And in company news, the situation is getting dire for a retailer, seeing credit withdrawn as an accounting scandal threatens to doom the business. That is all ahead. Julie hyman is here. It sounds like the rally is taking a pause. Julie it definitely looks like a pause. Ulie we have seen stocks bounced between gains and losses since the open of trading, and see all three major averages into the red. We have some of the interestrate sensitive sectors like utilities and Real Estate Investment trusts lower along with technology, which you can see by the decline we are seeing. We have some analyst calls from largecap stocks, apple among them. Apple getting a rare downgrade from nomura. The analyst says positives are already priced into the stock, lowering the rating to neutral. Le shares up just 0. 8 apple shares off just zero point percent. Walmart, an analyst getting ready, saying ecommerce can be a competitor to amazon. Finally, General Motors are the third in our trio of largecap stocks being upgraded to outperform at rbc. Into the fits squarely preferred narrative for next year that there is more confidence on resiliency during on auto downturn. A deal in the health care business. Kindred healthcare is selling itself to humana as well as pbg capital and Welsh Carson Anderson and stowe. Pay more than a billion dollars overall. Kindred shares trading around level. They are down 5 because they have been trading about the offer price. They are going to split the company between humana and private equity companies. Then, you have Community Health systems and tenet healthcare. Tenet is explain a sale of a subsidiary that provides Debt Collection and Financial Services to other hospitals. Community Health Trading lower after tenet said earningspershare forecasts or numbers did not reflect changes to current tax law, and could be lower than forecast. There is speculation Community Health might be vulnerable to that. Finally, a quick check on the treasury market. Gaine seeing a substantial in yields, three basis points, 2. 43 . I have not seeing that level in a little while. That is putting pressure on some of those interestrate sensitive groups. The end minutes until of the action on this tuesday equity section. We are little changed after rising the most since july 12. Investors yesterday awaiting the outcome of the tax votes today, and maybe tomorrow, in the u. S. This is our equivalent of the vix, our fear index. A record low today. This is a chart going back a year, before the april may election and france. It has disappeared. Will see it. We there is laura. We did see the stocks rise to the highest level since june the prior year, just ahead of the referendum. You cannot see it, but just envisage it. Volatility in the u. S. And europe has been around record lows this year. I will get back to my charts a little bit later. Lets not spoil it. Lets look at what is happening in the u. S. Vonnie the anticipation is killing me. I cant wait. In the u. S. , it could be a historic day for the tax reform effort. House republicans expected to vote as soon as 1 30 p. M. Eastern. It is expected to sail through the house, largely along party lines. The measure would head to the senate, where passage is a near certainty. A huge boost when maine republican Susan Collins, often a thorn in the side of republican leadership, announced her support. thisr collins legislation will provide tax relief to working families, encourage the creation of jobs right here in america, and spur Economic Growth that will benefit all americans. Republican Susan Collins joining Susan Collins there. Joining us now is Laura Davidson. At 1 30, a boat kicks off the process. Where might we see stumbling blocks . A couple of are points where things could go awry. Here are the points to watch for. , largely will vote expected it will pass. There are republicans from hightech states new york, california that do not like the state and local tax reduction. There are not enough of those people to stall the bill. From there, it will go to the senate, where there are up to 10 hours of debate where republicans and democrats will go on the floor and talk about it. Republicans are expected to give back a lot of their time. They want a boat as soon as possible. Democrats will be raising some objections. If they find anything that violates senate rules, it could have to go back to the house for another vote today. There could be a bit of pingpong. Not expected. They have been carefully scrubbing the bill to make sure nothing violates rules and procedures. It could pass sometime this evening from the senate, if all goes as planned. Mark how much future legislation might be needed to protect drafting errors or technical issues in the tax bill . Laura this is the and. Kevin brady of the ways and Means Committee says what we have to do is at least some level of corrections. That is typical for a bill of this size drafting errors or slight mistakes here and there. Because this bill was moved so quickly, folks inditex community are concerned there are going to be bigger problems. Not just technical changes, but policy changes. The law is going to have to be rewritten and some portion. This could be a process that plays out over several years as we start to realize unintended consequences and congress has to come back to the drawing board and say, how do we fix this . Vonnie Senate Majority leader Mitch Mcconnell speaking on the senate floor, saying the senate will vote on a tax bill this evening. Comments on the floor. I didnt want to ask you, once it is past, and we can assume it is close to getting passed, how does it impact the 2018 agenda . Laura they want to move to welfare reform and infrastructure. Infrastructure, has a possibility to be some sort of bipartisan effort. Coming off of health care and taxes, and want nothing to do with trump, and the republicans in congress and their agenda. It looks like another republicanonly year. They are going to be nervous. They are going to go into midterms next fall we saw doug jones win in alabama last year. It is not a great time to be a republican, particularly in a purple district, as sentiments against trump go stronger. Vonnie if its in for vacation might be for individuals, but there is a lot of complicated procedures for companies and corporations, the states, and heirs. Laura this does not achieve the simple vacation goal republican set out. They wanted to get rid of credits or deductions. Specific members wanted to keep those in. You may see a slight since the vacation on the individual side. Certainly on the corporate and Small Business side, it is just as complex, if not more complex, because these are new and nobody knows how they work yet. Thanks to Laura Davidson on capitol hill, our tax reporter. Senator Majority Leader Mitch Mcconnell saying a few moments ago that the senate vote will be later this evening. Lets check in on the first word news. Here is emma chandra. Emma the saudiled military Coalition FightingHouthi Rebels in yemen said it intercepted a missile over riyadh. The column of white smoke was seen. The rebels say they fired a missile at a palace in the saudi capital. For the First Time Since oil prices collapsed three years ago, saudi arabias budget deficit has fallen below 10 of gdp. The Saudi King Salman says deficit targets next year will be less than 8 . The new budget is aimed at boosting growth to offset tax hikes and cut subsidies. In washington state, federal investigators say that an amtrak train was speaking before a fatal derailment. According to the data recorder, it was going 80 mph in a 30 mph zone. At least three people were killed, and more than 70 others treated at hospital when the train hurtled off an overpass. The train was making its first run along a new, faster route. Singlefamily Housing Starts in the u. S. Have risen to the highest level in a decade. The increased more than 5 in november, to an annual rate of 930,000. Singlefamily Home Building tends to spur more Economic Activity and apartment construction. Global needs to four hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Much. Thank you very coming up on bloomberg markets, futures in focus. Financials taking a pause. Teachers and focus is next. We are live at the cme. Vonnie and marco wants to reiterate. Leader mitchty mcconnell speaking on the floor. He mentioned the senate vote would take place today on the tax bill. 1 30. Me close to senate rules require 10 hours of debate, the republicans may give up some of that time, and who knows what democrats might do. At least the Senate Majority leader is expecting the senate to vote on the tax bill this evening as well. Vonnie breaking news. President trumps pick to lead the Export Import Bank has been opposed by the senate panel. That is a major setback. It was anticipated. Garrett had been advocating for the abolishment of the xm exim bank and was nominated to lead the bank. Headlines crossing that he is opposed by the senate. Senate panel. Mark Bitcoin Trading lower, falling the most in nearly three weeks. Extending stockpiles their drop. Joining us now from the cme is the head of the could see group is the head of a trading group. Not joe. It is todd, sorry. Sometimes, i just read what is in front of me, but iraq and mise i recognize the face. Todd, good to see you. Of Bitcoin Futures. Day one went off pretty smoothly, didnt it . Todd i think it did. We had a little bit of a beginning a week ago at the see both cboe. It is opening the door to investors. The key to Bitcoin Futures is, you do not own the bit point. It trades off an index. You can trade off the market without having to go through the process of buying and selling bitcoin. It could open the door to investors who are not sure about cryptocurrency as a viable way of transactions, but want to participate in the market itself. I think that is why we want to see this market really grow as we head into 2018. Mark of course, it opens big going to shorting opportunities, doesnt it. Would you short something with so much momentum, upward momentum . When youhink right now look at bitcoin and people are asked, what do you think the top prices for bitcoin the overwhelming answer is, i do not know, or there is none. It makes it difficult to want to step in front. A market that sees volatility swings like bitcoin does offer twoway trades. There is opportunity to trade not only against the index, but along the underlying, this is a way to trade around your position. To be naked short bitcoin at this point is something i would take a second look at before jumping in with both feet. Have tomorrow, the oil front is oil on a bullish trend through the end of the year . Is. i think it the opec trade right continues to kind of nachos higher as they continue to hold back on some of the production and get participation from not only opec but nonopec members. The second part is going to be demand. That opecsve demand numbers versus eias demand numbers . Opec see stronger demand. That makes the u. S. The wildcard as far as production goes. Will the fracking makeup the difference . 60s until we get these supply numbers and see what u. S. Production numbers are going to be in 2018. Than 60w much higher could we go, given the shale players coming into the market . Is there a top four oil around 60 . Todd the higher you get above 60, the more the the slower the market will move, because they will increase production. 6065 is a number where we will see significant resistance. We will need some kind of event to process north of that at least in the First Quarter of next year. Colvinodd mid todd with ambrosino. Vonnie it is time for the latest business flash. Lets get some of the biggest stories. The health care industry. Humana and private equity firms buying kindred healthcare. Deal, aboutg on the 4. 1 billion in cash. Humana will get kindreds home health and Physician Services unit. The private equity firms will take over the hospital and rehab facilities. The belgian food distributor grignard is in talks to buy dole foods. Grignard says it has secured financing. Dole ships everything from pineapples to packaged salad, and may be valued at 2. 3 billion, including debt. Here is apple, up more than 50 this year. Now, they have gotten a rare downgrade. Cut to neutral, saying games are in the late innings. Iphone x sales, another positive for the company, are baked into the stock price. That is your latest Bloomberg Business flash. Violencell ahead, new in the ongoing conflict between saudi arabia and the rebel houthi militants in yemen. A live report on the aborted missile attack targeting the royal palace in riyadh. House gop leaders holding a News Conference. This comes before the expected tax vote around 1 30 p. M. Eastern. Senate Majority Leader Mitch Mcconnell saying a few minutes ago the senate will also vote tonight on the bill. We will keep following the developments. Leadershouse gop holding a News Conference at this hour. This conference coming before the expected tax vote, which is at 1 30 or place shortly thereafter. In the senate, Majority Leader Mitch Mcconnell has been speaking, and he says the senate will vote tonight as well on the bill. We know that 10 hours of Senate Debate are due to take place. But republicans can give up some of that time, as can democrats. Her haves republicans to speed up the process. Also want to bring you im bankte with the ex vote. Scott garrett, the candidate, was opposed by the senate panel. The white house has already come out with a comment saying it is disappointed in the senate decision. Scott garrett will not lead the exim bank, the exportimport bank. Mark the saudiled military Coalition FightingHouthi Rebels in yemen said it intercepted a missile over the city of riyadh. A lot explosion was heard and a column of white smoke was seen. Rebels said they fired a missile at the palace in the saudi capital. Our executive editor for the middle east joins us live from dubai. Tell us about this missile. It is not the first recently, is it . Reporter it is not. There have been missiles before on the southern border. In early november, there was a missile that targeted riyadh airport. This seems to be specifically areeted the houthis saying themselves at the palace where the king was supposed to give his budget speech. It was an expansionary budget. Give us the big details. So, as you said, it has been a budget expansionary budget increasing spending 6 . They say they will manage to get s doubledigit figures to below 8 of gdp, mainly on the back of rising revenue. Extent drivenarge by the rebound in oil prices that we have seen. They are saying they are expecting a significant jump in nonoil revenue, partly from taxation they are bringing and. They have also cut subsidies. They are seeing they are hoping this expansionary budget will drive will revive Economic Activity in saudi arabia, which has been quite faltering a little bit in the past year. Exchange, you do the it is about 200 billion u. S. Dollars of u. S. Revenue and 260 billion of spending. Where will the spending be targeted . Will some of it go to citizens to keep them happy, to keep the fabric of society glued together . The deal theat is crown princes offering. He is cutting back on some of the subsidies which he views as a blunt instrument and a wasteful instrument, because it encourages waste in terms of energy consumption, for example. Most of the subsidies seem to be ending up in the pockets of the rich, the people who do not need it. Month, theyr next want to start what they call the citizens account, where they are going to look at peoples income, andsonal from that decide how much money they are going to get paid from the state. Other industries will the administration, if that is the right word for it, be targeting in terms of spending . Riad well, they have said they want to spend big on the entertainment industry. They are planning tourist resorts on the red sea, and Entertainment City in the region of riyadh. To investlso planning heavily in their own military industry. They are planning to invest in mining. There are all sorts of industries they have said they want to encourage and build out. And coming together with the money that they are hoping to , replacing the subsidies with the citizens account, they are also hoping to encourage consumer spending. Mark really quickly, how much uncertainty is the anticorruption purge spreading given the International Investment the Company Needs . I think it depends who you ask. In saudi arabia it seems to be popular. There is a real change in the way business is done. Among many in the International Business community and the family businesses, there might be a bit of unease because of the lack of clear procedural process in this. They will be looking to have this wrapped up sooner rather than later. Mark riad, thanks for joining us from dubai. Vonnie lets get back to a developing story the Senate Banking committee has refused to recognize confirmation of Scott Garrett for the role of chairman of the u. S. Exportimport bank, an institution the former congressman called corporate welfare. He tried to shut down the exim bank before President Trump nominated him to be its chairman. Iste house saying it disappointed in the decision. Kevin cirilli is on capitol hill with a guest. Kevin we are here with senator heidi heitkamp, a democrat. Scott garrett rejected 1310, not being approved for chairman of the exportimport bank. You were against him . Why, and what is next . Senator heitkamp first off, we need a functioning exim bank. We need a quorum so everybody understands the urgency of getting these nominees moved through the banking committee. What we dont need is somebody who is going to be a saboteur at the bank area i am interested in how we can reform the bank, how we can make the bank more responsive, how we can get the bank to do more with small lending. The problem is that with mr. Garrett, he refused to commit to changing his mind on whether bank. Should be an exim it makes no sense for us to put somebody in that position does not believe in the mission of the organization. Other there were four nominees that went through the board as well as the inspector general. Moving forward, senator pat toomey as well as senator shelby has said they will do everything they can to make sure they do not get a vote on the floor preventing quorum. Do you have assurances that leader mcconnell or the white house will move the Board Members forward so that the bank can meet quorum . Senator heitkamp we have been trying to talk to the white house, because we think they believed until last week that garrett could move through with a positive vote. That did not happen today. Two people voted no in the majority party. We know there are more numbers on the senate floor. Spende need to do now is time and move a couple of nominees to get a quorum, so we can get the bank of and functioning. My request to the white house is to encourage leader mcconnell to actually move a couple of these nominees. Ae exim bank is such critical piece of trade infrastructure. We have jobs on the line. We have lost jobs to other countries, and we cannot continue to hemorrhage jobs, and we cannot continue to hemorrhage manufacturing opportunities. Kevin you raised this issue with President Trump within the last half hour. Legislativethe affairs director, putting out a statement that he is very disappointed with what has happened. Do you think president is going to nominate a new person to chair the exim bank . Senator heitkamp we are going to encourage him to do that. In the meantime, it is critical we move a couple of nominees and get a quorum on the bank. Then, we will sort out what those reforms can look like. One of the challenges we have is, we are immediately in next year going into reauthorization discussions. We wont have a Bank President who will help us go through that. Whoeed to get someone there is in charge of the bank. In the meantime, what we need to do is, we need to get a quorum on the bank board so we can move these. On tax reform. Y you were in fargo yesterday and had a town called townhall with constituents. You are a democrat. How are you voting on this bill . Going toeitkamp i am vote no. I concerned about the embedded benefits, whether it is for real estate or people who own private jets. We have run numbers in terms of if we were going to take this the amount of money we are spending on a tax cut for individuals, and actually give it to the middle class it would be very dramatic in terms of the increase to their tax benefits. This clearly is heavily weighted toward the top 1 . I think we could have done Corporate Tax or form. We are now hearing that some of the provisions are not going to be adequate to stop outsourcing jobs, and may in fact drive the movement overseas. That just not a package has been well thought out, in my opinion. Kevin on a busy day in capitol hill, thank you for coming on. Vonnie kevin cirilli, thank you for that fantastic interview. That is the bloomberg chief washington correspondent. It is a very busy day in washington. We will continue to follow all the developments as the house and senate are due to vote on tax reform. For years, the Federal Reserve warned about Interest Rates. The focus shifts to fiscal policy. We spoke to fed officials about the state of the economy after rate hikes this year. The minneapolis fed president opposed the Committee Decision to raise Interest Rates last week. Have a listen. The bond market is saying a couple things to me. One is, Inflation Expectations are drifting lower. They have drifted lower. That is in large part i believe because of the fed, because we have been sending hawkish signals by raising Interest Rates in a lowinflation environment. Second, i think the markets are pricing in a lower neutral real Interest Rate. An Interest Rate that balances savings and investment in the economy offset by macroeconomic forces it has been trending down over the last few decades. Markets are embracing that concept and pricing lower, which cap swear bond yields are, and can explain some of the appreciation in the equity markets, discounting cash flows at a lower rate. Those are the signals i take away from the bond market right now. The long end of the yield curve, i will put up a number. We understand by the short end is coming up, given what the fed has been saying. Talk about the long end. If you had your way, if you went from the fed is predicting three increases, 21, what would happen to the long and yield curve in your view . In my view, that would take off some of the downward disinflationary pressure that i think the committee is putting on the long end of the curve. In my view, by raising Interest Rates in a low inflation environment, we are sending a signal that our 2 inflation target is not a target. We are sending a signal that it is a ceiling, and i think that is putting pressure on the long end of the curve. Way we haveat the behaved, we say it is a target, not a ceiling. If you look at how we have behaved over the last five or six years, we have been treating 2 as a ceiling. I think markets have figured that out and are pricing that in. The fed is pushing up the front end with rate increases, and pushing down the long end by sending a hawkish signal about the outlook for inflation. David i am not going to try to pin down an exact number, but give us some directional guidance on a tenyear treasury. If it is now at 2. 4, give or take, is it 3. 0 question mark is it north of three . Have you backed off on signals being sent by the fed . It is normal to expect flattening when the fed is in a tightening cycle. To move more tends than the long and does. I do think it would be higher than it is. I would have expected with the tax reform package coming together i would have expected some movement in the long end. The fact that the long end is not moving in response to either hikes or the tax package that tells me Inflation Expectations must the solidly anchored or drifting lower. Concerning tos me. If we continue this cap of pushing up the frontend, i think we are going to see a stronger flattening take place. That is a concerning sign. Vonnie the president of the minneapolis Federal Reserve. He was not the only policymaker we caught up with today. The dallas fed president , and nonvoting member of the fomc next year, spoke exclusively with Michael Mckee. I think gradual and patient removal of accommodations justified my. Was three, right on the median. Will it turn out to be three . I think time will tell. I do think we should be removing accommodation in a gradual, patient way, and that is the key thing. Michael how much of your forecast is based on the impact of tax cuts . Modest. I have been saying up until a few weeks ago it did not have any effect. Over the last couple of weeks, i modestly we modestly firmed the2018, 2019 i mean dallas fed. It created a bit of firming for us in our gdp forecast, and a little more aggressive overshoot of full employment, a lower unemployment rate. I would say the impact was on the margin, a modest impact over the next three years. Seem to it does not have any effect if you look at the fed consensus on long growth, potential growth. There are two parts of this tax bill. One of them, i have been very positive about, which is to the extent you do Corporate Tax reform and improve incentives to locate your business in the united states, and invest in the united states. That could be positive on a sustainable basis. The part of the bill that is a tax cut financed by increase in the deficit will give us a shortterm bump, a modest increase in the short run. Then, we will tell back down to trend growth. The issue is, we will be more highly leveraged in the end of it. I already think u. S. Government debt to gdp is unsustainable. It makes that issue worse. Michael there is already talk about what and whether companies will do with the tax cut they get. What are corporate ceos telling you in your district about whether they are going to invest a lot more . There is not a ceo i talked to who did not want the tax bill to pass, for several reasons. One of them it is going to improve aftertax earnings and earnings pershare. The bigger question is, will it cause them to change their investment . One thing you have to emphasize corporate profits are at record levels. Of capital cost to debt, cost of equity, is historically low. I would say most ceos i talked to, the bulk of them may not have any explicit impact on their investment. On the margin, it may be positive. It might, for those who are thinking about moving facilities offshore it may cause them to be more likely to stay here. But i think the impact of it, understanding we are already at or near full employment we have already got record profits, and capital is relatively inexpensive. It means the impact of this, when i talk to corporate ceos, is probably modest and on the margin. Vonnie robert kaplan, president of the dallas Federal Reserve, speaking exclusively with Michael Mckee, who joins us now. Kaplans comments about the tax overhaul. That may be the most open about fiscal policy i have ever seen a Monetary Policy maker, currently sitting. Michael we are at the point where the fed has to look at the tax bill and say, what is the difference for the u. S. Economy . They would probably have to lean against that. The almost unanimous verdict you heard kerry say the same is,g a fed policymakers this is going to add very little to growth. They have been talking to the ceos in their district, and the ceos are saying, we are not going to be investing more money. The interesting thing is what we have seen over the last couple of months is the stock market keeps going up and up and up. Is the tax package and what Equity Investors are going to get more money out of this, because the money is going to go to shareholders rather than investment, according to what these fed officials are saying. I think we had a graphic of the tenyear note yield. It has not moved at all. You are looking at the bond really dont, we care about the tax package. It is not going to do anything for us. It is not going to create inflation. Vonnie that is the fascinating thing. The bond market is having the reaction, stock markets having a different reaction. What are fed policymakers supposed to do . Not hike Interest Rates because the tax overhaul is not going to have the impact promised . A separate is question from the tax bill, as far as those who would like to maintain the status quo. Charlie evans voted the same way. Their view is that inflation is not rising. That is part of their mandate, to get it to 2 , and it is not happening. We should leave Interest Rates unchanged to try to spur additional inflation. That is one of the concerns that they have. Kaplan takes the other view, that because unemployment continues to go down his forecast is it will go below 3. 9 . That is the fed consensus. That has to push inflation the wage channel. We will see. The menstruation argues the tax package will raise wages. Most economists do not think that is the case. Mark one of the stories on the bloomberg i enjoyed today fed have lost the plot as economists puzzle over the outlook. Is it time to review the dots under a fed led by Jerome Powell . Is it time to rethink the dots . Be. Ael it may a lot of people in the markets do not like it and some fed officials do not like it. The way it gets interpreted is as a promise. We are going to do three rate increases in 2018. The fed would say, from where we sit today, looking over the course of the year, that is probably where we would indent end up given our forecast. They could change their mind. The market does not seem to absorb that idea. It may be something that does get looked at. There is a big conference in washington at the beginning of the year to talk about that. Vonnie it is fascinating. Do you know what happened today . 58 basispread is up points. The 530 spread as well. That is one spot in the bond markets where fed officials will be thinking, how will this go . Can see the yield curve. It has been significantly over the past year. What where it has flattened is primarily at the short end. We have seen the short and go up a lot as the fed has raised Interest Rates. The long end, the tenyear year note yield, has not moved very much. Kashkari makes the point that if we keep pushing up the short end, that could lead us into an inverted yield curve, which usually signals recession. Kaplan said it is something to keep an eye on. We will see the dynamics of the economy as it plays out over 2018, whether we get additional growth, additional inflation, which would push up the 10 year yield and steepen the curve, or whether the only thing that is happening is Monetary Policy, and that is leading us into a fed policy mistake, two tight. Too tight. Vonnie Michael Mckee is our International Politics and policy man. Mark coming up, the bad news hes coming for steinhoff, shares continuing to fall as the retailer stands on the brink of collapse due to the accounting scandal. Vonnie mark live from the city of london, i am mark barton. Vonnie i am vonnie quinn quinn. This is bloomberg markets. Steinhoff falling again today. The troubled retailer losing credit lines as its accounting scandal deepens. Joining us now is abigail doolittle. In london, we also have eric. Im pleased to have you for a roundtable discussion on this troubled retailer. Is it troubled or bringing trouble on itself . Abigail that is a good question. His extraordinary story reminds me of a financial thriller. To your question, there are more questions than answers at this point. We are perplexed or puzzled by all of the facts that are out there, but more questions than answers. If we look at the bloomberg and the stock on the day, we can talk about the volatility on the day. At the highs, the stock was up 15 , then plunging down to 4 . On the highs, it was higher because they did say they have named an interim ceo. They were meeting with Bank Creditors. There was hope that Bank Creditors would have a positive take for the company. I say a positive take, relative to the overall accounting scandal. Look at the plunge. And have accounting issues have nonrecoverable, nonsouth african european assets. Investors wonder what those represent. The best Case Scenario might be a write up of adding too much value to those assets. A worstCase Scenario could be offbalancesheet liability. There is not known outside of the crisis. Its creditis losing lines, which could be the death knell for any retailer, whether or not it is correct that the in the fabric of the company. Eric, let me ask you. Who are the auditors here . Why are people losing confidence in this retailer . Eric there was deloitte initially, which was not able to sign off, which prompted the crisis. They brought in peter beuth the two take a closer they take a closerc to look. They are still investigating and cannot decide the full extent of the problem. Mark abigail, can we draw parallels with past president s precedents and what it might mean for the shares . Priorl we can look at examples. If we go back into the bloomberg, i have put together two stocks, and we are looking fromretailer, and we see 1991 through 2000, a big rise. Then, this 94 plunge on an accounting scandal. We also see to some degree the company has recovered as the company sorted through issues relative susann relative to subsidiaries. Here is tesco in 2014. The fund has barely recovered but is making it through the scandal to some degree. It as you recall, back in the early 2000s, we had an run. That company is the worstCase Scenario. As we were talking about, it is unlikely, probably we do not know. Not enough answers right now. It does not seem as though steinhoff is a matter of faking business, but there are questions about the nonrecoverable assets and what that represents. Mark eric, we have this new team that is going to try to rescue, essentially, this in battled company, embattled company. Who are the new leaders of steinhoff, and what are their priorities . The people they have brought him to try to clean up this mess are insiders for the most part. It is the c. O. O. , the chief operating officer, who has taken over as interim ceo to try to meet with the bankers and spin as convincing a story as they can that this is something they should prop up, and extend new credit to, to keep it going. Very quickly, what has steinhoff said publicly . Are they defending themselves as innocent parties . Eric one of the problems is they have had a drip feed of things they say publicly. Every other day or so, there has been a new statement coming out and saying we are taking this or that step, but they have not gotten to grips with what the problems are. They have not been able to defend themselves, per se, and say, we did the right things. They are not saying what they have done. Vonnie thanks to eric cantor pfanner and abigail doolittle. Ahead, hedge funds are dreaming of a bonus for christmas. We will tell you how much and why, next. Mark live from bloombergs new European Headquarters in the city of london, i am mark orton. Vonnie mark barton. Vonnie i am vonnie quinn. Hedge Fund Managers are expecting year end bonuses to climb 39 . Take a look inside my bloomberg. Life the fund has stock markets each year since 2009, trumping some Institutional Investors to slam the industry. Joining us with more, the woman who wrote the story, a bloomberg investing reporter. You are given a survey. You know the results are going to be made public. You are asked how much your bonus is going to be. Arent you going to Say Something radical . Think what we have to realize is that this has been the best year for Hedge Fund Performance since 2013. Despite the fact that hedge funds, on the whole, have lacked the stock market significantly. They are up about 6 this year. The stock market is up over 23 november the same teimeperiod. People are so excited they have made money after two pretty lackluster years, they are saying, my bonus going to reflect that. I think that kind of does not reflect the general malaise of the industry, which has not been doing very well. For us, theit down compensation between bonus and base salary. Simone it is enormous. The numbers are a little eyepopping. The base salary expectation for 2017 is 172,000. The bonus is 562,000, ringing you out over 730,000. That is on average. That would be an enormous jump from last year, about 560,000, all in. It would be a huge jump. Would reflect performance, i suppose. 2016 the average hedge fund was up about 2. 5 . Vonnie it is important for hedge funds to hold onto the talent they have. That might be one reason they will see enormous wonks, enormous bumps. bigger firms are expecting bigger bumps. That said, when you are talking to pensions and Family Offices who are saying these fees what am i getting for these fees . I think they are going to look at the salaries these analysts and Portfolio Managers are being paid and say, why am i paying that when you guys are not even doing that well for me . Strategy that a obviously, if you are a manager that is making money, you want a good bonus. But is there a strategy that is proving lucrative in demanding bigger bonuses . Simone this is what surprises me. It is equities managers that are believing they are going to get a much bigger jump in their bonus. But i have to say, when i talked to investors, that is the last strategy they are really excited about, unless there is something niche in emerging markets or you are in some weird sort of small cap. They are not looking to allocate more to equities. Whereas things like credit, niche strategies like asian finance that is where i see investors saying they want to put more money. Vonnie we just had the story yesterday about traders and big banks who are definitely going to see a drop in their bonuses. Your story is fantastic and i would urge everybody to read it. Mark . Mark it is tuesday. We are coming up on the european close. We are telling you what is coming up. The dax is lower. The cac is lower. Investors are awaiting the outcome of the tax dealings in the united states. 33 minutes until the end of the day. Its 11 a. M. In new york, midnight in hong kong. From the European Headquarters in the city of london, im mark barton. Vonnie this is the european markets on bloomberg. Hero the top stories we are covering from the world. In politics, Michel Barnier is holding a fine line on brexit and catalonias holding its first election this week. We are live in barcelona and in brussels. In markets, whats the Credit Outlook for next year . Jpmorgan will tell us why his favorite European Bank capital in u. S. Highyield is. Coming up, and interview with craig fleming, chief executive of rockefeller capital. He talks about baseball, building a business, and the current state of wall street. 30 minutes until the end of the tuesday session