Tightening is set to hasten . While disney is said to be near a deal for a big chunk of the murdoch empire as comcast drops out of the race. How will sky shares react . Were less than half an hour away from the start of european trading. Taking a look at futures. We are looking at gains here in the ftse about a quarter of a percent. Much on the continent. It is the oil stocks that are going to be the interesting thing to watch. A big gain, highest level we have seen in 2. 5 years. You will want to watch the producers as well. Gain is due to the crack in the pipeline and the shutdown. Taking a look at treasuries, u. S. Treasuries, if you look at the Bigger Picture is not as interesting. They have not moved that much. 2. 38. We are stuck in a range but it does look like investors are buying treasuries today. They are doing the same with gilts and that could mean they might not be to have the cash to put to use of the equity markets. We will see in 28 minutes time. Anna lets have a look at the gmm function. China sea as i down. Of a bit of negativity in the session. Even if the policy decisions might come as no surprise, we will see if that is true but there outlook for where they see policy going, that could be crucial. China going lower but volumes in the Asian Session a little bit weaker. If we have a look at what is happening in the commodities market, that is of interest. We did have brent popping into the bottom of that screen showing the movement we are seeing higher and brent. It was up 1 . Andas above 65 a barrel 2. 5 years. The pipeline will have be taken offline. We have seen some upside pressure on brent once again. A lot to say about commodities when you look at what Goldman Sachs have been seeing. About way they think we will make returns over the next 12 months. Thats get a first word Bloomberg News update. Britain wants a treating relationship that is virtually identical to the one it has now after brexit. A meeting the International Trade secretary liam fox said keeping a similar arrangement would ensure a smooth transition. Thatdismissed the warning i can is a style Free Trade Agreement is the best britain theresa maysiven red lines. Donald trump has said that new york citys bombing yesterday shows the urgency of immigration laws. The 27yearold suspect was wearing a pipe bomb that exploded in a subway station near the bus terminal in new york. Homelandtment of security said the suspect was admitted from bangladesh in 2011 on a family immigrant visa. The people of alabama cast their vote in the bitterly fought senate election. Leading candidates roy moore and doug jones have see sawed in the polls. Hass externally, alabama not elected a democrat in two decades. In preparing plans to do with fallout for the nation stemming from tax overhaul. According to an official, the peoples bank of china is ,repared to use Interest Rates controls on the flow of money across its borders, and currency intervention to support the yuan if needed. The pboc in the state and ministration of Foreign Exchange did not immediately reply to question seeking comment. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna brent crude has hit a two point five year high after one of the most important pipeline in the world was shut because of a crack. It advanced 2 in yesterdays session. Joining us is mark cudmore. Good to have you on the program. What are the thoughts from the mliv team on brent whether it goes any further for higher from here or is this the extent of the move we will see with the outage . Mark we expected a spike to be temporary. Always with oil and any disruption there is an overhang of supply and out of the u. S. It can turn around quickly. That does not mean we cant not get spikes. We expect this to be a leg higher that will last into the year. We are getting this spike at a time when were getting several highly inflation whether it is u. K. Or romania. A different problem in the rest of the world. When you hear youre getting Higher Oil Prices it might put. Ore pressure on the bond moves another thing is we are a widening of the wti crude spread. Light liquidity muchf they take up too pain they will close of trade and forget about it until the new year. Whis page,ave on the running a survey. I wonder what you are seeing from the what kind of feeling you are getting from this on inflation in general. In europe and maybe the u. S. As well, inflation could be a little bit higher than central bankers have conservatively forecast. Mark you are seeing the consensus for higher yields next year. On the survey we do have yields for treasury yields and the bund yields. The market is showing the expect slightly higher yields next year. Not aggressively so. This be on this idea that we will have this big bond bear market but they are expecting a jump. The bond yield is coming from the lower level. There is this consensus on the street that we will see a little bit more of an uptick in inflation next year and we will see developed market yields rise slightly. That is expected to crimp gains in equity markets next year. The other thing we see is conservative outlooks for equity markets. For the s p is for where it is now. Flat on the year which is interesting. The thinking around bitcoin after we have seen a couple of days of futures trading and Goldman Sachs inc. Bitcoin is not taking the edge blackrockrading and said there was a bubble. Mark it is important to is ize we believe there it is important to emphasize, we think it is a bubble on the way up and it has a lot more to inflate and prices will go higher but we fail to see the use of bitcoin and how it will have a viable high value in the long term. Butill cause a lot of pain a lot of people are getting more excited and more people want to buy an. The price would go higher. A lot of belief that there. And and buying to hold lot of people want to buy and. The price will go higher but there is a lot of pain, it will come crashing down at some point next year. Where we argue is will it crash in a month or two or several months down the road . I think it will crash in the next year. Screen on thea , 3018. Rg in case customers want to look at the futures contract which has come down and the volume as well. Theres a lot of arbitrage to be played with the new futures contract. 13 was the number we saw yesterday but it is around their. With that coin down a little bit this morning. Do you expect that to be played tooor is this contract disconnected from the underlying asset sensitive getting paid out in dollars . Mark there will be some attempted to play the arbitrage. There are a lot of flaws. The futures contract is cash out. It is not a perfect arbitrage. The other is bitcoin is hard to trade. It is not liquid which is why we have seen this big discrepancy between the price in various platforms. Some people find it hard to sell out of holdings. There is a discrepancy on platforms on the internet and this discrepancy on the futures market. When arbitrage gets wide, people will try to play it. With such volatility you will take a bet where it will settle one day in january or february. That could be controlled i people who have a futures addition. You could find that the futures contract settles a different price. It is not an attractive thing to try arbitrage in. If the spread gets too wide some people will attempt to. I want to tell customers you can go to whs and participate in the survey. I am looking at the bitcoin , 14,000 is the yearend estimate for next year. That seems very conservative because it is close to todays price but there is three days left in which customers can participate. Yields,at the treasury two. 7 , crude 5850, that is the nymex contract. It will be great to see how this survey turns out when more people participate. You can follow marks insights and the teams on the bloombergs mliv. Will bitcoin Investors Join us at my 30 p. M. U. K. Time. They could be bitcoin billionaires if they invested the 11 million in bitcoin when they said they did and if they still hold onto it. Interesting to hear what they have to say. Brent 65, we will get more as crude surges to a 2. 5 year high after the closure of the pipeline. This is bloomberg. Anna this is the European Market open. It is 7 45 a. M. In london. 15 minutes away from the start of the european trading day. Lets get a Bloomberg Business flash. Heres juliette saly. Atos is acquiring gemelto. The french come and he has proposed paying 46 euros per share representing a 36 premium for the closing price. It delivered a friendly offer and wants to engage in discussions about a deal which would be the biggest of the year between two European Technology companies. Walt disney may announce a deal as soon as this week to acquire large piece of 21st century fox according to a person familiar. That comes after comcast, the other major contender for the asset said it is no longer in the running. Disney wants to acquire foxs movie and tv studios, networks including fx and national geographic, and International Assets including a 39 stake in u. K. Satellite provider sky. Boeing has raised its dividend by 20 and announced 18 billion in share buybacks to replace a 14 billion program put in place a year ago. The Quarterly Dividend jumped to 1. 71 per share of from 1. 42 surpassing expectations. Shares rose an extended trading after the announcement. That is your Bloomberg Business flash. Danco has agreed to by westfield. They offer values the australian mall operator at 18 higher than yesterdays closing price. It comes amid a time of consolidation for mall operators worldwide. Joining us on the phone for an exclusive interview is unibailrodamcos ceo. Why this purchase why now . To theup wearing my vans food court and wreaking slushys. That was before amazon. Is it a good investment . Guest we absolutely think so. If we are talking about retail, between a difference the winners in the industry and those that will have a harder time. Westfield is one of those premier brands and platforms that we believe fits seamlessly with what we have been doing at unibailrodamco. So absolutely. This is a strategic transaction creating the first global in the world. Been doingield has well and we have been reporting on that. What kind of changes do you make an lets start with how the purchase is going to work. What is the corporate structure, what is the Management Structure going to look like . Guest the Senior Management of westfield will be returning on the closing of the transaction. The ceo will join the Supervisory Board and the bender of westfield will chairing an Advisory Committee of the Supervisory Board of the new group. It will be an acquisition and will be bringing the talents of two Industry Leaders together. The concept we see is tremendous synergies in terms of the brand, the advertising offering a unified brand platform with 12 1. 2 billion visits a year. We see terrific opportunities by putting these companies together. It is a logical combination. 2007e may have thought in when unibailrodamco got together you cannot apply the skill sets in different countries. We will do the same in this transaction. Morning, thanks for joining us on the occasion of this deal. When i spoke to you in the past i tried to get you to say when youre going to buy more assets in the u. K. This brings you into the u. K. In a big way. Are you not concerned about the slowing u. K. Economy with this purchase . Guest were not going into the u. K. , were going into london. We believe it is a global city. It will be fine. It be choppy . Probably. This is the benefit of having a company of this size, scale, Balance Sheet that we have that we can take advantage of opportunities where others may not. We believe that Westfield London , westfield stratford, this is where people want to be. Toy will continue to want be. People have to eat, watch a movie, and entertain themselves. Anna they may assemble to drink said. Es as matt Family Support a seems the better deal emerges. Predict. Cannot the key element is this is standard under australian rules. The Family Supports it, there is a unanimous recommendation of their board. We believe this offer is the create value to for both sets of shareholders and we will do with what happens if and when it does. Matt if you talk about the synergy you expect to talk come from this deal there is the down payment before you get the return. When do you expect the deal to pay off and what kind of improvement do you expect to see in the results . Guest we believe we are this is going to be accretive from the first full year and especially on the run rate synergy basis, it will take three years to get, it she also energies. There will be more to come. We have tried to make sure that we put in front of our investors and the readers 100 million synergies. We are confident we will be able to achieve those. Matt what does the mall of today look like . As opposed to the fast times of ridgemont high that we all remember as kids. What are the kids doing now and anddo you marry the online brick and mortar experience . Guest we are engaging with the visitors before they get to the Shopping Center. What we have found is especially the younger people do their research on their phones and go to the mall. Want. Er to get what they and also hang out with friends. You have a meal, go see a movie. As we have talked about before, people want to have an experience. Experience does not translate into shopping. More restaurants, food and beverage, entertainment, and some stores are geared toward offering the level of entertainment and brand interactivity with the shoppers. We believe that westfield is a leader like we are on the continent in that field as well. Be more, ithas to has to be about the experience. What does this do to your portfolio mud that when you are buying or the when you have at the moment question mark you have been selling smaller acids to enable you to focus on the bigger assets you say are going to be more resilient to the online threat. Are you selling more of your smaller assets or selling any of the westfield malls that you are buying . We will sell 3 billion euros worth of noncore assets that comes from the word folio. This is a number that we are coming up with not necessarily to support the deal but this is part of our ordinary planning process. The returns are not sufficiently high. We will be selling those. It is fair to say that the u. S. Is not the market where you would want to try to sell secondary assets. We think we will focus on improving them and ride out the storm and see where we go from there. That is a question we will be able to answer following the closing of the transaction. There wereay that doubts about how much transferable knowledge there was between various retail is this is in different parts of the put that together and you say it has been proven you can do this globally so it will be europe, the u. S. , london , where else fits in the universe . At we will have to crawl before we walk and walk before he we run. Our after that we will see. If there needs to be more. Anna thank you. Enough to do at the moment. We appreciate your time. The cfo of unibailrodamco. Lets get a look at the stocks we are watching. We are keeping our eye on oil stocks, the brent prices going higher. The fracture in the pipeline means it will be offline for a couple of weeks. We will keep an eye on how the oil stocks are moving as a result. At i want to keep an eye on sky. One of the most interesting stories as far as m a action you have seen develop over the past few weeks is what disney does with fox. They want to purchase it, comcast dropping out so this could go through and try for century fox, 39 of sky. That would go to the house of mouse and possibly some of those executives would move along with it. Very interesting stock to watch. We are four minutes away from the open. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Or a little internet machine . [ phone rings ] it makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And ask how to get a 200 prepaid card when you buy any new samsung device with Xfinity Mobile. A new kind of network designed to save you money. Click, call or visit today. Anna this is the European Market read less than a minute to go until the start of European Equity trade. Are watchingre we is anything oil dependent. Any of the oil stocks. We see brent crude prices coming higher as a result of the temporary shutdown of the pipeline in the north sea. Pushed crude prices higher, the brent higher in mondays session and continues this morning. We are up another 1 on the brent crude price. Lets have a look at the futures. Expected toutures be higher by about. 2 . The ftse 100 up 1 . The session in asia was pretty lackluster. Certainly keeping an eye on what we will see in europe as we head ports the start of european trade. A lot of Central Banks giving us their thoughts this week. European equity market trading underway. Opening prices. We expect to see futures a little higher at the start of trade. We seem to be getting that on the ftse 100. Move to the upside. So many Central Banks meeting this week. Clues from the fed, the ecb, bank of england about policy and how loose or tight we see it into 2018. Going and the ibex a little higher at the moment as well. Up. 8 on the major markets that have open. The dax, a little bit of a light art likert. Laggart. A lot of m a to talk about, whether it is jim eltel gamalto. Percentls up by 18 of a in todays session. Up one fourth of a percent. Consumer discretionary and staples a little bit of a laggard. What i want to do is take a look under the hood so to speak. Individual stocks are doing. The first thing i am looking for , in i hit this move screen look for Oil Companies. Inause of the price action the underlying commodity, brent crude hitting the highest level in two and a half years. Shale, bp, hotel, those will all be big movers, especially for the ftse and the cac. The dax is not an oil heavy index at all. You do see them on the upside and helping to lift the stoxx 600 index up. About the second largest Equipment Rental company in the u. S. It is based in london but 90 of its revenue comes out of the u. S. ,hen you seen glaxosmithkline some of the Pharma Companies doing as well helping out the stoxx 600. If you look at the companies that are hurting or dragging on the stoxx 600, you know by road emco rodamco. One and one third percent. It suffers from accusations it cheated on diesel. Hashis point, bmw proclaimed its innocence among german carmakers. That could be one of the reasons you see bavarian motor works falling this morning. We see much some of the more defensive stocks down, anheuserbusch, pernod. Anna . 8 03 in london. Equity markets just opening up. Traders are playing it safe ahead of the feds final Monetary Policy of the year today. A rate hike all but baked in, focus will be squarely on plototcoms for any dot for u. S. Policy tightening. Traders are betting on about two 2018 hikes, while a forecast was for three in september. Some suggest the forecast could climb to four at the conclusion of tuesdays meeting. To discuss, richard join jones joins us from berlin. A rate hike first suit nailed on them for this week, what is the prognosis for 28 team. We spoke to a guest yesterday who said a lot depends on the extent to which the fed bakes into the cake the tax plans that are currently in their various forms passing to washington. To be a that is going major consideration in 2018. The other thing is, we will have a little change in personnel. At the top, jay powell, but a governor post is coming open and bill dudley from the new york fed is going to be leaving. Onhink personalities matter the fed. Institutionally, the work of the the entire across organization, but individuals matter. Leadership at the fed is important. On the one hand, you get continuity from jay powell because he has been on the yellen fed as a member of the board of governors, but going forward, that little bit of uncertainty is why we are seeing the market taking a cautious view on prospects in 2018. Sure, i think the whole tax plan will feed into this without a doubt. Anna we will keep an eye on the personnel. , where dop dots we expect do we expect movement in these dots to be a a part of the conversation out of this tuesday fed meeting, because there is already a gap between the markets and the dots. If the markets go dots hired to the markets go with them . The dots will be the key talking points from the fed. Forward, the disconnect we have between the market and the but not as wide as previous years. In 2015, it was a wider disconnect. Squaring that will not be a problem. Lets say we get four dots from next year, you might get a small reaction from the futures market, but realistically, everyone is that tax plan, the makeup of the Federal Reserve starting in early next year, and as a result, i expect caution to prevail amongst investors until we get more clarity on those issues. Matt i wonder what you think of real rates here. I am pulling up a chart customers can access here. Core minus cpi, this will be affected by oil. Is then says 1 , which red dotted line, is a key Inflection Point for the markets. We still have a long way to go till we get to that. Do, and focusing on pu, thei or course co court is the target. As a result, i am hearing a lot more caution from fed feast speakers about why is inflation not higher than it is given all the stimulus the economy has had . I think the real rate is still well below the level where we start to get a real impact. Inflation should be higher than it is and it isnt. Matt how important is the difference between core and headline . People are talking about the difference a spike in oil would ate globally, but most look the core numbers. That should matter at all. Richard i have always viewed ae rise in energy costs as bit of a tax on consumers. You philip car at the pump and it will cost you more money. It feeds into the economy as something that will take away from Discretionary Spending on other things because consumers have to pay for a fixed cost for them. Matt it could even act as a brake on the core. Couldd i think it because it reduces spending on other things. Petrol is a big cost on people and if that cost goes up, it reduces spending on other things. Matt anna . Anna lets thank Richard Jones. Matt sorry, i will think richard thank jones. You will stay with us in berlin. Coming up, laying down the law. The brexit bill continues to make its way around parliament as mps look at legislation. That conversation next. This is bloomberg. This is the European Market open. We are 11 minutes into the trading day and one stock that has caught attention is jamaal gemalto. Seeking to create european leader in cybersecurity, Digital Technology and payment surfaces services. Up by almost 30 . Beenfriendly offer has proposed to the board on november 28. We have heard from gemalto this morning and they are reviewing the proposal. U. K. Time, gone 6 00 they will determine the bed review the bed and to determine the best course by december 15. Matt we will continue to cover the envy news. Nv news. Theresa mays brexit bill will make its way through Parliament Today as mps scrutinize key aspects of the legislation. Meanwhile, liam fox said the u. K. Would like a trading relationship with the eu after it leaves the block that is identical to the one it has now. Anna mcdonnell also told about the need for a close relationship with the eu. The issues around the four freedoms, particularly the freedom of movement have to be addressed. I think those issues will be addressed anyway. Not just in the u. K. , but across europe. That enables us to have this relationship which is as close as we can get that will protect the jobs and protect our matt Richard Jones is still with us from berlin. Vincent fox says he wants an identical trade relationship to what they have now. In theresa mays breakthrough agreement on friday, the fallback plan would be to have identical Regulatory Regime to what they have now. It leaves me to wonder if anything will change postbrexit . Richard i think that is the key the hard brexiteers in the conservative cabinet wont be pleased with that. They will be looking for something very different to that and so far, i think what we have seen in the Weekend Press at the u. K. Show that cabinet has not yet fully is not yet fully in line on what they want as the next phase. What the endgame game is. That determination is yet to be made. If i am looking at it in terms of how markets are reacting, when the pound rose on friday on the back of the news, it was a very shallow rise. Andre actually now falling i think there is a realization among investors that now is when the heart yards start. Everything up to now has been prolonged and the real negotiations begin, and they will be more tricky than what we have seen up to now. Tot and theresa may wants finish negotiations she has put into her bill by march 29, 2019. Not that much time to get a deal that is at least better than canada. How long did that negotiation take . Richard many, many years. Whole idea that everything is going to be wrapped up in the First Quarter of 2019 is very ambitious. Probably not realistic. I think the negotiators on the eu side have made that point on several locations. Why the u. K. Wants to push that agenda, but i think it is probably going to take longer than what the uks hoping for. Anna what are we expecting on the u. K. Inflation story. It has been on the rise as a result of the weakness of the pound in the brexit vote. I was amazed at how little progress we have made after the initial falloff in 20 16 at regaining any ground despite the recent rallies. What do you expect . My screen shows me cpi in the u. K. Was previously 3 year on year. That was the last months number. What are we expecting . Challenge forig the u. K. Economy has been, you take the Inflation Numbers in context of what the wage gains are doing in the u. K. We have negative real inflationadjusted wages here. That dynamic has been the postreferendum reality and it doesnt look to turn around any time in terms of the headline inflation prints, a could be the impact from the weaker pound will see these inflation prints start to top out, if not now, very shortly. We need to see wage gains commiserate with those to see s pickup. Holdw anna the squeeze on the Household Economy very much on the domestic. The ftse 100 and u. K. Stocks not just a reflection of the u. K. Domestic story. This is showing the underperformance of the ftse we have seen since the beginning of this year, comparing it globally to the stoxx europe 600, clear on the performance. U. K. Equities look well in terms of valuation, but you have to be invested. I think it is very much a stock pickers market and you have to look at individual stories and that is may be especially true in the u k, given the playoff against the pound and the uncertainty there. Becoming any more clear now that it has been during the entire process. Earlier, the really hard part of negotiations are about to begin. You can see why businesses are nervous about that uncertainty because the march 2019 date is looming large. Richard, thank you very much. Bloombergs Richard Jones in berlin. Up next, we will look at some of this mornings movers, including an acquisition offer for 3. 4 billion euros. Anna welcome back to the market open. Lets get your midcap movers of cake update with nejra cehic. Nejra gemalto up more than 30 right now after atos offer to buy a for 4. 3 billion euros. Said it is reviewing the proposal at the moment and gemalto have been under pressure amid slumping demand for its chips, but they are getting a lift today. , up fourh ashtead point 2 . Second quarter beating expectations, also launching a buyback. Its shares have hit a record high this session. On the downside, greene king downgraded to underweight at j. P. Morgan. That seems to be putting shares under pressure, one of the worst performers on the stoxx 600. Thank you very much. Brent crude has jumped above 65 a barrel for the First Time Since 2015 after the closure of a major north sea pipeline. Crack in thesaid a system is expected to take two weeks to repair. We will be speaking to the companys director later on the program at 8 30 london time. A fascinating subject. Joining us now from singapore is expert. Odities what is so important about this pipeline . The pipeline is really globallycritical a critical piece of him to structure. It is not significant in the amount of crude it transports, but really what is most important about it is that those crude fields supplied the blend 40s blend of crude. It is used to determine dated brent, which is the benchmark for about half the worlds crude oil. That is why you are seeing the reaction we are seeing today in the brent market, in particular. Anna what other impacts are we seeing in the market despite the brent price . As well as this move you are seeing in the flat price in are also key market spreads reacting pretty dramatically. Notably the brent time spread between brent and the further out contract. That has quadrupled in the past four days. That is an indicator of the of tightening supply. You have also seen the brent ti spread, premium brents command over u. S. Crude futures. That has increased to about seven dollars a barrel since this outage. Key Trading Opportunities there if you can get on the right side. Matt what does this mean for Oil Companies . Oilaid this comes from 80 people fields. I know the apache 40s charlie platform is one of the ones up there. Do they sit on the ones they have . What do they do with the oil . The key conduit out of that area, some might be able to barge it out of there to other points in the north sea. Largely, it probably means at least a reduced output from the platforms. It is bad news for them. It is bad news for any operator. Refinery is at the far end of this pipeline that needs crude from the pipeline to operate. This is also potentially problematic for european oil refiners. As brent prices rise, so do crude costs and that is going to put pressure on the refining margins. There may come a point when they decide it is too much and they may trim runs. That is who it is significant for. Anna and are right in saying this has not operated for all that long. Is that of interest in looking at how this story has developed . Alex they have owned that refinery at the end of the pipeline for longer, but yes, it only took the Pipeline System from bp earlier this year. They wont have the experience bp has got, but they will be cord knitting on getting that pipeline up and running. They say it could take up to two weeks. It depends on the nature of the damage. It make it is onshore, which makes things easier. Matt im sure there hasnt been any spillage, otherwise we would have heard about it, but what is the nature of this crack . Does it go all the way through the pipeline . Alex that is as of yet unknown. It is a hairline crack. I dont think there has been significant spillage and no contamination of water or anything, because it is on shore. These things are pretty unusual. I cant remember a crack like this. I do remember about six years ago, the 40s Pipeline System was shut for a few days because of an unexploded world war ii mine that was discovered near the pipeline. These are questions we will put to calm tom crotty. , thank you fori joining us on this developing story. This is bloomberg. Matt we are 30 minutes into the trading day. Here are your top headlines. A crack in a key crude link. Brent jumped above 65 a barrel for the First Time Since 2015 as ineos is forced to close its Forties Pipeline. We will speak to tom crotty to get more details. In dots we trust. Traders play it safe and advance to the final meeting of the year. Will there be any signs u. S. Policy tightening is set to hasten . And the fox and the mouse. Walt disney is said to be near a deal for a big chunk of the murdoch empire has comcast checks out of the race. Welcome to the european open. I am matt miller in berlin alongside anna edwards at bloomberg headquarters in london. Anna lets have a look at how things are shaping up. This is the grr function on the bloomberg. It tells us how we are performing sector by sector. Gaininggas the biggest sector. The stoxx 600 a little weaker despite futures showing is higher. The oil and gas move is up by. 6 . 7 for oil and gas stocks. The price of brent going higher yesterday and today is helping push higher. Activity in the technology. 6ce, one reason we see percent higher in technology. I see real estate moving down. 7 . Westfield in australia, being bought by a demko. Interesting to see we saw weakness in the early part of the trading day for rodamco. Britain wants a trading relationship with the eu after brexit that is virtually identical to the one it has now. Theking in point of cyrus, trade secretary liam fox said keeping a similar arrangement would ensure a smooth transition. The chief negotiator Michel Barnier warning that given prime mayser mays therese donald trump says the bombing attempt in new york city shows the need for immigration reform. He was wearing a pipe bomb that exploded in the Port Authority bus terminal, injuring himself and three others. That theton said suspect was admitted to the u. S. 2011 on aadesh in family visa. Votes were cast in a senate election, leaving roy moore and doug jones have seesawed in the polls. The processes extraordinary, inre no democrat has won more than two decades. Chinas leadership is preparing to deal with any fallouts stemming from the u. S. Tax overhaul and the feds expected interestrate increases. The peoples bank of china is prepared to use tools including Interest Rates, controls on the flow of money across its borders and currency intervention to support the yuan if needed. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more. Han 120 countries this is bloomberg. You, ed ludlow. Manus cranny is at the Arab Strategy Forum in dubai. He is joined by a guest. Manus . Manus thank you very much. I am joined by professor djokovic stiglitz. Panele been debating on a of things. Talked about we the tax deal, the tax change that may come. You, if i may paraphrase, were very scathing. That is right. I think it is probably the worst tax bill i have seen in my lifetime. 1986, when reagan had a tax reform, it was very well thought out, i thought there were many revisions needed in it, but they wrote down a new friend blueprint, they argued among experts about the details, and they adopted it. It was simplifying, getting rid of a lot of the loopholes. This is going in the wrong way. There is no blueprint. Corporate i say the theial interest feeding at trough and everybody trying to get as much as they could as fast as they could. Bill thatp with a tax on a majority of citizens in the second, third and fourth percentiles to pay for a tax cut for large corporations and the billionaires at a time when the rys major issue is inequality and it creates in normas distortions of prosperity sectors, new loopholes of an enormous magnitude. The only sector that will really benefit are the real estate sector and the tax lawyers. Manus the lawyers always get the money, sir. Lets circle back to policy. That is a lambasting and a half. If i take it back to the Federal Reserve meeting, they have now got to consider the possibility of this tax deal, the worst ever as you say. What is there risk of interpreting this deal . Macro point of view, they will be looking at the overall numbers, the one point some trillion dollars increase in deficit, normally in macro models, that provides substantial stimulus to the economy and they will worry about overheating the economy 4. 1 isin normal terms, called close to full employment. In their mind, they are going to as a time to maybe it seller it the increased in Interest Rates at the same time that these are overall macro, the tax bill has a lot of strange provisions. For instance, it taxes the parts of the economy that are most dynamic. Our education sectors, and our east coast, west coast, and the question is, those who benefit, will they grow to offset those who are taxed who are going to be contracting . Hass the market penciled in four and three more hikes next year. Could you see it being more aggressive next year . Joseph it could be more aggressive i how much . By how much . Joseph they will be feeling their way and because there is so much uncertainty with this tax bill and we dont know what is going to look like it is going to look like, many inside the tax bill are several provisions that are almost surely not wto compliant. Normal government, you would say we have to rewrite that. But this government, which is antiwto, they will say we will go ahead and start the trade war. We dont know which way this will go. It back to ake i look at some data. Createdufacturers have 27,000 jobs on average each much month in the past four months. Soft dollar has added, i presume, to that. My question to you is that economics, is the strong dollar policy dead in trumps mind . Know what goest on in that particular mind forgive me. Joseph but he has finally learned that a weak dollar is good for exports and good for getting a trade deficit down. Doesnt fully grasp, perhaps, is that the value of the dollar is not controlled by the president. He may have a lot of powers, but that is not one of them. The value of the dollar is basically determined by underlying macro economics. The underlying macro economics that he has been pushing, namely lead to aut will large fiscal deficit, which will almost surely lead to a large trade deficit and the mechanism of that trade deficit is a strong dollar. I think we can count on the likelihood of a stronger dollar if this tax bill goes through. Manus that could be the consequence of the tax bill. Global Central Banks are in the age of easy money is over. We are in the foothills of a big change in centralbank policy. Who is going to potentially deliver the biggest shock or the biggest impact . Is it the fed or the bank of japan, or maybe even china . What are your thoughts . Joseph i think it will be the fed who is leading the way. Their concern a 4. 1 , we are at the edge, in their mind, of full employment. That we may bed facing another recession in a few years time because it has been a long time since we have had a recession. There are those who emphasize that we need more ammunition for the next time around. I think what you are going to see is the strongest action being taken by the fed. The interesting question is, what will be happening at the European Central bank, because they face a dilemma. If they follow the United States and try to keep things in normal balance as they have often in the past, italy faces a problem. Italy has such a huge deficit relative to its gdp. Its Interest Rates rise, it Interest Rates rise, it becomes difficult for them to manage their way through that and europe could go back into a crisis. That would mean they will be more constrained in their adjustment. Manus that could have an impact on growth. I dont quite know how we go to the coin question right now. Bitcoin question now. What would make you reconsider your position in terms of the social uselessness of bitcoin . Im paraphrasing your words. Joseph i have not seen anybody provide an argument for why bitcoins are socially useful. What are bitcoins about . They are a medium of exchange. Traditionalat textbook economics, what is a good medium of exchange . We have the dollar, the euro. Manus but we were doubtful about gold. Goodh gold is not a exchange. Is it stable against the dollar . No, it is all over the place. That is not what you want from the medium of exchange. Is a transparent . No. It is because it is not open and transparent that there is a demand. Whodemand is for the people want to engaging in legitimate activities and in my mind, as thatas it becomes clear there are significant amounts of these kinds of illegitimate illegal activities going on, the government will shut it down and when that happens, the demand bitcoins will disappear. The alternative approaches for the government to say if you are going to engage in Financial Transactions over bitcoins, we will insist on the same kind of transparency that we require of the natural transactions over the financial system. Over our banks. Why should this be favored over Financial Transactions through banks . Currently favoring it because we dont demand the same transparency. Once we demand transparency, again, i think the demand for these bitcoins will disappear. Manus too close, what is the biggest risk from an economic point of view in 2018 . Trump i think overall, is the biggest risk. We dont know what he is going to do in any dimensions. That includes foreign policy, north korea, there are a level of it radishes and erratici sms, that make prediction difficult. U. S. Withdraw from nafta . The very idea that he propose we will do that will create turmoil in one or more markets around the world. Manus thank you very much for being with me on bloomberg today. Enjoy the arab foreign. A great conversation on stage this morning. There you go. Everybody on the European Market open show and daybreak will be delighted to know that in 2018, i am not the risk. Somebody else. Matt thats the forecast. You could still turn out to be the risk. Manus cranny joining us from dubai with Nobel Prize Winner joseph stiglitz. Lets get to our top stories as the market moves on. 45 minutes in. Nejra cehic . Nejra a second day of stunning gains. This after the stock was really pummeled last week, rising the most since 2015, up more than 40 . A word from the chairman, a standstill agreement on a marginal. The stock still rising off the high from that news. 3. 6log semiconductor up percent, rebounding from a threeyear low. Its power conversion chipset is being used in a smart series. That seems to have given the stock a lift. One of the worst performers, odamco, it has agreed to by westfield for about 16 billion u. S. Dollars. The biggest Property Acquisition since 2013. It is part of a wave of mergers and acquisitions in them Shopping Center space. We heard from several properties recently. This would be cash and stock and has been recommended by westfields board. Saw unibailrodamco down by 2. 7 . Matt thank you for that. Lets talk more about oil and the effects of a hairline crack in one of the most Important Oil pipelines, the forties Pipeline System in the fourth north sea is crippling crude markets. Brent jumped above 65 a barrel since the first time for the First Time Since 2015. Is to bes the pipeline closed for two weeks. Tom crotty joins us. I am looking at a map of the on the Pipeline System bloomberg terminal. We can see it from the bank in the north sea over scotland. How big is this crack describe to us the nature of this crack in large diameter pipeline. Morning, matt. Simply, this is a 36inch pipeline. We have a hairline crack that is long atve to six inches the base of the pipe. That is what we found over the routine maintenance process we did over the weekend just before the weekend. Sure now thatbe nothing has leaked out of the pipeline . That there hasnt been any via environmental contamination . Tom absolutely, we know for sure there has been no impact on the environment. We discovered the cracked through a routine process where we send a device along the line, that detected the crack from the inside. We been excavated the pipeline out, found the crack. We dug it out, found it at the base where it was sitting against a piece of rock. We can see visually there is no leakage from it. We reduced the pressure on the ipe over the weekend. It went from 10 millimeters to 16 millimeters, the crack, so it spread an inch or two. At that stage, we decided we couldnt keep the pipes running, put a collar around it to repair the crack, because we couldnt be sure it would continue to grow. That is why we had to shut the pipe down and do a repair, which will take a couple of weeks. Anna this is quite a recent crack . It sounded as if it could be quite recent due to the rate it has been spreading. Tom it is difficult to say, but you are right. The likelihood is the propagation, the increase in the ge, from acracka safety point of view, it is the safety of the locals, our people working on the pipe, we made the difficult but right decision to shut this down and make the permanent repair. During that twoweek period, we morebe able to do a lot extensive maintenance to this 230 mile pipeline. We will take advantage of that to do a good maintenance job and hopefully avoid the issue recurring anytime soon. Anna you have talked about a twoweek shut down. Exactly howu know long this pipeline is going to be out of use . Tom we should know within the next few days. The normal repair system we use for these sorts of issues is, we would have already prefabricated sleeves which can be clamped around the pipe to do a rapid repair and we dont have to shut the line down. We know that is not going to work. Assessing they are the repair methodology where you take pipe out, have a new piece fabricated, but we will have to have something fabricated to the repair and that is what takes time. We will know in the next few two whether we are talking or three weeks. That is likely the time we will need for this. Carries 30 ipeline youyou ks oil, right oil,il, right uks right . How much will that cost . Tom that is more than 6000 barrels a day, just over 25 . That will all be down. Clearly, everybody, all the shippers are making alternative arrangements. There are other ways of moving oil and for the refineries who would be receiving that oil like our own, we have a big refinery , we will be making other arrangements to bring oil through sea routes rather than pipeline routes, which all refineries can do. We dont think it will impact the availability of fuel in the u. K. , but an issue upstream for operations in the north sea who cant now flow down the line. That will reduce production. That is expensive. Expensive for our shippers, that is where the real hit is here. Wehin the bounds of safety, want to make this repair as quickly as we possibly can because we are losing a lot of money on a daily basis. That has to be short. Matt you have got to do it, but you have to do it right. Costs have to be enormous. You have an estimate for that . Do you have an estimate for that . We dont have a feel for the actual number because it really depends on the alternative arrangements that we made. What the costs are will depend on the arrangements and very from one shipper to the next in terms of how much they do and how much it will cost. It is impossible to put a figure on it. This is due to unforeseeable circumstances prevent you from fulfilling contracts, is that what you are saying . Which contracts are we talking about . Tom clearly, we have contracts to ship basically the Forties Pipeline business is a shipping business to move oil from the forties platform into the u. K. Oil system. It flows through the line offshore and onshore. It flows in and we process the oil, pulled the gas out of the oil and we take some of the oil ourselves and send the rest into the u. K. Distribution system. That is the way the system works. What we will not be to do able to do in the next two weeks. Anna you have recently taken over this pipe from bp. You have already suggested that this is a very recent crack. You rule out that this is something that existed at the time you took it on from bp . Tom impossible to say. We have owned the line since the 31st of october. Just over a month, six weeks. It is impossible to say where this came, but this is part of a routine maintenance inspection. This could have caught happen to six weeks ago, it has happened on our watch now. This is a 42yearold line that started in 1975. Clearly, maintenance is essential. You will find these issues. This is unfortunately, given our recent ownership, a issue to tackle up front. We are used to running very big systems in our refining business and indeed our offshore gas business, so we are perfectly able to manage the situation, but it is one of those things that has happened on our watch. So it has happened on your watch, does that mean you are not going to be talking to bp about whether or not they knew about this, whether or not they may be responsible for it . Conversation with bp would absolutely be private, but it is impossible to have the conversation now because we dont know enough about what has happened. These issues are routine in as much as you do find cracks on major pipelines. You have to repair them. The unfortunate thing with this the normalant do online repair that is done on a fairly routine basis. We have sleeves available, ready to clamp on the pipe if we find an issue. This is one that will not be suitable to have that sort of repair and that is why it will take that much longer. Matt why is that . Cut out ayou just piece of the pipe that is cracked and put a new sleeve back on it . Tom basically, what you would normally do is to do that, you have to stop flow. Normally, you would not stop the flow and simply clamp an overc lamp, a sleeve outside of the pipe that would effectively seal, a bit like a large patch when you used to repair bicycle tires. You put a clamp around the whole pipe, which would seal a small crack. The problem with this crack is it has propagated, lengthened, you couldnt guarantee that if you put a clamp around it, it wouldnt continue to lengthen under the clamp. You have to take it out. The logic is, we have to do what you just said, which is take the section of pipe out and replace it. To do that, you cant have oil flowing through it. Anna tom, thank you very much. ,om cotton, director at ineos giving us some great detail on that news. Matt absolutely fascinating. Up next, we go to bloomberg radio. Surveillance here on television. Rand brent goes above 65 dollars for the first time in 2. 5 years as the pipeline is shut for repairs. High expectations. Janet yellen prepares for the last policy meeting of the year as markets see a rate rise is a foregone conclusion. Ox in the mouth walt disney said to be near a deal for the good chunk of the murdoch empire as comcast drops out of the race. Welcome to surveillance. I am mark barton. Lets check in on the markets, one ho
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