♪ anna: good morning. manus: this is "bloomberg daybreak: europe." before today's top stories. anna: and move against trump. -- a move against trump. the dollar and u.s. stock futures rise after senate republicans passed their tax bill. manus: brexit hurdles. seeking to break the headlock in brussels. the irish border issue and divorce issue main unresolved. -- divorce issue remain unresolved. .nna: cvs to buy aetna ♪

anna: good morning, everybody. looks to you what has been happening in the asian session and what we expect for the session in europe and the u.s. tax.e all about the stock futures and the dollar, the market reaction we are seeing broadly focusing on the tax. not being distracted by trump's tweets and the activity over the weekend over the role of the fbi, trump administration, and ongoing investigations. that is not dominating the market news flow. what is dominating is the senate passing its tax legislation over the weekend. futures demonstrating that. all of the major u.s. indices higher on the trade today. the dollar index following with

point 3%. we are seeing yen weakness, which is not helping. the yen weakness not helping. we see the asian equities session, in contrast to u.s. futures, in limbo. there is a warning of frothy markets. goldman sachs talking about valuations of prolonged bull market in stocks, bonds, and credit leaving measures of average valuation the highest since 1900. the question for you as market participants and you digest 11 weeks of bliss, does that rotation continue? this chart says it all. a big mac and fries and a chocolate milkshake as opposed to -- ; there's down. -- semi conductors down.

they lost 10% of the value last week. up went transport, banks, and telecoms. if you believe this is a groundbreaking momentum moving tax bill and the joint tax bill -- and the joint tax committee does not necessarily believe that, is that enough for a bang for your dollar buck. that is the question the markets will ask themselves. what does that do to rotation trade? you have the vix as well. that is your conundrum. do with it what you will. let's welcome juliette saly. u.s. house republicans drafting a contempt of congress resolution against ron rosenstein and christopher wray

on claims or have -- there has been stonewalling in producing material related to the trump russia probe and other matters. theblicans come including president, have pointed to reports that the removal of an official is evidence the entire investigation has been politically motivated. the tax bill passed by republicans in the u.s. senate over the weekend and may boost profits to industries. the plan is still subject to the existing legislation is a reduction in the corporate income tax rate to 20% along with the provision that allows some companies to bring back hundreds of billions of dollars of foreign profit i would -- at a lower rate. thomas barkan has been chosen as senior executive as next president of a company. he has the support of the fed

order governors in washington. -- the fed board of governors in washington. it wasn't clear if they voted to approve him, which is required. brexit talks being torpedoed by the european court of justice. while a deal on what happens to the irish border after brexit is still to be done, the role of that ecj in enforcing the rights of citizens has emerged as the greatest obstacle. that comes as theresa may heads to brussels today to meet jean-claude juncker. the venezuelan president has said the nation will create its own petrol currency backed by reserves in oil, gas, gold, and diamonds. it will enable the country to advance towards new forms of international financing. the announcement highlights how u.s. sanctions are hurting venezuelan ability to move money to international banks.

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 . it has been a little bit of a fluctuating session in asia. we are seeing the yen weaker. it hasn't helped the nikkei. a lot coming through on the tech players. the nikkei closing down the session by half of 1%. a turnaround coming through in hong kong and the csi 300 of the large cap stocks. we have seen insurance and tencent coming back in buying today. some of the other stocks we are watching, wanda hotels rising sharply. we are hearing wanda commercial will sell one hotels stake. this is a nonbinding letter of intent to buy 60% to buy 65% of the company.

-- letter of intent to buy 65% of the company. from move coming through retail stocks in japan despite a downward pressure. csaa -- fter front retailing at a two-year high today. manus: thank you very much. leading democratic senator dianne feinstein said a potential case of obstruction of justice is developing against the president. she was speaking to "meet the press." think what we are beginning ofsee is a putting together the case of obstruction of justice. i think we see this in the indictments, the four indictments and please that have just taken place in some of the comments being made. attitude at the

white house, the comments every day, the continual tweets. anna: on the subject of those tweets, trump was active on twitter over the weekend, but the comment that raised eyebrows "i had toe tweeted fire general flynn because he lied to the vice president and the fbi. anna: let's bring in jodi schneider. she will break down the latest news four. let's start from the comments from senator feinstein. what is she getting it? partly tois referring what she just mentioned where the president said -- to what you just mentioned, that the president said he had to fire general flynn because he lied.

some say this shows the president knew there was falsehood before he is saying he do this, which we didn't know previously. senator feinstein is also referring to the president's firing of james comey, the fbi director, last -- earlier this year. mr. comey was looking into russian collusion and putting these things together, there is a case, she believes, can be made for abstraction of justice, which is a serious thing to even say. the question will be, is she going to ask for hearings? are we going to see this on capitol hill in the forms and inquiries -- in the forms of inquiries? manus: this obstruction gathers momentum, how much of a problem could this be for the trump

administration? win ande the political donald trump federman we can this makes the republicans in principle in next year's election, so how big a problem could be? interesting timing there. they get this big win on tax reform, something they have badly wanted to deliver. they are not there yet, but they did get a big vote in the senate, and then they find out mr. flynn has pled guilty and the president comes out with the tweet. this is the kind of thing where it doesn't mitigate the wind, but a lot of attention -- mitigate the win, but a lot of attention will be on the mueller investigation. thank you very much. jodi schneider joining us with analysis with the u.s. political story over the weekend.

simon french joined us. good morning to you. let's talk about what the market is focused on. we have these potential distractions surrounding the russia probe him and clearly it is distracting the president. then, the senate passing the tax bill. we see u.s. futures pointing higher at the front of trade. murder u.s. assets go for you on the back of this desk where do u.s. -- where do u.s. assets go for you on the back of this? being able toket backup a good earnings season and a pickup in u.s. gdp, above expectations in the back end of 2017. in theselear for me geopolitical stories, very

short, we saw a brief spike in gold and then it came off, and the momentum behind the coordinated earnings story and tax cuts story and the anticipation is really the thing driving markets. from a political standpoint, most americans won't feel this, any change to their tax burden, until 2019. it is difficult to see that change in the dynamics politically in the u.s.. manus: our inboxes are full of notes. the u.s. already has 3% growth level. isn't much of a boost. the joint committee on tax fed and 8/10 percent of growth rate on average over 10 years, is that bang for your textbook --

bang for your textbook? simon: building on the analogy, giving the economy and digestion. lots of convergence that needs to takes place before the senate and house bill. got'sou potentially monetary policy having to be tighter in the u.s. to compensate for a pickup at almost full employment in the u.s. economy, being able to absorb that stimulus without higher tax rates, which translates through to funding costs quicker than some of the tax pass -- tax package. there in lies the risk for the u.s. not being able to stomach what is being served up. anna: where does that leave the dollar? it is doing well this morning, up a quarter of 1%. i have this chart.

this talks about the other side of the story, the hedge funds positioning for bearishness. why, when we have seen optimism on the equity market around what a tax plan could deliver them have we not seen that reflected around the u.s. currency? are there different narratives? simon: there is a different narratives as you head into the midterms. of the investors i was speaking to our worried about some of the wins the president will need to get before midterms, which he may use executive orders to push through. they may be more protectionist, and that will be weighty against the dollar. manus: the other proposition in

charts this morning is the extra yield in the market -- we are seeing bond futures in the u.s. dropping, pushing the yield higher, and this is the point. the extra spread you get for wider since march of this year, does that continue? do you think the bond markets reprice more aggressively? simon: i think the spread is a problem for u.s. treasuries moving higher. it will be quite limited. that yield gap, which is going to be material. the reason i don't see u.s. 10-year going anywhere towards 3%, or likely it will remain rage bound as it has for more than -- remain range bound as it has for more than nine months.

there is no sign of a buyers strike, particularly with u.s. gdp. anna: simon, thank you very much. simon french stays with us. let's you a little bit of m&a news. .his is prysmian the company is based in malan. we have news. prysmian to buy general cable for $30 per share in cash. they are talking about beef synergy they will be able to get after they are up and running, -- they see this manus: you see the drugs deal go through, and another european-u.s. deal go through. -- coming the going

up, bitcoin. gdps more valuable than the of countries like is the wind and romania. -- mike new zealand and romania. we are live in brussels. this is bloomberg. ♪ ♪

a shot of singapore there. unchanged on the msci asia-pacific. indices u.s. equity bleeding over in tax politics, but asia is a little bit more circumvent. selloff int of a carmakers. holding back a little bit in the asian session.

let's get juliette saly with your business flash. juliette: cbs help is buying , crating a healthier and retail giant. -- cvs is buying aetna, creating a health care and retail giant. named simons thompson as chairman, reinforcing an industrywide investor drive for higher returns and caution over project spending. and executivesly director at anglo american. do plus is stepping down. while disney has renewed partssions over acquiring

of 21st century fox media assets. the discussions are said to include the 21st century fox some studio and fox's stake in sky. anna: juliette saly there for us. big going on the rise once again, up 5% today. -- bitcoin on the rise once again today, up 5% today. it is now more available -- it is now more valuable than the gdp of assorted countries. >> it is a. pure commodity -- it is a empty commodity. , if it were ag

a very badt would be one. french is with us. great people have debated what bitcoin is. the next step is the cme futures contract. 20% -- it ist overbought 20% of the time. bringe regulation could daily price limits in of 20%. this could be a progressive thing for bitcoin. it could put control into the market. just another addition to volatility? you have the extraordinary scenario where

technology once regulators to get involved, which is almost 180 degrees from where the used to operate. you have the regulators not wanting to regulate and technology wanting that. that is a paradox. bringing it into a less volatile scenario is regulators will be worried of unintended consequences of encouraging more retail investors into the space. for the most part, retail investors aren't exposed to it and it doesn't represent a consumer interest problem for regulators, but as soon as you start widening the access platforms, reducing volatility to get let -- to get less risk-averse, it becomes a systemic problem. anna: are we there already?

people waiting work to trade bitcoin. -- i have heard people quitting work to trade bitcoin. what was interesting to me in reading a piece is they were referencing how the cme trade can add so much to this affect -- to this asset. gold, you could end up with the derivative is market -- with a derivatives market. that is what cme products can do to a nest that. -- can do to an asset. simon: i think it is storing of the problem. is large in terms of market capitalization, but it manyns the case, to how

retail investors are exposed? like this story, the danger is when you start to see significant pockets of retail money moving to this space and recognition will encourage that. it will be a signal to market precipitants that regulators are almost giving it a nod of approval. certainly brokers are making money. $3.40 versus $1.70 on gold. double your money. french stays with us. a ceo joins us at 10:00 a.m. up next, theresa may

heads to brussels. she has the challenge of aleppo time -- challenge of a lifetime. this is bloomberg. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. this is "bloomberg daybreak: europe." it is 3:30 in tokyo. yen.ollar against the not helping the stock market in japan. we see weakness on the nikkei this morning. we are half an hour away from the start of the european market open. let's get a market update with guy johnson. guy: let's talk about what is going on in terms of markets. this is what is happening in japan, which is an anomaly this morning. is the are dealing with

market is not dealing with the .olitics in the united states it is focusing on the tax story. you can see that clearly represented. it looks like we will see if percent to the upside, being added to u.s. equity markets. we have trading and ftse futures as well. it is going to be interesting to see how the pound trades. theresa may's lunch engagement with mr. juncker. if we get a strong pound on the back, could that take the edge off the ftse 100? we will see how that gets priced in. by nikkei is trading down half of 1%. ataware of that as you look pricing taking place.

i want to show you a few other things. this is the issue in the commodities space. , brent crude trading softer this morning. what you may see with gold miners is oil stocks coming under pressure and gold miners as well. copper is reasonably well bid. story is front and center. we will see how the pound trades around it. we need analysis of what has been described as a fluid situation going into this meeting. the issue of the irish border still one of the factors. from carsonit take later as he discusses brexit talks. back to you. manus: thank you very much. cable down this morning. prime minister theresa may is battling to put out multiple --

to put multiple political fires at home and she is heading to brussels to end the deadlock in brexit talks. may's conservative party set up new red lines ahead of the lunch meeting today. nejra cehic joins us from brussels. good to see you there. it could be a tasty lunch with some potential breakthroughs. is that what we are picking about? --is that what we are thinking about? nejra: good morning. unfortunately, i want to be at the lunch. at the lunch.be in terms of breakthroughs, this is looking less likely as time goes on. about theresang may's party already putting down more red lines.

now, another stumbling block could come up through the talks yesterday, and that is about the european court of justice. before today we were seeing the brexit bill as a big issue. that got resolved, and then with the irish border, another big stumbling block, but we were getting signs progress was made. the european court of justice has come up on the u k and e u side as a potential problem today. what theresa may has been saying is after we get brexit, the supreme court could voluntarily pass cases to do it you citizens right to the ecj. the ecj wants more of a automatic binding role on the citizens rights. there are three things key for -- youalks to move on citizen rights, brexit bill, and irish border. the irish border and you citizens rights still outstanding.

theresa may going to meet jean-claude juncker for lunch at 12:30 brussels time, likely to be joined by david davis and michel barnier. this bill was the deadline, but theresa may put her best offer forward to move talks forward to trade. you have the summit coming up on december 14, and that is where the talks need to move on to trade to get the progress the u.k. wants in order to avoid crashing out of the e on march 20 9, 2019. -- on march 20 9, 2019. anna: what do we expect to happen? we have lines coming through talks on brexit citizen rights to end in weeks. how do we see things progressing? great point.s a

that goes back to the issue of the fact that citizens rights and ecj have come up as a new stumbling block. the eu is time when to discuss what brexit has offered, and you are right, they will not let the u.k. come up with offers at the 11th hour. the concern is the u.k. has said it doesn't see today as a hard deadline but is working toward december 14. one thing that was giving up michel barnier and jean-claude juncker was to be meeting with a working group ahead of the lunch today. that gave signs e theu was trying to get the parliament on board. new stumbling blocks raises

questions as to whether they can work quickly enough to get an agreement. manus: thank you very much. these are not new roadblocks, just the same and have come back. . -- and have come back full circle. the border, i haven't heard anything. nobody has told me or suggested to me how they are going to square that away. if you look at the harder brexiteers, they want a trade deal. the timing tied to any financial sediment. the money should be off the table. saying weth basically want trade deals to begin discussion at least the end of the first quarter 2018. it is trying to get something for your 50 billion euros. then: it is trying to link

future state and divorce bill is not something that will go down well over lunch. we thought the divorce payment would be the easiest part, but i don't think it will be a problem for europeans to accept the amount of moment -- you might of money now on the table. it will probably be an issue for theresa may getting through a settlement with her own parliamentarians. the big risk is the possibility we get a resolution in brussels, but it gets rejected by the u.k. wherement parliamentarians, it doesn't suit anybody, and we have somewhat of a rerun of a couple years ago when david cameron came back from europe. remember those happy times? life has moved on. he came back and nobody was happy with the concessions he brought. theresa may can suffer the same

fate. anna: do you have any suggestions that fixes the issues? they are looking for wording that will satisfy both sides. does such a paragraph exist? simon: two words, customs union. therein lies the problem. integrity of the single market, the eu 27 are not going to sanction a system where goods, services, people across the border, but they don't want to see -- there is a problem for the europeans. they don't want to be seen as the instigators for the hard problem -- the heart border. -- for the heart border. -- for the hard border. manus: they might northern island -- they want northern

ireland to be treated as the rest of the u.k. we have been here before with the role of the ecj over citizens rights. we have been there before with the divorce bill. will we also see a concession to the only workable option? u.k. government is holding out for some special arrangement whereby a frictionless border can coexist outside the customs union. the irish government seems government to take it on trust. them?n blame said: the foreign minister they don't want to extract blood at this stage, they want the process to move on. asecond brexit referendum has 16 point lead. a poll suggested most of the the felt the eu has all

winning at this stage. a second vote, a second referendum. interesting. anna: interesting also how the labour party rhetoric is shifting as well. a position around the june election, and that they are not committed to what happened in the june manifesto. the language is moderated. simon: i wrote on june 24 after the brexit vote i felt there'd be a second referendum down the line. i think history wilbur pete itself again. what needed to happen -- i think history will repeat itself again. promises that were needthat were inconsistent to have daylight shared amongst

them. after that happened, then the broader u.k. public will be prepared to sanction a second test of public opinion. anna: simon, thank you. we will talk more with simon french in a moment. he stays with us. remember, if you are a bloomberg customer and you want to watch tv , go to the tv function and follow along with the charts and functions we are theg, and you can influence conversation with the button at the bottom of the screen. ,anus: cvs is buying aetna creating a health care and retail giant. cvs will buy with $207 a share. the deal is amongst the biggest in health-care mergers and the past decade. anna: timothy joins us from hong kong with the latest. why does this deal makes sense? what is attractive?

surface, it ise easy to see these two companies and businesses complement each other. we have the largest u.s. drugstore chain plus the drug benefitshealth icvs also s plans throughout companies and insurers. see that more of aetna's customers will be stopping by cvs. manus: let's talk about the benefits. there has got to be an opportunity when you put the two together. what are the opportunities when they combined these? off the bat, there is not going to be no major financial in the near-term, but longer-term, as customers

gradually change the way they ,ccess both companies products the combined company expects to see benefits to shareholders. anna: tim, thank you very much. up, prime minister trudeau embarks on his second visit to china. what will he get? anna: theresa may attempts to avoid a breakdown in brexit negotiations. we will have further analysis. this is bloomberg. ♪ ♪

it is 1:47 a.m. in newark. -- in new york. let's get to your business

flash. juliette saly standing by. cvs is buying aetna, creating a health care and retail giant. pay $207 per share. 'sat is a 29% premium to aetna share price. rio tinto has named simon thompson as chairman, reinforcing an investor drive for higher returns and caution over project spending. the current chairman is stepping down. 800 new is to either

staff in london, expanding its u.k. headquarters, even as a comes under scrutiny from the countries lawmakers. the jobs, predominantly engineering roles, will bring the number of staff working for the company in the u.k. to 2300. that is your bloomberg business flash. anna: thank you very much. is in china,u attempting to boost canadian , as aties and open a door standoff festers with japan. manus: he is expected to launch talks for a free-trade agreement. david tweed is in hong kong for us. this is his second trip to china. why is it so controversial?

is it because the axis of traders usually with the japanese? -- of trade is usually with the japanese? david: he is expected to open free-trade agreement talks and we say expected because we don't know that is what he is planning to do. is closely area that watched, but if he does, it will be controversial for a couple reasons. domestically, a lot of people in the canadian government, particularly conservatives, who are concerned that canada might get toasted by china, because china has the upper hand in so many areas and you could end up with a lopsided agreement that gets china more benefit than canada. canada has been very stringent in some of the things it has been arguing for in water multilateral agreements, like the tpp.

second reason is because of japan. bought the tpp japan was pushing, but we don't have the deal signed. now he is going off to talk with the chinese. can't see the japanese will be happy about that. anna: there's china also want something out of this? do they want to get something on an extradition treaty? david: that is right. anticorruption program, 1.5 million officials have been ensnared in it. they describe it as a life-and-death program for the communist party, which rules china. they're looking to see if they can nab some of the suspects residing in canada. they are looking for an

extradition treaty. ondeau is said to be cool this idea, but there is a lot of things that canada wants. canada wants to be involved in the belt and road initiative. it can be profitable for canadian companies. see what theea to chinese have over forcing canada into agreeing to some extradition treaty. we will watch that. david tweed joining us live from hong kong. simon french still with us. this is fascinating. , many riskanada factors of trying to open up a trade conversation with china. i have brought up a function that shows trade relationships. china is the second largest

trading partner for canada. it is an uneven relationship. this has the potential to alienate partners. doing a trade deal with china is full of risks. simon: the size of the chinese economy versus the canadian economy is one of an imbalanced negotiation position. the canadianth to economy, which could benefit from the demand the chinese are a historically monody hungry economy. could benefit from reduced friction in that trade relationship. grow and atld it what cost to domestic chinese -- domestic canadian industries of chinese producers come in and have access to the market?

that is what will concerned lawmakers in canada. we have to talk about capital flows. a large part of west coast impacted byly relative proximity to the chinese mainland. inot of capital flowing there and adverse consequences for citizens of vancouver. could that happen in a wholesale basis if frictions are reduced further? line thatove david's the concern is the canadians could get toasted. part of theck to reason why the previous prime minister did not open up to china. there is a line from one of his , china is notrs interested in a level playing field, but they are full of the and elements -- but they are full of benevolence with the belt and road.

simon: there is a danger that the headline and practical islity for canadian industry very different. the more you has -- you have potentially a scenario where the potential- you have a scenario where the reduced friction, and many countries that have pursued the chinese consumer have found her access into the chinese market has been impaired by local regional constraints, which don't look frictionless at all. china,n the subject of we have another chart that shows credit spreads in the chinese market. yields going higher in china.

this is chinese corporate credit spread going higher. this is -- is this one sign around the deleveraging campaign that has been implemented by the chinese government? does this give you short-term concern or medium-term competence? -- medium-term confidence? simon: medium-term confidence, actually. the bubble was inflicted after the slowing of the chinese economy in q1 2016. a big monetary supply expansion, they are starting to pull back credit leaders. you would expect credit spreads to move out on the result of that. i think it is a natural response to what would be necessary. bubbles, you see decent policy intervention. manus: thank you very much. a next, we talk about potential obstruction of justice

case building against president trump. we break it down. equities indicated higher in the united states of america and u.s. bonds lower.

manus: good morning from bloomberg's new european headquarters. i manus cranny. anna: and i'm anna edwards. "bloomberg markets: european open." top democrats say the potential of section of justice case is building. meanwhile, the dollar and u.s. stock futures rise after senate republicans pass their tax. may's brexit hurdles. the role of the ecj, irish border issue, all remain unresolved. aetna.cvs agreed to by -- to buy aetna.

7:00 a.m. in london. it's daybreak europe. these markets like what they see in terms of the tax bill from the united states of america. stock traders are cheering. volatility did rise by 18% last week. bear that in mind. on the countryside, you have potentially and absorption of justice charge against the president of the united states of america. the grand old party, could they check their president out now that they have their tax? london up by 57. no doubt about it. this growth momentum will add to the synchronized level of growth story around the world, but beware ye all. they joined the chorus in terms of stock valuations. they say monetary policy is a key driver. goldman sachs also saying the prolonged run in the stock and bond market, the valuation models are the most stretched since 1900.

at the highest level since 1900. points. strong, of 150 one point 23%. you are looking at the paris market, up another 53 points. these markets have got the tax story in their sideline. that is what is driving this higher. in europe, you have theresa may going to meet with juncker. you will see a real momentum, anna command terms of what happens next on the political theater in the united states of america. they have got their tax, but what are they going to do with the president? anna: all the comments and activity around twitter, that does not seem to have distracted the market from what they hope will be in store with a tax bill in the united states. on the u.s. futures, that is reflective, up .9% this morning on the dow jones. the markets are focusing on the andntial for a tax deal

what that could deliver for the tax market. dollar index up by .3%, trading around the same story. dollar positivity recovering from friday. we saw some of the politics in washington. weighing on the dollar during friday's session. all of that has not added up to a very positive session. you might be expected to see that with those kind of features in the united states, we would get a more positive session in asia. are really flat on the overall msci asia-pacific. not helping to boost the japanese exporter stocks. story is really where we focus. there are many other stories and narratives we can look at. the twitter goings-on. and the deadline of december 8. do we end up talking about shutdown once again? manus: let's talk about how this all translates to the bond markets. they call him macro man. 315 words.

expect more planners. expectpect morel -- more flatteners. just below here is where you are seeing a support level. the range and yelled we had our last guess -- range --a 2.22 2.5% 2.2% to 2.5% range. of these, boysd and girls, in other words, the american bond market relative to g7 cures is 1.4%. you'll differential draws money into the u.s. bond market. support theers will bond market. that is the view for macro man this morning. bond futures are lower. dollar is bid.

equities are absolutely convinced there is more to go on the upside. juliette saly standing by. juliette: manus, u.s. house republicans drafting a contempt of congress resolution against rod rosenstein and fbi director christopher wray. that is on claims they have been stonewalling and producing material related to the trump russia probe and others. republicans, including the president, have pointed to reports that the removal of an fbi official assigned to robert mueller's probe as evidence the entire investigation has been politically motivated. the tax bill passed by republicans over the weekend may boost profits for banking to retail to fossil fuels and put the squeeze on hospitals and renewable energy firms. the plan is still subject to revision. the centerpiece of the legislation is cutting a corporate tax rate to 20%, and

allow some companies to bring back foreign profit at a lower rate than they otherwise would have paid. directors at the richmond fed have chosen thomas bargain for -- as its next president. according to a person familiar with the decision, he has the support of the fed board of governors in washington. it was unclear whether the board of governors formerly voted to approve him, which is required before he can take office. in the u k, ministers are reportedly launching a crackdown on bitcoin amid growing concern it is being used to launder money and dodge tax. planseasury has disclosed to regulate the currency that will force traders to disclose their identities and report suspicious activity. anybody buying and selling bitcoin have been able to do so anonymously, making it attractive to criminals and tax avoiders. axa talks risk being torpedoed

by the taboo issue of the european court of justice. official,to a senior while a deal on what happens to the irish border is still to be done, the role of the ecj in enforcing the right of citizens emerged as the greatest obstacle after a weekend of intense talks. that comes after theresa may had to brussels today to meet european commission president jean-claude juncker. -- come at 24 hours a day, powered by more than 2700 journalists and analysts in more than 100 20 countries. you can find more on the bloomberg at top . pretty flat in asia. we are seeing the close out of the chinese equity markets. tencentge-cap players, in hong kong, turned around helpin the hang sengg. we saw weakness coming through in tokyo despite a weaker yen. the nikkei closing down .5%.

and miningenergy players in the region look pretty good. in terms of specific stocks, water hotels are rising very sharply in hong kong. this is on news that want a commercial will sell its hotel state. we have seen good moves coming through from energy players in the region. are seeing hong kong up by 3%. this stock here in taipei off by 5%, a producer of the apple wireless charger. perhaps the demand is not quite as strong as people thought for that product. manus, anna. anna: juliette saly in singapore. leading democrat senator, diane feinstein, said a case of objection of justice is developing against the president. she was speaking with nbc's meet the press. what we are beginning to see is a putting together of a case of obstruction of justice. i think we see this in the

indictment, the four indictments. beenleas that have just taking place. i see it in the hyper frenetic attitude of the white house, the comments, the continual tweets. onus: trump was very active twitter over the weekend, but the comment that raised the most eyebrows was on saturday when he tweeted this. have a look. "i have to fire general flynn because he lied to the vice president and the fbi. he has played guilty to those lies, and it's a shame because the actions during the transition were lawful. therefore, there was nothing to hide." jodi schneider in hong kong. it was a fairly prolific weekend for him in terms of tweeting. senator feinstein's comments changed the game a little bit. what exactly did she mean. where are we in the escalation of the litigation?

jodi: what senator feinstein was referring to, and she is a serious player on this issue, she was referring to the fact that he said in that sweet that he had to fire mr. flynn, that he knew about, oakland to his own sweet, he had lied to the vice president. het she is saying is that knew there was lawlessness that was being concealed. that combined with the firing of james comey for the fbi director, who was conducting an investigation into russian meddling in the election. she starts making the case for obstruction of justice. serious words to be using in an atmosphere where there is an investigation going on. the question is, will she and others want to start hearings on capitol hill in addition to

robert mueller's investigation? and the other issue is how close is this coming to president trump and his inner circle? anna: indeed. that takes us onto the bigger question. how big a problem, with some context, could this be for the trump administration? conceivably, it could be quite a big problem. it could be huge. there are some signs they are worried about this. because with mr. flynn, who obviously, you know, was a member of the administration for a while, with him pleading guilty, he could -- they could be asking him all kinds of questions, and he was in a position to know some things. the question is how much does this stick? how close is this coming to the president? i think we will be finding that in the coming weeks and months, dropother shoe there is to on this. that is all to be seen. question is, what could they do on capitol hill as a result?

manus: jodi, thank you very much, jodi schneider, with the very latest on the trump administration. more shoes to drop. that is probably a proverbial statement. he joins us now. good to see you. let's deal with markets. it is tough between politics and what the market has got. what the market has factually got, not what it can provide, but what we can say is this. we have to bring big macs. fish, and a chocolate milkshake. this is basically what they said over this. is it that much of a punch for you? i have not been in a mcdonald's for many years. i would love a big mac. i remember how to pronounce them. how big a deal is $1 trillion of a deficit? we have a lot to reconcile, heavenly? -- haven't we?

ashok: longer-term, really, the effect wears on because it must be funded unless the deficit is allowed to increase and then the debt to gdp starts to rise again. it hardly has come back right now. we have hardly had any consolidation. the bond yield is later on going to have to reflect the fact that the budget deficit is continuing to rise and a lot of the tax benefits are unfunded. so the benefit of the short-term boost is counteracted by the long-term tightening that the bond market put down the line. anna: that is mutual context. i mean, within the policy that we know the senate intends at the moment, and we don't know what be reconciled tax policy might look like because we have the senate version and the tax version. in terms of a corporate tax rate, does that give you anything to invest around some opportunities for certain industries that will really benefit from a much lower corporate tax rate?

ashok: the higher rate tax paying companies have seen some momentum and compared to the lower rate taxpaying companies. a lot of that is more in. in aggregate, it is very positive. the point is you have earnings with the market rating, the valuations coming back a little bit. it is still a positive impact, but not as big as it would be the first time around. it effectively, the corporate earnings benefit by a 10% because of the tax cuts. deviated by sale. single-digit for the equity market. ,o, we are halfway through that already taking place. last week, the market was in a pretty good state and will continue for a few days before it is discounted in the tax cuts. manus: we talk about the bond markets. ten-year bond yields trading at 2.4%. i just did the futures. we are down 30-odd ticks.

by the way, before you went to get on the helicopter, he said the tax rate could be 22, not 20. there is a great deal by the way, the difference between 20% and 22% is $200 billion. if we look back in a period of time between 2004 and 2006, the bond market has a bandwidth of 2.5% as the fed raised rates. what drives bond market yields? abilitycit or the fed's to move rates higher? ashok: it is much more important to look at the inflation expectations down the line. is going up, rate that is going to put a downward pressure on the trajectory. we already know the inflation is pretty common through the core inflation is just down. we are way below 2% target level. the bond market is really not going to get that much for right

now. you are going to get a cyclical boost of the gdp and that might create the small inflationary impact, but it is quite small, nothing really significant. from a bond market point of view, just a tiny bit of tightening is what you will get. the bonds remain relatively stable in terms of the yield structure. anna: in terms of the stock market, how much upside do we see from here with all this as a backdrop? seetioning whether we might something a little frothy. particularly in the u.s. market. index.y have the here we go. this is the ratio. the s&p 500. if you want to pull it up. the point that the dis is making is whether things might be overvalued on this measure of u.s. cyclically adjusted ratios. pick your ratio and are we there

yet? ashok: we don't have ingredients for any significant correction in the marketplace. we have the global momentum in terms of growth picking up. we have corporate earnings, yet another good performance ahead of us. everything retains their current level. then you have got the underlying strategies of the sense of bankers to guide the market with the foreign guidance being very slow and measured, which encourages people to put on risks rather than take off risks. the absence of ingredients which allows the market to correct here and now. we should expect the continuation of what we had for the next couple of quarters. anna: interesting stuff. ashok shah. minds -- coming coming lines coming-- through. previously saying fossil fuels will be the core of the energy markets for many decades. his answer to, you know, how long is the shelf life of this

particular equity? a host of comments coming through from him. will not let go and so oil market is balanced. fascinating commentary. wpi is at 5791. agreedhey only just to review those halfway through the year. wpi, 5791. a little bit softer this morning. coming up, brexit never far away from the rundown. brexit breakthrough or brexit breakdown?that is the market deliberation. theresa may heads to brussels on the deadline on whether the talks can progress. this is bloomberg. ♪

anna: this is "bloomberg markets: european open -- this is "bloomberg daybreak: europe."

risk being torpedoed by the taboo issue of the european court of justice. according to a senior british official, a deal on what happens to the irish border is still to be done. the role of the ecj is enforcing the rights of citizens have emerged as the greatest obstacle after a weekend of intense talks. manus: those talks will continue to brusselsay heads today to meet the european commission president, jean-claude juncker. more on what we can expect. nejra cehic is in brussels with us. i know you are disappointed you will not be at the table. all of this talk about breakthrough at this lunch, what is the reality of what we think we are going to get today? nad i and i, we think -- an and i think it has gone full circle. ecj. yeah, it's interesting, menace, isn't it, how these issues have one by one, but as the most important stumbling block to these talks moving on to trade in december?

the latest development over the weekend, we heard from british and e.u. officials is that it is the issue of the european court of justice and e.u. citizens rights that might be the most difficult issue to get over at this lunch today. this lunch happening at 12:30 brussels time between jean-claude juncker and theresa may. it was built by the e.u. as the deadline for theresa may to come up with the best offer of the e.u. on wednesday and ideally past so it can come to trade on december 14. however, over the weekend, there have been a number of developments. the european court of justice, what we have got is sort of an outline agreement on the brexit bill, but then the third issue of the irish border, still to be resolved as well. we have seen some progress on this. theminister saying that all island wants is parameters to be set out of how the hard border can be avoided when brexit happens. you have the irish cabinet

meeting on monday as well. the irish times putting the chances of any kind of agreement, a breakthrough, at less than 50% coming today. that needs to be resolved. there has been progress. what theresa may has to do is come up with an agreement that is acceptable to dublin, but also to her northern irish party that is propping up the government. if we don't get any progress today, some sort of breakdown, it raises the question of whether we can move talks on to trade by december 14. officials concerned we could crash out of the e.u. on march 29, 2019. manus: thank you very much, nejra cehic in brussels, tracking the story throughout the day. ashok shah is the director of london and capital. it ising to nejra, almost as if we came. your the irish foreign minister saying ireland need some

answers. we are not asking for the impossible. the irish are holding out an olive branch in terms of same we will not hold the cross later today. where are you in terms of risk? the pound seems to be fully priced for a breakthrough. are you as helpful as the pound? ashok: in the short term, yes, thepound has reduced negative that is recounting. in the medium-term, the u.k. economy is pretty much implementation. the spending cycle is pretty much lackluster, and what we have seen is the consumer spending cycle is about to lose its leg because it has been funded from the falling savings rate. [laughter] ashok: going forward, i mean, the market is, in terms of the economy, pretty lackluster. there is no need for sterling to get carried away here and now. every family have some reviews,

it tends to break this level. it is on the side compared to where it should be on the long-term budget and so on. that means that, you know, over the next three years, there is room for sterling to gradually continue. it is not a straight line journey. there is to be a lot of upsets coming through. anna: and that is to your point. the pound is selling lower than the dollar, but it has had a it? run, hasn't sterling has had its best weeks since the middle of october last week, so it had a very good run recently. just a quick thought on this, ashok. ashok: to get anything organized, we need to give a lot of time to the companies. these things take a few years, not a few months to do it. i think agreements, perhaps, is what will be the first step before the longer-term agreements are put in place, so it needs a little bit of a time to get everything worked out in a timely manner.

anna: thank you, ashok shah, joining us here in london. that is it for "bloomberg daybreak: europe." "bloomberg markets: european open" is up next. this is bloomberg. ♪ is this a phone?

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>> good morning. this is european open. than 30ity trade less minutes away. so, we have some senate access the dollar yield rallying on the tax reform story. brexit's day in brussels after a weekend of