateral deals, bilateral deals, i dont think it matters one way of the other. Deals ande bilateral everybody in the world does them in you one big multilateral deal for everybody. It does work out that way. Less complication. Whats the sense in canada . I think the Unemployment Rate came out last week, the lowest in about a decade. So the economy is on fairly solid footing. There is hardly an indicator that everyone has been more wrong on the canadian employment this year. It a surprise to everybody. The Europe Russell domestic economy in canada has been a bit of a surprise because of the instability of that growth. Many dont understand but it is also an inescapable fact that the consumer level in canada is extraordinary light high. 170 debt to income now. Thats higher than it was in the u. S. Ahead of the great recession. We also have Housing Market bubbles. Activity versus demographic requirements, we have been in excess for some time. I look at that, i look at the bank of canada tightening up Interest Rates. The costs of that interest burden rising overtime, as being precarious elements. Would it be wise for them some say they might move before the second half of next year. Would that be counterproductive . The challenge for the bank of canada at this point in time is a fragile fundamental for the domestic sector. Has alle export sector the potential to be a real dynamo in the economy. We have counterbalancing factors inside our economy. It makes it very difficult to pinpoint Monetary Policy and say, which one of these factors is going to prevail and how will that weigh against Canadian Economic capacity. Last question do you think too ary policy globally is loose or too tight . It has been ultraloose for a long time. As the Economic Cycle lengthens, i am in the camp that says we have a few years to grow. But during that period of time, normalization is fundamental if for no other reason than for setting ourselves up to be able to stimulate the economy goes down stimulate next time the economy goes down. Thank you very much. Joining us live in our hong kong studios. Coming up, why is singapore being labeled a hotbed for piracy . This is bloomberg. Singapore prides itself on law and order, but it is being called a haven for piracy. Lets get over to our chief international correspondent. She is with us from singapore. The question is, is the charge merited . Merited in a way and its a huge surprise. Even more surprising that within the asia pac region, singapore is worse thats what the group lobbying for this is saying. It says viewers can buy legitimate settop boxes that allow unauthorized streaming of thousands and thousands of movies, tv shows and live sporting segments. These devices are easy to get. Just go to any electronics store. And they are cheap. The cost as little as 70 u. S. Dollars. To can be found on youtube tutorials can be found on youtube. The issue is the government says it is unaware that the devices are illegal. They say theres nothing unlawful about using them. I dont know anything about it. I dont want you to. Watch youtube. When you look at the World Economic forum it is ranked very highly in terms of protecting intellectual property rights. So it is a property so it is surprising. You are right. Singapore ranks fourth for protecting ip rights. The government says it has strong ip regime which protects innovations comprehensively. Some of the numbers are staggering. Digital Research Estimates online tv and movie piracy will cost the industry 32 billion in global revenue this year. By 2020 expect the amount to rise to 52 billion. , theer sobering nugget asia pac region will become the largest for online piracy next year. Thank you. Life for us out of singapore. We are heading back to freezing token tokyo with a reopened is next. Nothing happened across equity markets. Democrat on the Senate JudiciaryCommittee Says the investigation into links between the Trump Campaign in russia is developing. Feinstein she is talking aides andmer trump t Michael Flynn. President trump the tax burden makes him unbeatable for reelection in 2020. Trump said he would consider 22 instead of 20 Corporate Tax rate. Tim cook used his first visit to a world internet conference to bel for Enter Technology to. Umanity and Technology Apple has been criticized for cooperating with china by removing apps for uncensored communications. International creditors and asece agreed on new reforms it seeks to bring a bailout to an end. The two sides reach, grown on energy, public administration, Financial System, and social programs. Loans and help athens regain the trust of International Investors. David thank you. Earlier about some key commodities. Have a look at brent. Yes, we will get a rebalancing at some point next year is what they are saying, but bearish on the price. We are at about 60 right now. At iron ore, go long short term. They are revising forecast next year and 2019. They are saying upside into the the 75 region in the First Quarter of 2018. At howat when you look markets are trading, you do get a sense there is optimism out there. Headed back ore into bull territory. Lets check in on chinese steel makers. A mixed bag there. Likely benefit from improving dynamics and supplydemand. Osteel is one of the biggest tracks. The shanghai session under pressure, now up. 1 . Large caps gaining, and shares in Hong Kong Set to snap of fiveday drop, so a little bit of optimism there. Yields higher, that has benefit the banks . Sophie japanese banks, this is 6270. That is providing that booze for that sector. That boost for that sector. South korea, that market seems to be bucking the trend today. What is that down to . Some of these products that make you feel more confident about yourself . Sophie cosmetic stocks are helping the kospi. Iny are rising after a jump november exports and grew at the highest monthly rate since february, so solid despite weakened demand from chinese consumers. Showingto china are signs of improvement. China led consumer stocks finding support on the return of mainland to her groups tour groups to south korea. Automobile stocks are also on the back foot with domestic sales falling 3 last month and exports fell by 8 in november. David i would imagine the strong currency has something to do with that. Thank you for the update. Lets stay on theme and look at china. C has issued new rules for mutual fund investing. Ingspende og had been approvals for some funds planning large allocations of hong kong traded stocks. Beijing byed now in our markets editor. There was speculation last week. Im guessing we did get confirmation. What do these new rules and tail than what problem are authorities trying to solve here . Typical beijing style we got the announcement of the rules, but very little detail of what they actually contain. Csrc hasw that the issued new guidelines for the inspection and registration of mutual funds that invest in hong kong equity market. This comes after people familiar with the situation told bloomberg earlier in the week that they were suspending approval for mutual funds that allocated more than 80 of their portfolio to the hong kong so i guess we can potentially put two and two together and surmise that is what these new rules are to do with. David a lot of this comes down to the stock connect, shanghai and shenzhen into hong kong. How is that doing . That has grown a lot and become very popular over the last year. These two stock connect, shanghai and shenzhen, we have seen intense capital controls in currenciesem the decline, which has happened. So now that has become an appealing and legitimate way to get their cash out of the country and invested into something that has done pretty anl and contributed to asiabeating rally in the hang actually year, and seeing record flows in the vicinity of an equivalent of 11 billion from the mainland flows into the hong kong equity market this year. Guessing that we are dependent on the money coming through from the mainland now. Thats right. That is probably why we saw a bit of a selloff in the Hong Kong Market last week. In 2017, because this has become so important for the hong kong equity landscape. They are a major tribe of investment into stocks driver of investment into stocks into the city. The investor profile is mixed, a lot of retail investors, but also strong mutual fund component, which may be why the regulator has trained on the sector. David thank you. On that. Ouch you are a fan of stock connect, this is your function and gives you a snapshot of where the money is going. Billion. D, 9. 9 we will do a 15 day chart. This resets at the start of every day. Here is that money coming through using up the daily quota. Been as it has not impressive, the flows from shenzhen into hong kong. Mma is your function. Hna unit stoke borrowing concerns. Tos bring in Andrew Monahan talk about these conditions, what they are like in why they are hitting the bond markets at this time. Month last month of her off the chinese bond market. A number of companies canceled local renminbidenominated bonds, the highest in several months since about april. Despite that, we saw hna and the hna units coming out with a number of bond sales with high yields. It has to be said that companies have a number of reasons for issuing bonds. Ceo said each business has done cash Flow Management. We reached out also to hunan units thatome of the sold above it and they did not come back with comment. Some analysts are saying it is concerning to see a Company Issue at a time when yields are spiking so much rather than waiting. David have Credit Ratings agencies waiting on this . Are they really distressed, or normal fundraising operations . S p, which doesnt have a Credit Rating on hna group, but has something called a Credit Profile said last week it had cut that profile by one step to b, which is the equivalent of five steps below investment grade, so that shows concern it is fair to say. Another thing is looking at the market and yields the units are charging to raise money. One example was Hunan Airlines who sold a bond last month. Rated as tops ratings, but the yield in the market demand was the equivalent of a junky old and the local market. David that was 9 . Quite one year. Andrew, thank you so much for wrapping got up for us. The story is also on the website. Latestails on hnas developments. Up, will londons lost be paris is gain . We will look at how the french capital is trying to woe companies to the citys postbrexit. This is bloomberg. David this is Bloomberg Markets asia. Lets get you an update of your latest business flash headlines. Bring u. S. Exchanges embracing bitcoin, dragging federal regulators into this. Debut onontracts will december 18 for cme. Cboe will announce their debut date later. Japanese developer mori is betting on untapped demand for with unitsin tokyo priced from 9 million. It is Building Three buildings many Central District and Office Towers and embassies have buildings there. Lets have a look at movies. Brought andest coco 95 million. Unfolds on mexicos day of the dead and tells the story of an aspiring young musician. Warners Justice League raking second, and murder on the Orient Express came in third. Lets continue to look at europe. Paris will organize its 21st and among them opportunities being discussed, lets take you to that forum. For coming on the program. I want to start this conversation which began with the u. K. Referendum last year. Some indepth discussions in european city on the continent might be able to replicate what london offers. Frankfurt is top of the list, dublin, amsterdam, but also paris. Help us understand what paris can offer that those other cities cant. Thatrst, may i remind you during the campaign and referendum concerning brexit that we expressed many times that we were in favor of remain, but now that brexit is here, paris is competing. Ago,red to 34 years nobody was talking about paris. Now the election of Emmanuel Macron has been a game changer in the acceleration of the reforms by the present commit meaning paris is back in the picture and can be a good choice for Many International banks to relocate part of their activities in the eu when they will lose the benefit of the passport. David help us understand what those reforms are . Rishaad on two major issues for are key issuest for the International Investors andave met around the world two years now. First labor rules, giving more flexibility to the labor rules in france, and second, the cost of labor with the reduction of , reforms in terms of taxes, the wealth tax, the reduction of the Corporate Tax, which is a very important issue, and even the reduction of the tax on wages in the Financial Sector, so these two big reforms which have been announced by Emmanuel Macron before the election have been implemented as a government and will be voted before the end of the year. Y the Parliament Labor rules have already been voted and we are waiting for the decisions concerning the budget for next year and the fiscal incentives. Any case those three things do get passed, will that help reverse some of the views. For example, japanese banks have frankfurt is their postbrexit locations. Could that refine the view that paris is the place to be . Some international banks, japanese banks have taken the first step with respect to the legal entities and the way they are creating legal entities in different European Countries to be in position to cover the european market, but like jamie dimon was saying last number, legal entity is not the activity of the business, and when we are coming to the business, and mostly to the trading activities , to the Investment Banking activities, or to the Asset Management activities, paris is a better choice because of the talents in the Financial Sector, which are much more in person frankfurt, which is more of a traditional commercial banking center. You are seeing in a few weeks, you have heard new announcements traders,f america, 300 ages bc has confirmed 1000 people, j. P. Morgan 25 of the team will be in paris. Hsbc has confirmed 1000 people, j. P. Morgan 25 of the team will be in paris. David are you happy to reconsider some issues . We were planning for 10,000 jobs, a minimum for paris to be relocated from london. We have to say that as from now we are still half of the way in terms of the first announcements which have been done, but i am not sure we have seen the real Big Decisions to move complete in the Banking Sector, the insurance sector and Asset Management, so i think this number could be higher and the global picture of a Consulting Company like ernst 30,000 tog from 100,000 people leaving london, we will see what will happen. For youre theme oneday forum in tokyo, new opportunities in the new european landscape. Help us understand what this means. If someone on the street ask you what that meant, what would you say . People will be interested to hear that compared to one year , everybody was a little bit anxious about what could happen in europe, mostly with the elections and the increase of. He protectionist in the votes the situation has completely changed and we are talking today about the renaissance of europe, the way the elections have given substance to european parties like in france with Emmanuel Macron, who will take decisions to accelerate Economic Growth and reforms. We are waiting on the situation in germany, but we are confident germany will find a way. And the Economic Growth is , something in europe com like 2 , pretty good for the coming years, and we see coming back of International Investors to europe. We have to leave it there appeared we are out of time. We appreciate you coming on the program. Up, i look at shares of infosys, 1. 9 to the upside as the Company Names its new ceo, but can he turn things around . We will be live in bangalore next. This is bloomberg. Of infosys arising namedsalil s. Parekh was ceo. We are now live from bangalore. The reaction from markets and analysts, it seems expectations are quite high. They certainly are. This is a company that is quite iconic in india. , they broughtup in a new corporate standard and governance to india. As a they are seen bellwether for the i. T. Industry, so expectations are really high. The expectations will behind on salil parekh to deliver. David were talking about a company with 200,000 employees. A lot of this comes down to thinning thell be culture of the company. He has buried experience. He has worked in the european outsourcing firm for 17 years and has been very instrumental in getting deals in north america. All the time he has been based there is over 100,000 people, so he is immersed in the cultural themes. I think he would find it not so hard to fit into the culture, but at the same time there are a lot of challenges he has to face , the least of them being he has really david some interesting challenges, not just the Company Issue, but industry. Policies d. C. Him having here . He has a certain level of experience to do with all the standards, but the challenges are several. At one level, companies such as emphasis have to change the Business Model from traditional outsourcing and move into higherpaying digital services. Rishaad we have to leave it there. Certainly the challenges are mounting. That is it for us. Bloomberg markets middle east next. As the probe into alleged links between Donald Trumps campaign and russia deepens, a top democrat says an obstruction of justice case appears to be developing against the president , but the prospect of tax cut legislation is proving the stronger driver for markets, the dollar, yields, and u. S. Equity futures are all higher this morning. Theresa may heads to brussels for what could be the most expensive lunch in history. Will she b