summit there. the kremlin has said both sides were working on a feasible time, but rex tillerson has said the meeting was irrelevant. progress on issues is not likely. the trump campaign is under investigation into ties with the russian government during the presidential election campaign. and the yuan secretary-general says it is essential that piece is reserved in lebanon, warning the conflict could have devastating consequences to the region. he told reporters that the united nations headquarters today, he has had intent contacts with saudi arabia and lebanon, and also with other countries in the region, where with an influence in the region. another roadblock coming up in the brexit talks. the european union calling for a trade rules to be the same on the -- in ireland and in northern ireland to avoid a hard border. that is almost impossible for

theresa may's government, who has said they will leave the market. and the british economy on a mixed note for the quarter. construction fell the most in 18 months. the trade deficit did shrink, but it was not enough to keep the shortfall from widening in the quarter. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. ♪ julia: live from bloomberg headquarters in new york. i'm julie chatterley. scarlet: i'm scarlet fu. joe: i'm joe weisenthal. julia: we are 30 minutes from close of trading. stocks are heading for a weekly drop. a touch of volatility written into the markets.

joe: what did you miss? scarlet: china opening the financial system, even as some investors have lost interest. is it too late? and in washington, the senate finance tax bills could derail hopes of tax reform before the end of the year. they are clashing on everything from the number of tax brackets to the timing of a corporate cut. and pressure on for the you get a reach a deal on brexit, the eu raising talks of ending the year without an agreement. and it is tumultuous for theresa may. trump's big win for trade and he did not even know it was coming. and a historic move, hours after the president left beijing, the chinese president removed ownership limits for financial firms. now the floodgates are open to the world's second-largest economy, but will foreign

investors take the bait? here to break it down as peggy collins who oversees u.s. investing coverage at bloomberg news. talk to me about what was actually announced, because the skeptic in me goes -- hmmm. >> we have spoken to people who had a similar reaction, wondering if this is more symbolic than transactional, but essentially with the government said today is we know we have been pushing you out and potentially now we will let you in in terms of foreign ownership of our own banks or investment firms. one of the things to note it sounds like, they have a timetable, about three years out in a lot of cases for the things that are rolling out, but that is essentially what they were indicating, they are opening the doors to foreign o ownership and control. julia: in the insurance sector, i believe it is five years. scarlet: maybe 3-5 years.

we were comparing how it sounds similar to president trump saying something will get done in the next two weeks joe: five years -- two weeks. joe: five years in china is the new two weeks. scarlet: what do foreign companies want to do with the 51% stake they could not do previously? peggy: one thing we have looked at his a lot of the asset managers globally around the world have seen the pressure, and it has encouraged them to find other places for growth. u.s. managers have looked overseas for growth. so you have seen companies like blackrock and vanguard ramped up their sales over in europe, but they have not been able to do that as much with asia. this could enable them to do two things, feel more confident about selling products through some chinese asset managers, but also potentially take stakes and

use consolidation as they have in the u.s. and europe. joe: are there some players who seem like the obvious candidates to go in and start buying? peggy: one thing we thought about today was pimco's ceo told us in may he was looking to expand globally and is looking in asia and latin america. he did say that china is tricky, or it was at the time gone because of restrictions. that is one firm without would be interesting. the vanguard ceo also told bloomberg earlier this year that they expect to expand their staff in shanghai to 15 by the end of the year, so they were already starting to ramp up their presence. scarlet: and in the banking industry, you kind of question how much demand there is, because bank of america and goldman sachs they recently exited some chinese banks. julia: exactly. what about for these guys?

peggy: the question is whether or not we will see the u.s. banks go a little flat. they tried to make inroads and then took resources out. the other question we're wondering, on the asset management cited there is opportunity for consolidation, but on the banking side it there are many people question marking the debt of china. and whether or not there will be enough transparency to make people feel comfortable taking these stakes. scarlet: and it highlights the extent of the borrowing binge china has seen. the white portions, this is a percentage of gdp that has been rising. but the bars over all steadily climbing. people are questioning the move to open the doors to foreign investors. joe: corporate debt is a percentage of gdp over 150%. of course it raises the question

of, why are the chinese doing this now? if someone is selling to you, what do they know that you do not? peggy: and if it would be smart to take on a stake in a bank where they might have something in the closet, some dark things going on. julia: very big. and never syndication potential, the gains, maybe perhaps have a western influence could re-energize. peggy: it is true. we saw some merge in london just this year. so that is a prime example of how they said, we will have a stake in one area of the world, and sell our products more easily. in an asseta stake manager in china it could be easier to do that. scarlet: you talked about pimco and the interstates -- intricacies of china. have you heard other ceos are companies saying that they want

to tackle china? peggy: yes, and the reason is because of the growth and wealth in china, they are on track to become the second largest area of access in terms of people who are wealthy. they have an emerging middle class as well as more wealthy people to sell products to. and the other question is whether or not chinese homegrown companies will have a good head start, by the time they actually really get there and get in the door, that it will be too late. alibaba has the largest money market funds, essentially like amazon selling the money market funds to people in the u.s.. three years from now i expect it will be even bigger. julia: what more do they need to hear from the chinese in order to be would go, ok, in three years you said the ownership limits will increase to allow somebody to take a 51% stake in a company and take it over, so what we need to see to even start to think about the opportunity of scalingup or

buying something? side theythe banking need to hear about transparency, that they could get inside the books of a certain company. and the second thing, regulation. in terms of buying a company, you want to know the regulations and what am i able to sell. and the third, who are the customers? how large is the base of customers and how wealthy are they if we are going to sell wealth management products to them. scarlet: thank you. peggy collins on the big bank story in china. peggy covers, i should say you lead the coverage here at bloomberg. coming up, leonard lance talks about his opinions on the new tax bill and how much of an impact the election really made on his party. this is bloomberg. ♪

♪ scarlet: the details of the amended tax bill are out and congress is divided. the new jersey congressman leonard lance said he would vote against the current tax bill. take a listen. >> i do not support it in its current form for the reasons you suggested. the average deduction in the district i represent a $21,000 and we're making progress, but we are not there yet. the senate version completely eliminates it. >> how much of it is really big into the way that senators -- baked into the way that senators are elected? -- senators are elected statewide, said the do not have the same incentive that you did it take care of constituents. >> i would argue our senators in new jersey would enter the fight

and i am critical of the democratic party data, because they have been critics but they are not indicated what they will support. i would hope they would indicate what they support. i favor many of the proposals in the tax reform bill, but this is a deep hurdle for me because of the district i represent. >> the house bill cuts mortgage caps to $500,000, not so from the senate bill which leaves it in fact. could you support such a move? >> i favor leaving it where it is. this only affects new mortgages, so if you have a current mortgage you would not have a negative impact. but i favor leaving it where it is, because as you know this has been a criticism by the homebuilders and by the real estate industry in the country and i think there is a strong tradition in this country to make sure that as many americans as possible are able to purchase residences. >> there are some he thinks

people would like to have with tax cuts, but we have to pay for them and whether it is salt on the republican side or the reduction in mortgages on the house side come is to pay for the cuts. theconcerned are you about deficit are you and how would we pay for the cuts? >> i think we should recognize we do not want the deficit to be extremely high. i favor a modest amount of dynamic scoring, but a non- -- not a non-realistic amount. and for example, the corporate rate is going to go down to 20% and maybe that could be moved a little bit. i do not think it should be borne on the back of those of us in states like new jersey. new jersey sense more to washington per capita and receives less back than any state in the nation and i want this to be a winner for all states. >> how do you balance the fact you need a win for your constituents, but the gop also

needs a win on some legislative progress -- does it give you pause when you are going against this bill? >> i think we should have tax reform, but i do not think we should do it fast. we should do it comprehensively and in a fair fashion. that is why i think it could take longer than november or december. the last time we had major tax reform was 1985, and it took two years. >> how do you read the elections on tuesday? as a republican representative, is it for your own district, or as a look at fellow members of congress, how will it affect the tax reform plan? >> speaking about the district i represent, we had an election for governor on tuesday and my side lost, but the republican candidate carried the district that i serve by about 14,000 votes and i was pleased to see that. secretary clinton had carried my district by 1300 votes, i carried it by 38,000 votes, so i

prefer the extra zero but i point out that a writ broken -- point out that the republican candidate carried our district. we were not successful in virginia and new jersey, and i think it was based on circumstances in those two states, but i would not over read what happened. >> are you saying there was not a referendum on president trump or the gop? >> after eight years of one-party being in power in new jersey, the other party usually comes in the power. these will be based on national issues next year. >> doesn't make tax reform more likely or less likely to get enacted? >> i do not think the elections will have a strong imprint on tax reform. i think we should do tax reform, but i want to do it right. scarlet: that was congressman leonard lance speaking earlier. julia: time for the bloomberg business flash, a look at the biggest stories right now. shares dropping today after a

senate tax plan revealed operators will have to pay more taxes if the bill becomes law. the levy on cruise liners is included in the house version of the plan. the three largest lines, are miami-based but incorporated carnival,with norwegian and others declined to comment. next week, total estimated value of the $1.6 billion, about 45% more than last year's sales. highlights in the offering include a rediscovered da vinci estimated to be worth about $100 million. valued at $50 million. and a ferrari estimated at $5.5 million. this is that southern these. and brokers may have found a way around the tax plan proposal under consideration in congress that will eliminate the mortgage

interest reduction for second homes. one client for the broker plans to turn a vacation home into an investment property by setting up a limited liability company. it will enable him to deduct the interest and earn rental income at the height of the season. that is your bloomberg business flash. scarlet: that is unfortunate for anybody who is in negotiations to purchase a vacation home. i wonder if anything is falling through with anxiety ahead of the tax reform. scarlet: in aspen as much as second homes are purchased with cash. joe: when you are buying second homes in aspen with cash, you are not worried about it. scarlet: we are looking at homes that cost less then $1.5 million that will get hit. julia: i saw the da vinci this week. it is worth seeing. scarlet: weekend plans. we are getting to the stock of the hour, passing a milestone today.

square's cap surpassing that of twitter. julie hyman is here to discuss. julie: he is doing well. even though twitter has been down a lot. and twitter is kind of coming up from the lows to some degree, although it did not do well in the earnings report. take a look at the bloomberg, we have the market cap of each of these, so sort of like he is hedged. if one is not doing well, the other is. square is the white line. and i was emailing with our team, as well as with andrew, who looks at wealth issues. he said if you look at the filings, jack dorsey has about $200 billion of square stock and only about $266 million worth of twitter stock. and he has more, the square shares are in class b, where as class a is where we tend to

track it. it is interesting to look at how it shakes out between the two companies. joe: somebody should make an etf that is 50-50 balance between the two of them. scarlet: we can explore that. [laughter] joe: we would have a whole story to talk about. scarlet: shameless plug. joe: get eric to figure it out. scarlet: there is an etf for that. that is one of the themes. is up, thesquare company has applied for a charter that would allow it to form a bank and an analyst said today that the -- made comments about commercial companies moving into banking, whether it would be positive for square. julie: that is the catalyst for them to take this recent leg upwards. the interesting thing is, you think of square as a payment company where you go into a small merchants and they have

the platform, or even a flea market. but increasingly they are getting larger and more corporate customers to sign onto the platform as well, so that seems to be boosting the numbers. scarlet: and where there is one, there are many, so maybe the beginning of a new market. ok. julie hyman, thank you. coming up, is the junk bond bubble ready to burst? we have a chart that could reveal the answer, it depends on how you look at it. this is bloomberg. ♪

♪ scarlet: i'm scarlet fu. "what'd you miss?" the selloff in junk-bond a theme this week and we are wondering if it is the start of something bigger. let's put it in perspective. this is from bloomberg market's blogger, sharing the combined

shares outstanding of the largest etf tracking high-yield. it is a proxy for funds close. go to this part of the chart, hardly a standout. not looking dramatic when you compared to other periods since 2010. jeff rosenberg on today and he said that they were really tight, now a little bit looser, but it creates vulnerabilities. there were some specific issues for companies that were making their vulnerabilities felt, but it is not like we are closer to economic fundamental default. he had downgraded u.s. credit in late october from overweight to neutral. joe: good perspective, still it will be a lot in focus for the next week. scarlet: setting as of for next week. joe: one thing we saw today and we will talk a little bit more about at the top of the hour, gold selling off. what drives gold? real interest rates are the

determiner. here is a chart of the gold spot in blue and the u.s. 10 year yield rates in verse in white. we see the rates rising. that is why gold has been dropping, because the rate are rising. earlier this year, when the real rates were falling, gold was rallying. people look at volatility, nervousness, the fed, just look at real rates and more often than not it will tell the story. when you think about it, gold has a negative interest rate because it has carrying cost, so the higher they get the more you are punished for holding gold. julia: and tax reform prospects. that is what i love about you. if you are one of those people like me you needto shop, so alibaba is a mind blowing prospect, so what we saw actually in the first hour of sales today, a $.6 billion worth.

in fact that $8.6 billion worth. in fact, i am showing you this comparison of the single day over in china. and we have seen three-day totals in the united states of thanksgiving black friday and cyber monday, so come on united states, we need to do extra shopping as you can see. the blue bar showing the single day is clearly way more lucrative for some of these retailers, than what goes on in the three days in the united states. this is alibaba trying to connect by enlisting 600,000 convenience stores in china to hawk some of those goods and get people buying bid joe: we really need to catch up -- buying. joe: we really need to catch up. we are fallen behind of the consumer. we need to pick us up. scarlet: spend more. go shopping. the market close is next. take a look at the major indexes, little changed for the s&p 500 and the nasdaq, the dow

off by 31 points. from new york, this is bloomberg. ♪ . .

is this a phone? or a little internet machine? it makes you wonder: shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. ♪ [applause]

ulia: "what'd you miss?" stocks end the week with a come back next to uncertainty over tax reform. also the dollar under pressure. if you are tuning in live on twitter, we want to welcome you to our closing bell coverage every weekday from 4:00 to 5:00 p.m. eastern. scarlet: let's begin. u.s. stocks moving to the close here, little changed for the s&p and nasdaq. the dow finishing off by .2%. it looks like the s&p will and with a 4% drop for the week. -- nasdaq speaking out again nasdaq eking out a gain. in the green is jcpenney, surprisingly strong sales sent the stock on its biggest gain and almost three

years, helping lift the retail sector overall. we should note that even with that 15% advance, this is a stop that took a hit new the start of earnings season when it gave a disappointing preannouncement has yet tond it recover. before it gave the guidance, it was about 3.66%. we are still below that level. $3.66.as about we're still below that level. julie hyman was telling us square is now worth more than jack dorsey's other company for the first time. with a veryrecently strong earnings report, giving the stock a leg up. joe: let's look at government bond data. rates solidly higher in the u.s., and this is interesting. we have deepening kospi long end

of the yield curve higher than the short and or jumping more -- we haveort and the long endcause of the yield curve higher than the short end. people are not jumping into safe haven long end rates amid the selling. also seeing higher rates in the u.k. today. here's the really long-term chart of u.k. yields going back a long time. we are at the bottom but higher on the day. those are government bonds. i'm seeing the dollar index here year to date, just to give you a sense of some of the price action. the dollar headed for its first weekly loss in four.

i think we are just searching drivers. -- fresh what about selling as well? yes, we are looking at what is going on with the latest brexit talks. they want to progress to talks on trade next month, but it is a tough one to see which way this goes. just have to put in perspective some of the choppiness we see on a day-to-day basis. quick look at what is going on in some of the emerging-market currencies. you can see the dollar is stronger versus the rand. got to remember it is friday here as well. finally on the commodities front, let's look at oil and gold. oil generally has been on a nice bull run.

gold falling about 1%. if we look at the intraday chart, and you will notice something interesting happened around 10:30 or 11:00 a.m. -- a very sharp drop out of nowhere on massive volume. nobody knows the story. there was no particular news catalyst or anything like that. nonetheless, a sharp drop in gold. dip. a flash tiny in the end, down about 1%. scarlet: sorry, i had to pick up something off the ground. was that a technical term, a flash tiny dip? fromore, eric joins us boston. i want to start with the retreat we have seen and high-yield debt -- in high-yield debt this week. the fear is that credit always leads high-yield more than

anything else, and everybody has been looking for some kind of run, especially in equities. eric: first, thanks for having me on. we have seen a selloff in high-yield this week. it has gotten tighter since we had the oil selloff at the end of 2014. i still think you are probably ok and high-yield bond markets and will more likely earn something close to your coupon, but if we had an inflationary world and higher rates, that can also be challenging for high yields. with spreads tighter, the chance that investors are in their coupon is certainly lower than what it was a year or two ago. interesting move overall this week in markets. it's not like we saw a real selloffs in risk assets or anything, but a little more anxiety than we have seen in recent days. nonetheless, not seeing a bid in traditional safe haven assets. what do you think is the source

of this comfort that perhaps we saw? eric: good point on the volatility. as he said, we have seen a lot lower volatility. things have happened this week from what is going on in the middle east, saudi arabia, u.s. tax reform. there is concern on u.s. high-yield market. to me, nothing in and of itself is that big, but i think geopolitical tensions are part of it, uncertainty over u.s. tax reform, but the point you make on u.s. treasury yields not rallying is a good one. should be picking up, particularly with higher oil prices, and our view at eaton vance. onia: how do you capitalize opportunity? we have inflation-linked bonds in places like the u.s. as

well as thailand and new zealand and really trying to play the breakeven. another nice thing about our global macro strategy as we can be long and short, we can play options basically betting on volatility to go up. those are some strategies to take advantage of the current market environment. scarlet: what about your cash position? i'm looking at your notes and it seems to indicate double digit. are you likely to add to it or take away? eric: our global macro strategy is different because we are going long and short using cash instruments and derivatives. our cash position not as relevant as for a traditional bond manager. julia: you mentioned the idea of there being a lot of trapped capital. what exactly do you mean by "trapped?" eric: good question. i am wondering a little bit where you got that in your notes. when i think of trapped capital, you can think of financial

repression and people being forced to buy bonds, forced to buy u.s. treasuries. from a longer-term perspective, when we think about why yields are so low, and a lot of investors, banks, insurance companies, other captured institutions are sometimes forced to buy u.s. treasuries. people the idea that sometimes have these long-term obligations and rates have been falling, and the way to compensate is to buy more at the long and to try to squeeze in yields as they can and every time yields go up a little bit, ? ey are forced to buy more eric: certainly, there are pension funds where that perspective matters. when yields are lower, they are forced to buy more and vice versa. you can bifurcate investors into two categories. we are looking for value all around the world. we are not forced to focus on an

index. we are not immunizing liabilities. other investors have a really specific focus where they can only operate in one part of the market, and they are forced to use that one particular interest rate, that discount rate that might force them to buy something. julia: interesting. great to chat with you. happy friday. coming up, what is causing investors to dump junk bonds? that is what the panel discussed today on "real yield," and we will bring that to you. from new york, this is bloomberg. ♪

>> let's get to first word news this afternoon. president trump wants trade deals with asian nations but only if they are willing to play fair. the president is in vietnam. he says the u.s. will no longer --ned multinational meal multinational deals like the transpacific partnership. instead, he says he once won a one -- one on one agreements. the european union chief negotiator raised the prospect on brexit sides failing to reach an agreement by next month. says threeosecutor chinese students were injured ofn car drove into a group students in southwestern france today. none of the injuries is considered life-threatening. the driver said he acted deliberately and has been arrested. a man accused of bombing a german soccer team bus seven

months ago wilco on trial next month. two people were injured when three explosions hit the bus. the suspect faces 28 counts of attempted murder and two counts of bodily harm and setting off an explosion. carlet: "what'd you miss?" the run-up in junk bonds is showing signs of returning to earth after a series of bad news triggered selloffs. ferror today, jonathan asked his roundtable about cracks in the credit market. >> don't think so. think this one is a little different. best guess is credit spreads are probably in for the year. there are two things different about this selloff. one is there is fundamental deterioration in earnings that have come out. telecom names, retail names,

pharmaceutical names, ig high-yield, there is real disappointment. it will be hard to rerate these near-term. the other thing is we are seeing bills. we are seeing a house bill and senate bill for tax reform. some of the losers will be in things as there it is hospital bonds in the municipal market potentially to cruise ship securities. we are starting to figure that out and as we start to focus on winners and losers, it is just going to be something that is a little bit of an overhang for credit. >> it started out as a stock specific or company specific story. and goes intopses telecom and spreads into health care, and those were the leading declining sectors. is is sector specific for you, or does this become an asset class problem? >> i definitely agree that there are sector specific concerns,

but from a valuation standpoint and as the starting point for this, i think some of the concern is that we baked into a andtive correlation story tile in the kerry and low volatility and if you start to get a whiff that equities are going to selloff with rates, becomes a question of our models and how we think about credits and rates. do we have a larger unwind? it is possible. >> do you see the valuation problem as well? anyeah, and i think this is intended consequence of quantitative easing. in an environment where yields are low, investors go further and further up the risk spectrum in order to get returns. what happens as a consequence is over time, you start having this risk will up in the system. the question is it is about risk versus reward. very simple terms. i feel like we might be

at a tipping point where the reward.ht outweigh the >> we have been talking about that for such a long time. i could ask any guest around the table for the better part of the year if they are being compensated for the risk they are taking in the market, and they say no but there is no alternative. you can pick out the tesla bond in august and ask people if it is priced appropriately. they say no but they buy anyway and take a look at where it is now. >> we are in a synchronized growth environment. hard to see that changing. that is fundamentally a support for credit. spreads may be tight. does that mean we are about to have a 2008-like experience? we don't think so. we think this will be more range trading, but the driver of the big default cycle in u.s. credit -- it is not there right now. >> something you said, the economy is doing well, and i wonder if credit is somewhat

divorced from the economy anyway given where the rest of the market has been trading well ahead of the economy recovering. look at what is happening in europe. we were incredibly tight before we came into this year and we said guest this week who rather counterintuitively maybe that the taxes come through, the economy gets better, you will not have a good environment for credit, maybe have the opposite. what do you say to that counterintuitive environment? >> i say it is a question of degree. say we have a 30-basis-point backup and we are still sitting here with the same u.s. growth environment, which is a reasonable enough hypothesis, we think we will continue to see foreign demand. one of the big stories in credit has been the demand from japan, from overseas, from asia. we see this as an interesting time and place to invest, again assuming the economy is sort of still at this level. >> you see that support coming in as well?

>> probably. there is a lot of conversation about it, but one of the things intoink about is the flow passive products, and i think s of is funding the tesla the world. the question becomes what happens when there is call and liquidity in the market. we see in extending into private credit and private equities. that call on liquidity is going to be private markets, so what happens then? we need to because doesn't of the risk. >> have you seen any of that this week, evidence of almost some forced selling of things? >> that actually is what we have not been seeing. the point here is it is fundamental-driven. we will watch for these cracks to spread into a more broad-based call on liquidity. so far has not happened, but that is how these things get started. they do not start in the most obvious fashion. andcannot see a catalyst

pinpoint it ahead of time. it is when you least expect it. right now, there is a lot of positive news. your point about the economy is well taken, but what about the risks in the middle east. there is a lot of risk in the market right now and we are not compensated for it. julia: that was jonathan ferro and his panel on bloomberg "real yield" earlier today. you can catch the show every friday at 12:30 p.m. new york time, 5:30 p.m. in london. if the house bill gets passed it would have to face off in the .enate we will have the latest on that next. this is bloomberg. ♪

ulia: "what'd you miss?" it has been an intense week for tax reform as senate leaders debuted their own bill yesterday. that set off a debate in the house over what exactly would make its way to the president's desk. and entertainers here with all the details. she has been following this story. ton. it feels like we have a manufacturer tax reform plan on both sides. what are people saying about how difficult it will be to bridge the gap? anna: you can tell that each bill is designed to pass in the chamber.

someouse bill is threading needles in order to pass and the senate bill is doing the same. once each chamber passes its bill, if they manage to do that, then to reconcile the differences, like you said, it is going to be a face-off, and i think a lot of house members are wary it will end up looking like the senate bill since they have a smaller margin in that chamber. joe: one factor people need to be aware of -- and there is a great story on the bloomberg today -- that none of the bills are written with the byrd rule in mind. , neither are constructed to add to the deficit in the next 10 years. said republicans have there is a lot of cheesecake, a lot of things everyone wants, and now they are looking for the spinach that nobody really wants to include, but they have to in order to make it comply with reconciliation rules.

that is how they will get it through the senate without being subject to a democrat filibuster. they are looking for revenue. there is still talk about adding the repeal of the individual mandate, which would get them $338 billion in extra revenue, or even phasing in the corporate rate cut, or if it comes to that, phasing it out. pay fory do not need to this all if they are willing to let it expire at the end of 10 years. if they are willing to say it is just a temporary thing, than they are ok. do you think there's a prospect that at the end of this, they will say it's too hard to guarantee there is no balance at the end, but at least we get 10 years with the tax cuts? anna: it is possible if they are desperate to make something tok, but if they are willing let it expire, that negates the argument of doing it in the first place because temporary rate cuts really become just a

sugar high for shareholders. it does not have the impact you would like it too. it does not change corporate behavior or trickle down to workers. they will resist that if at all possible, but they want to win more than anything. scarlet: right, and if it means winning with tax cuts more than tax reform, so be it. hawksed about how debt kind of disappeared when the tax bill was released. is there concern that will come back to hot them? there is some concern, more in the senate and in the house, even when you take into the benefit from faster -- into account the benefit from faster economic growth, but it is a really important bill or them to pass. some of them are willing to swallow their deficit hawk concerns in order to just get a bill on the president's desk. scarlet: we also have to remember that congress needs to fund the government and raise the debt ceiling and about a

month. how is that coming up in the conversation in the sense of urgency, having to get something done with tax reform? story this week that most republicans agreed that tax reform has to get done, but there's a lot of disagreement on what the end of the year deal should look like. there is concern on how immigration should be handled, what they will do about the debt limit, and how they will compromise with democrats in order to fund the government. right now, it is looking like it's possible there could be another short-term stopgap measure to keep the government open at least until the beginning of next year, but that will be something that could the very crucial time in tax reform in december when they are trying to have hard conversations about how to reconcile those bills. one of the hard conversations probably being had behind the scenes is the situation with roy moore, republican going for the senate seat in alabama.

i saw a report that he is tied with joe -- with doug jones, his .emocratic competitor how is that playing into this at this moment? numbersere is a pure calculation. if they lose that seek to democrats, that is an even smaller margin and they will only be able to lose one more public and senator to be able to pass legislation with a simple majority. on the other hand, having roy moore in the senate is a political liability. if they are responding to comments and things not looked upon with good eyes by most of the electorate, that could be a huge consequence for republicans in other elections if they end up having to defend him to people who disagree strongly with the way he has conducted himself. scarlet: it is a dangerous precedent. thank you for joining us. up next, the x -- the

brexit battle heats up. why the eu is raising the prospect of no deal by december. this is bloomberg. ♪

>> let's get to first word news this afternoon. in the alabama gop senate race, candidate roy moore is tied with his democratic rival. an opinion poll found 54% do not think he should drop out of the race. almost 3% of surveyed republicans believe he should remain. poll since first reports surfaced that roy moore initiated a sexual encounter with a 14-year-old girl years ago. russian has ordered state broadcaster rt to register as a foreign agent. russia is poised to make u.s.

media outlets do the same. rt denies claims by u.s. intelligence agencies that it acted as a proper and a garment -- propaganda arm -- top again arm of the russian government. that it acted as a propaganda arm of the russian government. pope francis is asking world leaders to imagine a world without nuclear weapons. he warned nuclear deterrent policies from the cold war era provide a false sense of security. he also endorsed the new u.s. treaty calling for the elimination of atomic weapons. carlet: "what'd you miss?"

let's get a recap of today's market action. little change or the major indexes. the nasdaq basically unchanged. the dow inching lower for the week. the dow and s&p 500 declining although the nasdaq did eke out again -- a gain. julia: brexit talks may be over for the week but a new dilemma concerning the future of the irish border is brewing. all this only adding to pressure on u.k. prime minister theresa may, who lost her second cabinet minister in a week yesterday. the more, let's bring in the senior editor for business, finance, and energy. he joins us from los angeles today, which is great. lucky you, john. fantastic to have you with us. we will get to the irish border situation in a minute, but explain to me what happened in

terms of the end of the talks. union chief negotiator hinted actually that we might not reach a deal on the end of this year. why is that so critical? john: it is critical because the key part for the united kingdom important toly wrap up the first part of negotiations by the end of the year. if they do not, there will be very serious question marks about if the united kingdom will have time to negotiate a so-called transitional deal before brexit actually happens in march of 2019. the longer they go without reaching an agreement on the first stage of negotiations, the greater the chance is that the u.k. will fall out of the european union without a deal. doeset: what happens if it fall out without a deal? what is the free market in which the u.k. would operate? john: this is the question. there would be huge uncertainty

about the tariff rates that would apply. there is a risk the united kingdom would revert to what is known as preferred country status, which means that essentially you might see 20% imposed on cars being imported into the united kingdom. you would seeat chaos. that is why there is this real sense of urgency coming back into the negotiations, because the risk of this very difficult situation for business is getting worse and worse. of course, the real problem here also adding to the situation the u.k. is and is that the government itself, the u.k. government itself, cannot seem to agree on what their negotiating position should be. you brought up the u.k. government. it seems like unbelievably, theresa may's bad domestic position got even worse this week. for the people who do not pay

close attention to cabinet ministers in the u.k., can you give a quick summary of what happened this week to further weaken her government? john: if you get into the ins and outs of it, we do not have the rest of the show, but the real problem is she has an authority problem. strong seems to be unflappable, going from controversy to controversy, where as other ministers who also make mistakes get into trouble. they are the ones who get fired. if you are looking at theresa as an euing at her negotiator, you see someone who barely has the authority to keep her own cabinet, her own government disciplined. if you are determined not to take prisoners, determined to drive the hardest possible bargain you can in the brexit

negotiations, she looks like a very weak link. she does not look like someone you need to make any compromises too. the worse her domestic situation gets, the worst her negotiating position becomes as well. julia: let's bring it that to ireland because that is how we introduce you. explain exactly what this means because this paper -- this a your paper basically adopts ireland's position -- this eu paper basically a dots ireland -- this eu paper basically ireland's position. john: it seems to have cut the government -- caught the government by surprise. if you took the irish position and decreed that northern ireland would stay with in the customs union, you would be setting up a de facto border around the entire island of ireland.

almostlists say it would be tantamount to reunification of the island of ireland, which, to the dup, the pro british unionists popping up in the british government, is untenable. the government seems to be giving them veto power, so it is very interesting looking at comments coming out of dublin even today after the negotiations finished. there is a sense from dublin, "we do not quite want to be seen to be holding the entire negotiation hostage," and there is some sense that they are prepared to be a lube with flexible about the border issue for now, but certainly, the red line from the government in dublin is there cannot be a hard imposed at the indo brexit. we might see the whole issue of the border get postponed until the very end.

-- the red line from the government in dublin is there cannot be a hard border imposed at the end of brexit. julia: we got the rights of eu citizens and the separation bill. the way i see it, the u.k. has two weeks to come back with a better offer to try to entice the eu to talk. billion they want 60 euros, $70 billion. 1/3 of. is offering some that. can they come up with a better offer in the next two weeks? john: it is going to be ethical. theresa may will have to overcome issues that have the doubled her government -- it is going to be difficult. theresa may will have to overcome issues that have sinceled her government the beginning. it will make any compromise very difficult for her, so it is really hard to see a way forward. theresa may will have to make a

decision, but she may have to make a decision soon. is she going to put britain on a course for a node deal brexit, or is she going to sacrifice what is left of her own authority and agreed to give the eu more money? it is hard to see a british prime minister facing a harder dilemma than this if you look over the last 20 or 30 years. this is a prime minister who we have been saying for weeks is in a very difficult position. the eu have any reason to soften their stance? could you imagine them saying, "ok, we will accept 45 billion euros?" jon: possibly. the brexit was a very traumatic event. they went into these negotiations determined to drive the hardest bargain possible, but it is also true that it is

not in the eu's interest for there to be a disorderly brexit. at some point along the way, you would expect the eu to be prepared to make some , but this has been a relatively early days, soy compromise on the bill is possible, but my best guess, having covered many of these eu summits, is it would be very much at the last minute and only if the eu feels compromise is happening on its own terms and it sees concessions on some of the other issues still on the table. scarlet: and it sounds like a dead end for theresa may no matter which way she turns. is there any chance she will be replaced or step down before the ? gotiation is up john: yes, this is an incredibly fluid situation. we have not seen a situation as fluid or dramatic as this in british politics in decades. she is a prime minister who is

essentially functioning from day-to-day. this is a huge problem. the big weakness of the british negotiators say they do not even know if the prime minister will be on the other side of the table in six why give themo credibility as a negotiator? it is unprecedented. it is a mess. as you say, we could at any point in time along the way in see herin theory replaced, but the big dilemma for a challenger is do you want o inherit this position? if you topple her, you will have to see through these negotiations. the new prime minister will have to make these terrible compromises that i just spoke to earlier. if you are a challenger and see yourself being the next prime minister of the united kingdom, you might be tempted to hold off

for now and wait until the brexit deal has been negotiated and then make your play for the top job. scarlet: john fraher, thanks so much. julia: someone who has spent many overnights waiting for these negotiations in brussels, i can tell you i'm very happy to be here in new york. scarlet: still ahead, general electric path downward spiral could come to ahead next week. the new ceo set to seek investors' favor with a turnaround plan. he has to unveil details, but that might involve cutting the dividend for the first time since the great recession. this is bloomberg. ♪

"what'd you miss?"

scarlet: "what'd you miss?" fall from grace presents its new ceo with a daunting challenge -- ge's fall from grace. john flannery set to update investors on his turnaround plans on monday. rick joins us with a preview. we talked about missteps, but is it strategic miscalculations or just really bad luck? rick: it is a little bit of everything. some markets are really troublesome for them. power generation is a big win. that's one market where they recently booked up -- balked -- with a recent acquisition. that was a strategic miscalculation and also just kind of bad timing. but they have also had trouble which is why the

dividend may now be in jeopardy. julia: cut to the chase -- will it be cut and to what degree? rick: it is hard to see it will not. some are expecting 50% or more. they have not announced it yet, so there is still the possibility maybe they do not. julia: just looking at the numbers, seven billion dollars in cash flow generated this year. if you back out pensions and $8h, it is normally around billion. rick: ge says this is temporary and cash flow will rebound in the coming years, so there's a case to be made that perhaps they will be able to fund this if they can get through a rough hatch, but a real focus of the meeting on monday that john flannery is going to hold is how they will be able to sustain the dividend at whatever level. thatet: how do they make

credible? rick: that is the real challenge and why you have seen the stock credibility.ack of investors are just not giving them the benefit of the doubt anymore. joe: back in the day when it was a financial company, it is intuitive a financial company could go into a death spiral. you have a bank run. what does it mean for an industrial company? i get having a downturn, but what does it mean for an industrial company to have a debt spiral like this where it just seems to be getting worse and worse? what i think that is everyone is trying to grapple with. ge has always been a company everyone thought of as invincible. it's really surprising, really shocking how quickly it has fallen apart. i think a lot of factors go into it. one of those might the dust does it make sense for a conglomerate in this day and age? scarlet: it is a company that is

very insular in many ways. tend to be lifers. john flannery is a good example. he began in 1987. walsh for so long was the model ceo that everyone try to be but could not do it. do they need new blood from the outside? rick: in some ways, they are getting that. they have an activist investment firm that has held a stake for about two years and just recently joined the board. there is a sense that maybe they will get some of this new blood shaking things up. also, ge likes to say that john flannery is kind of the outsider insider because he spent a lot of his career on the finance side and only fairly recently kind of ran operations when he , sothe health care business maybe there is a case to be made that there is almost an outsider there now.

julia: you have got to show commitment and shore up confidence. i know we will talk about this again. thank you so much for coming on. moving on, up next, the remote .egion of patagonia our alix steel went to .nvestigate -- this is bloomberg. ♪

julia: "what'd you miss?"

revolutionized the u.s. energy seen. can it do the same for argentina echo our alix steel went to argentina to find out. -- can it do the same for argentina?" alix: this is the biggest place outside the u.s. producing shale, argentina's answer to the permian. do you think of revolution can happen in argentina? >> yes. i think we have everything in place for the revolution to happen here. covershe formation 12,000 square miles and has 5.2 billion barrels of oil equivalent that can be produced in the future. that's just 11% of what can be produced in the permian. >> in our opinion, better than the u.s. the productivity of those areas are three times the productivity

of areas that you have in the permian. alix: argentina's majority state-owned company is leading the development. they owned almost 50% of the region and produce 50,000 barrels of oil equivalent a day. chairman miguel gutierrez is optimistic. >> by 20 20, we will double production. if the permian is in the third inning, then here they are still in batting practice. their wells were expensive. how the u.s. market started and the pace at which they developed. i believe we will reach that point probably in year five or six from now. rig is going to drill six wells. each could produce 800,000 barrels of oil equivalent over

its lifetime. pablo was just promoted to run the entire upstream operation. success is key to development cost. >> our objective for the next is $10 boe. alix: why is that so magical? >> because that's the cost to remain competitive with other companies. alix: the goal is to hit that magic number by 2020, which would still be two years behind schedule. one problem is logistics. the name of the region translated into english means "dead cow," and walking around,

you can understand why. they need the experience and money, and that comes from big oil. >> experience from the u.s., experience from companies that went through the same cycle who can bring technologies eventually that we do not have here. piece that was just a from our special "the next shale revolution." you can catch the full special on saturday at noon new york time and throughout the day globally. do not miss it. joe: coming up, what you need to know to gear up for next week. this is bloomberg. ♪

scarlet: "what'd you miss?" little change in u.s. stocks on the day. for the week, the dow and s&p lower, the nasdaq inking out again. coming up, the ecb host a conference with fed chair janet yellen in frankfurt on tuesday. joe: then i look at nafta as

negotiators meet to resume their talks. julia: third-quarter earnings coming in on thursday. scarlet: that does it for "what'd you miss?" julia: "bloomberg technology" is up next. joe: had a great weekend. this is bloomberg. -- have a great weekend. this is bloomberg. ♪

alisa: i'm alisa parenti in washington. you are watching "bloomberg technology the senate republican tax proposal set to be marked up on

monday would cost $516 billion over a decade. according to the tax foundation, the plan would boost gdp to 3.7% in the long term and raise wages nearly 3%. the study also found the nation's highest earners would benefit the most on a static basis. finds alabamal gop candidate roy moore tied with democratic rival doug jones. the poll also finds 54% of people surveyed do not think roy moore should drop out. allegedly initiated a sexual encounter with a 14-year-old girl in 2012. was criticized for taking a vacation less than a month after hurricane maria slammed puerto rico. aftersignation came a day demands that cabinet members submit unsigned letters