Futures for tech. Lamborghini rolls out a luxury suv. We will speak to the companys ceo at 9 00 a. M. U. K. Time. Looking forward to that. Matt absolutely. I am looking forward to seeing how we open up this morning because of that tax news out of the u. S. It will be interesting to see how this rotation continues in europe. We have some chipmakers. In finney germany and the Big IndustrialTechnology Companies across the continent. Take a look at what we see in the futures, positive indications with the exception of the cac 40. There is a catalonian issue we will talk about as well. Although very little change in those Index Futures on the dax Index Futures. A gain of 1 . Take a look at treasuries. Not a lot of movement. The perception of a dip in yields on friday. We have been trading pretty sideways at 2. 388. 2. 4 percent but not going much above that level. Guy lets take a look at the gmm and show you what it is showing us at the moment. And want to focus on what is happening over here. The british pound is coming under new pressure down by. 41 . We saw a lot of volatility yesterday. The yen is showing signs of weakness. The other thing is what is happening with iron ore. We will be talking about mining later in the program. Iron ore fdle coming unstuck. Lets get a bloomberg first word news update. Heres juliette saly. Handing him a major victory. The court will uphold the restrictions. The president will be able to b from sixtrict entries mostly muslim countries. It marks the first time the Supreme Court has let restrictions take full effect. The aussie has climbed to a threeweek ive after the bank kept its Interest Rate at a record low. It expects inflation to quicken. At the same time retail sales [inaudible] European Finance ministers meet today. According to the latest draft of proposals obtained by bloomberg the list includes south korea, panama, tunisia, and the uae as barbados, account, the marshall islands, palau, and st. Lucia. Guy we seem to be having technical difficulty when it comes to what is happening with the audio. Lets move on. A near miss for the uks brexit negotiations. Prime minister theresa may came close to a deal during a meeting with the eu president. Anotiations took embarrassing turn after they were directed by a phone call. That conversation was regarding [inaudible] which props up the government in london. Nejra. Ring in it happened within those crucial minutes . It was a crucial few minutes. The lunch started at 1 30 p. M. And he for there was a lot of anticipation there could be a breakthrough. We were told that the eus chief brexit negotiator had spoken to came out one of them and said a breakthrough is imminent. The pound rose on that and there was a flurry of excitement among the u. K. Press in brussels as that lunch meeting began. And gone went on longer than expected. Theresa may missed a meeting scheduled for 4 p. M. With donald tusk. She put a positive the lunch and went out to make a call to arlene foster. The come out after and make a twominute statement, do not take questions from the press and say we were not able to reach a complete agreement today. They did not give details on what went wrong but irish Prime Minister the irish Prime Minister said dublin and the u. K. Came to an agreement on the issue of the irish border and it unraveled during that lunch meeting. See theuld we still talks move on to trade before the end of the year or is that a pipe dream gone up in smoke here . An optimisticruck hopeful tone during their statement. Juncker said this is the beginning of the final phase. They said they will continue talking this week and he was hopeful they could make a breakthrough by that crucial december 14 eu Leaders Summit which is when the new wants is the talks to move from divorce to trade. U. K. That dublin and the came to this agreement, it is going to look like a concession Theresa Mayif now does give into the dups demands. It is difficult for dublin. Therefore it will be for the u. K. As well. That is one thing to bear in mind. The irish Prime Ministers said if we do not get a breakthrough in december, perhaps we can call an emergency summit in january. Some talk of it spilling over into next year. A person familiar told bloomberg that while the irish border was a difficult issue during the lunch, there was still also the stumbling block of the European Court of justice. There seem to be many reasons why these talks may not move in in december. And noopeful that doubt that theresa may has a lot to achieve in a few days. A surprise in brussels this did not happen . Is there an expectation that it would . Choreography pointed to it being done. What is the feeling on that side about what went wrong and is it surprising . I have no doubt that probably a lot of emotions are running in brussels, perhaps not just surprise but a little bit of embarrassment around what happened. It is interesting that you point out what the feeling was here. Ps spoke to reporters before theresa may and juncker went into this lunch. Who said theyers were cautiously optimistic about this lunch going ahead. The u. K. From the beginning did push back on this optimism of a breakthrough at that lunch meeting. It kept saying it was not a deadline, it was a staging post till december. Perhaps the u. K. Had a sense that something might go wrong at the 11th hour where is brussels was a little bit optimistic. The breakthrough did not happen. Matt thank you. Some sweetnd getting interviews for us. Thanks for that. Euro area finance ministers have theen Mario Centeno to had euro group. The incoming president has his job cut out as the blocks strive to complete its Banking Union and the to narrow the economic gap. States of the eurozone are growing above 1. 5 for the first time in many years. Else have a balanced budget overall. And we have the ability to make the euro area grow a little ifter and for a longer time we implement the reforms needed. We have a long debate ahead of us. Thes important to note that time window that we have following the electoral cycle that several countries have , we need to take advantage of that. Reforms nt a implement reforms. Want toou have said you get consensus within the eurozone and that would be part of your role but what do you prioritize, do you prioritize a common budget, do you prioritize stabilitythe mechanism to be more like the imf . Of course being the chair of be theo group i have to generator of consensus. So my opinion is important but i am more of a listener now. I am going to my opinion. I can translate what has been going on in the euro group in the last couple of months. Union, the issues in the Financial Sector, the Risk Reduction and then risksharing measures which i prefer to call better Risk Management would be in the area and certainly with the issues they raised on the stability mechanism to strengthen it, to allow it also to respond to other different needs in the eurozone. These are the main priorities. And we have a discussion on the budget. We have a discussion on other will make the eurozone the largest Single Market in the world. Much more stronger economy in the future. Interesting interview. The tech selloff continues. U. S. Tax reform sent tech stocks tumbling but wheres the money going . We will discuss that next. The market open is 18 minutes away. This is bloomberg. Matt welcome back to bloomberg markets, the european open. The tech selloff in the u. S. Continues through asia after the Senate Tax Plan was seen hitting some road bumps. Chip companies were some of the worst hit with the s p 500 Semiconductor Index down by five out of the last six days because of concern about the alternative minimum tax. Where is that money moving to that is leaving the tech stocks . The reason i ask is we called this a rotation. It seems more like a selloff. ,f that money is going back in what are investors buying . Mark your observation is fair. There are two different economics. There is a rotation out of stick out of tech stocks or Growth Stocks and we are seeing a rotation. There was after value stocks underperformed and it got a surge yesterday as we are seeing. Overall we are seeing money, out of u. S. Stock market, it did not trade great yesterday and there is more negativity that tax reform spurred the economy so much. After the bill passed in the house that week as well, u. S. Stocks surged and finished the week lower. We are seeing a repeat here this week. Could the selloff accelerate into the weekend . When do we start worrying about the debt ceiling . Mark it will not necessarily accelerate but volatility will remain high. Like we will fudge the deadline. They are talking about rolling it up to the 30th of december. It does not seem to be a great time to start paying people. We are days way from a partial shutdown of the u. S. Government. Have not made much progress on a longterm solution because they have been distracted on the tax bill. Also a partisan divide which has grown wider given the way that the republicans passed the tax reform through the senate. The debt ceiling will become more of an issue at a time when volatility is declining. I do not think we will see Downside Movement but the rest of this year will be volatility with equities and not great risk reward. Overnight in seen stocks, saw commodity oil, Energy Stocks all come down. Over the last week, iron and steel have been performing well in asia. Where do you see commodities right now and the that produce the underlying commodities reacting . Mark the commodity story for next year depends around china. As you go, i am bullish on the china outlook, the growth slowdown if you call it a slowdown given we still have growth above 6 which is phenomenal, that growth trajectory has been managed. Well. There is a little bit of turmoil around the local assets but onrall, the knock on effects the regional economy has not been two major. That is why the outlook generally looks good for commodities. There are some Amazing Stories and a little bit in the shortterm, comedies are being weighed in. You have the by the river sell around opec and oil is coming off from there. It will weigh on the region. Oil energy cost is the biggest expense when extracting and transporting any other commodity like metals. How do i position myself around the pound, what are we expecting from the pound . It is beginning to move higher. It is nowhere near what it was around the election and nowhere the what it was around brexit vote. That is the oneyear chart but i will pull and the brexit and you can see what the story looks like and where we are. What can i expect over the next 24 hours, how will the pound be moving, do you think . Mark we can see a rise in volatility over the next week. Near want to get any that brexit volatility which is extreme because the result was not expected. This could go to the wire about whether the u. K. Will have made progress. The eu wanted to say that progress we made but the irish border situation is hard to do with. The two red lines are polar opposites. The whole point of the Democratic Unionist Party is to emphasize the border between ireland and the republic is greater than the border between ireland and the u. K. They do not want that kind of quarter in the irish [inaudible] and they cannot accept the border between the republican Northern Ireland. There is enough political will but i can see it going to the last moment. We will get some bleed through of stories next week which will send sterling in either direction. Who knows where it ends up but there will be a lot more volatility next week. I love to use this function on the bloomberg, whis go. We will get the nonfarm payroll numbers on friday. Play yourself and see how you do against other bloomberg clients guessing. What are you looking at for this number, what are you looking out for surveys at the yearend . Are running this markets live survey. We just opened this yesterday. We are starting to track the early consensus coming to starting to come in. For most assets people are forecasting they will finish where we are now. The highest consensus seems to be that yields will move higher but the bund and treasury yields are seeing forecasts higher than we are today and the other one is the nikkei much higher. Even bitcoin, people are not broadcast forecasting much volatility for next year. Nothing is strange when it comes to bitcoin. No volatility would be the strangest thing i could imagine. Mark cudmore, bloomberg mliv strategist, follow his Teams Insights on mliv and check out their survey, when you type that in you see the asset they are looking at come upon the launch page. We are minutes away from the open. Next we will take a look at your stocks to watch including cinema cineworld announcing its purchase of regal. The open eight minutes away. Matt welcome back to bloomberg markets, the european open. Lets get a couple of the issues you should be watching. Deutsche bank is one. After the u. S. Special prosecutor Robert Mueller said he wants to look into the lenders data on its relationship with president donald trump, that according to a person briefed on the matter who declined to be identified. He has issued a subpoena to Deutsche Bank. It was received several weeks ago according to this person. To loansn relation that trump has out from Deutsche Bank tied to his role as a Real Estate Developer i4 he moved into the white house. This is something we have been hearing a lot from lawmakers opposed to donald trump. They want to see more transparency into this lending, into these issues. Deutsche bank has lent money to the president and his family members and miller will be probing those loans. The money stick with bond unitsme, money are being investigated as a way a result of the way they treated distressed customers. The stock is down reasonably sharply. Moreean stocks called it negative. London will move more on what is happening with the pound today. Keep an eye on some of the basic resources, stocks as well. They could be interesting. Coming up is the market open. This is bloomberg. Is this a phone . Or a little internet machine . [ phone rings ] it makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And ask how to get a 200 prepaid card when you buy any new samsung device with Xfinity Mobile. A new kind of network designed to save you money. Click, call or visit today. Guy we have a minute to go before the start of cash trading for equities. The pound is on the move this morning and that means the london ftse will outperform. Here is the cable rate. You can see the move. The cable rate trading a little softer this morning and that will translate, and i use the word translate correctly here, into what will happen with the ftse 100, because it is that translation of earnings. Oil is also coming under some pressure. But the big theme of the morning is what is happening with this off. Rotation, fall call it what you will. Take a look at the grr on the spx, and youll see its tech. Semiconductors are taking the biggest hits right now. Were going to want that space carefully. Heres the European Market open. The ftse 100, actually opening 73. 38. Ative territory at were looking at a positive story. The other European Markets are expected to open into negative territory this morning but the pound, this is the pound effect, which is interesting. Matt will have the movers in a moment. S talk about the sectors. Here is the imap. At the moment, the stoxx 600 is letsutely flat, but break it down. The tech stocks are continuing to come under pressure. Energies are trading lower. We just showed you what is happening with the oil trade. The materials are also largely weaker as well. Its interesting. Littleancials are a more mixed. Theres a lot of year end effect going on here, but its interesting to see materials, i. T. Coming under pressure. Health care is also selling off this morning. Generally, money coming from that side into this side this morning. Energy off, materials off, and i. T. Trading softer, matt. Matt i do have the mov screen here. I have gotreak i a broken down by news points. News thate the could be moving the stock here. You can see the actual how index, as in points the company is adding or subtractingfrom. The stoxx 600, how many Percentage Points are moving. Lvnh is moving down 1. 7 . As far as the losers, glencore is a loser today. Rio tinto is a loser today. Well be talking about the world of commodities. They had a rough trade in asia overnight, though they have been doing quite well over the last few weeks. On the leaders side, hsbc is a winner here, as well as santander. This goes to the theme guy was talking about, a rotation. Investors, selling tech stocks at least we have seen that in the u. S. And asia overnight and using that money to buy financial stocks. That could be in the work in todays trade as well. This basically at the water level, as there is very little change on the index. Guy the pound is under pressure this morning and it rallied into the meeting yesterday in brussels. It faded fast. It failed to reach a deal with the european union, who was the last minute over the irish border. A lunch that and it without an agreement. Morniow down again this ng, as we continue to give up those gains. Volatility has begun to spike again. That catches the period of this european summit, which is by no means anything like it was surrounding the brexit vote, which looks a little bit like this. Yes, we have come up, but we are well within the bounds we have been operating in in the last few months. Joining us now, the fx strategist from nomura. Whats next . We have got a lot of physical posturing and a lot of lobbying. Well the talking about the d. U. P. Overnighthe reports and i validated the price action with sterling. I was surprised yesterday that we did not treat a day lower. But what we are seeing is being reported by the sun and times, these are minor points the d. U. P. Is arguing against. It seems it might be misrepresented to the d. U. P. Agriculture and energy were going to be included within that regulatory alignment. If she can convince them over the next couple days, we might have another meeting tomorrow, if she gets that done today that is theresa may or friday. Friday is the new deadline. What you show in those charts is sterlings two week vol. Essentially, things are going up or down. Guy by the sounds of things, you are a buyer. I have been a buyer since june. I have been the highest on the forecast. Cable is what we are looking for. I am a buyer because i think both sides want the same thing. I was quite surprised. Wecker was the most positive have seen him when it comes to market expectations. Both sides want the same thing. It was a bit of noise from the d. U. P. They will come out of this looking like winners and both sides will win. That is how i see this playing out. Guy that will get us to the hard part, right . Jordan the hard part is longer protracted. That is what matters to sterling. Inwe agree to a transition january, which is what both sides are talking about, that pushes out the real brexit date by two or even three years. I cant be short sterling and say brexit is bad if i dont know what brexit is for the next two or three years. I have got more things to trade for, bank of england trade hikes. So, i think if we get a deal agreed to in december, that is positive news. A few weeks ago we were talking about how we would get nothing done. You saw yesterday what both sides were saying. Matt you expect cable to trade at 1. 40. I guess that is a year end , which isjordan coming quickly. Where do you see the pound in euro terms, in which is the more important pair . Jordan at the moment, most of the trade weight on sterling is back against the euro. The euro defines where the sterling strength is. Main trading partner. We actually prefer it over cable right now because we think the noitax reform noise will complicate the dollar. Think it has a small impact on the economics within the u. S. Then we get into the cable trade. Over the next couple days or weeks. We plan to switch that. So, forget the 0. 87 on this brexit process. It might overshoot more, but next year the big story will be the ecb normalization and that will be a lot more powerful in the second half of next year. It is the wanting down of tapering and if you have the ecb thinking about removing negative rates, that is when the action might move a little bit higher. Sterling really outperform most of the g10, but against the euro, its a little bit weaker. So, you expect this extension to be the last for the ecbs qe program. Its done in september and they start looking at normalizing rates . Jordan well, when you have growth rocketing as high as it is in europe, its hard not to see that. Theres pressures there. You see a slow pickup in the output models. I think inflation might not go higher next year. I think it will be similar to what the bank of england has done, and the fed to some extent. Some people will start worrying about the Financial Leverage in teh system. But growth is doing so well as it is, perhaps it is time to step off the gas. Thats probably the winding down story we expect for next year. Guy how important is christmas for your sterling expectations . You talk about the bank of england. We have had some pretty senior people across this desk across the last three weeks. It was interesting to look at justin king. He talks about the First Quarter of next year. He was talking about it being pretty dramatic for the british consumer and he worries there will be a real crunch point coming through. How important will that be in your thinking as to how we set up next year for a fiscal policy, Monetary Policy come everything . Jordan we had a negative print on the retail sales, but that is compared to last year, which was 5 to 7 growth. We had a really good year last year. Essentially, we would be happy with the same performance of retail sales that we had last year. Guy he says christmas is going to be ok, and then it really gets crunchy. You think the fo Furniture Retailers go bank first. Theyve got visibility on what their sales look like into christmas and the new year and then you start seeing that rippling up the chain. Jordan they have tightened credit standards as much as they can for the time being. Those are the steps they are taking. The mpc said it in april. If dead incomes are rising, there is only so much financial policy can do. When you have debt incomes rising in the u. K. , that just implies you are in the late cycle. Youve have Consumer Credit at 10 year on year. I understand the points he is making on q1. I think it is a crunch point for brexit and a contingency plan for financial services. I am much more worried about that if we dont get a deal done. It will not be as quick, the slowdown in q1. Interest rates are still very low. Guy you said christmas will be very good and as a result, the consumers trade pretty good post christmas. Then, they start bigticket and gradually it rolls down from there. We will carry on the conversation. Jordan rochester will stick around. Coming up, campaigning kicks off in catalonia. We are live in madrid. That is next. This is bloomberg. Matt welcome back to bloomberg markets. Looking at new pictures of our gorgeous new headquarters in london. We are 14 minutes into the session. We see the index is basically up, though very little changes. Especially the ftse, which is gaining 0. 3 as the pound falls. 0. 1 . Ex is also gaining the catalan Election Campaign kicks off today, with a pivot away from proindependence parties. The three separatist parties are 68teh cusp of losing the seats they need to secure a majority in the regional legislator. Meanwhile, the former president is trailing in third or fourth place, while in his selfimposed exile in belgium. Its hard to campaign when you are not even in the country. We do have in the country, maria taddeo. Does it lookway like it will go with the proindependence parties . And doesnt matter if they keep their majorities, because they dont necessarily agree with each other . Maria that is an interesting question. We have never had a regional ballot in a region that has effectively been suspended. As you mentioned, we have seen declines. Basically, surveys show was the proindependence parties might cling to this majority, but they are at risk of losing seats. You could interpret that as a sign of weakness. When you talk to people here in madrid, they will talk about how they expect results. But what they think really make the difference in those elections is the fact that article 155 has been shown to work. The transition of power has been very smooth. State feels like they have to defend themselves, they feel like they have the tools to do it. Matt holdwhat does the future for mr. Puidgemont . Maria remember, he left spain after fleeing the country. He is concerned he will get a political trial and it will not be a speedy trial. He is still in belgium. Says he will lead more time to make a decision and decemberion is now due 14, one week before the election. We dont know if he will be able to campaign. , butll do so from belgian it is hard to do so when you are out of the country. Is, when is puidgemont going to arrive in spain . And does that mean he will be headed straight to presenison if he lands in madrid . Matt we are getting spanish pmi data out now. The market, spains services pmi, came in at 54. 4, missing the estimates of 55 even. The services pmi, 54. 4. The composite at 54. 2. We look at this data from a number of European Countries today and we look at the collective number at 10 00 u. K. Time. That is when we get the eurozone collective number for pmis. Still with us is jordan rochester, fx strategist at nomura. The catalan issue has been fascinating all along. We see in local bond yields, we see real moves on the three year. Can access this on your bloomberg as well. But it hasnt really affected the Broader Markets, has it . Have you seen a spanish effect on the euro . Now, not really. I am more worried about what Inflation Forecasts the ecb will have. The polls say essentially there some big majority that is not in favor of independence. Therefore, spanish equities and spanish credit names, especially based in catalonia, those are the ones that are really in focus. The three year did spike higher since the yield. But now, it has tightened in. Even the markets in catalonia think it is unlikely to have a big upset. If we do have a big upset, it is unlikely to have any larger impact on the eu as a whole, and especially the eurozone. At the time being, it is a fiscal issue, but less so a market one into december. Matt i mean, what kind of political risks do you see for the euro . When we have these coalition up s and downs in germany, the euro moves a little bit, but it does not seem to have much of an fx. Do you think most of the european worries are behind us . Jordan i was surprised by how much the euro moved in the first place when the Election Results came out. The Jamaican Coalition was what most people were expecting at the time going into it. But really, the main material things did not change. Political risks in europe, the only one i could possibly say, that is a big risk, 40 foot dental one, or a potential one, that is the italian election. But even there, the polls say it is hard for the parties to surprise us, especially with the coalition rules they have brought in. Its a lot harder to have an upset. But you never know. Polls move. Just because the polls say things are safe now, it does not mean that they will be. Corbynlook now, jeremy was not supposed to be anywhere near in reach of getting anywhere close to the majority and we saw a huge pickup in the u. K. Pulls and that is quite important. I think what is interesting will be the election cycle in the u. S. Next year. You might have a wave election. You might have democrats take the house. It is very hard to take the senate. Mathematics are very difficult there. But in the house, pulling is very much in favor of the democrats right now and the tax plan is very unpopular amongst democrats and voters, and even amongst Republican Voters it is not a big win either. We are seeing a lot of resistance to the tax plan in polling, and therefore, it will not translate to a success in the polls as well. We could have an upset election in the u. S. As well. Guy can i go back to this question you asked in the beginning, which is what the ecb thinks the inflation figure will look like. You cant argue with the fact that there is an economic recovery. Yet the ecb has penciled in sub target inflation numbers. This tells the story here. This is the european surprise and next. How much more momentum could we get from the done . The data will struggle to get better from where we are now. Jordan the chart is showing the economics surprise index. Everybody is gloomy, saying europe is going to be a struggler. Everyone is very pessimistic. It will be the goldilocks plus. Guy we are already kind of their. We have gotten to that point already, so i am wondering what the next leg is. Wasan the ecbs tapering designed to stop a temper tantrum. They were worried, so they did the ninemonth extension to push against that. The policy is on hold and it will be a can youd slow taper. And it will be a continued slow taper. It will not be as exciting as the december meeting, but the 2020 forecast is such a longterm forecast. So, they could put in may be a slightly higher than their 2019 forecast. That is the best we can hope for. They dont want to give the markets any sign of policy cutting just yet. But maybe that is something that will happen early in q2 next year. You need a really big upset for hiking policy. So, that is the story, but it is a long and slow story. Guy jordan is going to stick around. Plenty more to come from him. We need to talk about the u. S. And the british pound. We also have more on the stocks on the move this morning. A regulatory probe into this credit card unit. The stock is being hit and hit a singlepping 15 in session. This is bloomberg. Guy lets talk about what is happening in the Financial Sector of the u. K. We are seeing some interesting stuff right now. A quick look at what is going on. This dashboard allows you to take a look at what is happening here. 23 ,stock is down by 15. Dropping quite sharply at the moment. Quite a lot of interesting action by the analysts this morning. It will be interesting to see if they reposition over such a big move. Well talk about the tech exchanges in a moment. Welcome back to bloomberg markets. This is the european open. We are 30 minutes into the trading day. Prime minister theresa may begins another brexit salvage effort after a lastminute upset over the irish border. Where does the pound go next . Attacks thete overhaul. Futures with u. S. Futures pointing higher, will the selloff come to an end . Lamborghini rolls out a luxury suv. We speak to the ceo. Also the former head of the for re team. Also the former head of the team. I i am matt miller in berlin alongside guy johnson in london. Guy i am looking forward to getting your take on what they produce down there in italy. Let us talk a little bit about what is going on with the market. What is being bought and what is being sold. The stoxx 600 is paying flat. Is bang flat. Interestingrface, stuff going on. Food and beverages and retailers bid. That is where we are seeing some of the bids. And the utilities. Isthe u. S. , the tax story negative. Also affecting the utility sector as well. A big move in iron or to the downside the iron ore to the downside. Financial services. That sector is turning around a little bit. At the open, it was trading reasonably stronger. Reasonably strongly. It is dipping now. The heavyweights some of these are stocks you want to focus on from the dividend point of view as well. We will talk to a mining analyst later in the program. The uks theresa may came closer than ever to the brexit deal she has been working on for months. A lastminute upset left all parties embarrassed and does not bode well for a second round. Ansh Officials Say it is intractable problem. What to do with the shared border with Northern Ireland . Efforts, andr best the significant progress, our teams have made over the past days over important issues, it was not possible to reach a complete agreement today. A divided Supreme Court has allowed Donald Trumps travel ban to take affect while legal challenges go forward. A major victory. It suggests the Supreme Court will ultimately uphold the restriction. The travel ban is on citizens from six mostly muslim countries. Brussels, up to 11 countries could be rubberstamped for inclusion on a blacklist. Ofording to the latest draft proposals, the list includes south korea, panama, tunisia, the uae, or betas and barbados and macau. The portuguese Prime Minister says the u. S. Tax reform law will also be discussed. It will betant a general discussion on the impact it might have on the world economy. Sebastian ole deutsche banc has received a subpoena. Which was received weeks ago of elijahs germanys biggest lender to provide documents detailing the relationship with the trump family. Will be illegal unless it receives a formal request to do so. Global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. This is bloomberg. Let me just give you some information you will need. Is one of a few affected by technical issues right now. Trading on cash and derivatives. Not impacted. The cac 40, if you are experiencing some individuals. Experiencing some difficulties. Techs get more on the selloff globally. A frantic rotation as chipmakers are really no again. A fifth drop in six days as investors switch into stocks more likely to benefit from the u. S. Tax overhaul. The Semiconductor Sector is down nearly 12 . Food retailers on the other end have surged almost 60 . Where are the biggest casualties as far as the asian trading we saw overnight . Techter asia is a supplier territory. Pretty big losses. In taiwan. The Semiconductor Maker makes up over 20 of the gauge and it has closed at its lowest level this month. Big losses in hong kong and even in japan, the nikkei was down as well. The losses have been widespread from the likes of small, apple suppliers like a Chinese Company that supplies cameras and camera parts to smartphones. Even to samsung. Which is also an apple supplier. Widespread selloff here. Almost mimicking the decline from last thursday which was on similar grounds. Guy the supply chain factor is one to be aware of. What about tencent . Is that related to that story . Reporter we always get a fair bit of sentiment related contagion in the asian market. Are, opening up within hours of wall streets close. Hitent does tend to get during these tech selloff and hit quite badly this last week. I think it has more to do with it having such a strong runup than people thinking that this tax situation in the u. S. Which has triggered this selloff in the likes of apple and other u. S. Tech suppliers because of concerns the plan will not be advantageous to them. It is not going to impact a where itske tencent main market is primarily china where it is so dominant. We have seen a decline over 3 today building on the 55 billion of value lost last week. Up doubleis still what it was pretty much this time last year. A little bit of profit taking on the tencent front. That there. Leave fascinating stuff. Interesting to see how much of it is tax related. Thank yous much for joining us. Still with us toward in rochester. Let us talk about the tax story from a dollar perspective. When reagan changed the tax taxy, when bush changed the story, the dollar went down and not up. Is that what we are expecting this time . Most people are talking about reflation trade for next year and how the dollar should bounce back thanks to the highyield in the u. S. We are finding the opposite. There are many factors that lead to a structural decline. Current account deficit. And government spending. Love a double deficit spending in the u. S. Let us talk about trade and tech stocks. Interesting as we segue into that. Health care. They has still not solved that really. I dont see how they are going to get anything done next year on that as they had all of this year to get it done and they failed. Tax reform done in december. What is next . There are no other policy from apart from trade. That is where we think he will shift his focus next year. More going on in trade. Biggest bigger risks on the trade front. And north korea. And working with the chinese on that front. We have the trade angle, the current account deficit and the fed pricing which is essentially more hikes from the fed but they are in the latter stage of their hiking cycle. In europe, and in japan, the a signal that you have in a small change in policy. That is more powerful than a fed hike. From unconventional, negative Interest Rate, to rising Interest Rates that is a huge impulse in foreign exchange. You see steeper curves. That will move the dollar lower against the majors. It will happen slightly closer in terms of the timeline. Fore is nothing priced in any concern around the debt ceiling. One thing we have learned from the tax story and to the health point as well, the u. S. And its politicians are deeply divided at the moment. All kinds of things could get in the way in the last minute. We may see a budget at the end of this week but at some point, on have to grab the metal this one. Jordan it matters more when the debt ceiling expires. As of the end of this week, you have the Government Shutdown risk. The extraordinary measures the treasury has to implement to get the u. S. Through this negotiation should last through january on the debt ceiling side. The u. S. Default is not in the story until next year. Maybe february or march. The Government Shutdown. Democrats need to vote this through with 60 senators. They want to get their say on the dreamers act. The most likely scenario is kicking this into next year so the democrats have more leverage so they can negotiate around the debt default risk in the debt ceiling in february or march. I think this will be kicked the can down the road and the new crunch time will be in the new year. Who wants to get the latest Social Security check around christmas . Matt not i. What do you expect for the fed . Especially with good friends coming on the board. What about the pace of hikes next year and how will that affect the currency . Jordan in terms of the hawkdove chart somewhere in the middle. More of the same, really. That is what we are seeing from the fed candidate choices overall, especially with the chair. More of the same. What matters in the u. S. , the december hike is pretty much priced in with just a few points off. Next year, we may have a slight improvement in pricing. Two or three hikes. That is the story in the u. S. A slow and more of the same story. It is hard to get really excited. On the front end, it doesnt matter. On the back in, what happens when you see the fed Balance Sheet unwind policy start picking up from march onwards . More sales going through and more and no more repurchasing of the redemption. Most people would say u. S. 10 years should selloff more at 260. It is a consensus view. It is not really where the big trade is at the moment. Matt jordan, thank you very much for your time. Jordan rochester, head of european and mining june in for that as well. Still to come, mind the gap. Mining gap minimize. We ask grant sporre after this. This is bloomberg. 8 46 a. M. In london. 46 minutes into the session. I bring up room. We just got some data on the pmi. It looks better than anticipated. It is one of the factors we are watching into next year with the election upcoming. The services number, 54. 7. That is about the survey. And the comp number is coming in at 56 even. A decent number. High 50s, that is some positive data. Germany is trading in the low 60s with its manufacturing line which is incredibly solid. Someve on and talk about of the input prices into the industrial sector. Bhps ceo says the minor is ready to benefit. Speaking in melbourne, he also said chinas recent Party Congress has underscored that shift. We shape the portfolio to be simpler, smaller, and focused on just a few to deliver all of our high quality products. Guy meanwhile, the Mining Sector is trading at a discount. The Broader Market will the gap narrow in 2018 . Joining us now is grant sporre who is from macquarrie. Is that sector undervalued right now . Grant sporre in my opinion, yes. It trades at about two times the discount to the broader ftse 100. There has been some good reasons for that. One, in the boom times, the advocation. Apital guy that is being polite. Thet sporre that has been message coming out of the recent Capital Market space. And secondly, there is a looming concern about a china slowdown. We do think china will slow down modestly next year but we think the fears that it will be a hard landing or a sharp slowdown are overdone. That has created a great environment for the miners to write closer to a market multiple. I dont think they will quite get to that market multiple. It is a cyclical sector. M a that would imply that would be something sensible to do. Grant sporre in certain circumstances, yes. But i think the miners that have the Balance Sheets with the ability to do emanate are probably still a little sore guy quite shy. Grant sporre exactly. I think they are going to be very careful in allocating capital to m a in this upcoming cycle. The one exception is glencore and they will always be looking at the market to pick up some assets. It is more of a trader mentality. They will buy some assets and sell another set of assets. Ongoingu have a buy court. On glencore. Grant sporre what it has going for it is a large copper exposure and a large cobalt exposure going into next year. If we look at the earnings momentum, it is the one minor where we do not have a earnings decline for next year. We have earnings that are relatively flat for next year and that sets it apart from a lot of the diversified miners. Where we see a little earnings drop for next year is predicated on a slightly lower Iron Ore Price for next year. As well aso like rio bhp but you have a preference here for bhp over rio. Why is that . They are both out performers for you but why do like bhp better . Grant sporre both are great companies. And both are undervalued. We just think bhp has a little more to run. They are arguably a little behind rio in terms of squeezing excess fat and costs out of the business. We think there is a further upside to run for bhp then radio. Furthermore, in terms of the growth options Going Forward, bhp has certainly almost got an embarrassment of riches in terms of their growth options Going Forward and that sets them apart from rio. Rio, in contrast, has growth options but they are centered where the market is less accepting. Fashion us talk about and the discount story. Trying to put them in the same storage. Him etf. He lethe lithium etf. Electric vehicles. Take a look at the allocations. Mining, 16 . How do i think about the miners and should i be thinking about them as a play on electric cars or a play on factories or anything that will attract the kind of multiples that we see in other spaces . The smile on your face tells the whole story. Grant sporre personally, i think that is a little bit of a stretch to far. There is no doubt that some of the miners have the metals required for the lithium batteries Going Forward. It has a lot of cobalt coming up in its production profile. But its still makes a small component of its earnings. It is much more into thermal coal and copper. To play glencore clients, you talk to how often do they ask this question . How seriously should i take this . Grant sporre i do get a lot of questions about playing glencore for the ecb . I think it is a sweetener. A nice little bit of icing on the top of the cake to have if you are going to play glencore but it should not form the basis of your investment case. Guy it has been quite a ride. Excuse the pun. Bitcoin. People talk about not taking it seriously. Thank you very much indeed. Grant sporre, the head of European Metals and mining over at macquarrie. Let us talk about france. Issuesere some technical surrounding the cash open. We do have some pricing out of france. In negative territory. We are also getting details of the french pmi which is dropping. To composite pmi rising 60. 3. The preliminary was 60. 1. Let us get back to the car story. Matt moore pmi data coming out of germany. And the eu number out as well in about seven minutes. Let us quickly talk about lamborghini. It is unveiling a High Performance crossover. The carse bigger than they make and it could double the size of the brand as the italian manufacturer enters an increasingly crowded sector which is attracting competitors like rollsroyce. Be ans going to interesting im going to be excited to see the car for one thing and it will be interesting to see how people purchase it. And it will be interesting to see how lamborghini sells it. They do not have the kind of Dealership Network yet that i see getting 10,000 units out. It will be interesting to see if they beef up their Dealer Network or their service network. Lamborghinitime for and car aficionados. Guy i could probably walk into any vw dealership and order one. I joke. People argue if this is a zerosum sum game or does the perimeter of the market that larger . Between aow choosing porsche or a bentley or whatever it is i am still going to buy an suv but i am not going out to purchase two if you get my point. Matt the number of millionaires and billionaires in the world continues to grow. More people can drop 200 grand or 400 grand on a vehicle. In the appetite for these big land yachts is growing. As of now, there is no reason for them not to build these. The margins are so high as well. The problem is it dilutes the brand. I think this will only have eight cylinders. From that perspective, that is a bit of a disappointment that i also cannot afford one of these and i am not part of their audience. Guy soon they will have no cylinders. This point. Le at data dropping out of germany in terms of services. Pmi falling 54. 3. And a comp number which is 67. 7. The manufacturing element of the german data is always the more important number. Matt very interesting to see these numbers continue to come out as the economy continues to grow. We will see if the markets continue to recover from the u. S. Tax issue. And i will introduce and i will interview the ceo of lamborghini. Now, she runs lamborghini. He runs lamborghini. Join us for his first interview of the day at 9 00 a. M. This is the first time they have put out an suv since the rambo lambo. This is bloomberg. 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. Irish border leaves britain. Unveils thisrmaker new was model. Welcome to surveillance. Im mark barton. Let me tell you about these three charts. Nove