anna: u.s. republicans pass the tax bill and a first step towards a historic overhaul. saudi arabia's interstate -- energy minister calls opec to extend output curbs and they need to this month. that byed to recognize the end of march we are not going to be at the level we wanted to be at the five-year average. that means an extension of some sort is needed. the ratings agency upgrades india for the first time in 14 years. the bond and stocks rally. ♪

a warm welcome everybody. this is our flagship morning show in the city of london. i am anna edwards. matt: i am matt miller in berlin. politicians stayed up all night and yet still missed their self-imposed deadline to end the preliminary coalition talks. they will continue at noon today. it looks like they have serious impasses. anna: we're talking about 16 points with the climate and the eurozone. let's have a look at what has been going on in the asian sector. let's bring that to our audience. risk on in the equity markets but it is certainly not a classic risk on.

the nikkei rebuilding after getting the 25 date of the coverage. rebound in japanese stocks. limited by what we are seeing in the again. india, increasing the credit rating for the first time since 2004. a vote of confidence. fascinating to look at the fx markets and see what is striking things. the weakness in the dollar, the strength in the yen. suggesting special prosecutor mueller is having an impact on risk appetite in fx markets. matt: take a look at my risk radar. i have a couple currencies. the dollar weakness is across the board. i thought it was interesting that the yen coming down to 113 again. people are piling in to the yen.

also into the euro and pound. the pound is up to 132. it looks like people are fleeing the dollar today and pouring into treasuries. the yield down 2.36% on the 10 year old -- yields. up moree s&p 500 was than one full standard deviation yesterday. pretty strong gains. we could see a lack of that strength in today's equity trade. ed: robert mueller has served a subpoena seeking documents relating to contacts with russian operatives. was last month and more than one dozen campaign

officials. that revelation came on the same day that the top public in and democrat pressed jared kushner to provide additional documents for his investigation. >> india's sovereign rating raised for the first time since 2004. to bellies updated india 2oubly to -- baa that is one level shift from the lowest ranking and puts india in line with the philippines and italy. saudi arabia's minister says they should announce an extension of the output curve at the end of this month. speaking to bloomberg, the organization is unlikely to cut under the current deal. we still have excessive

inventory we need to drain. the timing is we're entering into a period of so we needsupply, to recognize that by the end of march we are not going to be at the level we wanted to be at the five-year average. >> debt payment delays by venezuela in the oil to be triggered payout triggered with their debt. $1.5 billion of the credit ruled aves after they failure to play credit events. of $1.34 billion tied to fit and $250 million tied it to venezuela.

direct talks with the group of generals who seized power. the newspaper published photographs showing in the meeting with the armed forces to tomander who is urging him in his 37 year rule. a prominent catholic priest is mediating the talks which includes officials from south africa. global news 24 hours a day powered by more than 2700 journalists and analysts in more , you can findries more stories on the bloomberg at top . here is sophie kamaruddin. sophie: asian traders looking forward to a happy hour after he finished to a tumultuous week. the yen rose to a high. first -- the cost behind for a second session. a fourth day on the rate hike expectations. rising for a second day along

with bonds and following the upgrades. chinese stocks in shanghai are faltering. sinking after the news agency weren't about the shares. a chinese bank was ace bright spot in hong kong after new shareholding rules this thursday. gaining ground. onpei, surging to a record benefits from the iphone x. anna: thank you so much. what is going on politically in the united states. house republicans have passed the tax will while the senate approved their own bill in their finance committee. this in his proposal will be sent to the four chamber -- full chamber for a vote that could come as early as the week of thanksgiving. jodi schneider this morning. good to have you on the program. give us the big picture.

the significance of the votes to pass tax reform and what are the hurdles than the -- the senate needs to get through? >> a big achievement. this was a complicated bill. this was a big achievement for the house. now it is the senate's turn. the senate bill is more complicated. they have to be able to do it the way they want with only republican votes. they have set up a structure for a 10 year budget window but they have fought -- tight fiscal constraints on what they can add. they have also added to the legislation a repeal of a key part of obamacare. the individual mandate. that could come to kick things for the mayor.

error.small margin of no democrats are going to vote for that bill. the latest news from this going to is distract the white house or capitol hill in a way that could help -- hurt the chances for tax reform? >> an interesting question. it has in the past. we have seen the legislative agenda pushed by the white house that republicans would like to see. derailed because of the continuing news about what is coming out in the russia investigation. 12 according to sources familiar with this.

12 people connected to the campaign have been linked. ar campaign officials. this is news that will certainly dominate. whether it distracts is the question. the senate wants things done quickly. they are taking time off for thanksgiving. the question is how quickly can they get things done. thise senate does pass bill they have to reconcile it with the house bill and they have differences. including the repeal of obamacare individual mandate. it will not be so easy to get something to the president's desk. if there is a further distraction from the robert mueller investigation that could delay things further. anna: thank you very much for the analysis of the latest news on investigations stateside. london us on set here in , jeffrey. great to have you with us. let's get into the bigger

questions around tax and the fed and the mueller investigation. fascinating to see that we are risk on in stocks. bouncing after recent. the dollar is quite considerably weaker in the overnight session. what does this tell you about what is front and center for markets at the moment? >> a schizophrenic relationship with risk. it gets awkward when you want to be risk on. you want to buy japanese stocks but at the same time given u.s. tax reform, that investment this year says hold on to the tax reform. that could lift the u.s.. there should be rotation into the dollar as well read that is why the dollar could benefit.

squaring, thening dollar is struggling to establish that relationship. in terms of the long tax ahead jodie was getting out for, , this takes high tax companies and how they compare relative to the s&p 500. asre was another expectation to what this deal might do to them. we have not seen the market getting all that excited given the progress that has been made over the last day or so. >> if you compare performance versus when trump was elected towards the end of last market, expecting a big move. you can sense the strategy

coming through on the part of the ministration. let's not overhyped expectations. bit by bit, very very limited margin of errors. this is where you want to under position and people wants to be a bit circumspect. >> and wondered about the dollar relationship with treasuries. when i see a lot of people going into treasuries expected they have to buy dollars to fund those purchases. is it ought to see the dollar down on a day when treasuries are up? >> yes and no. a cheap answer. one thing we have to bear in mind is the elimination on the part of central banks. these days, central banks converging so that is where it is risk on.

that bid is actually no longer in place. that level of support is no longer in place in terms of something of help treasuries and the dollar. rotation back towards u.s. investors, you could get a relationship where it is funded within the states and yields lower but the dollar is neutral as well. if it is going to be risk on into the states i think you could actually have a stable yield as well. my next question on treasury yields. there is no longer central bank bid. we get inflation numbers that make the market here more confident in the fed plus.

if we do see the market move closer to the fed interest rate increase, do you think that we see yields on the 10 year ago up to three or more? >> three is a bit of a stretch at this point. yes the market is not sure where the dot plots are for 50 year basis points for the rest of this year. have anthat is going to effect. that will reflect the financial positions in the u.s.. even the fed it wants to keep that is tempered as possible. a prospective against the negative percent, tax reform and everything else. u.s. get u.s. growth, if growth it's back to 3% or higher and we get a massive moves in treasury yields, is that such a

bad thing? should the world be worried about strong u.s. demand? by everyonemove being too conservative on u.s. growth. that is one area where we should be. chart, almost red white and blue. the short end rates picking up in conjunction with the fed. this is the 10 year for treasury yields. where do you expect the 10 year yields to go? you think it might go higher. how high is it going? >> our outlook for u.s. growth is 2.2% and towards 2.3% 2019. if you add 30 basis points on top of that, 275, that kind of level.

i think it is a bit too much of a stretch. matters as much as the volatile nature of the move. hopefully no wild swings in the meantime. anna: thank you. he stays with us on the program. talk,a month of coalition the deadline expires. progress is made overnight. some. one of the points, we will discuss that next. aramco ipo loses the support of the biggest in equity investor. steering away from oil and gas stocks. this is bloomberg.

matt: good morning.

2:20 in the afternoon in singapore. the clouds and small, they are still there. in european banking congress frankfurt addresses from ecb is friday --and it it is not friday. today's friday? it is friday. wow. hiscatalan president and cabinet members are due to appear in court. that will be interesting. later we are going to get the from saudipdate arabia. a lot going on today and i just remembered it was friday. extra exciting for me. anna: where with you. it was super exciting to live through that with you. the german chancellor glenn ochal will resume talks with coalition partners at lunchtime as she works overnight.

key differences still remain. daysarty says several more may now be needed. the hold -- the coalition talks, carbon emissions, also sharing risks around the euro area. even in germany, the euro project still got some issues. >> one area where the ftp is going to hold the line on the core part of the campaign when the ultimate vision for europe is determined. don'tuld say maybe they want to make it the last time in coalition. i think you can look at it in two ways. germany is struggling with a vision.

what do we mean by having the currency? or riskree of eurobonds sharing needs to be back on the table. the political calendar in europe or risk on.owded >> talks through night. >> they do not look good. everyone is optimistic that something is going to happen since we have never had to call a new election in this postwar germany. i wonder how much the market has priced in european immigration. we are still a long ways off from that. low, thatds remained is a sign the market thinks the ecb is going to be doing the bulk of the work.

want to longer do you depend on the ecb? wondering what a post draghi is going to look like. secondly, emmanuel macron finance ministry. a greater french version of what we are sharing. to achieveng to come credibility. markets are not there yet. the proof is in the pudding. for now, don't anytime soon. anna: around inflation and what the ecb is doing, this is euro it's -- expectations. we know he looks at it. as we see the ask

growth story picking up, when does the ecb start to run into difficulties? we are just so far away from that. >> the ecb will fall back on the mandate. expectation.on but ifmight be strong you look at a forecast right now, i will be surprised if they can move back to 1.5%. tricky where it gets because do i have enough assets to buy. financialint, key positions, they hope to be pricing the upside of on inflation. what do you think about european stocks?

the price-earnings ratio, they do not look terribly cheap right now. look at the forward expectations here in yellow. what do you think about european stocks right now? >> right now, we still think you want to be overweight stocks in general. now,wn investors right there is a growth case for the world. index as partthe of the diversified global portfolio. they could not get a conversation on europe because of political risk. if you want to look at the positioning driven, your a lot of benefits. an background. bsg.

-- an acronym. bsg. during the bloomberg team at 8:00. this is bloomberg.

anna: 6:30 here in london. the dollar against the yen at 112 .59. the dollar weakness and yen more broadly one of the themes of the morning. especially towards the european trading day. the dollar against again the lowest in four weeks. many people putting this weakness in treasury markets. the latest twist as turns of concert -- molars pro into friday. mira.s more broadly, gainshave a second day of

, the benchmark overall up .5%. tech stocks leading the gains. the tech industry has been one of the out performers this year in terms of like -- asian equities. see a performance yesterday. following through here in asia. just mentioned dollar-yen here. this telling you how it hasn't been attempting to consolidate above the 50 day moving average. not quite happening with today's dollar weakness. be the miller probe overshadowing this and putting in the dollar weakness. the highlightsf is leaving behind moving averages, best-performing asian currency has been resilient

despite the geopolitical tensions around north korea. causing concern in taiwan. recoveryaking the earlier this week, a new record towards 8000. thank you very much. saudi arabia's energy minister said opec and allies should at the end extension of the month. speaking to the minister about oil production, clean energy, and the recent arrests in the kingdom. the strategy will be one of gradual adjustments. we have done our reduction in a gradual way at the beginning of this year as you have seen and it has worked beautifully so far. we will be mindful that when the agreement ends that we will come

up with a gradual adjustment increasel match demand of excess supply with those inventories again. >> how do you reclaim market share once the cuts are over? >> market share is healthy as it is today. we are still number one or number two in all of the major markets that we target whether that is japan, china, korea, are supplyhe u.s. has trimmed because the u.s. is oversupplied. exporting 2t is million barrels.

also a major producer. the u.s. has two canadian, venezuelan, as well as gulf of mexico and shale production. we do not intend for it to be permanent. once the supply curves are lifted we will probably be back ourhe u.s. to make sure customers in the market in the u.s. receive the saudi crude it desires. >> as the aramco ipo comes up or has been disruption politically with these arrests. how do you feel about foreign investment? do you think this will discourage foreign investment? understands this is a very limited domestic affair.

the government is simply cleaning house for something that is way overdue. investors that have been doing business in saudi arabia, many of them have been doing it for decades. he will tell you that they are not seen the corruption. their interaction. this is totally local and domestic and very limited towards a few individuals. sharedormation will be once the investigation is complete. it has no impact on foreign direct investment because no impact whatsoever on the capital the ipo is completely on impacted by any of this

crackdown that i talked about. energy minister speaking to a range of subsection desk subjects. let's bring in other dimension. proposing something all of the oil and gas stocks to diversify away from energy. the exit may create concerns. , the oilof the ipo giant risks losing a cornerstone investor. it might also produce global achieving top valuation. he joins us here in london. still with us here on set. lots to cover. at start off with what they were saying about the opec cuts.

some of our reporting suggests the rushing -- russians are not entirely on board. we are two weeks from the meeting on november 30. the expectation is they will want to extend cuts the questions are how long they extend those and whether they actually reach a final decision. it is important that he wants a decision on november 30. matt: the shot heard round the world will. considering exiting oil and gas stocks. first of all, because of the sheer size, the biggest equity investor in the world.

they control 1.5% of global stock. that is where they get their money. isn't this fascinating and is scary for oil producers around the world very important story. >> in a way owning oil stocks is already one of the most leading gas producers. clearly it speaks to the concerns in the community about the long-term future to a more electric energy system. most people expected oil demand to peak. that changes the nature of oil stocks. that may not be the case in a longer. clearly a very important decision here and it adds real fossil a movement that fuel investments.

significant event. with the arrival of norway into , does that change the dynamics around the biggest story? >> it is not a big surprise. i remember being in aberdeen there and speaking around the table. posts --get into your renewables? this is an area built. that is telling even where they see the future. >> saudi aramco trying to diversify their economy in aberdeen. exposure, i think you

can tell within the middle east in general there is an attempt away from the fossil fuel exposure as well. this is one of the areas they want to be at the forefront of ai. in terms of the global dynamics and developed markets, they are looking ahead. those are going to be investment opportunities as well. >> i sure you heard the excellent interview with the saudi oil minister there. does this starts to make them nervous? are they getting out of the last minute of their dependence on oil? is the aramco iba going to be more difficult than expected question mark -- expected? >> clearly that is not ideal.

-- the chinese have a huge dependence on saudi oil which is likely continued. make isr point i would there is -- the advantage they have is theirs is the cheapest oil in the world. you will hear increasingly as the world changes we will be the last man standing. a very last line -- a nice line. >> right. a nice message. does this raise questions about the timing of the aramco ipo if you're talking about how investors were not going to talk to you about renewables. we are does this leave an ipo of this size?

>> think in the context of what this is trying to do, very interesting. you try to talk -- try to find a new one. this goes for any energy company ahead. there is a massive base of investment availability in china. the quid pro quo is the chinese staples, as goods, well as other exporters. >> thank you very much for your thoughts this morning. >> he stays with us on the program. let's tell you about what you need to be aware of this morning. you can watch the show using the tv function. you get to follow all the charts and conversations on the ask a

question at the bottom of the screen. you can always rewind the program which is helpful. india has been raised, the stocks rallied after the firm -- aded india to be baa to -- baa2. what has prompted moody's vote of confidence? >> reforms. it is in need of a huge vote of confidence. impressedclearly been in the past couple of years. tax ofds and services

july this year has gone on really well. long-term expects the economy to get more productive. plan, italization believes the government has important steps to clean up the nonperforming assets faced by the indian banking system. all this has been positive. the government sees this as a vote of confidence. this is long overdue and the vindication taken thus far. and thel be seeing this optics are better. the world bank -- about 20

points. the timing could not have been better. win for primecal minister modi as well. >> how investors reacting to the great? people may be needing to get out of the dollar to make investments in india. is that what you are seeing? >> the knee-jerk reaction has been extremely positive. checked, the i rupee has gained 1%. has takenthis investors by surprise. a time when oil prices have increased, the trade deficit has widened. we don't know what kind of fiscal implications this is going to have. taken investors by surprise.

many have questions at this point in time and think valuations have reached proper levels. probably not. -- corporations would go out and raise capital overseas. i don't want to be a party pooper. the markets have reacted. years, monday morning the challenges the economy is facing. >> taking the longer view. joining us there from mumbai. bloombergways find radio live on your mobile device in the london area.

discuss all things u.s. and the u.k. budget as well. david davis tells the eu to wait for clarity on how much the u.k. will pay in the brexit the port settlement. major move as the house passes its plan. problems could lie ahead in the senate. the latest from capitol hill.

♪ anna: a live shot of new york for you. redempire state building and green in honor of opening night radio city christmas spectacular.

let's talk about what is going on in the united kingdom. negotiatorssays will have to wait a few more weeks on how much they are prepared to pay for the divorce settlement. politicsnd short-term above the prosperity of the future. a nice line from david davis saying putting politics above prosperity is never a smart choice. do you see brexit as the prosperity move? brexit going to get prosperity prosperity? disruption exit in whatever --pe or form is probably not

probably going to generate volatility. pound volatility easing ahead, they mistake -- david davis suggesting weighting of three more weeks. maybe early december around the time of the summit. there is a step to move on to the second case. despite what headlines would suggest, that is why you're seeing volatility easing. ultimately it will depend on the positions of both sides and behind closed doors the knowledge they are having progress will be beneficial. wouldn't it be great if they pay what the eu wants? about 10 billion

here, 10 billion there, we can get faster to a trade agreements. stated durings sureembership it is making that you have a commitment. especially when you consider the politics involved on this side of the channel. we are seeing progress that i think the behavior of sterling during the last press conference was actually quite favorable as opposed to previous rounds. towardset still leading progress. at least not more downside. matt: sterling is strong today or maybe it is just dollar weakness we are seeing right now. what do you expect for sterling? where do we go into 2018?

slidinging towards 135, is achievable at these levels. i think between 130-135 clients can accept markets relatively easy with these levels. anna: headlines from the swedish prime minister. he had a good meeting with theresa may. a summit taking place in sweden today thanks to further headlines. talk to your clients about the u.k. environments at the moment. do they spend time thinking about -- brexit is at the center of things -- about the domestic political scene and whether we

end up with a labor government before the official end of the five-year pilot mentally term -- parliamentary term? >> much more of a topic in recent weeks and months for obvious reasons. going to be a radical shift in policy. in terms of economic aussie and monetary policy. employment mandates with the bank of england. we have seen how changes in new eight -- new zealand has impacted. is there going to be a massive change in direction as well? how much uncertainty could that lead to? that will happen in any case with exit. in the event of a change in government you could see a shift

in expectations with uk's economic model. matt: what do you think about u.k. stocks, especially with an expectation for a stronger pound? the ftse up 3.5% not even this year. well underperforming all other european indexes. >> sterling is going to be a factor there. the market is going to agree that sterling is undervalued and going to be moderate appreciation. course, the ftse is to -- exposed to domestic conditions. maybe slightly higher. if that goes beyond performing the rest of the world that is what our position will be as well.

anna: thank you very much. with us for the past hour and we appreciate it. miller's investigation. more on that. this is bloomberg. retail.

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♪ trump milestone. house republicans passed their tax bill in the first step towards a historic tax overhaul. cutting the glut. saudi arabia's energy minister calls for opec and allies to extend output curves this month. >> we need to recognize that by the end of march, we are not weng to be at the level wanted to be, the five-year average. that means an extension of some sort is needed. finally, bets on modi. upgrades on india in the first four years.

bonds and stocks rally. welcome to bloomberg daybreak: europe. our flagship morning show. i am matt miller in berlin. i am anna edwards in london. it has been a fascinating session in asia. percentp around half a on the asian stocks at the moment. -- risk onic risk at story in fx markets. we see the dollar weaker and , but thator yen limiting the appetite for japanese stocks. what that translates to in the expectation for the start of european trading. --opean stocks set to open the ftse 100 could go its own

way. we are seeing strength in the pound this morning, but it is a dollar weakness story predominantly. the ftse 100 seen down around .2%. elsewhere a little stronger this morning. what does the risk radar tell us? matt: you are right. it is difficult to put this day in a drawer. is it a risk on or risk off day? we do see dollar weakness. we -- jeffrey said any pound movement is dollar movement. the dollar weaker against the yen at 112.48, weaker against 112.41.d at you can see they are pushing the 2.35.down also look at bonds. what do you see with bond futures trading? bund future's,

o.a.t. futures heading higher. treasuries heading higher, yielded lower on treasuries. andave appetite for stocks bonds this morning, adding to the complexity of what we are seeing this friday morning. that is the picture across these markets. let's get the first word news with ed ludlow. >> u.s. special counter robert mueller says donald trump's ex -- campaign subpoena. the subpoena was served in the middle of last month and with more than a dozen campaign officials. that revolution came the same day top republican and democrats on the judiciary committee pressed jared kushner to provide additional documents for its investigation. india's sovereign rating has been raised for the first time since 2004 by moody's investors service. the repeat bond and stocks india from thed

aa three. will helping pushed stabilize rising levels of debt. that is a one-level shift from the lowest investment grade rating and puts india in line with the philippines and italy. saudi arabia's energy minister has said opec and its allies should announce an extension of the output curves when they gather at the end of this month. he says the organization is unlikely to cut -- under the current deal. we still have inventory we need to drain. unfortunately, the timing now is a period of lower demand and perhaps additional supply coming from other sources. we need to recognize by the end of march, we are not going to be at the level we want it to be, which is at the five-year average. panel of derivatives

dealers and investors has ruled that the payment delays by venezuela and its state-owned willompany -- the ruling affect more than one point $5 billion of the credit derivatives after the committee ruled both borrowers cost a failure to pay events. derivatives the association, there were net wages of $1.3 billion tied to venezuela and $250 million on petroleum to venezuela. robert godbey has held direct talks with the leader of a group of generals who seized power in the country. the state-owned newspaper published photograph showing him meeting with armed forces commander -- the armed forces commander, who is urging him to end his role. a prominent catholic priest is mediating the talks which include officials from neighboring south africa. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.

you can find more stories on the bloomberg at top . let's check on the markets in asia with sophie kamaruddin. lost some steam in tokyo as the yen firmed up. it is asia's best currency this year. assets are rallying on the moody's. some investors reckon the positive impact will be short-lived. -- upgraded the state bank of india, including three other banks, including sbi. it is the only lender to have received a stable outlook from moody's. sbi one of the gainers we are seeing in india today. i also want to highlight shanghai stocks. -- dragging the most on the benchmark of warnings that the stock's rally has been too fast. the comp has capped the biggest weekly loss.

chinese banks, after the regulator imposed a new share of rules this thursday. thank you, sophie kamaruddin in hong kong. let's talk about what is going on in the united states. house republicans have passed their tax bill, while the senate has approved their own bill in their finance committee. it will now be sent to the floor chamber in the senate for a vote, that could come as early as the week after thanksgiving. and hasder is in taipei some insight, having covered politics for a long time. what is the significance of the house's vote to pass this tax reform and what hurdles exist in trying to square the versions? the house passage is significant. it is a compliment -- complicated bill. it has been a long road to get there. this is something house

republicans have long wanted to see happen. when president trump was elected, it was a top priority. however, it is also significant, the hurdles that still exist to the senate passing its own bill and then both chambers have to pass the same bill. they will have to reconcile them. there are several more hurdles and in the senate, they have both fiscal and political hurdles. to senate50 republicans. they really can't count on any democratic votes. they will have to do this themselves, therefore they can't afford to lose many people and several republicans have expressed concerns about this bill, including ron johnson from wisconsin who said he won't vote for it in its current form. there are significant hurdles there, and they have now added a repeal of a large part -- a key part of obamacare, the individual mandate to the bill. jody, from what i am reading, this will remove the

manyty of something middle-class americans rely on, which is deducting your state and local taxes from your federal income taxes. are a lot of people in the u.s. -- middle-class earners, going to be stuck with a higher tax bill at the end of the day? jodi: there are some middle-class people who will be affected by that. that tends to be higher income, higher earners in places like new york, new jersey, california. someactually cost republican votes in the house because these republicans from those states were not happy about losing that deduction. other things might hurt more on the middle class side, and that has been a concern of the democrats and some moderate republicans, like susan collins of maine in the senate, who says she doesn't see enough for middle-class people in the bill. also removing the individual mandate will cause a lot of

lower income people to leave the health care system and leave them uninsured. that is something that troubles largely democrats, but some moderate republicans, as well. anna: thank you very much, jodie snyder joining us. in the london market. carillion now saying the 27 king profit below expectations. the headings continue at carillion. consent to making the amendment. more needs to be done to cut that. if early small company by european standards, but fairly volatile also.

let's get back to the main line of our conversation at this point. the head of rates at aviva investors joins us. hearing about what has been going on in the tax debate and mueller and the special probe into the elections, in terms of the tax, you view this as something that could -- do you view this as something that could be material, and you have to weigh that against the likelihood of things being passed. charles: if you look at the numbers being talked about, although they are not the same bill at this point in time, it is about $1.5 trillion. one third of that more or less is already in place. , onlys net new money around a trillion. over 10 years. but it a lot of money,

gdp., .3 on anna: you don't think it provides much of a fiscal boost? charles: not enough to move the needle in any of its versions drasticou get some multiplier effect. it is not enough to alter the fed. the economy has been strong for some time in the u.s.. 2.5, 2.7, 2.8 in an annualized growth rate isn't going to make much difference. inflation would alter the reaction function from the fed. i wonder what you think about u.s. stocks as a reaction. they have come so far and are trading at 19.5 forward earnings. is a tax deal going to give us a is there ae s&p or

ways to go. ? -- over the course of this year including the equity market. looking forward, the devil lies in the details. stocks lookgue that relatively expensive, but equally that the bond market looks relatively expensive. most asset classes are not areas you would describe as having value. the right kind of corporate tax reform in this bill, it is potential that equities could move from these exalted levels. at the moment, if you look at market reaction and how the dollar is reacting to the passage of this bill and the likely timeframe, it seems most things are in most asset class prices at this time. scenario just discussed seems to be in the price. just discussed seems to be in the price. -- it is darn at

near zero, is it going to get down there? if we continue in the scenario we face right now where we don't have a particularly needle moving tax deal and the fed look like they are going to with thes they have hike in december and carry on a course of slow tightening in the yield curve will probably continue to grind flatter. the longer-term argument about the terminal level of rates and how high interest rates needs to go hasn't really altered. all we are doing is making progress along the way to that point and thereby, it isn't suffering as long as inflation remains anchored. flattening up to the long end of the curve. for the time being, unless we get some uncertainty with respect to inflation and term

premium kicking in, the curve will continue to flatten. anna: charlie, thank you. the head of rates at aviva investors stays with us on the program. merkel pushes ahead with party talks of key differences between the four parties. at 8:00 a.m., we speak to an executive board member at the deutsche bank. this is bloomberg. ♪

♪ matt: it is 18 minutes past 8:00 in the morning in berlin. seven: 18 in london. you can see the sun coming up over the brandenburg gate. a little rain this morning, but i believe it will clear up in the afternoon. let's check the markets and see what the weather looks like there. as far as what happened in the u.s. yesterday, you had more than one standard deviation gain on s&p futures.

tax rate, on the s&p up .8%. we will see what happens today. rallied hard and lost their luster in the afternoon, but we do see investors buying bonds today. that could be a sign as to what action we see in equities. let's get a business flash with ed ludlow. vivendi has reported a 5.7% in third-quarter earnings. that was boosted by its acquisition of an advertising group and a french tv unit reporting the first growth since the start of 20 stiff -- 2015. earnings came in at 293 million euros. bitcoin has hit another record justto close in on $8,000, days after a plunge of as much as 29%.

multiple reasons have been cited for the boat -- volatility, one viable is that investors are switching to alternative corn. a cryptocurrency that includes many upgraded's debated my -- has more than doubled. comcast looked into acquiring a big portion of 20th century fox after talks to sell assets to walt disney culled. approached the rupert murdoch controlled media group about the assets. two people also said verizon has some interest in the same collection of holdings. has shut its keystone pipeline after a spill in south dakota. the line from alberta to the spilled in

marshall county. that is days before a regulator pipeline canf the proceed. tesla's elon musk has revealed what he hopes will be the reason for investors to take seriously his plan to electrify all the major forms of "terrestrial transport." he unveiled the tesla semi-near los angeles. safety features like automatic braking and a lane keeping system. that is your bloomberg business flash. anna: ed ludlow. angela merkel will resume talks partners as she works to form her fourth term government. progress was made, but differences remain. yesterday was set as the informal deadline, but her party says several more days may be needed. charles diebel still with us. what are your thoughts on this? merkel's chief of staff

saying differences between negotiators can be overcome. it made progress in some areas, good signs there. it is a process that drags on. charles: it does drag on, but you have to view it in the with macrontext and in power in france, you have someone who is looking to reform and restructuring not only the french economy, but how it works. her coalitions established, we might start to see more progress towards that because i think that is somewhat key. tore is this -- it relates the brexit story, but not directly. more that europe realizes it needs to reform itself. anna: that is the lens through which you see the german coalition talks. the appetite for reform. that is what we could get a gauge of? charles: exactly. ande get the right mix

agreement, if you see what i am saying, that could be a significant medium-term positive for the eurozone and the euro, overall. much water has to flow under the bridge, but i think it is quite important because europe has gone on an avenue of trying to change itself and to reform and particularly, with macron in charge of france, the potential -- if you like a more integrated , less idiosyncratic europe is there, should they take the chance. a lot of decisions might be made in berlin, which is where we find matt miller. matt: charlie, you hear all to my are saying they can overcome these differences, but angela merkel wants her fourth term in power. get it, we might

have to have new elections for since thisime germany has existed, this postwar germany. in the euro area that you point out look like one of the biggest sticking points there are. the other two parties don't necessarily need to be in power. they can be in opposition. is this priced in, the possibility that the german government may not be formed and we may have to hold the elections? what would that do to the european investment outlook? charles: at this point, i don't think it is priced in because the processsed to of coalition formation in germany, which is always very , and almostwnout inevitably, and a lot of horsetrading and wrangling as we are seeing right now, goes on as part of the process. to see a degree of

political uncertainty kick in, clearly that wouldn't be good for risk assets across the other but equally on the side, you still have the ecb buying assets and thereby, the damage would be pretty limited. the more important point here is the conclusion they reach. something of an opportunity to take europe almost to the next level as a result of these coalition negotiations, but that depends on the coalition partners and the details of the agreement. anna: what is the opportunity in the eurozone? i pulled up five-year euro area inflation expectations, on the rise generally speaking but not touching the levels mario draghi mentioned. charles: that is the point. if you look at the three-year forecast, they are still not hitting their target in their

own estimation. a rise in oilseen price recently, which is going to be an uptick in headline seeing itwe are not feed through to inflationary expectations. we are not seeing wage gains you would have expected. there is a conundrum going on and the growth is great. we normally would expect inflation and wage growth -- that is that we are not seeing. anna: charlie, thank you so much for joining us. , head of rates at aviva investors. time to bring you up-to-date on the irish -- it is possible to get an agreement. we may have to wait till the new year. it is possible to come to a conclusion in december. we need to avoid any barrier to

trade after brexit. some of these lines coming to us ahead of a eu summit. that will do it for daybreak, europe. the market open is next. ♪

♪ guy: friday morning, welcome to bloomberg markets, the european open carry cash is about to open. we will bring you the first trade of the day. i am guy johnson in london. matt miller is in berlin. special counsel bob mueller is subpoenaing documents from the trump campaign. they's upgrades india for first time in 14 years after a selloff in e.m. bonds this year. is this a buy