Transcripts For BLOOMBERG Whatd You Miss 20171215

Mcconnell says that incumbent senator Luther Strange will retain the seat until january, allowing the republicans to maintain a majority. Cal chancellor on Angela Merkel and Emmanuel Macron held a joint News Conference on immigration. We are not quite in agreement on solidarity. Work,we must continue our because we cannot have solidarity in europe on certain matters and not on others. Mark germany has taken in the largest number of refugees. Global news 24 hours a day, the by more than 2700 700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. Julia live from bloomberg World Headquarters in new york, in julia chatter i am julia chatterley. Scarlet i am scarlet fu. Joe and im joe weisenthal. The question is whatd you miss . Senator bob corker makes a 180 and says that he is a yes for the tax bill after initially opposing it. As a cryptocurrency take steps towards going mainstream, concerns over an initial offering grow. Meanwhile, another hedge fund victim. A 6 billion fund shut down as another struggles to reboot. Julia whatd you miss . The Republican Caucus singing a different tune. Bob corker, one of the last holdouts and the only republican to vote no last time is knowing yes on the bill. The legislation now looks like the senate. Through also joining corker, marco rubio who changed his vote after the Child Tax Credit was expanded. Yesterday we were saying marco , whatever he says, would vote yes. Bob corker, we expected to be an no. Today a very different picture. Was a bigthis surprise. Corker has been the lonely deficit hawk among the senate republicans. He is the only one who said he would not abide by the new deficit that is expected to trillion, perhaps more if these cuts are extended as Party Leaders say. This is a turnaround, but this premuch secures the passage in the senate. We have some undecided members. But its very hard to see how this bill fails. Joe did senator corker give any explanation for why a bill that does not address any of his concerns is certainly worth voting yes on . A statement put out saying that after speaking with businesses and farmers and various constituents, he has decided to vote yes on this bill. He called it a once in a Generation Opportunity to remake the United States tax code. To seize the potential to add about 500 billion dollars to the deficit, but he says his hope is between the tax cuts and regulatory changes, you know in other words the deregulation the Trump Administration is anaged he sees opportunity to improve the wellbeing of americans and he did not want to pass that up. Deficit hawks of really died in the senate. Lets talk about marco rubio was well because he got the ansion of the tax child the Child Tax Credit. What will they do to pay for it . Reporter we dont know. The bill is expected to come out at 5 30. There are committees in the house in the senate but still have not been able to see this. I think we can expect surprises, perhaps some gimmicks as well on the pay for side in the tax provisions. On this idea of gimmicks. Does that mean things might expire sooner question mark what does that mean . Reporter it means they can play around with the dates, the sunsets of these provisions. Right now in the senate version, aty were expect it to expire the end of 2025. They can perhaps change that to raise revenue. There are all sorts of things they can do to make to frontload the tax cuts and say, well, these things are scheduled to expire down the road, but they probably wont because we do not want them to an future congresses will extend them. That is the main tool they have. Scarlet i want to ask about Susan Collins. She was extracting promises, that now that rubio and corker are yeses, has she lost all her leverage . Put it thist me way. It is difficult to see republican lawmakers bending over backwards to accommodate her at this point. She will have to make a decision whether to support this. I think, yes, she has lost some leverage here, with the fact that corker jumping on board with this bill. But i spoke to her office a couple days ago and she remains optimistic, in their view that congress will pass these bills. She seems to want to get to yes, at least on the tax bill. Couple otherare a wildcards. There is john mccain, of course, cochran, out for health reasons. Are we expecting that those tend to men back in d. C. For this vote . Republican leaders sound confident they will be around. We do not know the status of senator mccain as to when he will return. His office says that he is receiving treatment for expected side effects as he battles brain cancer. We do not quite know the answer. Senator cochran more expected to be around. People seem less worried about him at this point in terms of being around for a vote next week. Joe going back to corker real quickly, obviously, as you said in his statement, he went around and talk to people and that all laid his deficit concerns. The single interpretation for why someone leaving congress would vote yes is they want to remain into Good Standing of conservatives, lobbyists . Could that be a factor, not just for corker, but others who may be expected to suffer a wipeout in november . Reporter could it be a factor they want to stay in Good Standing with the conservative base and conservative donors . Absolutely. That is a huge driving force. They have spent years pulling up to this moment. They have created enthusiasm among their base i should say among the donor base more than anything else, and the business community. Not necessarily their voter base. But its a powerful thing and very hard for any republican to oppose. His bill is very unpopular this would threaten their reelection chances in 2018. Headline,nother senator collins apparently waiting to see the tax bill text. Julia underscoring that others are voting for this without having actually seen reporter right. Julia just making that point. A significant proportion of voters believe their taxes will be higher, not lower, as a result of this. When i look at bob corker, its all about corporations, galvanizing better competition for corporate spirit is not for benefits for individuals. Will this be good for the midterms . The real youre right power behind this bill is on the corporate side. , theeason they made this individual tax cuts temporary, the Corporate Tax cuts permanent, there is expected to for0 and a top rate cut these entities, so, yes, the real motivator is corporations and businesses need a tax cut in order to be freer to invest and hire and raise wages. It remains to be seen if that will happen or if they will use the gains to reward their shareholders and buyback dividends. About therrect also polling. A two to one margin, americans believe that this bill is likelier to raise their taxes then cut their taxes. Republicans have not done a good bill to theng this public and democrats have done a very good job sowing doubt in the minds of americans. This will mostly help corporations and the wealthy. Scarlet that is an argument that a lot of people in high state and local tax states certainly believe. Tweeting doos not forget senator mike lee, of course, because we have not heard from him. Scarlet right julia i like the idea being backed up on twitter. Youlet coming up, we bring thoughts on the disney and fox deal coming up. This is bloomberg. Scarlet whatd you miss . Disneys 52 billion deal to i a chunk of fox will have to be approved by regulations. This would give disney more than a third of the market. Gamco investors holds 350 million fox shares. Bloombergs tom keene caught up with pimcos ceo. He is taking his holdings and rgest holder la in disney. So basically he understands globalization, he understands scale and he understands the direct line to the consumer and has these challenges, so i think unexpected was different part a, he did not go out and find a premium for his voting stock, but he is paying a premium 8 billion, maybe a lot less, 6. 5 billion depending on the tax structure he is going to spin new fox and merge with disney and becomes a large shareholder. Tom with this is bob iger. My history of bob iger, he ended food abc, went up the chain. If disney does this, it will fail. No. What is disney going to do, for example, with the simpsons . What is the pixie dust that bob iger has with content . Pays about company 4 billion of cap x, ok . They are taking on 5. 5 billion, the way i look at it and with growth, they are talking 6 billion, but the capex is 100 billion yet, they go global, they go direct to consumer with sports and entertainment. That got content. What would be able to have all of the big six . What happens next . And do you assume in 2018 coming years, further consolidation into the business, how do people you know respond to this . Ets talk about cbs what do they do when they see all of these other players in action . Challenge, of the tom, is you have out the bet, google, these behemoths. Forget about alibaba and tencent. You are talking about just u. S. These Companies Like fox, 70 billion. Share is less than 6. 5 billion. That is the challenge. Meanwhile, the tax cut helps. The Net Neutrality rules are in play. There is regulation coming down at the same time you ask what is going on with regulation . And hissay with les team on the stand live entertainment, live news, how do they play that . Mentioned sports twice. Are you suggesting again the pixie dust, to use the phrase from mr. Disney is there for espn and they salvaged traditional tv . Or are they all saying, no, its a whole new world after all . Theres another dynamic in that is not only viewers, targeted media medicine, targeted advertising . How do you do that . Digital is 40 of the advertising. That is where the challenge is. Tom one digital menu like right now. In digital. Africane own a south company that owns tencent i like to stay domestic. Jeff bezos is changing the World Distribution and price efficiency, so theres a lot of companies we have in that category. you mentioned mr. Bezos. He is not in graham, dodd and coddle. How do you own amazon . Reverse that. I will go shopping now we do price comparisons. That is terrific. Its helping the American Consumer become more efficient. There are going to be bottlenecks. The company is going to get too big. Will run into problems of scale and distortion. Is innovation. Creative destruction. I call it creative innovation. We see Creative Destruction of banking . Banking we come out of the crisis, 10 years on, can you own the big banks . Can you own the regional banks . Are you owning a bank in sioux falls . Mario of course. The banks have less regulation of a certain size. You read jamie dimons report. Brilliant analysis. Tom, they hadide, an electric fence around them for about 10 years. That is changing. They are in fundamentally great shape. For the next year or two, they will be in great shape. Less regulation, lower taxes, flat yield curve. Although it will rise for other reasons. Scarlet and that was tom keene ceo marioith gamcos covelli. One of the top stocks in the s p lth care sector today is bergen. Abigail doolittle, what is going on . Amir source bergen is a large cap wholesaler, so they to other sell providers. Walgreens is one of their biggest providers. They are best positioned against amazon, says goldmans. We are all hearing about amazon. There could be an Inflection Point here for numbers. At the pointre that companies are getting an upgrade just because they are not going to be killed by amazon. Abigail thats a pretty interesting point, joe, and i cant fault it. Its amazingly have this mentality out there that amazon is going to take over the world. He is also saying Walgreens Walgreens is their biggest customer. Because of the acquisition of some of those writings hours, that could right aid stores, that could be a future driver. Is tax reform a factor here at all given that it is the headline today . Abigail it is. That could be a tailwind. In fact, lets check the bloomberg take a look at this. Ais is the intraday chart on weekly basis. In blue, we have the low tax companies, in white, the hightechs companies. Companies. Today on these positive headlines, back up almost 1 and we have other companies in this index also higher on all of this. So these High Tax Companies are getting a boost. Interestingly they are at this blended basis where they were before the start of the election. The question now is can they actually, will there be a big bump ahead tohave analysts recommending buy that basket. Julia thank you so much. With a year as president under has President Trumps business arrangements changed since he took office . We have the charts. This is bloomberg. Scarlet i am scarlet fu. Whatd you miss . If you want to know the different ways that the stock market rally has stretched, there are different ways you can do that. You can look to be spread between stocks and dividend yields and bond yields. The u. S. Is the white line at the bottom, and what it shows is the s p 500 dividend yields are below the yield on treasuries. That is the First Time Since going all the way back to 2011. Japan is the yellow line and europe is the blue line. Stocks continue to yield well of above government bonds. Making matters worse for increment investors is the u. S. Stock valuations may be looking more frothy and Dividend Growth could slow down as well. Joe very cool chart. Speaking of that tax bill we have talked a while can they turn it around for republicans . Trump may need it. We have been tracking the average of all of the polls. The blue line is his disapproval rating, the white line is his approval rating, the bar chart low that is the spread. He is down to 20. 8. The last day is maybe one day worse. He is at the worst point of his entire presidency right now in terms of his net disapproval. It is still a while until the next election, but thinking about the hope that the tax bill will get some momentum and turn it around, bottom line is, he needs it. All of the discussion has been about tax reform. The polls suggesting that tax reform is deeply unpopular. So, for my chart now, still in the United States, if you had to guess about the equity in peoples homes prior to the financial crisis, what kind of recovery have we seen . What would you guess . I would not have guessed what this chart shows. Take a look. What this chart is showing you, as far as homeowners are concerned, we are down to the lower levels of equity returns. We are where we were before the housing crisis began. Have people deleveraging. Its the numerator that brought us up to this level, this according to j. P. Morgan chases head of mortgage strategies joe . Its mortgage strategies. Its incurred to. There are a lot of signs that americans are not overly levered. Its encouraging. Scarlet it took eight long years. [cheers and applause] julia whatd you miss . Of these attacks overall coming within touching distance. The dollar also gaining ground. [bell ringing] julia im julia jeter lee. Scarlet im scarlet fu. Julia im julia chatterley. Joe im joe weisenthal. If youre just tuning in live on twitter, we want to welcome you. Scarlet it looks like the republicans have the votes for is one bill, which driver, but it is also quadruple witching day. We saw some parallel dip gaining in the last 20 minutes of trading joe all of that witching going on. A very good day for investors. Scarlet i like that. All that witching going on. Trading volume was 26 percent 20day average. A lot of activity in equities today. Lets look at individual movers. Cloud computing sales missed analyst estimates. That is a setback in oracles opportunities to turn itself into a giant. Cosco shares up by better than 3 . Signaling customers are at least staying loyal as amazon makes gains on the other retailers costco shares up by better than 3 . Under armour up by 9 . A price target of 17 per share a stock that has taken a huge hit in recent months. H m down 13 , losing more. Round there is a crisis, of course, in brick and mortar stores. But certainly the underdeveloped online businesses of these names might be a reason why investors are comparing the two of them specifically. Joe lets look at the bond yields in the u. S. The 2 and quiet. D of there was the dip on wednesday when we got the fed decision, but rebounding very nicely. No change on the 10year. I want to look at a different spread. This is the 530 spread. We dont talk about this one. A different story, but arguably more intense, continuing to plunge today. To 53 basis points. You can see back in october, it was around 90. The beginning of the year, 100. Quite an interesting move. Keep your eye on that one. We shall do exactly that. The dollar raising on the day, hopes for a tax reform vote by week. D of next also looking at different currency today. Climbing ton india high. Emonth this as Prime Minister Narendra Modis party expect did to retain power in this is a very important indicator ahead of National Elections at the end of 2019, the importance of Deval Patrick in india very critical. All things dollar in brazil as well. The finance minister expecting rating agencies to wait until february before making any decisions on the countrys Sovereign Rating according to officials. They have a reform bill vote that is being delayed, and india seems,uested that, it from those close to the government. Also want to look at what is going on in peru as well. Joe will be talking about this later in the show. We have seen the assets of the country under pressure and the the president who is a technocrat. This is imperiling chilean assets and peruvian assets. Ont looking at what is going as far as the implied implied,y, one month you can see the chilean peso rallying significantly. Love the peru story. We will be talking about this later on the show. Finally a quick look at the aboutities crude up half a percent. Gold up marginally higher. Copper up in industrials. Those are todays market matters. Scarlet for more on Market Action ahead of the expected gop textbook, lets bring in our guest. It would be tempting to say that stocks rose to a record on clarity from the tax bill. [laughter] you could say this is a last gasp of risk taping risk taking on the increased odds of a tax cut . Would that be a way to interpret todays advance . Have beenems like we increasing on potential tax reforms every week this year, i think, so its really tough to say. I think what is really going on i heard someone say its like recessionolitical this year, but no one in stocks is really noticed. I think really the markets have more or less been ignoring what is going on in politics for some time now. Joe as you say, that is an understatement to say markets have not paid much attention to politics. An extraordinary year for risk assets. You have been doing some spelunking in the data, looking at what history tells us, what we can infer. What are stocks going to do in 2018 . Well, the probability is roughly 70 or 75 of the time, stocks are up on a given year and i of looking at the data. Whether they are up, down, 20 , you can take the dow or the peoples index going back to the late 1800s and almost every year , it is a 70 of ability it will rise. It does not matter what happened the year before. Its kind of random. What happens in one year does not have much of a bearing on what happens the following year. Great pointake the that doubledigit gains for the stock market are the outlier or not the outlier. They are the norm, according to our data set. Again is as likely as anything else. But what is not so normal is the downside volatility. Ben yes, thats pretty crazy. The average gain is 20 . For this year, its pretty normal. The volatility has been lower. We have not had a down month in the s p since trump took over as president. This could be the first year ever the s p 500 has had consecutive monthly gains every month and a calendar year, which is something of a quirk of the calendar. The record is 15 straight months in the 1950s, but basically volatility has been nonexistent for some time and is pretty crazy. Scarlet eventually though, stocks will come down, and when they do, you look at the pattern for down years as well. What did you see there . Its unusual given that we have not seen any significant drawdown anytime during this cycle. Even during appears, stocks typically have a drawdown. The average peaked to trough drawdown since 1950 is 14 entry year, and this year, the highest drawdown is 3. 5 , which if that sticks, the next couple weeks will be the lowest since 1990 since 1995. Before that, the lowest was 1964. So, people would say the easy money has been made in stocks, but i think 2017 bears that out. Julia how do you construct a portfolio heading into 2018 . Think if the last year has told us anything, no one really knows what is going to happen. Yeare going for our ninth in a row of gains. Thats not to say that stocks cannot be up. 35 chance inis a the fall. Lagged untilty this year and they just diversify their bets and they play on a wide range of scenarios because no one knows what is going to happen. Years, this rally has been called the hated rally. People underexposed from the financial crisis not wanting to have that much money in stocks. You see a lot of peoples port olios as they come into your firm. A lot of peoples portfolios as they come into your firm. Do you get the impression that they are still cautious about their risk exposure . Ben its hard to believe, because we have had such a big gains, but we have had people sitting on cash for five or 10 years. Single07 2 2016, every age group has seen their equities folder drop since except for people 75 years and older. Seems like it should not be because stocks have continued to rise and valuations. But the public overall has not taken part and its gains concentrated in small hands, actually. , director ofrlson Asset Management at ritual management. Lz management. This is bloomberg. With im Mark Crumpton first word news. Congressional republicans are scheduled to reveal final details of their agreedupon tax overhaul legislation today. It is the culmination of a sixweak legislative effort policyd to be a major victory for their party and for President Trump for the end of the year. Tennessee republican bob corker says that he will support the 1. 4 trillion tax cut. The senate and house plan to vote next week on a final version of the bill that will cut rates for businesses and individual. Earlier, Bloomberg News learned that florida senator marco rubio would also vote yes. President trump continued to criticize the nations Visa Lottery Program in remarks at the quantico Graduation Ceremony today. He said the immigration lottery system allowed suspects in the recent new york city terror attacks to enter the country. President trump you pick people. You think the country is giving us their best people . What kind of system is that . They give us their worst people. Of the worst. Congratulations, you are going to the United States. Mark the president says a meritbased system of thegration should replace existing standards. Vice president pence may not receive a warm reception by middle eastern leaders during aftersit next week, reports that he push President Trump to recognize jerusalem as the capital of israel. Thet is also angered by declaration. To death toll has been risen five children in britain after a crash. 18 other children and the bus driver were injured in that crash. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Julia whatd you miss . 1 billion of client withdrawals at the end of the month overseen seen assets plunge by three quarters, and thats not the only industry name making waves. Is beinge capital closed, ending three decades in hedge funds. Joining us to discuss, peggy collins, the head of u. S. Investing. Good to have you on. Just put this in perspective. To 40illion down billion and now another 1 billion loss potentially this month. Reporter by the end of the year. Once one of the largest hedge has really howard been struggling. Its important to think about the strategy of the hedge funds really struggling the two strategies that seem to be hitting managers the hardest are macro, which is alan howard, and the long short strategy. Difficult to lose money as an equity fund when everything is rallying . Exactly. To get things are weighing on them the low volatility and the Interest Rate environment extended for many, many years, and the long short funds that have made a lot of money on short thats, that is getting harder and harder. Some of the passive benchmarks are really taking some of the short stocks or the stocks that would be initially shorted with them along the way. Have you on to tell us about managers that are still operating . I feel like this is becoming such a hot story, when i read one of these, i am like, i just assumed that they closed by now. Reporter it has been a head weeks for our team. I am almost getting them confused. But there are some Hedge Fund Managers that are quietly doing well in two main areas. One is ai those that are starting to integrate the computer driven trading better than others and the others that have gone long tech stocks, which does not make them that different from a good mutual fund manager. They are doubling down on tax. Reporter exactly. Scarlet lets bring it back to alan howard. You mentioned ai you mentioned ai. He is looking to integrate that into the funds . Diversifyingy are to survive by going into fun services next year, but also experimenting with ai. They are not incorporating it told,rading, we have been but they are incorporating it into strategies. There is such a range. Some people say that they are putting a tech person, an engineer next to the manager of the fund for many, many years, and others are trying to look at algorithms that can make the traits on their own. We were talking about this earlier on on bloomberg markets, the japanese pension fund, saying that one day we will have the big tech labels disrupt the industry even more dramatically. Orter i think two things one on the cautionary side, not to get too excited or fearful. Its an extremely regulated space. Into not just to jump Asset Management. But they are competing for talent, trying to evolve over the future. That makes it really hard here it and its really difficult to apply computer models to trading once you go beyond looking at the economic data. Its really hard to spot the tech within milliseconds. Julia very quickly we were talking about the shifting nature of hedge funds. Maybefastforward, and you do not have a sense of what at what point will alternative assets be a greater proportion of peoples portfolios Going Forward . Or as a subset of the industry itself . Reporter there are managers who notthat low returns are going away. What does that mean . People will turn more to yield,tives to get more especially as the baby boomers move off into retirement and need income. Notrnatives are incidentally scalable. Its not so easy to become a blackrock in alternatives because you cant just make and etf of 100 publicly traded stocks. I think that something hedge funds are really trying to pivot towards, but its not easy to do. Peggy collins, great analysis. Peggy and her team have been leaving the way here. Julia fabulous couple of weeks. Thelet jpmorgan says credit cycle still has some room to run. You will hear from the Top Companies in credit. This is bloomberg. Slew of there was a Central Bank Decisions and policymakers are gender lead trying to take away the party. Gingerly trying to take away the punch bowl without ruining the party. Floor, a reporter interviewed lisa coleman and a guest. Take a listen. Not to like . I love the Central Banks. I love it. They have acknowledged higher growth, moderate inflation, and when it came to policy, they are looking the other way. You have a very benign rundown of the balance sheet. Almost no rate increases except to be fed. Its great for asset prices, certainly the first half of the year, and any policy stimulus coming out of washington with tax or form, youve got to go with them. Lisa . Not to like . You have accommodative conditions, great growth, Central Banks raising globally at a rapid pace. Youve got the fed outlining what they are going to do. Onen it makes sense not . Lisa we have had some very sector specific issues, whether it is the wireline sector, the retail sector. I think people are concerned. When you take a step back and look at where defaults are, where are the benefits we will see from the tax plan . We are actually in a pretty Good Environment for highyield. Hasts not that highyield performed badly. If you are going to own the top of the capital structure of a company, you have got to let you got to like the bottom. If you want stimulus, youve got to on the bottom. That is what we are seeing. I interviewed someone who thinks that highyield might be topping. Is that something that you are thinking about, bob . No, i dont see it. Jonathan why not . Credituse i look at spreads. If you think about some of the tailwind we are going to see in Corporate America next year with tax reform, the reduction of tax rates down to 21 , that is really nice for corporate profitability. I think we have a while to go. And of cycle you typically see 300yield come through towards 250. Jonathan you sounded once bearish, less bullish. What is behind that . The fed aecognize bubble is a bit worrisome. Are definitelyks taking the punch bowl away, so it is a question of how much longer do i want to ride it . In a couple of quarters, for sure. Jonathan 5. 5 is not going to do it in highyield. To bobs point, do you think you look at the financial structures and capital is going to be ok why go to the top of the stack . Lisa i am at a fixed income investor. You got to be somewhere. I like highyield. Ulia that was Jonathan Ferro that is from bloombergs real you can catch every friday at 12 30 p. M. Eastern. Explore whether the features listing represents the comingofage of cryptocurrencies. This is bloomberg. mark the United Nations Security Council met today to discuss the situation on the Korean Peninsula. The secretary general this blunt assessment the situation on the Korean Peninsula is the most tense and dangerous piece of security issue in the world today. I am deeply concerned by the risk of military confrontation, including as a result of unintended escalation or miscalculation. Mark earlier this week, a United Nations envoy was said to be deeply worried about the prospect of ending in john kuhns Nuclear Weapons program after returning from the country. An unnamed member of the Security Council also said north koreans do not believe the time is right for negotiations. Benjamin netanyahu was questioned at his home in jerusalem today. The report says he is suspected of being involved in breach of trust. Hes already been questioned six times regarding gifts he received from hollywood business figures. The ap also reports one of netanyahus former aides has turned states witness against him. Netanyahu calls the accusations a witchhunt. In germany, leaders of the social Democratic Party have agreed to start talks about a coalition with chancellor Angela Merkel, moving her one step closer to forming a new government. Theres been three months of political stalemate since the election in september. The man accused of driving into a crowd of counterprotesters and charlottesville, virginia, in august is charged with firstdegree murder. Prosecutors say he rammed his vehicle into a crowd protesting a white nationalists rally. One woman was killed. Several people were injured. The charge was upgraded from seconddegree murder after prosecutors presented Surveillance Video and other evidence. Local news 24 hours a day powered by more than 2700 in oversts and analysts 120 countries. Im Mark Crumpton. This is bloomberg. Scarlet we saw gains all around. In fact, games to record highs on heavier than average volume. It was quadruple witching day, after all. Tax and, it looks like the deal is so close to a done deal. Scarlet marco rubio and, surprisingly, bob corker a yes as well. Futures set to sunday. New york on there are signs the Bitcoin Futures market may be getting more and more efficient. The big thing we saw as a result of the see of only cboe , what happens to the spread when we get the cme involved . As you said, earlier this week, you had a market where futures were trading at a huge dream into the underlying cryptocurrency, and it has come down from about a 13 premium earlier in the week to about 2 now, and some say the gap could even narrow further once you have a whole new futures contract on the market, a competing product in the cme. Scarlet what else is different from the product cme is offering versus what cboe has been offering . They have a few different nuances, including the pricing mechanism they used to price bitcoin to figure out the different types of futures, so gemini, and a group of unused on cme. what about in terms of interest in trading them . For all the height, there has not been a ton of volume. Kind of a quiet first week i think most people would agree. Ath a bigger contract on bigger exchange, is there any indication that more money will trade this one, or will we have to wait and . . Wait and see its true we have to take a bit of a wait and see approach, but its possible youll see contractse coming in have exceeded expectations in terms of volume. In termsy difference of margins, collateral requirements . There are some difference, and you might have more toitrage opportunities compete with cboe. For coveringyou the cryptocurrency market here on bloomberg scarlet thank you for covering the cryptocurrency market here on bloomberg. Wonder if the launch of the Bitcoin Futures cboe earlier this week and cme on sunday, does anything to the sentiment surrounding new initial coin offerings. Does it boost interest . Does it get more people into it . Stephen i dont know that it has a direct connection to initial coin offerings. I do not i think i would make a distinction between the ico world and the Bitcoin Futures world. What you are seeing and what cme etc. Are showing is you are having almost a commercial and regulatory normalization of bitcoin. Accompanying that, you are seeing an regulatory action. In the past week, we have seen week or two, we have seen the sec commissioner making statements. We have seen sec enforcement including several substantial ones that today, we saw the release of the cftc has proposedr comment regulations regarding the definition of advanced delivery, psy think what you are seeing i think what we see is more of an emphasis on regulatory compliance. I do not actually think that is certainly not a good thing for the ico scammers we have seen in the last year. Certainly not a good thing for icos as a mechanism for raising a significant amount of cryptocurrency without having built anything. Joe lets talk about regulations and responses, specifically to icos. It seems like regulators are starting to spring into gear, as you hinted. Early on, they busted a few tiny ones that looked like almost anyone would be able to judge them as scams not very complicated. Now they seem to be going after more and saying this may have been ostensibly an attempt to be legitimate, but this was an unregulated security offering and you cannot do this. What have we seen about how the regulation is involved. Sec commissioner i i have front of me statements from december 11 on cryptocurrency an initial coin offerings. If you have not read it, you should look at it. Basically what he says is what most of us who have been paying attention said as well. If were not going to elevate form over substance, you cannot call something a utility token. Just calling something a utility does not mean it is utility. One of the recent Enforcement Actions was an outfit called i love this name its called munchies, and it had something to do with food reviews. They were going to raise 15 un tokens. M what is particularly interesting is these folks they read the white paper, which the sec treated as evidence when an order was issued, and they quoted at length, but what was interesting about it was the people behind it had apparently actually developed an application. They had been at this for two years. They had built technology. They had launched something apparently that worked, and part of their argument was using an overly optimistic and probably over sit overly some plastic analysis overly simplistic utility was we have tokens, so this is an investment. The exact same argument was used in a significant ico. Some people would say it was not an ico exactly, it was a sale, a solicitation for contributions, but folks which raised 2 million in cryptocurrency which is now worth over 1 billion and is apparently ensnared in litigation, they made the same argument that because there is something they have already built, the inference is they could not possibly be raising some insecuritys offering and the sec commissioner specifically said that is wrong. He also said, editing people in this to understand that what he has said and what the cftc both have said is they will support innovation. The cftc has said that multiple times, but they have also said the law is the law. The law that was there before is the law that remains today. With what problem will call a frenzy in the bitcoin ipo is the value those who want to fake this also increases because they always seem to be ahead of the regulators. For those who actually want to cheat and are not really backed by any kind of value product Going Forward, they keep working at it and actually, the. Egulators cannot keep up stephen i do not see the regulators having a problem keeping up. They take their time. Folks familiar with coin base, one of the largest exchanges in the world i actually do not know offhand if it is larger than gemini. Maybe the largest u. S. Cryptocurrency exchange. The irs issued a summons for records for 2013 and 2015 not 2015 and 2016 or 2017. So they take their time, right tackle it is the same thing here. I would say you can place the into twoble icos buckets. One are clear scams. An example of that was launched by a couple of folks in quebec. There was an enforcement action two weeks ago. These people had been ordered by court in quebec to not do anything related to securities. They did. They launched a scam ico. The sec warned them. They basically used the money they usedtion is money for nothing they said they were going to use a fork in their white paper. They used it for Home Remodeling purposes. That is sort of low hanging route. I would say the difference between that and the folks at m unchie obviously i dont know and i will not judge the merits of their product it appears they may be mistaken and maybe dumb, but they were not out and. Ut scams theres scamsters one group who might be overly optimistic and another group who are traditional scammers. They could be doing the same thing using fax machines or telephones. Stephen, for, joining us. Scarlet also sending emails from nigeria as well. Julia coming up, done deal or done deal . Republicans seem to have the votes to pass the tax bill. What did it take to get the lastminute holdouts to jump on board . We go to capitol hill for the details. This is bloomberg. Scarlet whatd you miss . Senate republicans falling in line one after the other. The only republican senator to vote no last time, bob corker, has gotten to a yes, and he joins marco rubio, who barely 24 hours after voicing opposition is on board as well. It now looks like the bill will sail through the senate, giving republicans a muchneeded edge a slate of when headed into 2018. Bloombergs tax reporter joins us from the hill with the latest. We know Susan Collins, a senator from maine says she is Still Holding out until she sees what is in the text. What can you tell us about what we know so far about what is in the tax bill . Laura we know the corporate rate is going to go down to 21 . Not the 20 they were hoping for, but they got to close. The top rate for individuals, 37 . When change we recently found out is that will apply to people with incomes starting at about 500,000 for individuals. Originally, those about one million, some kind of in that middle upper income deal, you could see some tax increases from what people might have been expecting. Joe im kind of confused. Marco rubio gets expanded tax credit, individuals get lower rates that kick in at a lower level. How will they pay for this . Laura where they got a lot of the money is bringing down the threshold for that top rate to kick in. That paid for a lot of it, bringing up the corporate rate dialed in a little bit more, also on repatriation. They were at 14. 5 and 7. 5 . To 8. 15 . D that up they were basically looking at everything they had. They do not really throwing anything new. They were asking how they could make it shorter, have they could make rates a little bit lower with all the lastminute changes. Without introducing anything new that would make some other senator who was voting for it all out. Bob corker now in, senator marco rubio in that he has got the tax credits he was hoping for. Talk to us about Susan Collins and mike lee as well. Laura this has been the big change over the past way for hours. Yesterday, we have four, 5, 6 undecided. Now just two. Mike lee had the same concerns as marco rubio. This looking likely that change will appease him. Susan collins now is the one holdout, and they do not necessarily have to have her vote. They can push forward without her. They would like to have her vote and a lot of things she has pushed for the deduction for medical expenses in the bill, limiting carried interest, making sure the distribution tables do not overly favor the wealthy there have been some tweaks that look like they should keep her in based on what her stated goals have been the past couple of weeks. We will see if she comes out and officially says one way or the other. Julia as scarlet said earlier, all leverage on that point lost. Thank you for giving us updated. Coming up, perils in the root. Lawmakers introduce impeachment against the president. We will tell you what is at stake. Perils in the root perils and peer perils in peru. This is bloomberg. Joe whatd you miss . Potential impeachment in peru. Opposition lawmakers began the process to force the president out of office after hereby calls to resign over his ties to companies that received payments from a disgraced brazilian builder. Here with the latest is bloombergs managing editor for latin america. This totally came out of nowhere. Today, we are talking about peru. Yesterday we were not talking about it at all. What is going on . Its amazing how fast momentum built in peru. Lawmakers are building this right now, so they might decide if they keep it a yes to start impeachment proceedings as early as next week. Joe i assume virtually none of our viewers have any idea what is going on. Quickly summarize the allegations. Related to al Brazilian Company which admitted paying bribes to some officials potentially involving the president when he was a minister. That is basically what the opposition is claiming that he lied, that he never divulged this money, that he took drives not when he was president , but when he was a minister in the previous administration. Joe he denies it. Where are the allegations coming from . He denies it all, said he never lied and he has always been an honest man and that he is not resigning, but its looking pretty difficult for him. Joe the scandal or the potential scandal it is the same Company Everyone has associated with car wash in brazil. Its true. It shows you how much and how many ties these companies have throughout latin america. Is one of theru countries most affected by the downfall. Gdp is lower now because of this. They had every single contract in the country, so for some people, that is the reason why he should go and they should have a clean slate. Joe prior to today, the peruvian currency was one of the best performing in latin america, very stable. It got slammed today. Economiche current story . That is the sad part of the story. This was one of the Fastest Growing economies in latin america. Markets really reacted poorly. We do not really know who can be the next president of the country. There are two as president s. One is in canada. Its kind of an interesting situation. For investors, definitely not a good situation and right at the end of the year. Joe by a large, investors have liked the presidency. They favored him. He was a businessman, promarket, reforming the country, boost growth, so definitely a big disappointment. Joe were he to leave you mentioned the uncertainty regarding the Vice President , but given the political mood, could he be replaced by someone ultimately with a very different sort of ideology than him . The people surrounding him a very much his personal choices, so they are very similar, but some lawmakers are calling for new elections. God knows, right . Joe we will see what happens. Right. Joe thank you. We have breaking news crossing the bloomberg right now, details of the tax bill, highlights obtained by bloomberg show the tax bill will repeal the corporate alternative minimum tax. It also eliminates the obamacare presumably the individual mandate you had to pay under obamacare that would be eliminated in this tax bill. All abouts is financing as well. If you lose that again, its another one of these things. How are we financing this bill . Scarlet we also seek it keeps the tax preferred status of private activity bonds as well. At the moment, what we knows all far is the corporate amt has been repealed within the tax bill. It eliminates the individual Obamacare Mandate and keeps the tax preferred status of private activity bonds. To bring will continue you those headlines as they cross on bloomberg technology. Scarlet coming up, what you need to know for next week. Whatd you miss . Scarlet whatd you miss . U. S. Stocks closing at record highs for the nasdaq, s p, and Dow Jones Industrial average. Joe tax bill getting rid of that individual mandate. No more amt. Scarlet dont miss this the worlds biggest Futures Exchange launches its own competing Bitcoin Futures product. Joe i will be looking at the bank of japan and its latest policy decision. And japan has until friday to give the government operating or will face a shutdown. Global and the First Network for social media powered by bloomberg journalists and analysts streaming live on monday. Julia so exciting. Scarlet that does it for whatd you miss . Julia had a great weekend. Joe is this a phone . Or a little internet machine . 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. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. 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. Alisa im Alisa Parenti in washington and you are watching bloomberg technology. Bloomberg news has learned republican senator marco rubio will support a compromise tax overhaul package. An aide and rubio got to yes at the congressional leaders agreed to expand the Child Tax Credit. Another former holdout gop senator, bob corker, says he is also on board. Maine senator Susan Collins says she is still waiting to read the bill. Today addressed lawenforcement graduates at the Fbi National Academy in quantico. The president says he plans to rebuild the bureau. He also offered to release messages from fbi officials criticizing him as disgraceful. Female members of the Congressional Black Caucus want gop members to allow doug jones to join the Senate Immediately or delay votes on major legislation. Jones defeated republican roy moore and a special election tuesday, but Mitch Mcconnell says incumbent Luther Strange will