Progressiverudeaus mission stalled in beijing, with Sticking Points on all sides. Betty david, good to be with you from hong kong there. Favor,stocks today in those that will benefit from tax reform. But dont pull out the party have yet. I want to pull out this chart, g btv 339. It is according to vanguard, the index fund company that manages almost 5 trillion has drivenot of what the markets, the low volatility, the record runs in stocks, the record stimulus, the low wages, no inflation, that is about to end in 2018. Tax reform or no tax reform. They see more volatility to come, which means they see lower returns. Do not expect of those nice, juicy returns of the last few years any longer. David absolutely. It is almost impossible to , the conducive assumptions and realities we had in 2017 continue well into 2018. It is almost like mothers womb. It is a perfect environment, but do you get it in this harsh world, it which is what 2018 seems to be like. Analogy, we have been drunk on easy money, that punch bowl, for almost 10 years. It is all about to end. There could be crying into their soup. [laughter] betty we are using lots of different metaphors. David markets in the u. S. Started higher, ending a little lower, i believe. Betty lets check where the markets ended. You sawtek shares taking a big hit on the back of tax reform. Some expectations it is going to hit some of the chipmakers. Nasdaq closing lower by 1 . The dow a little higher. The s p unchanged. It is not getting much momentum in asia. David not at all, a good example is new zealand. Theyre market has been flat for three days, nothing happening with the kiwi dollar. Have a look at the market open in sydney. The rba very much in focus. It is not about what they do, but how they say what they say and how they say it. We are also counting down to the markets in japan and korea. I checked, when we do the math, were looking at the kleins. Japan down. A lot of it comes back to currencies, have a look at the sterling, the euro, the loonie in the mix here. May was at lunch with juncker. Canada coming out with a that failure with trade talks with china. Interesting to see how this session will be shaping up. The bloomberg dollar index after all these swings midsession monday into where we are at the moment, essentially looking at about the midpoint. To give you an update right here, there are lines that of bmw, gunning for a 50 increase in electric vehicles. Next year, bmw in talks to add one more carmakers to an Autonomous Car alliance. They will talked with they will talk with uber and lyft and technology. Nomous in the meantime, your first word news. U. S. Supreme court has ruled of the trump travel ban can take full effect while illegal challenges continue. It does not address the merits of the ban, but is a key victory for the president , they will ultimately uphold the restrictions. He can bar people from six mostly muslim nations, even if they do have a relationship with a u. S. Person or institution. Brexit talks failed to materialize in brussels, as a tentative agreement was delayed by the irish border. Aeresa may has been given monday deadline to discuss her plan for postbrexit border. Shortly afterward she and Jeanclaude Juncker announced a no deal. Plans to launch free trade talks between china and canada have failed, with the two sides abruptly canceling a tech conference, but agreeing to keep negotiating. Justin trudeau indicated one Sticking Point, canada wanting more progressive pacts. But the two sides are in a golden the stage in their relationship. Bitcoin may face the big short. Group and the nasdaq will make it easier to bet on the decline. Hedge funds have largely stayed away. But we ares told they are waiting for them cme futures to bet against. Bitcoin has rocketed, and the investment of one dollar will be worth almost 1. 5 million. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am this is bloomberg. David thank you. Lets look at the dramatic reversal on wall street. The s p 500 ending the day in the red. Keenan has more. Su horizon volatility. Microsoft dropped almost 4 . Take a look at the benchmark. Brussels, an index that turned around in the final hour. The s p also dramatic turnaround, a lot of this having to do with tax reform. The Senate Voting on the tax measure. The passage of the legislation early focus is away from the investigation between president ides and russia. Lets get to the big movers. Tech was big on the screen. But also media stocks. Take a look at disney and comcast. Stocks tend to favor disney as a buyer for their studio. The murdochs believe it is a greater strategic fit. Microsoft again, one of the big tex tech stocks that dropped the most 4 before the close. , the go to g btv 56 elephant in the room is a big story. Vix optionhart of volumes. Friday, more than 3 million options on the vix were bought and sold. And that is a record. What the elephant is, when you have large bearish and bullish options rolling over, we need very good players expend extending bets. That means more volatility ahead. David you mentioned microsoft. Talk about the broader sector. Tech shares, a fiveweek low. Momentum there theeen a lot of pressure on bitcoin activity and machinery. Advancede micro. Micro. If we go into the semiconductor index, you can see how it has come down in the last five out of six days. Back in the bloomberg, trump trades, winners and losers. This is a dramatic depiction of financial gains. Chipmakers tumbling. The white line is the financials. It is shooting higher. And the blue, the chips shooting lower, as we get close to this tax overhaul. A dramatic bifurcation in those two sectors. A lot of money changing hands. Dramaticch a difference. Lets get quickly to oil. It was another down day for oil futures. Su a veteran in the oil industry, if you take a look at this chart, you will see we came back up a bit on this opec extension. It was down on the day by 2 . It has a lot to do with the fact gettingn though we are a steady climb on the production fact we u. S. , the see a deal unraveling because of the way it is promoting shale output. The idea is to bring output down. See how interesting to it plays out. It is a complicated picture. Betty thank you so much, su keenan. The u. S. Up ruling the trump travel ban can take full effect while illegal challenges continue. It came late in the day. It uphold restrictions on people from six mainly muslim countries. Here to help us break it down is joe sobczyk in washington. What does this mean, that the court has ruled in favor of President Trump and his travel ban . Joe it is a technical win, but a political win. It is something he has hammered on to his supporters and others, that the courts are wrong, his travel ban was legal, and it was a big Campaign Promise of his. Victory hem another can tout, along with the house bill in the house and senate. Presumably that will go through, as well. Maybe a few more shoes to drop on this. Some legal challenges remain. Something the president can probably proclaim. He is going ahead with what he promised. Betty a technical victory, still a victory for him. Lets talk about tax reform. That looks closer and closer to victory after the Senate Passed their reform bill on early saturday. Who are going to be the key players to watch for as they get this committee together to gel the senate and house version together . Joe there are several players in this. The house will be appointing its Conference Committee tonight, and the senate may do so later on. Mostly these will be the heads of the committees that had a big hand in developing the plan. You could see kevin brady and in hatch, senator tom soon tom thune. He has been a big player in this. This will be worked out among the leadership. It is not an open, democratic process, where a number of men and women sit around the table hout their differences. The republicans have a much thinner margin. David the third item on the agenda this week are these budget talks. Talk about progress in hammering out the differences. Tell us what that looks like. Joe on the budget, december 8 is the deadline for the funding to run out for the government. And it seems likely to go through. It the house and senate will clean, continuing resolution. It will continue government funding for a few weeks, no extraneous issues. Nothing to do with immigration or obamacare. Then it will come out and try to work out a deal on a few other things they want to take care of. Democrats are pressing for an agreement on the socalled dreamers, the people brought to ,he u. S. As children illegally and were given protection against deportation during the obama and administration. They want to deal with that before the end of the year. Part of the tax bill, susan allins among others, wanted passage of a law to stabilize the obamacare markets. There are a bunch of things wrapped up in that. We are at going right up to christmas, december 22. Republicans would like to do another extension, getting them into january, so they can go in and have an entire month to negotiate these efforts on these other issues. But it is unclear whether democrats to have a little leverage in the senate, whether they will go along. Sobczyk, thank you. The conversation continues around taxes, the budget, the debt dealing. Advisor to a former imf and another for his take on the divisions between house and senate republicans. David later, trade talks between china and canada. We will find out what is next for Justin Trudeau in beijing. This is bloomberg. Are counting down to the open of the markets in tokyo, futures indicating a decline at the open of about 0. 33 . On the lower end of the past 24 hours range. We wont getions, the risk back on. You are watching daybreak asia. I am david inglis, here in hong kong. Betty the republican tax plan that passed through the senate late last week is getting positive reviews. Jeremy siegel told bloomberg the Corporate Tax cut is a big deal. I think what we have now is a positive reaction to the tax cut. It is a big deal. The Corporate Tax cut is a very good thing, positive. I think the news is out. No one wanted to sell before the tax cut got through. Betty with us to discuss this is university of california berkeley professor, who has a book titled how global currencies work. Thank you for joining us this morning. Do you agree the Corporate Tax cuts are a big deal . Deal, but ia big think they are a bad deal. Time, the worst possible time, to be cutting taxes and stimulating an economy that is already at full employment and growing at capacity. I think volatility will remain the same. The markets will get a sugar high in the short run and then realize were blowing up the trade deficit. They will get back what they got. Betty how soon could that reckoning come . Barry we saw within the day the markets are of two minds. Investors cannot figure out whether the positive implications for profits or negative implications for economy, that we wont be able to cut taxes in a recession, because we have already done that. We have already been there. The federal be hiking Interest Rates faster. A bigger deficit will feed President Trumps protectionist instincts. All of those things will be bad for the economy coming forward. Betty getting back to Corporate Tax cuts, will they be stimulative to the economy . Will they take the money they are getting from lower taxes and putting it back into the economy . Barry i do agree that some of it will be transferred into investment. But there is not a lot of Spare Capacity to produce investment goods. The additional spending will come from foreign sources, which means imports. That will not be great for the u. S. Economy in the short run. And it will antagonize the president , who sees the trade deficit as the indicator of how well or poorly we are doing. David that takes me to the core of the issue. Betty was talking a little about it. There is never a perfect time to ease the tax burden, unless it unlocks something that is not there in the economy. Is that what is happening here . Should we hope that eventually growth will outpace the debt . Barry that is the idea. Got waslem is, what we a tax overhaul and not a tax reform. We did not simplify the tax code. We have those complicated pass through divisions, among other tongs, which are not going lead to a more efficient allocation of resources. If there is additional spending in the u. S. , i do not think it will unlock anything. Us banks and analysts tell 0. 2 for the next couple years. I do not think that will make a first order difference. What will is the impact on inequality. We know how that shows up in the polls. David a lot of these discussions surrounding the need to change the tax regime when you look at the cash corporate were holding onsite, does this raise the incentive to repatriate that outside and decide what to do with it, when you bring it back in . Barry one thing this tax overhaul will do is cause it repatriation of broad, which firms will use for firm buybacks. Good for the stock market, but not the economy. Interest rates are low, firms are already swimming in cash. It is hard for me to see how there would be a big impact on investment. Betty i want to talk about the currency market. You have written extensively about the dollar and the interconnectedness of the currency markets. I want you to weigh in on the bitcoin debate going on right now, and whether you think all these calls about the demise of the dollar, is that related to the rise of bitcoin . Barry no, i do not think it is about bitcoin. It is more about rivals to the dollar like the euro and the renminbi. Bitcoin can go up, but it can also come down. I think your earlier segment was on the money. Now there will be good ways to sort bitcoin. In terms of bitcoin volatility, yet. Nt seen nothing david assuming you are correct, we are in for a wild ride. Betty fasten your seatbelts. [laughter] david i am fastened right now. Be sure to check out his new book, how global currencies work. And dont forget our interactive tv function, tv. You can watch us live or watch past interviews. Dive into any securities we bring up here on the show. You can hear conversations, send us instant messages doing during our show. This is bloomberg. Check lets get a quick of your latest business flash headlines. Chinas hna group under investigation in germany, whether it accurately reported its holdings in deutsche bank. In switzerland, they were judged to have given false details. Hna says it swiss and german laws are fundamentally different. Alleging look the casino operator failed to make disclosures about the risks of doing business in china. It relates to a sharp drop in the price last year, after employees were detained in the country and accused of illegally promoting gambling. They say they will vigorously defend themselves. Said to be planning an ipo with the market valuation of at least 50 billion. Bloomberg is told the new deal will come in the new year with hong kong as the most likely post. Xiaomi was once seen as the most valuable startup in the world. They are unsure if they can hit the 50 billion target. After its astonishing rise, bitcoin now more valuable than the economies of new zealand and romania. Short sellers may soon be circling, if not already. This is bloomberg. David it is half past 7 00 in the morning. Tokyo and seoul. We did manage to snap the fiveday decline on monday. You look at the futures on tuesday, 111 points on hang seng futures. Lets see how everything comes together when everything opens up in hong kong, give or take about two hours from now. Anchor a short respite from the selling. 6 30 p. M. Monday here in new york, and markets did close generally lower to mixed, i would say. A lot of the tech shares got hit on the back of, interestingly enough, tax reform, and that is what really drives the markets down. I am betty liu in new york. David and i am david ingles in hong kong. An update of the first word news. Americas newest warplane as exercise inbiggest south korea. The f35 is part of the vigilant drills which last until friday. Two dozen self jets are taking part along with 12,000 troops. North korea threatens serious action in response. Germany is closer to a new coalition with the social democrats approving talks on whether the party can support chancellor merkel. Spd leader Martin Schulz says the talks will be open and are expected in the coming days. The move needs the endorsement of the party bank and file rank and file. Philippines may regulate initial coin offerings. Tertral Bank Governors nes speaking with ipos. The use of cryptocurrencies is rising for remittances. The sector is now worth about 6 million per month. Three times the level of last year. Aviation, has been accused at an extradition hearing of project funding his formula one team. The loans were linked to his defunct airlines. He borrowed money to the sailing carrier under false pretenses and used it to prop up his racing team. 24 hours a day, powered by more than 2700 journalists and analysts in more than 100 20 countries. This is bloomberg. David thank you for the update. We are counting down to the open. Sophie is here with us to give us a sense of which direction we are headed at the open. Mean, are we going to see more selling here in asia . It might be one direction. Tuesday. A terrible tech stocks falling over 1 , tracking the drop we saw for i. T. Shares on wall street. There is a dollar to contend with. Futures in tokyo and seoul pointing lower. When it comes to what we have in asia for a catalyst, potentially, the latest services pmi, which is expected to continue showing moderating , so notnto the year much in the way of catalyst, perhaps, here. Showing you themes we are watching in japan, these include defense related ways. The country is boosting its Missile Defense to face north korean risk. Theh Energy Stocks as nikkei reports the four oil majors are on track. Toyota sees u. S. Sales fall into 2014 levels. Posted a monthly record high in sales. David amazon officially betty amazon tapping the growing Online Retail market. How are Retail Stocks faring the week of amazon . Sophie they are not taking it very well. Consumer stocks are under pressure. This has the prospect of a shift towards online shopping. We have seen this lead to analysts cutting profit fo. This move is advantageous for retailers that can leverage the film and platform. Checking on the board to see how ret