There are some things going on outside the market. Good morning. Emma the Trump Administration is opening the door to more oil drilling in atlantic waters. The president awarded the interior department to auction oil and gas rights off the east coast. President obama had ruled out using that territory. Police say it would be a suicide bomber who chose to explode a bomb in a subway station because of the christmas theme. He is described as a 27 euros m a great from bangladesh. He told police he was a follower of isis. The u. K. Once a trade relationship to eat you identical to the one now. The International Trade secretary said that would ensure a smooth transition. They already have harmonization with the eu. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Alix i want a Million Dollars for christmas. David thats unrealistic. Thats a really good deal. We will have all of the obligations and no say in the eu. For thes time now first three stories of the morning. U. K. Inflation accelerates to the fastest and more than five and half years. Second, the Alabama Senate race heats up as voters head to the polls. A crack in the most Important Oil type lines ripples through the market, causing distortions. Joining us is megan murphy and josh diner. Thanks for joining us. Lets start with u. K. Inflation. Us a fair will lend amount. Its less about inflation and the in certainty. Its a hard job to be eight central bank governor. Now you get to figure out what going to happen with your trade deal. On the pound, thats whats been driving Inflation Higher in the u. K. David its not his fault. Housing prices are coming down a bit largely to airline prices. Asking the sliding pounds and spreads it. We have seen this number. I dont think they are losing much sleep over this. They just height. Group ishether wage going to match. Domestic prices are really going to knocked down growth in the brexit situation and whether or not we are going to see inflation outpacing as people still dont feel the wage growth. Thats a big problem for theresa may. Alix businesses are getting squeezed. Input rices arising. You literally just describe what the fed is talking about for the next orient hours. 48 hours. You know i love this. This is where the projection is. This is where the market is. You know december is a done deal. What do you expect these dots to do . Josh megan might be smart enough. I know what megan is hoping for. As i said before, the issue is its a hard job. You have the uncertainty with the tax cuts. Its an unusual time to do something which is more stemless of to an economy that is growing. They are going to be concerned about full employment. They will be watching Congress Area david there is a race coming up in alabama. We will find out who that senator is going to be. This is the latest poll from fox. This is likely voters. It has jones 10 points up. This is a really republican state. Trump beat clinton by 58 points. Megan its a deep red state. He would be the first democratic senator in 20 years. A lot of people are looking at turnout. There is an incredibly controversy a candidate. He had extreme views before he was accused of Improper Conduct with teenage girls. What people are not talking the wave of antiestablishment sentiment and how disruptive this is. Another the system is broken and we are willing to vote or a candidate who puts a finger in the face of establishment washington. Are we going to go back to a place of what we think of the values we hold in a more traditional norm in politics. The amount that he picks up on this trump style anarchic politics will be the numbers we should watch. Josh its a bad day or a lot of people if he wins. If you look at what happened in North Carolina after they passed the bathroom bill, there was a severely bad impact on jobs moving to the state. Alabama isyment in 3. 6 . How have they done that . Google is opening a data center. If judge moore wins and you are a ceo, i dont think so. Your i want to pick up on point. As a lawyer, this man has been taken out as chief justice of the Supreme Court twice for flagrantly disobeying the Supreme Court of the United States. This is anarchy. ,egan his views on lgbt writes he said he does not consider transgenders to have the same rights as traditional human beings area beans. He has extreme views. Has come so far. It still has the fifth highest poverty rate in the nation. The health care is one of the most indebted. Ons race is been so focused personalities, havent focused on it. Josh he is concerned this is going to set them back. Alix if you take a look at rent prices, there was a nice move. Its the highest level in 2. 5 years. A pipeline was shut that carries 40 of oil and gas from the north sea. The question becomes, what is the widespread affect . Do you see this as sustainable . There are hedges getting into the market. Josh opec has been constricting supply. That is put pressure on pricing. The supply is coming off the market because of the pipeline. That is a relatively small amount of oil. The real impact is the effect it has on brent pricing. If you take 400,000 off the market, you can see that effect sevent is now spread to dollars. You can see in the markets its not supply and demand, its an important question of distribution. If you take distribution off the market, it affects the prices. Alix you have to go to different areas. That causes those distortions. Megan this is taking it out of the market. We were talking on the terminal about goldman saying this is driven by Global Growth. We are talking about Central Banks in general, we are looking at projections for stronger Global Growth, which will continue to fuel commodities. We see something that might disrupt inflation. Are we going to see that . Do we see something that disrupts the u. S. Trajectory . Ofht now, the trend is out Global Growth for oil. Alix i love that you brought that up. Goldman sachs is doubling down on that. Energy, they see a 15 return. As you wind up selling those contracts, you wind up getting the cheaper ones with extra cash. That is all based on Global Growth. That brings us to china. Does it sustain itself . Josh people are relatively bullish. That has greatly enhanced authority and control. I think that is bullish for the overall economy. You have not seen stories about the anticorrection drive. People were not willing to make decisions. In an uncertain regulatory environment, its difficult to make decisions. I think people feel more bullish and willing to take risk. Alix thank you so much. Who talks faster . David you got to talk about that. Thank you so much. Alix thanks a lot. Coming up, we will speak with deutsche banks chief International Economist on the u. K. , ecb, the fed, and bitcoin. This is bloomberg. Emma there is a takeover in the Shopping Mall business. Europes biggest landlord has agreed to buy westfield for 15. 8 billion dollars. Westfield owns 35 malls in the u. S. And the u. K. They have been trying to repurpose Shopping Centers with changing retail trends. Disney is closing in on buying 21st century fox. According to a person familiar, a deal may be announced this week. They will acquire fox film and studios. Trading with the World Largest commodity trader says it will be the second highest since 2010. There is more volatility in the major markets. That is your Bloomberg Business flash. Alix i should put up the glencore says they are restarting their zinc mine as well. That was really what the market was waiting for. Zinc prices are lower and back to neutral. They are raising their guidance. Inflation is the highest and 5. 5 years. The bank of england governor said why it is so far above his target and joining us is torsten slok. He gets out a pen and has to write a letter to philip hammond. What does he say . Torsten the issue is the 800 pound gorilla of brexit. How do you deal with that . How do you quantify that risk when we dont know the scenario. This can be smooth or a hard brexit. How do you react to ordinary data when there is such a difficult uncertainty. I dont envy those who draft letters. David this was not a surprise. Werent they projecting inflation would rise . Torsten it touches on the dilemma that others see higher levels of inflation. What do you do when you have issues to deal with . Should you when inflation goes up stay more focused . We have other things going on and we have qe in the background. This has become very complicated here at high inflation should mean more focus on Central Banks. David they are not going to continue to rise. What have they signaled . What are the markets anticipating the cause of this inflation . Torsten thats why the communication challenges a norm us. On u. K. Gdp. Pact it could end up being very significant. They have to be signaling and try to say what do we think will happen. They are taking a be steps to figure out if the data is deteriorating. They can adjust some fine tuning. They are trying to tell with the best thing is to do. Alix when you going to be looking for . Torsten its all about central guidance. The bottom line is what will they say about the future . What will they say about what is expected. What do they say about the trajectory. They been very cautious to this point. The economy is doing ok. Many people expected a recession because of brexit. They cannot ignore that inflation is moving higher. These are not just small things. The bottom line is the Forward Guidance and what they say about future will be clinical critical for rates and what sterling does. David torsten slok will be staying with us. We will look at what the fed is meeting about today. That is coming up next. This is bloomberg. David the fed begins its meeting today. Rate decisions will come from the fed, the bank of england, and ecb. Thestors should brace for biggest tightening of Monetary Policy in a decade. Joining us is torsten slok of deutsche bank. He protects this will hit markets in the second quarter. Lets start with the fed. Goingne agrees there is to be a december increase. What happens after that . This shows in part the fed has been signaling higher than what markets are anticipating. Torsten that is important. The fed has said they will feel confident. We have said rates are going higher and we are going to raise rates. I think they will. We will be communicating think the economy does well, so we will be following the trajectory. David how does that work with the projections . Will they be projecting a lot more inflation . Torsten the argument will be we dont need to predict inflation. As rates go up, we will hold inflation down. We dont expect much forecast for the future. There is the issue that yellen will be replaced. The Forward Guidance of what they are saying is where things will go next year. That becomes critical for what the repricing of the fed looks like. The probability of a rate hike. We see a big rerating in the market here in the yellow line is where we were in september. The green line is where we are now. One year out, we saw 40 basis point increases. Torsten slok this chart is key. The market was not pricing in much action from the fed area of now the green line shows you we have moved a lot on front and rates. Long rates meeting tenure rates of not moved at all. We have had a repricing of the fed where the market is beginning to accept that the fed is going to do more than what they thought. This is really the smooth exit the fed has been talking about. We want to get the market on the idea that rates are going up without having negative consequences. They have pulled this off without seeing a decline in equities. So far, so good will be the conclusion. Alix communication actually worked. They did not miss it up. Torsten for the last for years, people have said qe has distorted markets. This is had a Significant Impact on stocks. You havent seen yet indications. X you brought up the room repricing on the front end. Flat. S flat flat the twoyear treasury bond spread is 254 basis points. What matters more for the currency crop . Is it going to be the ecb or the fed . Torsten its fair to say most will think the fed will continue. The key issue here is the ecb. The ecb has had negative Interest Rates for in place so long, they are going to end that in september. The real issue will be the market wakes up and sees the indicator for germany is the highest level in 48 years. The German Economy is relatively strong area they see much stronger data. The story will be the ecb will be repriced. The market will say maybe they wont hike is late as 2019. Maybe it will happen earlier. Maybe bond rates will go up and that will be something. David when the going to cut back on qe . This is the relative size of the alans sheets. Gdp, white is the u. S. And blue is the ecb and green is the bank of japan. It shows how big the Balance Sheets of gotten as a percent of the economy. How much is this going to stop qe . Torsten thats an important question. They have signaled they will and in some number. They will do a sudden stop in september and then no more. We will see what they say this week rid the bottom line is we think this is going to be a change in the mindset of many investors who are used to 10 year bonds being 35 basis points. We are leaving behind a regime of eight years of negative Interest Rates. I think we will basically get the bonds out of hibernation in 2018. That is the theme that will be coming for the u. S. And the euro area. Alix torsten slok is staying with us. Join our special coverage on the fed Rate Decision tomorrow. We will have the latest analysis and news from Alan Greenspan here it greenspan. Thats going to be a lot of fun. We are going to look at the worlds most popular cryptocurrency. Bitcoin futures are down 4 today. How smoothly did it go . What are the big banks doing . How is that going to work. We will discuss. This is bloomberg. Alix this is bloomberg daybreak. Im alix steel. Heres where we sit before the catchup in the u. S. Pretty much flat after the dam and s p closed at a record high again. A little bit of movement over in europe as you see and shes closing a nice monster rally. The weaker dollar continues to emerge throughout the session. I want to take a look at whats happening with cable, up 1 10 of 1 despite the higherthanexpected inflation data. My bond of the day is the swedish 10year. Yields are up three basis points. Its the underperformer over in europe as the inflation kisses its 2 target, raising questions of Monetary PolicyGoing Forward. They are both laughing at me. Brent is up a monster 1. 5 , over 65 a barrel. How long can that last . Now for an update on what is making headlines up side the business world, here is emma chandra. Emma the voters will decide whether to elect the Senate Candidate to split the republican party. Roy moore is accused of Sexual Misconduct with teenagers and is backed by President Trump, but he is opposed by a number of republicans, including alabama senior senator richard shelby. The mayor of San Francisco died overnight. Edley was 65. His office did not disclose his death. He was his first asianamerican mayor in San Francisco. South korea may try to reduce tensions with north korea during februarys games. They may delay the annual spring military drills until after the livex are over. North korea regularly denounces the wargames as a prelude to action for global hours a day powered by 2700 listen and listen over 120 countries, im emma chandra. David we have had over 24 hours trading on bitcoin. Julie hyman, things had really gone up. A couple of Circuit Breakers had kicked in. Julie it has definitely stabilized i. We saw the price move sideways and the same thing happened with volume. We saw a surge in volume when the contract started trading. When you look at the bloomberg, you can see these two days of action with the price action on top of the volume on the bottom. Its a pretty clear picture of what we have been seeing. The cboe seem to be pleased. We talked to ed tilly yesterday and he definitely seemed that he was content with how this debut had gone. There had not been turmoil in the markets. Yes, the Circuit Breakers were tripped, but everything worked how it was supposed to work. David is any reason to think the value of the options are affecting the underlying value of bitcoin . Julie not yet. You can take a look at the bloomberg and we have the spread between the underlying bitcoin price and the futures. It has come in a little bit, but theres an unusually wide gap here. There are a number of Different Things contributing to this. Could be that entities are allowed to purchase the regulated product. Futures cannot buy the underlying bitcoin. Seeing a lot of Short Interest on the futures. That is something perhaps expected ahead of time that we are not necessarily seeing. Interactive brokers, which is handling about half of the volume or at least yesterday of the futures contracts is not allowing clients to short. There might not be other there might be other clients not allowing futures to short. If you do it through Interactive Brokers, its 50 . Therefore it might be more difficult to get the prices to come into line when youre not having perhaps some Short Interest putting a little bit of a cap on the futures. Any reaction from the regulators . Julie we had an interesting statement from fcc chairman. Regulates the Bitcoin Futures and the sec will eventually regulate any etfs type to bitcoin. Clayton is talking about cryptocurrencies and generally and is also talking about ipos and basically says be really careful of the stuff. If you boil down the statement, thats essentially what hes saying. He is going to instruct the sec asbe vigilant about icos well. In which case, they would be able to regulate them. He basically says there are greater opportunities for fraud and manipulation and cryptocurrency and ico markets. That might be causing downward pressure on the price today. Ass quite a long statement he goes through some of the risks associated with it. David its great to have julie hyman. We will have the winkler lost twins, the gemini founders. We are told they are bitcoin billionaires by investing their facebook fortune in bitcoin. Let me begin at the beginning. What is a bitcoin . I have problems figuring out if its a Payment System where you can anonymously do something with others and its all open to everyone. Stock, isted in the know what the cash flow is of the company and i have a way of evaluating the value if its in the bond. I can try to find out what the value is today. From an asset class perspective, its really difficult to figure out what our fundamentals in bitcoin, because theres really no cash flow to figure out what the net present value should be. Itit a Payment System or is a way you can do transactions or is it an asset class you can invest in . David there are more efficient Payment Systems. People advocate an alternative as much more flexible. Even bitcoin cash was split off. People say its much more efficient than bitcoin. The moment, the average transaction if i were to buy or sell a bitcoin, it would take about 10 minutes to make it complete. Thats why there are 200 other bitcoins and other features and characteristics that are in different ways more or less attractive. The bottom line is for investors, its critical to keep in mind, is this an asset you are investing in that has no fundamental value or investing in something that doesnt have a cash flow or is this a Payment System that can do things that is more efficient than what we already have . Alix moore is it equity . Or is it equity . Im looking at the bloomberg and the volatility. Yesterday. S of other periods of volatility like the s p only hit 102 back in october 2008 and black monday going back to 1987. As volatility was hundred 53 . One argument has been the v ol. You do not see that and commodities and fx. Torsten its very striking that this volatility is enormous relative to our discussions. We always have volatility low inequities. Its certainly an asset class that delivers much more stomach churning that you can get elsewhere. Alix great to catch up with you. Thanks so much for joining us. The rise of bitcoin has brought out concerns over risks and regulations, but the theme from d. C. Has been moved to deregulate the Financial Markets like the act of 2002 and doddfrank of 2010 and the volcker rule. Joining us is can been staying benstein. We caught up a few weeks ago. What do you think will be the theme for 2018 . What do you think will be deregulated . Ken i think recalibration is the right word. We are at an Inflection Point right now. If you look at the largest banks in the u. S. , they are holding about 500 basis points over their minimum core tier one requirement. Juice of shareholding theyre holding over the international ratio requirement. Our institutions are quite stable and extremely wellcapitalized. We are seeing liquidity trap on Balance Sheets that could be deployed elsewhere. Thats what the Treasury Department is thinking about. How can we recalibrate so we have safe and sound financial institutions, but we are putting more capital and credit into the economy to drive the economy . The other thing is you look at an point where we just have an agreement last week with the laws of Committee Basel committee. A level set where we are at and tweak around the edges and fix things that need to be fixed. Thed we had a report from Treasury Department back in june saying that these are recalibrations. I want you to take a look at this and tell us whats most important to banking. They seem to break down into two categories how much liquidity and reserves you have to have and the other is things like the stress test and things like that . You can see the designation of going after 50 billion and reforming the stress test, which is a pain for the banks. Making the living will buy annual and Reform Community bank regulation. Whats most important to the banks . Ken i think at times around living wills and around the liquidity and capital rules, stress test and stressed t firms are already doing it anyway. And the supervisory space, its a good idea. There are a whole number of Capital Markets issues that regulators are looking at. Thats what came out in the second report. They are looking at the swaps market and how they can make that title vii more efficient. We are not going back to a eriod. 072008 p we are saying lets make this work better. Alix if you are seeing banks not having to store as much treasuries, what would they do with that money . You can make the argument that demand for loans is in therapy what d not there. What do they do with it . Ken i would argue you would still have very sound for the banks. Have seen is loan growth has been below the historical average ramus business cycle. During this business cycle. Alix you think its a supply issue and on demand issued . . Ken i think its a supply issue as a component of it. Alix what will be there for the banks to not take on more risk . , if the cost of financing alone, if the cost of underwriting and offering is such that you are price out, banks are going to pull back and not make that available. Certainly there can always be a demand problem, but we are seeing good growth in the economy right now, but we are not seeing formation that we would like to see. We need to find a fix that equation. Alix how do you understand the divergence and regulation from europe and the u. S. . We are seeing anxiety daytoday from banks in europe. How do we understand the two . How can there be more deregulation while you have mifid ramping up . Ken mifid ii is a pretty aggressive piece of legislation. I was in europe last week, both in the u k and meeting with the ec. I think theyre going to try to figure out how thats going to play out on january 3. We have been working in the u. S. To get accommodations as it relates to research and atf. Outally everyone is looking where you do not have an l ei. The europeans understand that they have to have a soft launch on this Going Forward. Is they willing look at this rule a year from now. The european Capital Markets are a lot different than u. S. Capital markets. The one great thing about it is that the europeans look at u. S. Capitol markets and say that something we would like to have your. David you look at read go on the bloomberg and its all about bitcoin. Im going to ask you what bitcoin is. Alix dont be scared. [laughter] david the banks are going to sort out what their role is here. How did the banks approach that question . What are the opportunities and risks for a bank when it comes to something new like bitcoin . Ken were not taken on that yet because our members are tried to figure out where thats going. I will say in the Hole Technology behind bitcoin is something that the industry is taking a good hard look at. People see a lot of potential positive applications of that, but the bitcoin itself is something that has not quite emerged to our level yet. David the block chain is here to stay. Alix and so is lloyd blankfein. I would just call yo a guy. David you have a customer who wants to do it. How are you going to say no . Any thanks to ken a disney deal for fox could be near. Could the house of mickey mouse and winnie the pooh become the home of the simpsons and the xmen . We will discuss the future of the walt disney empire and the fox franchise next. You can tune into tom keene on radio. Can beerg surveillance heard all across the United States on sirius xm radio. Live from new york, this is bloomberg. Emma this is bloomberg daybreak. This is the hewlettpackard enterprise green roof. Twins join us to discuss bitcoin. Emma now to your Bloomberg Business flash. John for banks capital will close its hedge fund after returned funds. It rose to fame after making a lucrative that against some subprime housing loans. There are focused on a special opportunities fund. If the biggest Tech Acquisition in europe this year. France has agreed to buy gemalto for 5 billion in cash. That would create a european leader in cybersecurity, digital technologies, and payment services. The price represents a 37 premium to jamaal close close yesterday. Doubling downis on its bullish commodity call. Y say the test commodities commodities will bring better returns next year could thats your Bloomberg Business flash. Alix for energy, 15 return for next year. Prices are higher today than tomorrow. Ou make a nice juicy profit. Time now for the wall street theme where we take a look at the top streets wall street is best stories wall street is buzzing about today. Look at the top stories wall street is buzzing about today. Pile, asffetts cash tos total t scheduled to add buffetts cash load. The disney fox deal. 4 areand fantastic joining again and they perhaps will with the avengers. David wolverine is joining. Alix joining us now is ed hammond. I want to start with the news over the last 20 for hours about john burbank. Passport capital hes going to close his Flagship Fund could he is wha. Heres what he had to stay about say about it. Returns over the past two years have been unacceptable and its caused me to rethink how to make money in this environment. We have lost about 112 hedge funds. Ed we touched on this yesterday briefly as well. This idea of the traditional Long Short Model seems to be dead at least for now. Think this is the seventh consecutive quarter where you have seen more Hedge Fund Liquidations then you have seen stocks. They are just having a savage time. How do you have a long short strategy when the s p is compounded 13. 5 annually going back five years . Really the situation here for burbank is he is saying he has this Flagship Fund and its no longer making the kind of returns it used to. This is a guy who made 220 betting against subprimes. You had this phenomenal record against one incredible bet. Markets have relied on the long short strategy and its not there right now so we are going to find Something Else to do what we return money to investors. David theres a broader issue that is covered as you suggested out of the bloomberg. Actually goes through the difficulty of long short. Most the problems are in short actually. The question i have is this. Is this a matter that there is so little volatility . If the Central Banks really come out of the asset business, does that fix the problem or is it passive investing . Ed its accommodation of both things. The lack of volatility is killing the hedge funds. How do you go short . The s p is up and up all the time. If you go along, just go passive. This is a great future of investment piece. Our colleague nailed it again and she always gets this stuff spot on. You are seeing this play out in hedge funds. There are ones doing well or very active stuff so you look like its much more active in terms of companies without not shareholder activist that are doing well. The other thing is more eu territory hedge funds. People are backing litigation finance. They just fun federal lawsuits. Model. Fascinating the idea that you can have a hedge fund and you can charge peopleis on the market is going up forget it. Youre are seeing the people lose and lose. Alix i have some breaking news for you. Omv, a natural gas and oil producer over in europe and the u. K. , at a gas exposure earlier today. You saw u. K. Natural gas prices rallying the most in eight years. Now we are getting news that perhaps that area will wind up restarting restoration in the matter of hours but not days. And restoration is a matter of hours not days. Gas supply could be secured through alternative routes the. The damage is significant, but they are working on alternative routes. Well off the highs of the session yet still up by about a few percent. Its about 10 so far today. Moving on to arthur topic, berger and buffett moving on to our third topic, burger and buffett. 3fett gets about 3 billion. Ed securities will pay about 9 annually. Now he is selling them back at 9. 9 premium so hes going to do very well from this deal. Burger king to me is one of the most fascinating companies. Its a way to make me feel like a complete loser. They did this great deal. It was seen as controversial because they were going to canada to limits tax base. Buffett was the guy who sold this to the u. S. Government. At the time, Warren Buffett was an obama adviser on tax policy and he joined up with 3g who owned burger king and got this done. For his efforts, he seems to be doing exceptionally well. The real question this raises is now buffett is sitting on 110 billion. What does he did . O . Jonathanalix valuations are so high so its put them in a pickle. Add, great to see you. Thanks for catching up with us. Much more coming up. This is bloomberg. Alix this is bloomberg daybreak. Heres where we are with the dow points, extending that record rally we saw yesterday. Emerges dollar story that the market as brent continues on its monster rally. next coming up in the hour, as Bitcoin Futures face a wild ride in trading, we will talk with cameron and tyler win klevoss to discuss the fate of the coin. They are bitcoin billionaires having investing their fortune from facebook. Alix shocker that they are bulls. Full disclosure. [laughter] david live from new york, this is bloomberg. Alix a fiveyear high. Cancellations jump over 3 , forcing mark carney to explain those rising prices and a letter to chancellor philip hammond. Yellen swansong. The fed kicks off its twoday meeting of the busiest week of the year for central bank decisions. A big boost for brent as prices climb above 65 a barrel and Energy Stocks enjoying the rise could david. David welcome to bloomberg daybreak on this tuesday, december 12. Im david westin along with alix steel. Alix the s p and dow closed at record highs yesterday. Its a weaker dollar story across the board although the eurodollar is flat. No movement having it in the u. S. With the 10 year yield completely flat and oil getting a nice pop. The action is in my chart of the morning. Its the brent today chart. Pop that wethat big saw as we had a pipeline being shut down and Goldman Sachs doubling down and saying they saw 15 return on Energy Investing or 2018. David lets can update now on what is lets get an update on what is making news outside the business world. Emma voters in alabama will decide to vote Senate Candidate to split the republican party. Roy moore is accused of Sexual Misconduct by teenagers. He is backed by President Trump but opposed by a number of republicans, including alabama senior senator richard shelby. In washington, conservative activists are demanding that republicans hold the line on a Corporate Tax cut to 20 . Some lawmakers propose cutting the rate from 35 to 22 . The difference would be used to offset other tax cuts. Thattax activists say would violate the attempt of the framework republicans agreed to. The u. S. And winter of the big toe south korea may try to reduce tensions with north korea during februarys games. According to a person familiar with the matter, they may delay the annual spring military drills until after deal of the olympics. North korea denounces the wargames as a prelude to envision. Global news 24 hours a day placeut more than of journalists and analysts in over 120 countries, im emma chandra. This is bloomberg. David the fed, the bank of england, and ecb come out tomorrow and thursday. We lead off with the fed. We welcome carl riccadonna, bloombergs chief u. S. Economist at everyone seems to know what they are going to th do. Dotare going to put the to plot up on what the projections are Going Forward and what we learn tomorrow that might change our expectations. Carl i think the language of the statement is going to be fairly straightforward in terms of strong economic gains and the labor market continues to mend. The real single will be signal will be in the dot plot. We have to give a best estimate of who can be ascribed to which dot and who is a vote for next year. The fed takes a hawkish turn as a lot of doves will be falling off the committee. There is janet yellen and dudley from the york said that falls off. Theresng roster a rotating roster that shifts from dovish to hawkish. David on friday, does that green line where the fed is projecting right now, does that go up or down . The blue line, does that go up toward the green . Carl i think the market is going to be doubtful as skeptical of the fed mai moves. They have three hikes for next year. Given the lack of traction they have gotten in terms of rain and financial conditions, they could maybe even lean into more of a dovish direction. The market you need to look no further than the 10 year treasury note. Its really expressing doubts about meaningful growth pick up that drives Inflation Higher. In the that 10year move market expectation for the fed is also going to be relatively sluggish to respond. Alix Morgan Stanley calling 1. 95 for the end of 2018. Carl riccadonna, good stuff. U. K. Inflation data unexpectedly accelerated to the fastest pace in more than five and a half years in november all on the eve of the boe meeting on thursday. It did force mark carney to explain why price growth is so far above its policy target. Lucy joins us from our London Bureau with the latest. How does this wind up affecting the boe meeting on thursday . Lucy ill be honest. I think it affects it very little. Theycted to be expected to be a percentage earlier. This was before big specter to raise Interest Rates for the first time in a decade, but it did not quite happen. They have already raised. Nterest rates could thi this is going to justify that decision and make it easier for them, but the action has been taken. Alix is this still a one and done story, lucy . Lucy i think one and done is too strong. The message they have given is over the next two or three years. Thats the forecast. Thats the way we are thinking about it right now. Nobody on the committee is trying to say otherwise. R has continued to push that and it will be quite some time until we see some changes and i will come down to brexit negotiations. David lucy, thank you so much. We are also going to here on thursday from mario draghi and the european Central Banks. For a preview of what to expect, we welcome paul gordon. We do not have a dot plot that im aware of for ecb so i cannot put that out. Let me show you the spread between the bund in the u. S. Treasury. After we heard from mario draghi, is that likely to change it all . Paul its may difficult to stay at the moment because like the bank of england as lucy pointed out, the Big Decisions started in january. It did leave some details undecided and all eyes will be on mario draghi to see if he will reveal more details this time around. In particular, how the reduction in bond purchases will be implement it. Well sovereign debt bear the brunt of the reduction or will private that purchases fall in tandem . Most people are betting that private that purchases will stay largely unchanged. Even if that decision is taken, doesnt necessarily mean that mario draghi is going to reveal that. He is not obliged to. We dont get much out of the this. David lets assume we get something out of it. Mario draghi said that after this plan but they were going to taper down gradually. There were some productions that they would go off a cliff. Is it possible there could be a more abrupt exit with qb . Paul im sure he will be asked about it and its interesting to see what his answer is. At the moment and what we have seen the recent months is that the ecb likes to put off these discussions, at least formal discussions come until as late as it possibly can. It may not be until june or so where decide whether it will endr or whether it will or to continue with the bond purchases after next september, the next cut off date, as long as it possibly can. A lot depends on the outlook for inflation. The ecb predicts inflation will dip early next year largely for technical reasons. We have seen a pickup in oil prices as he noted slightly earlier in the show. That will have an impact on inflation as well. We get new forecasts particular for 2020 for the first time and those will be critical. Alix will it move up to 2 . You mentioned the bond purchase program. Take a look at the chart on the bloomberg and it shows how much asset purchases on the white lines and the blue line is the redemptions. As you move forward, those redemptions pick up quite a bit. What will be the conversation keynd the q o capital on thursday when they can only buy a certain number of bonds based on a countrys economic strength in the eurozone . Hows that conversation going to evolve . Behind closedly doors for the most part is my that. The reason is that the ecb wants to maintain as much flexibility as it possibly can. It has pledged to stick to the capital key not on a month by month basis or perhaps over the duration of the entire program. Those three investments will be quite volatile next year. There is some concern among some members of the governing council that that could have a distorting effect on the market and they have the flexibility to reallocate those purchases over different months but not over Different Countries as much as possible. I think they will use that as much as they can to try to reduce any volatility in the market. David paul, thank you so much. Im sure we will talk to you on thursday. That is paul gordon reporting from frank for it. It will be the First Financial overhaul of the u. S. Tax system and 30 years and republicans are pushing to make it all happen before christmas. We will update you on all the latest. Thats next. This is bloomberg. Emma this is bloomberg daybreak. Im emma chandra with your Bloomberg Business flash. Theres a big takeover in the europe Shopping Mall business. Read them cap has agreed to buy australias waste failed westfield. They own and operate 35 miles in the u. S. And uk. To renovateng struggling retailers. Disney is trying to buy a piece of 20th century fox. Disney would acquire foxs film and tv studios, some of its cable networks, and a stake in european satellite provider sky tv. Goldman sachs is doubling down on its bullish commodity call. Goldman says that commodities will bring better returns than other assets in the long run. Thats your Bloomberg Business flash. David republicans are committed to getting tax overhaul legislation signed into law before the holidays, but they have to get through several steps to get there as we laid out in this list that we will put up for you now. The comfy tough to agree that there is clearance in the Senate Parliamentarian and the joint committee on taxation. They have to go back to both houses and then they knew the president s signature. To take us through what needs to get done, we are joined by peter vcs Tax Policy Services leader. Good to have you. Thanks for having me. David you lay them out for us. Theres a fair amount that has to happen, but its really a matter of agreeing could do the things happen automatically . First and foremost the has to be an agreement in principle between the house and the senate conferees. Then it is still a fair bit of work with drafting the language in the statutory text come up what whats under appreciated as you have to get a clean bill of health from to organizations with the joint committee on taxation to make sure that they are complying with hi instruction and this cannot be more inside baseball if you try, but it goes to the Senate Parliamentarian, whose offices in the first floor of the capital, look through the bill why my line and word by word to see if it affects federal spending in one way or another. If it doesnt, it has to come out. That is something initially do on a partisan basis and then on a bipartisan basis where Senate Democrats challenge provisions and you go through and it takes a couple days to finish. If they want to be voting next week, they need to be getting an agreement yesterday or today. David lets talk about what that agreement might look like and take off two or three of the issues. First off is the state and local tax issue, which has been a raging issue in some states. Are they close to agreement between the house and the senate on how to handle that . Rohit its interesting. The house in the senate bills going into congress were very similar in both allow the 10,000 reduction. Over the course of time, it has they wouldr that have to do better than that and be more generous for state and local taxes. There has been some conversation about making that up tempos and overall cap for allstate texas. That can be property tax or income tax. That is one thing that would move the needle in the house. There looking at the margaret mortgage interest induction. The senate kept it at a million and you could see some movement there. The property tax scenario is started at an area of agreement, and this happens sometimes, but the goal post have middle of it. Have moved a little bit. Members are entitled to move the goalposts if they are so wishing. David there is a difference between the house and the senate in that subject as well. Explain what the differences. Both bills are similar in structure and the have a 30 limitation. The house has a 30 limit da and the senate isat ebit. Context, 100 billion is about the cost of one point on the corporate right. One way to think about it is that if you are the ceo or cfo, do you prefer the house rule enough that you would give up one point on the corporate rate . Or as much as you much not like the senate rule, is it not worth the one point trade off in the headline statutory rate . Briefly, about the corporate alternative minimum tax, is that basically going to get repealed . Rohit i think so. Say it publicly, but privately folks would admit that retaining the corporate rate was to play a mistake. Simply a mistake. The most likely scenarios is that corporate amt gets fully repealed and find a revenue that will generate elsewhere and we have seen in public cameron that there is willingness to take the corporate rate above 20 even though that threatens the competitive advantage we would have. Rate is oneheadline of the dials that they can turn to make the numbers work at the end of the day. David thank you so much. That is helpful to go through with it. Rohit kumar. Alix it is my chart of the morning. Above 65ent jumping a barrel for the First Time Since 2016 on a pipeline closure. Dissect how long it might last for us. This is bloomberg. Alix the big move in the commodity market is brent. The 40s pipeline moves 40 of oil and gas from the north sea and about 400,000 barrels of oil a day. Joining us now from london is bloombergs julianna lee. Last . Ng does this outage julian the debate seems to be at the moment of whether it will take two weeks or three. Certainly longer than people would like it to last. Alix what does it wind up to doing to prices in the meantime . Im looking at the curve for brent and the rerating that we have seen is pretty done steep. The orange line is where we are now and the green line is where we were a week ago. It is backwardation where prices are more expensive than prices further out. How much more backwardation can we see . Julian we could see quite a bit more at least in the very short term. This is an incident that we think and we currently help will have a finite duration. It is not going to be a longterm boost to oil prices, but i think there are two reasons this is important. One is at the 40s is a very important part of the print market. Its very often the crew that is lowestpriced among those that make up rent. It is the one that determines the brent price. As that disappears from the will, those other prices be set by more valuable crudes and that will push the price of brent quite apart from any shortages issued. The second thing is replacing brent or replacing 40s for those refiners that depend on it is not going to be easy. The close of alternative grades are probably in the mediterranean or west africa. Away two weeks sailing away from west european 40s is three days. That will bit of prompt prices for competing grades. Some areas are not necessarily reliable either. Heres what he had to say about a longterm forecast for oil. We see things in a kind of high 50s to high 60 range. It seems to us to be the most reasonable outlook right now. I think there is more uncertainty. The big . Question mark hangs over venezuela. Alix is that realistic . Julian that seems to be the price range that people are talking about. It moved up from where it was andr to the opec meeting prior to the talk about extending the output deal. I think there is potentially weakness as we move into the First Quarter. As you look at forecast of oil balances to 2018, whether those are bullish or bearish, and theyre very different views, but what all of them show is the First Quarter of 2018 is likely to be weaker than the rest of the year. There is that weakness ahead. Alix 65 brent you bet those hedgers are in the market. Julian lee, thanks for joining us. We are also talking clean energy and Climate Change. Its front and center at the climate summit. Exxon mobil would publish new details about how Climate Change would affect its business and reports say the world bank will stop Financing Oil and gas projects. Norways biggest asset manager is claiming its bond portfolios of fossil fuels. For more, we are joined ethan zindler. Ethan, walk me through the continue conversation about shareholders getting much more aggressive about how they deal with Climate Change. Ethan we are two years on since the paris climate agreement and frankly theres a lot more work that needs to be done to try and meet some of the goals that were set two years ago. Whats intriguing now is we are a lot of investors and corporations trying to take the lead through a variety of different initiatives. This task force on climate related Financial Disclosures something led by Mike Bloomberg and mark carney ticket companies to disclose their Financial RisksGoing Forward. It is something called the Climate Action 100 as well, with a similar goal to get investors to focus on these issues. Its a fascinating time to see how much corporations and investors are stepping up to try to take the leap. Not seeinges, we are enough policy action to really deliver on some of the parish goals. David ultimately if progress is made, is needs to be it going to come from the private sector rather than the government . Ethan i think its i intriguing that we continually unbelievably have a debate on whether Climate Change is real. Many of the corporate world have seen the effects of wildfires and other things. Investors want to take the stuff into account because if they dont, frankly their portfolios are going to get slammed essentiallly. The reality is going to take over the conversation which is a good thing. David do we have a reason to believe that the deniers are being persuaded otherwise . Is there any conversion going on for people who dont believe its a problem . Ethan probably not to be honest with you. I travel a lot and i believe you do to twoo. The science of Climate Change is essentially t decided. Its not going to be debated. Here in washington is going to be a Blue Team Red team exercise. They will determine whether or not Climate Change is actually happening. Nowhere else in the world is this really seriously underway. Maybe a little bit in australia, but almost everywhere else is decided. Alix carbon tax any word on that from the summit in france . Ethan not much of it ive heard. Certainly in the United States it has not been part of the tax reform conversation in a big way. There was some talk that it might affect into the conversation, but we are pretty far along the tax reform process here and it has not been seriously looked at. Alix great perspective, ethan zindler. Good to see you. Coming up, we discussed bitcoin with gemini founders cameron and tyler winklevoss. The guys you want to hear from with a gold increase in bitcoin as a call. David 20 times. Alix how devalue it . We will talk about it. This is bloomberg. Alix this is bloomberg daybreak. Im alix steel. Just a few seconds away from the Producer Price index. Dow jones futures and s p futures modestly higher. Extending that record rally. Its a story at the margin of a weaker dollar. Not a lot of movement happening in the 10 year yield market either. The story is really about brent. Index. E Producer Price rising. 3 percent. That wound up beating estimates and is a sequential rise, a doubling of what we saw in october. 4 l demand month on month, rise as well. In 2. 4 in line with estimates. All of this ahead of the cpi number tomorrow as well as the feds Meeting Announcement tomorrow at 2 00. Lets go to michael mckee. Your take on the numbers . We are seeing an underlying inflation build. Thats what the fed is looking for at this point. It doesnt get reflected yet but you can see some progress being made. G btvtake you into 4095. The prices paid index has been rising for about a yearandahalf. Ron materials index. Companies are paying more for Raw Materials and thats going to show up sooner or later in higher prices. You can see that Services Prices have been rising. Thats an important component of the cpi the doesnt get enough attention and it has been rising on a regular basis. To see anrting inflation build that will matter in the longer run to the fed. Another number i have to point out in economic data, this is businesssmall confidence index. The highest since 1983. Small businesses can forward perhaps to a tax increase. The question is what do they do with the money . We will find out. Alix thank you, michael mckee. The dollar index slipping into positive territory. The 10 year yield around the highs of the session by about one basis point. You may have seen in terms of equities still a modest gain. At the margin you are seeing a little bit of movement building. Far as i know producers are not yet paying in bitcoin. Over 24 hours into futures trading for bitcoin and the debate continues over what rolled cryptocurrency should play. Is better than expected. We saw volumes at a reasonable level. I dont know what more you could wish for. It dont put your life savings and it ok . That would be wrong from the fundamental. Playing a little bit around with it is like a game and thats part of what drives Financial Markets. I dont know what it is but it has no Intrinsic Value in our definition of Intrinsic Value. If someone else wants to speculate on it or invest in it its for them. Its not for us. Andhen institutions regulators participate in the space thats generally a good sign for any industry. The line is vertical. Vertical lines are not sustainable in Financial Markets. We feel that bitcoin has no realistic basis for evaluation. It could basically have any value. Camerone are welcoming and tyler winklevoss. , theofounders of Gemini Exchange used to set the futures prices. They were early substantial investors in the cryptocurrency. Also with us is our colleague julie hyman. Welcome. Good to have you here. That thought string is a little bit skewed to the negative. There are a lot of people who are very positive as well. Let me ask you why is there Intrinsic Value in bitcoin . Why should people invest rather than speculate . We think bitcoin is like gold 2. 0. Whatever your reasons for investing in gold we think that bitcoin matches or beats gold across the board in all those categories. Its actually not scarce. Its fixed. You can send it around like you send in email. Its a lot harder to do that with bars of gold. The market cap right now is 300 billion. The market cap of gold is 6 trillion. We think that bitcoin disrupts gold. We are 300 times more correct today and we think theres a chance we will betray times more correct from here on out. David is there any reason to believe people are selling gold and buying bitcoin . Thats very possible. Anybody who likes the characteristics of gold in their portfolio definitely will be attracted to bitcoin. Note jeff had a note about talking about that. Etf loads havent seen outflows and a look at a different kind of supply and demand dynamic than what bitcoin will be. Be 20 timesould more correct than you are now. We could see another 20 or even 30 fold increase in the price of bitcoin. How do you get there . Even people who are positive on bitcoin many of them say we could see a sharp correction. It could be a rocky road to get there. Part of that is trading access to it. We built gemini. Com which is a license exchange custodian. We launched two years ago. Inare onshore headquartered new york. It makes it easier for hedge funds to get involved. We have some of the worlds most sophisticated Market Makers and prop trading firms already on gemini. Creating them is that is quitting a futures contract. Contract thatres allows institutions already trading in chicago exchanges to get exposure to bitcoin with cash. They dont actually have to touch or feel bitcoin and they get the exposure to it. I think the next phase would be Something Like an etp or etf product. With theu had a filing ftc. It pushed it back. Are you planning to refile . What is the next step in the process . Are in process because we are on appeal. The approval ruling is appealed right now and we just waiting to be heard by the commissioners. David what is the next step with the cme . It will be based differently. The price will be taken not from gemini but actually a combination of different exchanges. Our contract settles to the gemini auction. Really love our products because we think it is simple and easy to understand and the futurestween price we certainly welcome them to the party. They are settled on a blended index so its a different flavor. We welcome more products and price discovery in this market. Alix when the contracts are being launched one of the issues was daily auction volumes can be really light on gemini and you dont always end up producing a price and that can be really difficult for the exchange. Auction mechanisms are used around the world to price assets in all kinds of markets like equities. We think the mechanism that we have chosen is very straightforward and simple and it will naturally organically grow as the contract grows. Auctions every day. Even holidays and through the weekend. On weekdays that is really where you want to focus on where the contracts are going to settle. Its the Largest Global liquidity event in the entire bitcoin market. Alix 1. 3 million average thats the key. If you look at 4 00 and the constituents of another blended , a 3 million print is quite large. Its very elevated liquidity and increased price discovery. A lot of these auctions are also selffulfilling. You have a contract pricing to it so it builds the relevancy of it. It is sort of like unfair to take a snapshot in time before there is actually something tied to that price. Julie you guys are just one of one exchange. You see pretty divergent prices on these different exchanges which can make it more difficult to trade bitcoin. It can certainly make it more difficult to transact in bitcoin. What do you think causes more price stability and does bitcoin need to be transactional at some point more than it is right now . Corrects it depends on which exchanges you are talking about. Trust company. Rk we are the most regulated Bitcoin Exchange and custodian in the world. And you look at the prices across u. S. Exchanges that are actually regulated its a very small deviation. If you are talking about unregulated offshore changes exchanges of course theres going to be risk premiums. Sometimes people cant get there fiat currency in and out. Julie we are talking about coin based. Has been quite different at times from the other exchanges. Is all about getting more sophisticated players into the ecosystem. The Bitcoin Futures product we have been building and that is the first ever Bitcoin Futures product will create for the first time in easy way to short bitcoin so there will be a twosided market which will reduce volatility in the long run, increased price discovery and increase liquidity. We think its just a matter of time. If you look at bitcoin today is one thing. If you looked at it for years ago, completely different story. Withis the starting gun the new contract live. We think its the starting gun to a whole new phase of liquidity, price discovery and sophisticated entrance in the market. David how big can bitcoin get . I dont mean the prices. More specifically does the very nature the advantage of bitcoin limit the extent to which it can grow because it is secret ultimately . You dont know whos doing the transacting. It can be used for illicit purposes. Does that limit whether a bank is going to get involved . A if you look at that coin derivative product is a huge step forward. Think of gold before derivatives. Its a completely different market. Much less price discovery and participants. The anonymity of bitcoin is actually incorrect and overstated. The block chain is public. Is decentralized and you can trace the provenance and path of every bitcoin from the beginning of time. Its not a good place for Illicit Activity and people who have done their homework understand that. We have the largest Market Makers in the world working on and nowrading the spot trading futures contract so we are not seeing any of that. Banks are going to be thinking about clearinghouse for certain customers. We dont consider them one of the big when you think about marketmaking, prop trading firms i wouldnt put them in that category. Maybe for clearing or fcm its different and its true that a lot of the players that are even on gemini are getting into the futures contract. I think the position in the market right now there is still a lot of early entrance that are just getting in because we have only been trading for just over 36 hours. Alix come on, guys. Whatever. 36 hours. [laughter] the demand for this product has been huge. The price has actually gone up with the futures contract so the by demand. Its largely a retail driven market and wall street and the sophisticated players are definitely coming in but it would be wrong to say they are completely into that. Julie youre looking for futures to eventually provide more liquidity because people can short. The shorting is not really happening yet in part because players in big futures like Interactive Brokers are not allowing their clients to short. Theres highmargin requirements in order to trade this. What do you think changes that . What do you think those Big Companies need to see to get in . For jamiejust waiting heiman to trade Bitcoin Futures. Time. Hing takes it is starting to build. People are understanding the market, the risk profile. Its just a time thing. This contract has had a bigger debut than the vix contract. Acorn a larger tree grows and its the same thing. We celebrated our first bitcoin traded. Today we trade on average a quarter billion dollars notional bitcoin. We think thats going to look like a small number a year from now. These markets arent built overnight but we are highly encouraged and optimistic with what we have seen. We consider this so far a resounding success. Up. D a mighty oak going cameron and tyler winklevoss, thank you for being with us. Thank you to julie hyman. Coming up, the u. S. Tax overhaul push and its affect on the rest of the world. China is said to beginning ready for fallout from the United States tax changes. We want to remind you that you tomtune into our colleagues keene and Jonathan Ferro over on radio. Then pimm fox joins at 9 00 until 10 00. Bloomberg surveillance can be heard in new york, washington, d. C. , the bay area on sirius xm radio. For u. S. Ppi figures november eight expectations. 2. 4 year on year rise. Heres the reaction in the market. S p and dow still climbing after a record yesterday. The dax and european stocks also moderately higher. Still seeing yields somewhat around the highs of the session when it comes to the 10 year. Selling at the margin. 2. 4 is how we trade. It was a weaker dollar story. The dollar little bit stronger on the market. This is bloomberg. This is bloomberg daybreak. Im emma chandra. ,oming up on Bloomberg Markets ceo joins to discuss the Growth Business of amazon. This is bloomberg. Alix its not only here in the u. S. Where people are watching where the tax overhaul will unfold. Chinese officials are said to be prepared nate contingency plan repairing a contingency plan. Preparing a contingency plan. Are my guy on china and all things emerging markets. What is your read on the impact if we get to a 20 Corporate Tax and repatriation . What will drive the response in china and other countries is what impact it has on the u. S. Dollar and the cost of capital. Bear in mind that if the u. S. Tax reform package does increase the growth rate in the u. S. Economy and we havent yet decided what the impact will be on growth because it depends what the details of the tax reform package will be. If it does boost growth exports will improve. Countriese risk for like china and other emerging markets is if the tax reform package were to raise the dollar and push bond yields higher it could yield to some sort of capital outflows and we suspect the way china will deal with the normale through channels of potentially tightening Monetary Policy. Intervening in the exchange potentially leaving capital controls in place a bit longer rather than actually changing fiscal policy. War is talk of a tax between china and the u. S. But we know that is very overplayed and we expect to see normal Monetary Policy responses if the dollar were to go higher and yields go higher which we think is not a done deal by any means anyway. Theres a lot of things that could happen Going Forward before we saw a Major Chinese fiscal response. David if i am a republican sitting on capitol hill right now everything you are saying is music to my ears. The chinese are really worried that we will get more competitive with them. Dont believe the Chinese Government is particularly concerned about this. There is a lobby group in china that is asking for some sort of response like this. It is far from being chinese policy. We would understand that if the Corporate Tax rate were to go down to 22 percent it may well boost investment in the margin and make the usa a more interesting place to invest. All of this depends on what it does for the growth rate of the u. S. Economy and what it does for bond yields. A lot of this is going to be driven by what the capital flow reform will be. In a report we put out today we made the point that although you have seen another pretty fat rotation from e. M. Into dm equities the dollar and u. S. Bonds have basically moved very little. It could be telling us people are not sure that tax reform will pass. It could be telling us you are not going to go out of growth impact from the tax reform package and if you dont get much growth back the chinese are not going to respond particularly. We have a chart that shows the rotation out of emerging markets into developing markets. What part of that is also the tech trade as tech gets hit e. M. Very much made out in tech. What part of that is the story . A good deal of it. The election trade after the election of President Trump last november led to a sharp rise in bond yields. That hasnt happened this time around. What has happened in this tax reform trade is that you some rotation within the u. S. Market from some of the big winners of this year. The fang stocks into some of the potential winners from tax reform and that led to a sharp selloff in technology and em which was down in the two weeks we are highlighting by about 10 . Becauseponded in asia tech has been superstrong in e. M. This year. Frankly very welcome profit taking in technology. The sector looks reasonably fairly valued right now. Tech has been an important part of this because of the way the tax reform story has led to rotation in the u. S. Markets. Alix great stuff. Geoff dennis, Ubs Securities head of global emerging market strategies. Much more coming up. This is bloomberg. David this is bloomberg. Im david westin. There a piece in the wall street journal that says contrary to everything you learned in tax law but if the Senate Version goes through there are people that could have more than 100 marginal tax rate. The extra dollar they earn, they will lose more than a dollar in taxes. A 615,000 year lawyer in new jersey. If he makes one more dollar, he will 01 and five cents in taxes. Owealix owe 1. 05 in taxes. That wraps it up for bloomberg daybreak americas. Bloomberg the market open is next. This is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Jonathan from new york city, im Jonathan Ferro. This is the countdown to the open. Jonathan coming up, the twoday fomc meeting begins. Economists expect a rate hike before the year is out. Of the race for a piece of 21st century fox. Disney inches closer to a deal that could close this week. And bitcoins first 24 hours on wall street thieves euphoria and doubt marked by technical glitches and surging valuations. Lets whip through some of the market action. Futures farmer by. 1 on a three day winning streak on the s p 500. We closed out last week at an alltime high. Closing at a record once again. Bond market treasury yields of for 240. We grind higher by a basis point and the dollar more broadly a lot weaker. Earlier we erased some of that weakness