♪ anna: good morning. i'm anna edwards. manus: i'm manus cranny. here are the top stories. korea claims north it is finished its nuclear missileafter firing a that it claims puts the united states and range. plans gainblican tax steam as the bill heads to the senate floor. anna: the u.k. and eu are said to have reached an outline deal for the divorce bill leaving the irish border the last major

obstacle. $10,000 asoin tops the bubble warnings multiply. ♪ anna: good morning, everybody. "bloomberg daybreak: europe." our minds back to what happened in the united states yesterday. we are perhaps drawing a line in the sand in today's trading. u.s. stocks touching new highs. it's the everything is awesome rally. focus on the things that are good. tax progress. positive data.

the senate budget committee has advanced the republican tax bill. see the index is pretty flat. we had powell testifying in front of the committee. he talked about the december hike. he also signaled he was on the same page as janet yellen. the pound is up again. could we have a deal in brussels? it looks as if we have a preliminary agreement on the financials. it's a long way to go into actually get to brexit. you've mention what's happening in north korea. japan aims to get north korea to abandon the nuclear weapons and recognizing north korea's nuclear state would be a mistake

, but what is the issue for markets? basically the market, every time you have a missile launch from , this chart says, yeah, who is bothered? everything is awesome. it sounds a little bit like donald trump. is on target for its 11th straight month of gains. the global momentum, as you look the best day.s., was had by the s&p yesterday. december has never been a poor month for the s&p since the beginning of 1928. let's get your bloomberg first word news. bitcoin has passed $10,000 for the first time, taking this year's price surge

to more than 10 fold even as warnings multiply that the largest digital currency is in an asset bubble. this was set about the coin. >> this is a bubble and there's a lot of fraud mixed in. there's a lot of froth and fraud in anything as exciting as this. i think this will be the biggest bubble of our lifetime by a longshot. >> that the records say i didn't say that. the u.k. and european union have reached an outline bill on the divorce. while governments have not , they have reached a preliminary agreement. eu leaders will have the final say of whether the offers high enough. u.s., the outlook for

republicans to deliver a tax overall by the end of the year brightened after president trump addressed gop senate holdouts in a closed session. he said, they want to see it happen. seecommittee has voted to -- send the bill to the senate floor as early as tomorrow. president trump has won a legal fight over who gets to run the consumer protection bureau for now. mick mulvaney can remain as acting agency head. to blank -- a move block the move by leander english. in saudi arabia, one of the corruption cases of been released. prince abdullah was freed it wasn't immediately

possible to reach him before comment. news 24 hours a day. you can find more stories on the bloomberg at top . we are seeing asian markets fairly resilient. the nikkei on the close up by .5%. still seeing a bit of week is coming through in hong kong. it was down at this level yesterday and then turned around on the close. we saw a rebound and material players. you are still seeing a rich treat from a lot of these tech players in the region. chipmaker,, an led is down by about 5%.

six to $7 billion of capital still needed in the god see within demands. galaxy lithium demands. manus, anna? manus: thank you very much. .omprehensive roundup north korean leader kim jong-il and has said it has completed its nuclear program after successfully firing a new intercontinental ballistic missile. he says the weapon puts the entire u.s. and range. donald trump, quotes, we will take care of that situation. what do we make of these claims? the statement from north what basically confirmed

the south korean and u.s. officials are you know. it went as far as they claimed, it went as high as they claimed. not explained is whether they had a dummy warhead and whether that survived reentry into the atmosphere which are two key technologies to have a workable holistic missile. regardless, the fact that they did claim that they reach their goal is a significant statement because it signals, to some analysts, that maybe north korea is ready to talk. aloneave said all national along, and despite the sanctions, their goal is to have a nuclear force. today they declared they do. will they stop testing? work on deployments? get to the negotiating table? i think that is what analysts are looking at. anna: we will see with the end

goal is. from members of the japanese of ministration abe all they and trump -- scott's -- didot not discuss nuclear options. what has the response been in seoul? >> in terms of the market, it has been muted. -- words start the used are fatigue, desensitized. from the financial markets there was no reaction. what worried them the most was what is happening in washington. donald trump had a very muted reaction and i think that relieved the markets and as such it did not remark -- react as negatively as some would have thought. anna: thank you very much.

atemy cook, chief economist jeremy cook --at world first uk joins us now. the lack of reaction we have seen in asian markets and even the yen doesn't always react. context, isn't it? this is the new reality. jeremy: markets have gotten used to it which is sad if you get to the charts of the nikkei or other markets, you would not be happens inw things the peninsula. we are getting into the winter and we know the

government has difficulty feeding the people. this may be a measure to up the aid. this may come down to triangulation and you read the headlines that say we should not recognize north korea as a nicholls state. power. -- as a nuclear this is a trying relation between china, japan, and the u.s.. trump kind of rolled back on the rocket man sentiment. almost a performance at the towards north korea has become more professional. testing the metal of your

neighbors. it has risk and reward. us.my cook stays with if you're traveling to work, you know what to do. he will go to digital radio. to byre about to speak the judge. to body judge -- bobby judge. the u.k. and the eu are said to have reached initial deal on the divorce bill. this is bloomberg ♪. ♪

♪ manus: here is a live shot of singapore. we look at the msci asia-pacific.

nothing can keep a good index down not even the risk from north korea saying it has completed its assent to a nuclear state. up a quarter of 1% this morning. deputy prime minister substituted for theresa may. the outgoing fed chair, janet yellen, testifies on capitol hill. jerome powell has told lawmakers the case for raising interest rates next month is coming together. he said while unemployment is low, the economy does appear to be overheating. >> we don't see wages signifying

the tightness in the labor market. is no sense in an overheating economy or particular tight labor market. manus: jody joins us -- anna: jody joins us from hong kong. what will be the big takeaway? he sounded quite a lot like yellen on quite a lot of subjects. he resulted in not a lot of reaction. he did sound a lot like her in that dovish wing saying there is still room to keep it unemployment rates low and not have too much of a problem with inflation. the possibility of the rate hike in december. talked about the labor market

and how there is room to grow their without affecting inflation too much. there not seem to be -- weren't any particular huge headlines that came out of anything. he had a little bit of stuff questioning but basically seem to sail through. sailing through in politics in the united states of america is a relatively interesting combination. the senate budget committee has approved the tax bill. where do we stand on that? >> they did approve it on a partyline vote, 12-11. no democrats are likely to vote for this bill. so the republican leaders can afford to lose only a few votes. placate somee to of the republican members of the committee, including ron johnson.

that corporations corporationse treated better than pastor businesses. he still has some problems with the bill. they were able to deal with senator corker's issues. but there seemed to be some republicans that are still very concerned about the cost of the bill. it may add $1.5 trillion to the deficit over a decade. have a lot of amendments flying fast and furious and then a final vote. if it fat -- if it does pass their, in there are still other hurdles. thank you for that. jeremy cook is our guest. world first.st at

donald trump said, we had a lovefest. there are still issues. this is the prospect that we are looking at. these are the deficit that obama , bush, clinton, and reagan. we are headed towards a 1.5 trillion dollar deficit. concerning? it is concerning. there has been some word there has been some backdoor way of repealing obamacare if this tax bill passed but right now they are splurging on the tax without making the savings. as far as deficit dynamics go, they look pretty terrible. how much of a buddhist

will the tax changes give to the u.s. economy. surging, they are pricing in some affects from tax, if you look at the bond market with the flat yield curve , there is no expectation of a macro boost. the stock market is excited about buybacks and that is where we'll go. it may not actually deliver growth. buybacks, wey see may see moving in the housing but the bond market situation does tend to suggest that markets are pretty ambivalent about the trickle-down effects of these tax cuts moving forward. is either ahis symbol that the tax cuts are not being expressed the way they

or, it's a massive disappointment. the debate on the dollar, it's a fairly asymmetric outcome. you get a tax deal and you get a tax agreement, have a look at this dollar chart. down goes the dollar. is the market more obsessed about a flattening yield curve versus the tax agreement? jeremy: i think they are more focused on the yield curve at the moment. quickave become quit -- to price in an price out movements due to the trump administration. 11 months into it and nothing has really happened. are we going to get a bill? let's focus on something we can

legitimately put money behind and that is the yield curve. we know everything. it's only going to get more water down. the senate bill has to merge with the house bill. and it'smes together going to be a bit of a fudge. if it doesn't happen, that's another kick in the eyes to the trump administration. -- anna: talking about jerome powell and what he has what powell this is has been saying about the labor market. he says there is signs of overheating or a tight labor market. statistic.ed this he suggests there are still pools of labor that could come

in. this is painting palas quite the dove. jeremy: that line was probably the most important in his testimony. it could have been janet yellen with that same line. the participation rate is almost a forgotten statistic. rate --stration participation rate was something we're focused on in 2011, 2012. that has stagnated. it's a good thing for markets that you get this continuity between yemen and powell. they are saying the same kind of thing. there's no sense of an overheating economy.

you look back at the lines from the daily profit. look at an overall upbeat mood in the united states of america. this is one of the longest expansions on history. you're going to need something to keep it going. you need this momentum to continue. the fed is not pinning all its hopes on the tax plan coming through. as low asep rates they are for little bit longer, slower to raise the opening salvo of the powell said plan. for somebody who doesn't have a phd, he did a good job of sounded like an economist. the one hand and on the other. jeremy: a very straight back to

congress. no bells and whistles. central bankers are not rock stars. you can't see mario and mark and janet shaking their -- shakingian mark their booty? anna: thank you for staying with us. up next, bitcoin. $10,000 now. it hit another record. what is driving the surge? that is next. this is bloomberg. ♪

erga: this is "bloomb daybreak: europe." we have reaction from japan about north korea. in parliament that recognizing north korea as a nuclear state would be a mistake. japan wants to get north korea to abandon its nuclear weapons. manus: let's get across to nejra cehic. everything is awesome. what do you make of it? nejra: i don't know about

awesome but certainly unfazed. we look across the asian equity markets and its flat. the heinz saying is pretty much flat. everyone shrugging off those risks. the nikkei is up .5%. we have reached at least an outline of a divorce settlement between the u.k. and eu. the pound jumping on reports. taking a look at the dollar. the index fairly steady. we did see it hit a session high

yesterday based on the progress of the senate tax bill. relentless a pretty flattening on the curve. it has usually been a bit more sensitive to the front end of the rate curve. little bit of negativity coming through on the long-term prospects of the u.s. economy even as to get the incremental good news. finally, talking about where there might be euphoria, everything being great, bitcoin mania past the $10,000 mark. more than tenfold increase on bitcoin this year. people asking when it's time to take those profits. the u.k. and eu are set to

have reached a preliminary agreement to the amount britain will play -- pay when it leaves the block. that just leaves the issues of the irish border until talks can progress to the next phase. ,oining us now from brussels what exactly has been agreed? seem to have an outline of a on the financial commitment that the u.k. is going to pay as a result of brexit when it leaves the eu. the main point is the uk's seeing to have said, this is the overall financial commitment that we have to the eu. they have agreed on a methodology of breaking that down and coming up with a final figure of what they will pay.

this figure is going to be about 30 billion euros -- about 40 billion euros. we don't have a definitive number. theresa may doesn't want a lump sum payment. it's going to be some kind of staged payments reaching out into the future. she is going to avoid having to say what the final figure is. the speculation, anywhere from 40 to 100 billion. how does she sell that to boris politiciansother with aggressive language? how does she sell that because they will lambaste her. it's a difficult thing

because i think she has the eu on board in terms of doing the optics. if they focus on the methodology and not on the final some, i think they will be able to sell it back to their party constituents in london. you don't just have to sell this to the other eu countries that you have to sell it back in the u.k.. that is what they are trying to come up with here. it looks like they have something they can take back to london and make. manus: thank you very much. cook.turn to jeremy be at cross two of the major hurdles. the irish order is far from agreed. border is far from

agreed. look at the gilt market. down she went. the gilt market says we have a deal. says we havearket a deal but we haven't. to be honest, even if we do get an agreement, it doesn't change the grand scheme of things. manus: is that not good? jeremy: good in that it has progress but in the grand scheme of things it's another political maneuver that starts off just as -- starts to ostracize theresa may within her party.

-- hard-line brexit tears brexiteers would not send 100 pounds to your. it's not going to tell. if this is a pressure play on , we are getting somewhere, don't trip this up now -- manus: -- anna: that's an interesting one. i have a chart here of the pound. you talked about the guilt moves. the pound moving. are we a little ahead of ourselves? what is the fallout that is possible in the currency there how much tired we go russian mark -- how much

higher do we go? jeremy: the european commission on the 14th and lifting of december, there has to be sufficient progress. then trade talks beginning and businesses here are the u.k. coming up and saying our members are happy so we can start 2018 and 2019. .hat's been the news businesses worried about how to do business with the european union. what does this do for the bank of england? guilt space losses at the open.

there is a repricing showing that u.k. investors are starting position brexit. the door for the bank of england to adjust its policies next year. if you do get the beginnings of a trade deal, it could give mark carney the latitude to go for more aggressive height. agree or disagree? think he will do it. i feel 2018 will be a lot like the end of 2000 haven't seen. a lot of focus on consumer credit and real wages and the retail sector. the u.k. is a consumer. gdp is a consumption -- is a factor of consumption, investment, and trade. trade is poor.

investment is in coming. government spending this week. and consumption is for. so where does growth come up the bank of anna: england is worried about the consumer reddit side of. are you worried about political change in the united them russian mark it looks dowdy. -- political change in the united kingdom? it looks cloudy. comments citing the risk to u.k. assets that they see. the question is do we get a second referendum if we get jeremy corbyn in?

i don't know what the impetus is for us to have an election yet. 2022.l think we get to i don't see it the position where jeremy corbyn goodwin the premiership. win they corbyn could premiership. anna: maybe we will see what happens at that crucial lunch and what progress has been made. thank you so very much. bitcoin has passed $10,000 for the first time. the largest digital cryptocurrencies has risen by

more than 50% six october -- since october. many warned that bitcoins are a bubble. this was at an event in new york. this is a bubble and there's a lot of fraud and froth mixed in. i think this is going to become the biggest bubble of our lifetime by a long shot. >> i want the record to show i did not say that. >> it's because it's so global. i think this ismanus: it's goin. let's go to hong kong. busted $10,000. this is spectacular. what is driving the price? are we seeing mark dissidents -- more participants?

give me the side of this market. heard allase i have day long is foam oh -- fomo: fear of missing out. the higher the prices go the more institutional money is rushing in. there is this idea that the coin is getting increasingly accepted in the mainstream. i heard a comment this morning that investors need to do their homework and that it is not a foreign exchange in the traditional sense. there is no central bank. it is more like a commodity. how good is the mainstream understanding of what bitcoin is -- about?ian mark the people definitely want to get in on an asset that has

increased more than 900% in price this year. big news is that cme is planning to introduce futures for bitcoin. jpmorgan is considering offering those to their clients. there is really a lot more demand for bitcoin which is leading to a lot of these products to allow people who may not start a bitcoin wallet. manus: thank you very much. 50% rise in october. we are making a great deal about a bubble. but the market capitalization of $167 billion. that exceeds 95% of the s&p

index members. it's real and it's here to stay. worried -- i am getting worried. jeremy: the crash is going to have a wider effect? it's been a spectacular rise. markets like big round numbers. you treat -- anna: do you aeat it like a commodity or currency? it's a store of value. the fact that it is rising is that if you pay for a good, you don't really want to pass it on

in the former currency. you want to hoard it because it's commodity that is rising. eventually the transition -- transactional element of bitcoin starts to slow down. no one is really using it as a currency. thank you very much. jeremy cook stays with us. coming up, we will talk about oil. as ministers gather in vienna, will it reach an agreement of when to end production cuts? and north korea says it's nicola program is complete. we will discuss next. ♪

♪ break europe."ay vienna, the opec ministers are gathering today and tomorrow. they will decide whether to extend the production cuts. russia has yet to commit to the proposal. the uae would. the echo the talks was unclear. optimistic that this group that has worked very hard to stabilize the market, we have seen very good results in the market recovery. we still need to continue but that decision will be discussed. nobody can predict what will be the decision and we will have to

wait. the president of rapid on energy group joins us from the anna. oil is around $60. fuel stockpiles falling. why does opec need to extend these cuts? bob: good to be with you. opec needs to extend and russia needs to extend because they see through these builds up in prices. seen times when crude spiked higher only to reverse. they are looking at next year and wondering if the inventory draws are going to continue or not. year, we willext

have hit our target. but up the road they are saying you have to go through oil next year. this started out like world war i. everyone thought the victory was going to be one in x month. months.n six it's a longer war. manus: good to see you. a longer more but what the market really wants is they want to know what might be in the versailles treaty to carry your war theme through. russia concur on two things. the cuts are working and they could need to be extended but everybody wants to know with the exit strategy might be. how that might look. that is really what the market wants to focus on rather than a

cliff edge in your market. i think that is the case only because we are at $60 temporarily. the gulfok at producers perspective, they are concerned as they going to the first quarter and see stocks build again, prices may come off and they might wonder how much longer they have to do this. it's a tad premature to access about the details of how to end the restraint. the countries that are unfamiliar with these cuts and wanted to end, they are saying, it might have to go beyond the summer. the older, wiser numbers say they have a longer road to go. how much depends on the relationship?

saudi arabia and russia, how do you -- how do you assess that? bob: i think that relationship is strong. geopolitically, broader commerce, a visit by the king of saudi arabia to moscow, deals , i other investments, syria think there has been a warming up. opec and the producers isolate oil policy from broader geopolitics. i think they're going to be talking about barrels, balances, burden sharing, and those types of things. think the broader relationship will come into things too much. here a fewting months. there will be an extension. march what do the job.

we are talking about nuances and tweaks that i think the russians and saudi's can manage. manus: good to see you. , president of world --bobuk --jeremy cook, mcnally, president of rapidan energy advisors. thank you. jeremy cook joins us again. how important is it to sustain? -- howimportant important is it that they agree on the extension? jeremy: i think we need a hefty extension because of the inflation arguments around the world moving forward. oil is not something that has come up and a lot of conversations around inflation. it's all about productivity of the average worker.

central-bank have made allow themselves to park their thinking on oil. they will be happy if it extension occurs. seen why have we not inflation connected to this? itemy: i think we have seen but it's mainly been a currency related flow. it's been 50 or $60 a barrel for a while now. anna: thank you very much. jeremy cook. nuclearrea says its program is complete after firing a new missile. it claims it can reach the u.s. mainland. how did president donald trump react? we will discuss that and talk about the lack of impact of geopolitics on asian equity markets.

really to offset the strength of the rally we saw the united states. this is bloomberg. ♪

manus: good morning from bloomberg's new european headquarters in london. bloomberg is daybreak. these are the top stories. manus: north korea says it has completed the nuclear weapons program after firing a missile that it claims could put the entire u.s. in range. anna: the case for a rate rise next month is strengthening, and the return -- republican plan gained steam. manus: the u.k. and the eu have reached an outline bill for the divorce bill leading -- leaving the irish border as the last major obstacle.

bitcoin tops -- $10,000. thoughs of a bubble even which multiply. -- rates multiply. manus: welcome to daybreak. how does the world deal with another ballistic missile from north korea? shrugs its shoulders. everything is awesome. this is the sweep of the equity, the dax is rising by 79 points and paris up i-27 points. london down by 29 points. keep an eye on sterling. that is where you want your eye focused. we had the nature relief rally in sterling, that could begin a bit of a rotation in the u.k. equity market area the ftse 100, could it be that great rotation in the market? the nuclear program is completed. that is your risk. your reward is donald trump goes

to his array to sell the tax plan. the u.k. and the eu, have they reached a breakthrough, will the irish question as he can be referred to remain the last hurdle? through $10,000. those are the futures, we are set for arise around equity markets. it is a fairly will wish look and -- bullish look. the: the red headline says ceo issaying that the stepping down. there was tense conversations -- him.ing h im. there have been various factions within the shareholder community arguing for different courses of action and some cross with the way the chairman has managed the future of the company. he agreed to step down with

immediate effect. david warren, the cfo will assume the added role of interim ceo. donald brydon indicated he will not stand for reelection. general board changes coming through. interesting to see how the shareholders who had a lot to say on his tenure at this business and here he is next to me. there have been a lot of comments from various groups, some positive and others less so. we will see what they have to say. we are getting a comment from the lsc asking tci, one of the shareholder groups to withdraw its requisition for a general meeting. we will see how that goes down with tci. sc said bryden will step down. we had this report yesterday followed up with confirmation from regal cinema that they were in talks for a $3.6 billion sale . we hear the part of the u.k.

city well saying the group is making a possible offer for regal entertainment. they would fund that through debt and the material equity raise. about in terms of m&a. very important news item coming through from the london stock exchange. let's talk about what is happening in the markets. you talked about the lack of reaction we have seen to the the northsting from koreans. that is the part of the story. s&p futures suggesting they are flat at the start of trade. we talked about everything is -- the everything is awesome rally. the markets choosing to focus on tax, there has been some focusing on profits from tax -- companies and the better data. we saw the budget committee against the republican tax bill to the senate for giving the dollar a pop and the pound is up by .3 of 1%. a breakthrough in brussels, a

pulmonary agreement has been reached and that leaves ireland as one of the key stumbling points for a brexit deal. we saw the bond markets reacting to this news from brussels. we did indeed. he delivered a total of 26% return, you can get his performance relative to his peers and other exchanges. 13.6%. he was in the job for 8.5 years and he will not return to the office under any circumstances. these are the bond markets, there was the gilt market that we will be most focused on. we saw near a 40 picked drop in the gilt market. where they go that could have applications across the european markets. unds are down and oat's down. you're saying 10 year yields holding within a one percentage point move of the record low.

you have congress talking about tax cuts, consumer confidence higher, home prices are rising. the oecd has warned that as a prices have gotten a little bit too high and the global economy is said to take later this year. there is no immediate flow of money into the bond markets in europe on the back of the north korean risk. we will keep an eye on those gilt markets later in the day. that's get your first word news. juliette saly is standing by. is passingitcoin $10,000 for the first time taking the surge more than tenfold. -- hedge fundier manager mike no regrets is starting a cryptocurrency fund. >> this is a bubble and there is a lot of fraud next in. ande is a lot of froth fraud in anything that is exciting as this. this is going to become the

biggest bubble of our lifetimes by a long shot. >> the record show i did not say that. >> because it is so global. juliette: the u.k. and the eu have reached an outlying deal on the divorce bill that it will pay when it leaves the block. european national governments have not signed off. negotiators have reached a plea or -- a preliminary agreement on the settlement. eu leaders will have the say on whether the offer is high enough to unblock talks. the pound strengthened after the report. in the u.s. the outlook for republicans to deliver a tax overhaul by the end of the year right and after president trump addressed gop senate holdouts in a closed or session. he said the meeting was somewhat of a lovefest saying they want to see it happen. they voted to send the bill to the senate floor for a vote as early as tomorrow. a legalt trump has won fight over who gets to run the consumer financial protection

bureau. a federal judge ruled that mick mulvaney can remain as head of the agency. that came as a request to block by leanne english. mexico's president has picked t he governor. he will begin a four-year term on friday. the current governor is departing to head the bank for international settlements. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . the regional benchmark index notching up its first win of the week today. certainly defying that pessimism around the north korean missile test. you had the nikkei close higher by white five of 1%. hong kong's market off the lows of the day in late trade pretty flat and the csi 300 has turned around despite heavy selling and

large cap stocks earlier in the session. also have a look at the kospi, falling flat. have a look at stocks that we have been watching in the region. still seeing some significant moves coming through in hong kong. 11%, after ay broker upgrade from morningstar and rhp said the stock had been oversold. the mood that you are seeing in tech stocks in the region, we saw tencent in hong kong under pressure. a tech stop -- a stock listed in tokyo. not just in the u.k. that people are eating ill and recover cough sweets. -- require cough sweets. north korea's leader kim jong-un says his regime has completed

the nuclear program after successfully filing -- firing an icbm. they claimed the weapon puts the entire u.s. and range. told reporters "we will take care of the situation tell the u.n. which imposed stricter sanctions on north korea this year will meet to discuss the latest test today. manus: one of our other top stories as we have been telling you this morning is in regards to the fed chair nominee, jerome powell. he told lawmakers the case for raising interest rates is "coming together" and his confirmation hearing before the senate panel, he said while unemployment is low the economy does not appear to be overheating. that aligns him with the more dovish wing of the u.s. central bank. ducked questions about the economic impact of the tax cuts being debated in congress. let's get to jodi schneider journey us now. what was your take away from

jerome powell? we spent the past hour debating this with our guest. signs as if it is no change, keep on driving my yellen to powell. right.hat is on making sure that his message was there was plenty of room to continue to improve the labor market while not having a huge serious impact on inflation. that he thought this logo -- the slow go policy was the way to go. no real surprises. duct some of the hard questions tax cuts.c impact of it sounded like a continuation of his predecessor who we will hear from in the next day. she will testify on the hill for the last time before she leaves. it will be interesting to compare them. no surprises there, steady as she goes. there is still room in the labor

market. there are still some are not participating for there to be improvement without being a huge worry for inflation. anna: steady as she goes seems to be the message whether it came from banking regulation or the way the market is guiding -- guided. on the politics, jerome powell kept tightlipped on the tax -- what the tax story means for the fed. has the outlook for the bill, has that over -- improved now that the senate budget committee has approved it? that was ainly hurdle and there was concern as to whether it would get past that hurdle because they were a few republican senators who expressed concerns. it did get over the line there 12-11. a very divided party line vote. they were able to bring the republicans long although one of them, ron johnson of wisconsin, still has concerns about the way so-called pass-through businesses are partnerships --

at partnerships are treated. that they are not treated as well in this legislation as corporations. he is still perhaps a no vote only refute -- afford to lose to republican votes because no democrats are expected to vote for the bill. this is going to be an interesting few days. president trump will be on the road. he will go to missouri to stump for this bill one more time. they will have a series of votes, they call it voterama and the final vote on the bill is expected this week. anna: it sounds more fun than it is to experience. thank you, jodi schneider. richard erwin is chairman of the investment committee at saranac partners. good to have you on the program. let's talk about the things that are coming together. there is the geopolitics on the

korean peninsula. which the markets seem to be shrugging off to a large extent saying investors perhaps saying we have seen this before and it does not seem to move markets. everyone focused on what powell means. do you share the view that powell is something of a smith transition from janet yellen? richard: there were more candidates that were more disruptive. it from what we understand of s markets this is not a dramatic transformation. chart.we have, this have thisne -- we chart. everything is awesome, which is the s&p 500 ratcheting higher. one of the best days this year but the inverse is the bond market. one market believes in the growth story and the tax story

and the other market does not. the bond market is not convinced. where do you stand on growth momentum in the u.s. and the equity market, tired rally or more to go? richard: moore to go. what is the u.s. economy doing? it is reasonably firm. it is not moving. as we go through 2018, it is probably going to sell a bit. we're going to be in an environment where growth is perceived as holding up. the big risk to the rally in global assets is if we get a sharp growth slowdown, that is not our central scenario at this point. theher key issue is will markets holed up is -- if there is weakening growth and we think there is more to come. the key thing is the earnings side and next year could still seem -- you see reasonable earnings growth across the markets including the u.s. you: the u.s. -- do

disregard warnings from the bond market, the flattened yield curve, is that not telling us we are heading into recession or there is some kind of lag? richard: we want to see the yield curve being more flatter for that to be a genuine signal. you ignored that at your peril in the past. it is not a strong signal. set we look at the broader of drivers of macro conditions, monetary policy is going to get a bit tighter but it is not particularly tight. fiscal policy is about to get looser. u.s. companies are in pretty good shape financially. are financial conditions relaxed. it does not seem to be the sort of environment which generates recessions. manus: let's have a look at something that could have a market impact. bitcoin. it is the story that keeps giving.

up 50% in october. at whatet cap of this, point do you look at it more credibly? 160market capitalization is $7 billion exceeding 95% of the s&p five -- 500 index members. are you in the bubble cap? -- camp? richard: we do not invest in it. none of our clients. a personal view. only invest in things you can understand. it is difficult to understand. part of the attraction is this -- there is cool technology there. going back to the 1990's one of the lessons is you can have some pretty powerful technology which

is revolutionary, doing some interesting things but you do not necessarily want to invest in the company which is producing it. it --ot understand it and there is a large number of people who do not understand it. anna: a lot of central banks saying the same thing. interesting for the future but not bitcoin. is it a case of irrational exuberance? there is one to debate. stay with us. up, brexit breakthrough. said to and eu are reach a deal on the divorce bill. we have an exclusive interview. he might have a thing or two to say about negotiating with the eu. ♪

mass: 7:21 a.m. in the city of london. let's get you the business flash. aly has revived herself with a lozenge. juliette: save your role and will step down following a request from the board. he will be replaced by cfo david warren while the chairman will not be standing for reelection in 2019. the lse asked tci fund management to withdraw its recommendation. regal entertainment is in talks for a $3.6 billion sale to sin a world. negotiating a price for regal at $23 a share. the deal would create a bigger international rival to industry leader amc entertainment. that is your bloomberg business

flash. anna: nicely done. thank you. the u.k. and the eu are said to have reached a preliminary agreement on the amount that britain will pay when it leaves the block,, the so-called divorce bill. leaving the issue of the irish border before talks can progress to the next phase. chair atichard erwin is saranac partners. this dramatic move in the markets, sterling and gilt. looks as if you have the eu national sorted. bloomberg says 40. it has got this feeling of a new momentum that we have not had for quite some time. what is the gilt market telling us, is the gilt market telling us get ready for something to breakthrough?

richard: at this point in time it is not. 1.3, overlts, 1.2, this year it has been between one and 1.5. gilt yield seem to be stuck in this trading range. in our view, that is where they are going to stay. for them to break out we would have to be looking at a much firmer economy. we would have to be looking at inflation remaining high. not dropping back. what we are going to see is an economy which is pretty sluggish . inflation probably peaking toward the end of this year, falling back next year. oft is not that sort environment in which you get the sustained monetary tightening that you need to drag gilt yields higher. anna: when you talk to your client base, those that have a bigfoot in the u.k., heavily invested, what are their concerns? is it around diversification of the currencies they're exposed to, they're worrying what will

happen to the pound if there is hard brexit, what are the concerns they talk to you about? richard: they have pretty global exposures. weighting tends to be constrained. the big topic is brexit. at how this plays out. i think at this point from a pure investment perspective, there is huge amount of uncertainty. we are not going to see a major move in markets. until this uncertainty is resolved one way or the other. that could still take some time. dimension fourr markets, and i had the pound earlier, we sound -- saw a nice bounce in the pound. the gilt market is ignoring and the -- election risk and this is something which could be a very prescient risk. our clients talking to you about that? the view in the market is that the u-curve is not ready.

richard: political risk is there in most countries in the world. it is more exaggerated in the u.k.. the difference between risk and uncertainty, you can have a stab of quantifying but uncertainty is uncertain. nature ofnation -- the political backgrounds and the u k, until there is more clarity on how the brexit talks are going and we have greater clarity on what the economy is doing next year, it is very difficult to make investment calls based on politics. look at how much has changed so quickly in the u.k. and the u.k. political background in a short time. why can't that change again? anna: the week is a long time. thank you for joining us. that is it for daybreak europe. bob diamond joins bloomberg for an exclusive interview. when you are traveling to work you can always watch on your

mobile device. u.s. futures that flat but positive when they were negative earlier. this is bloomberg. ♪

guy: welcome to bloomberg markets. this is the european open. i am guy johnson at our new london headquarters alongside matt miller who is over in frankfurt. less than 30 minutes to the start of cash trading. ♪ a brexit breakthrough on bill helps divorce push up the pound but is the market ignoring the irish border? north korea says its nuclear program is complete b