far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. irish border leaves britain. unveils thisrmaker new was model. welcome to "surveillance." i'm mark barton. let me tell you about these three charts. november services, pmi data.

this is the final estimate. the earlier estimate was 56.2 as well. the euro area pmi rising to 57.5. the preliminary, 57.5. across data, flooding the eurozone today. as upn see, stocks are trading lower today, down for the third day surrounding optimism for tax reform in the u.s. dying down. before we look at sterling against the dollar, down by 2/3 %f 1%, yesterday we were up 0. 5%. % yesterdayp by 0.5 and today we are down by 2/3 of 1%. today talks will continue to get a conclusion of these talks.

nymex crude oil is down by 0. 4%. it rose by 1.7% on friday before government data forecasted crude stock piles decreasing for a third week. a busy, busy day coming up on "surveillance." we are going to speak to stefano domenicali later. we'll get the outline of the aviation industry later. trump's travel ban takes full effect while legal challenges go forward. it hands a victory and suggests the court will ultimately uphold the restrictions. the president can now restrict muslim basedx countries. it marks the third time the supreme court has allowed

his entry restrictions to take full effect? central banks said to expect inflation to quicken. countriess, up to 11 could be included on the blacklist of safe havens when european finance ministers meet today. the lists includes panama, tunisia and the uae, the marshall islands, and st. lucie it. incoming group presidents said the u.s. tax overhaul will also be discussed. economies take these efforts. they will be a very general discussion.

deutsche bank has received a subpoena from robert mueller. they wish to share on the relationship the president donald trump. y's subpoena obliges german biggest banker to release information on donald trump, which they previously rejected, saying it would be illegal in less it received a formal request to do so. futures markets will open for a fresh opportunity. bitcoin has been on a wild ride in recent days, currently trading above $11,000 after plunging 20% last week. country'son the consumers to offset stagnant growth in the world.

starbucks is opening its biggest cafe in the world in shanghai tomorrow. is 30,000 square feet store championed by the founder and chairman howard schultz. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm sebastian salek and this is bloomberg. mark: brexit negotiations have hit another stumbling block and talks an unraveled following a talk with foster. negotiations took an apparent turn after a phone call. for more, nejra cehic joins us from brussels, as well as peter flanagan, our reporter in dublin. nejra, just explain how this all went down yesterday. well this lunch with

theresa may and jean-claude ju ncker, there was a lot of anticipation ahead of it. some said that michel barnier had told them a breakthrough was imminent. the pound rose on that. at the meeting got underway, there was a point that theresa may actually called a positive the lunch and stepped out to call the d.u.p.'s arlene foster. the du.u.p. props up her government. they did not take any questions. they said, we could not reach a complete agreement today. basically, no breakthrough. they did not give a reason for the breakdown in talks, but we understand it was around the issue of the irish border and some stumbling blocks as well. peter, when it comes to the stumbling block that is the irish border, what are the main

points of contention? the main point of contention with the border is the republic of ireland wants regulatory alignment. so, in effect, there would be no difference between standards for the northern ireland. that would allow border checks on the frontier between the two countries. at the moment, there are no checks between north and south. yo ucaou can drive straight acrs the border. both sides want to avoid any sort of checks on thast border. mark: nejra, back to you in brussels. what happens now? we heard yesterday that negotiations will continue this week with the hope they will be some sort of conclusion by the summit on december 14 and december 15. does paint the timeline over the next 10 days. nejra: yeah, that's right.

jean claude juncker said this is not a failure, but a start to the final phase. they said they would continue talks this week and they were hopeful some sort of breakthrough could be reached by december 14 at the summit in brussels. the u.k. that wants to move the talk from divorce to trade. the irish prime ministers said if that breaks down in december we could also have an emergency summit in january and on the irish side, as peter was pointing to, we already have some comments this morning from the irish prime minister, very much suggesting that the agreement dublin made with the in any material way. that agreement was made prior to this lunch and broke down during this lunch after the call to arlene foster. it is really interesting what happens from here. nicola sturgeon has been

tweeting saying, perhaps this is the moment when we look at a softer brexit, where we actually remain in the single market and customs union. to avoid that hard border, northern ireland at the very least, would have to stay in the single market. this is the circle to reason a has to square. how she does that in a matter of days is anyone's guess, mark. mark: peter flanagan joining us out of the studio. s,holas brooks, peter thank you for joining us today. check out sterling, and a friday through today. we so that they can move up yesterday ahead of the breakdown of talks. -- we saw that breakdown yesterday ahead of the breakdown

of talks. that a less confident deal will be struck within the timeframe? >> i am not necessarily more or less confident. it was always evident to me that this was going to be difficult. if you asked me if i was less confident than i was at lunchtime yesterday, of course i am, but to put a little bit of a tongue-in-cheek comment here, this is the problem we have with the policy. it is not that easy to accomplish, but if i take the market view, and that is the reason pound sterling is going down, the market wants to see progress. it does not really care about political difficulties. the market wants to see a reasonable and workable relationship between the u.k. and the eu. to get there, you need to have talks about that relationship. therefore, every time you see progress being made towards that, the market likes it.

anytime we see any kind of stumbling blocks in the way, pound a sterling trips as well. -- pound-sterling trips as well. mark: how would you solve the irish problem? how would something that has not been achieved in months be achievable in a few days? >> i certainly don't have an answer for that, but i would say u.p. is playing a careful game and recognize they have got some leverage. but you also have to look at a bigger picture. the last thing they want is a new election. a labor win with corbyn in front. they do not want the tories to fall apart taste off of what is going on today, so i think they butplaying a bit of a game, ultimately, they will find some

sort of fudge that will allow them to have a transition deal. mark: if we get a fudge, peter? sterling? >> as i said earlier, the sooner we get connected to trade talks. trading at three or four months ago. mark:? nicholas? >> looking at the longer perspective, it is hard to predict. medium-term, i am relatively bearish on sterling, which i guess is not the consensus. the bottom line is the u.k. is in about as good a place as it can't be right now with access to the single market and the global economy doing quite well. 2018,move forward into

will the global economy continue to move forward at the pace it is going right now? as investors look at what the u.k. may get in terms of a deal, it will never be as good as it is today. when you have a country with a current account deficit close to 5% of gdp, ultimately, i would say this currency is going to weaken. mark: we had the case last week when expectations started increasing on a deal and then next rotations were brought forth of a boe rate hike in 2014. i think it was november to september, i think it has gone back again since. dependingers change, on the success of negotiations. are they closely tied, or not? >> they are closely tied, but not in the way you are describing. i totally concur with the medium-term prospects for sterling and the u.k. economy

still look quite dire. and therefore, going back to your questions. scenario we create a where we get a trade deal that is positive for the economy, that will be positive for sterling as well. let's say we get something that is extremely liked by markets, sterling will rally on that, which puts downward pressure on inflation, which puts the bank of england in a position where they won't have to hike. and vice versa, that puts upward pressure on inflation. isa way, the bank of england in a uncomfortable position because the inflation picture we are currently having is not driven by the strength of the economy, but the weakness of sterling in particular and therefore, imported inflation and that is a conundrum they have to work with. mark: so, all things being equal, nicholas, when are you going along with the boe, which suggested a couple of rate hikes in the next three years? is that the next best guess now?

there is no visibility over the course of brexit. >> they want to reload, essentially. if things go wrong, they have something to do. but in terms of the underlying inflation trend, it is actually very weak. so, if you take the scenario of moderate growth in 2018, inflation coming down as the imported inflation affect staves out, assuming we don't see another drop in sterling, there is not a reason for them to raise much more. they might put in one or two more, but from an economic point of view, they don't need it. errk: nicholas brooks and pet schaffrik stay with us. up next, we will speak with stefano domenicali about the italian supercar's move into the lucrative suv market. this is bloomberg.

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mark: you are watching "bloomberg surveillance" and i'm mark barton in london. sebastian: robert mueller has issued a subpoena to deutsche bank, demanding they share information on the client relationship with president donald trump. a subpoena was received several weeks ago, ordering they submit documents detailing the relationship with the trump family. previously, the bank rejected demands, saying the sharing of client that it would be illegal unless it received a formal request. buy regalas agreed to

entertainment group expand into the biggest moving market. the deal comes a week after the company confirmed the takeover deals. this represents a close on the regal the day before the discussions became public. senate republicans may their overall tax plan -- sent republicans overall tax plan could mean higher taxes. the tax bill will preserve the 20% corporate alternative tax, but under the senate tax, this could prevent companies making use of plant tax breaks. the chinese conglomerate, is being probed in germany, over whether it actively reported its.holdings . bartonbe by regulator

follows a separate case in which provided false information. that is the bloomberg business flash. ark: when lamborghini released the two seater low slung mid-engine car, it established the era of the supercar. , adorningels followed the walls of teenagers around the world. now, the italian sports car company is heading into the lucrative suv market for the first time since 1993. it has unveiled a $200,000 four by four you can take your children to school in, but still hit 60 miles per hour in just over 3.5 seconds. miller is inatt berlin.

and stefano domenicali is at the company's hq. matt, take it away. matt: thanks, mark. and thank you, stefano, for joing us. let me ask you, if you see any parallels between lamborghini's very famous first suv, are you trying to bring that back in any way, stefano? itfano: well, for sure, represented the first i would the suv in the history of automotive industry. that was a point of inspiration for us. but you know the lamborghini has to be focused on the future. i do believe that the car just behind me is representive of that. of course in a different dimension you can use with your friends and family.

you can be very smooth and gentle in the city, or if you want to be more sporty on the track, you go to a different area. if you want to use it in the ice, yo cu can. you can use it as a supersmart car. car. a supersport i believe it is a moment when lamborghini will represent a more important position with regards to this business. so, it's an exciting moment. we know it is a big challenge for us, but it is very exciting. matt: your cars have become more and more accessible. you have the 12 cylinder beast which feels at home on the track. streetablemuch more car. and now this.

first of all, how many cars are you going to sell this car, and how many say in 2020? stefano: well, actually, this year will be another year for the company. we just need to wait for the last couple of weeks. the figures we are heading for in the end of the year is something unique and spectacular. we are going to have over 3700 units. we will have incredible growth, year on year. being an exclusive brand, it is important to be balanced in the growth. if you look at the effect of this model versus our situation, we are expecting that in 2019 with a full year of production with the super suv, we will more than double. that is something that is putting our heads on a different dimension. nobodyim of this car was

would have thought that in this at 10 yearsou look ago, nobody would have believed that the momentum was there. it doubles the perception of the brand. the young generation follows us in a tremendous way. just to give you a little detail. it is something we take as a responsibility. with this car we will in large our presence in the market. that is something incredible for us. tt: which markets do you think will be the best for you? u.k.,mall market like the you see a lot more lamborghinis driving around in london than beijing. is this going to help you in places like china and eastern europe? that we i would say start with say a double dimension on each single market. for sure.

just to give you a bigger image. the u.s. represents one of the biggest markets. in the u.k. that is this year the third market after japan, we are going to expect another big growth. but what is more important, we believe this car will open up new markets, new countries that will be part of the lamborghini family. so, a lot of excitement around the world. mark: when are we going to see a hybrid version? stefano: very soon. that is already planned. the second generation of this car will be a hybrid and that will be around 2020. that is the idea, 2021. that is the idea. mark: where are you going to take market share from? we are you going to conquer the most customers? i am talking about the competition. this is a time when aston martin

, ferrari, rolls-royce, they are all launching utility cars within the next three years. what differentiates you? and who are you going to take the market share of? stefano: i think in terms of differentiation, our elements are the usual. the zion, we have a strong personality. withve a super smart car -- design, we have a strong personality. we have a supersport car with a huge personality. i believe that we need to be sensational. to prove this car is something special, we will the customers and welcome them into our world. matt: how can you, i mean, ever

since lamborghini set out to best and so ferrari, he's always hit the automotive world over the head with a sledgehammer. i mean, amazing designs that surprise people. can you still do that? can you still live with that dna in a world where you need to be more environmentally friendly and sell more cars to a diverse clientele? stefano: i think this is the biggest challenge, but for sure. we want to be, as you know very well, we want to be different from the others. we need to find the right balance. our idea is to keep it together because that is really something

-- that is what the customer wants. we can't forget one thing. willure, the super suv be a stepping twill into the future. -- a stepping tool and to future growth. we might have different names maybe, but with a different concept, for sure. that makes the difference of our brand. matt: i always wonder when i talk to companies like lamborghini about dealership networks, it's such a sensitive -- i mean, your dealership network is like your family to you because of the size of it. how much are you going to have to grow? will you need another dealership strategy? do you have a new concept? what is your dealership network going to look like?

stefano: absolutely. we we are large in the family members. next year we will have 165 members. today we have a very important meeting in 10 minutes to meet with all of them just to share the new vision of lamborghini. -- we cannot have success without a relationship with them. they know the territory, they know the customer. they know every country is different and we need to ensure the connection is really strong. for sure, we are shaping a different situation. we need to make sure the level of service is what the customers are expecting for this. altogether, we need to accept. today, the line, we moved the bar higher and that is something we need to do altogether. matt: can i just quickly asked, i know a lot of lamborghini

owners by one and then another i would say officially we are opening orders today. unofficially, more than the first year is already covered. it it's a good sign and really positive. matt: thank you, the ceo of lamborghini. of thank you so much for joining us. i am going to go back to radio. mark: great to see you. thanks for coming on. that was the chief executive of lamborghini. we have some breaking a net out of the u.k. services growth slowed from november. from 55.6 ino 53.8 october.

they had forecast a reading of 55, input costs increase the most since 2011. the economy is on track to expand about .5% in the fourth quarter. higher oil prices and the depreciation of the pound, that's what service providers reported. they have a higher cost of food, fuel, imports, and salaries. that's the breaking news from the u.k. economy. we will have more news later. story, we will be joined a little bit later. the headline is crossing the bloomberg terminal. the world airline industry profit is up 11%. don't miss our interview with this man.

5:30 a.m. new york. , where is the money moving? let's keep it on the u.s., what tax reform means. nicholas, i will start with you. what is this tax bill going to look like when all the wheeling and dealing and negotiations between the house and senate have run their course? nicholas: i think the markets are taking it is a done deal. i think from a political point of view, it should be worried they have midterms coming up and the republicans need something to show. that's how markets are looking at it now. they're going to get something through, no matter what it is. they still have a lot to work

out. i wouldn't say it's completely a done deal. when you look at where we are going based on what we know, most of the analysis puts the gdp impact over the next couple of years at .3 percent at the most. longer-term based on it, we will see a large increase in the debt level, at the moment i think there is a lot of trading going on. people are moving into sectors they perceive are high tax financials. i think this is very short-term stuff. mark: how does it play out? expectations have been tempered. how does it play out? given that every day we are getting new bits of information? we talked about the

flattening of the u.s. treasury curve. the question, one of the biggest questions for 2018 is if that can reverse. in my opinion, that is driven by two things. , hows the further funding is that going to impact the treasury at the longer end of the curve? when the economy is doing well and in the short-term it receives another boost, how are rates going to develop. does that drive up inflation? that is 60 or 70 basis points. if two of these things are coming together, there is a chance the curve might restate them -- re-stephen.

nicholas: it's hard to say. i have a more bearish view of the cycle. the forecasts are for relatively strong growth. and someok at the isam of the leading indicators of the cycle, some of the indicators coming out of china, it's about as good as it gets as the industrial cycle. if that starts to moderate next except,en if inflation it always picks up with a lag, the fed may feel it needs to tighten. if markets focus on the growth outlook, we may see a further flattening. what isthink that's already in the making. >> that is not that right. it, what you see

is the inflation expectation component is extremely low. if we get any risk of a change of that, even in the short term, the impact on the treasury market in particular could be meaningful. of the feddetails emerging on a daily basis, whether it's a regional president or a fed governor. nicholas, the makeup of the fed is going to be much clearer over the next year. how will it lean? how will it differ from the current makeup? policies?hat impact in the end, all of these governors are working with their research analyst and the people doing the work on the street. they are going to be getting the same information they were getting when janet yellen was

the head of the fed. biases, thereome could be some issues that lean one versus another. bottom line, there is going to be continuity and a focus on inflation. mark: we will be back to you in a second. both are staying with us. campaign gets underway. pro-independence parties in the area defies the polls. this is bloomberg. ♪

mark: your -- euro area finance ministers have chosen their portuguese counterpart. he will have his work out for him to complete the banking union. the economic data across the union, nejra cehic spoke to him. >> we have a strong economy. the members of the eurozone are growing up 1.5% for the first time in many years. we have a balanced budget. ability to make the for longeraster and amounts of time.

we have a long debate ahead of us. note the important to time window we have following the electoral cycle of several it's a political cycle that is just beginning. we need to take advantage of that and implement. prioritizedo you western mark i see you want to get consensus in the eurozone. what do you prioritize? do you prioritize a common budget? thending the agreement of inf? group,g the chair of the i have to be a generator of consensus. my opinion is important, i am more of a listener. i am going to my opinion.

i think i can translate what's inng on in the euro group the last couple of months. union, the risk reduction and the risk sharing measures, i prefer to call another risk management within the area. the issue will be raised on the , toanism to strengthen allow it to respond to different needs. are i think the main priorities. we had a discussion on the issues that make the eurozone. world,market, single that is a much stronger economy for the future.

that was the portuguese finance minister, the new euro group head. polls are suggesting a pivot away from pro-independence parties. they show the three separatist parties are on the cusp of toing the 68 seats they need secure the legislature. a former president is trailing in fourth place while in self-imposed exile in belgium. peter, if i could start with you, the euro group has a new man at the top. ambition, reform to the euro group, to bring together the banking union and more structural reforms. is it going to happen in the next election cycle? peter: i think it's a curious choice. it's a pivot away from northern

european 27 european area if you look at his personal track record in portugal, they haven't necessarily been the leading forefront of economic reforms and budget stability. when you look at what has happened in spain in the labor market, portugal is trailing quite a bit rude it's an interesting choice. elements where more members support strongly, such as the issue of transforming the esm into a european monetary fund. that is supported by france and germany. i'm certain these things will happen. one of the more contentious issues such as the european , budgetminister budget raising powers to the european union, who is at the helm of this particular group?

it doesn't really matter. all of the power lies with the heads of state and the national legislature. there is not a huge amount of support for this. this is the perfect point in the election cycle. mark: i'm sure german government will be formed sooner rather than later. it's the perfect opportunity to make reform. while thee grasp it economy is in good shape? nicholas: this view the time. it's clear that france is creating innovation. germany has always been the issue. since the coalition fell apart in germany and the liberals, it looks like the stp is going to play more of a role, one would of said that's it. were not going to get much on the budget or integration.

i'm not saying they're going to go that far, but there is a utter chance we are going to be moving toward some sort of integration. previously i would say the likelihood was close to zero. mark: meanwhile, the ecb carries on until september. peter: the ecb is not interested in a cliff edge scenario. publiclyrios have been talked about, a short tapering. something like that. i would not with that beyond the realm of possibility. that satisfies both needs, getting to an end in a reasonable timeframe and preventing the cliff edge. nicholas: draghi has made it very clear he is focused on keeping stability and he will watch what's going on in the markets and the economy. if it needs to be more

open-ended, he will keep it open-ended. he will try to anchor rates where they are. we are there unless we get stunning growth numbers coming through in terms of regional gdp and we see inflation come through. at the moment, there is no inflation. mark: gentle and, stay there. up next, starbucks is getting ready to open the world's largest cafe in china. does the company have the same allure for businesses? this is bloomberg. ♪

mark: you're watching bloomberg surveillance. >> deutsche bank has received payment from robert mueller, reminding lenders share data on the relationship with donald trump. this up in a weeks ago obliges germany's the gets letter to some -- present documents about donald trump and his family. previously, they rejected that. they said it would be illegal unless they received a formal

request to do so. it fors agreed to buy $3.6 billion to expand into the biggest movie arc it. it comes after the news report and take over. 26%price represents a increase. late-nightast changes, some republicans may mean higher taxes for corporations. the tax bill will preserve the 20% corporate tax. on the senate planet, they could prevent companies from making withf planned tax breaks intellectual property. want isese can graham the largest shareholder in deutsche bank.

according to two people briefed on the matter, this comes after the swiss takeover board found they provided some information in the takeover. a spokeswoman declined to comment. that's the bloomberg business flash. mark: starbucks is opening the biggest cafe in the world in shanghai. it sees china surpassing the u.s. as its largest market. they will offset stagnant growth and the rest of the world. does china continue to appeal to investors? still with us is nicholas and peter. the background in china is one of an economy that continues to move along at a steady pace. a report just came out on the back of the official data a few days ago. the bond market is around 4%.

the stock market has been declining and deleveraging. what is 2018 get a look like? nicholas: we are going to see slower growth. notgdp numbers in china are very reliable. it's pretty clear that the leadership in china correctly want to slow down the debt buildup. i don't think they want to see a sharp deal. they would like to slow down the debt. i think there is focus in these areas trying to clamp down on the nonbank financial institution lending. i suspect that will at the margin start to affect chinese growth in the local industrial cycle. when you look at measures like the credit impulse, it looks as if we've already seen some tightening. i'm not saying we're going to see a sharp slowdown in economic growth in china.

we will see moderation, that will ripple through the world. that is not in most forecasts. effect?ce the peter: we talked about the risks out of the u.s. risks inked me for the the global economy, you mentioned in your intro, you mentioned the bond yield in china. that is risen substantially. you might dismiss it because it might've come from regulatory elements. impacts some kind of an on the economy in general. you just said there is an element. we want to have some slowdown. we want to have some deleveraging going on. that is causing the slowdown in the region. exposed towe are asia.

i think this is where the risk is. mark: give me another risk. nicholas: that was my risk. there is always a geopolitical risk. i think the other point is in the u.s., if you look at asset , if youcross the world look at credit spreads, if you look at equity prices, you don't need a lot of disappointment to knock them down. we don't think we will see a recession. risk is much higher. that could have effects on the underlying economy. -- a fasteread more slowing and growth than people expect. are? key traits for 2018 slightly bearish

decisions in the bond market. we think that is going to play out more in the u.s. than in europe. in europe we are probably going to see that. you talked about the pound earlier. weakness is probably going to return. mark: thank you gentlemen. good to see you today. bloomberg surveillance continues in the next hour. tom keene is in new york. guy johnson is here in london. this is bloomberg. ♪

tom: the lunch failed as the prime minister took a phone call

onlin line two with his sponsor. talk negotiation and consultation with guy johnson. he will explain this brexit matter. the president, well, he guaranteed green on the screen for monday and that did not work out. this morning there is further curve flattening. while we consider financial travel, will business collapse in 2018? guy johnson in for fancine in london. guy, give me a little bit of the brexit disaster yesterday. how did mr. juncker leave lunch? guy: i think you have lunch a little bit confused, to be honest, which is something the rest of us will have to get used to as well.t to be honest, trying to understand british politics at

the moment is confusing. tom: to say the least. with our first word news, here's taylor riggs. theresa may hopes for a brexit deal by the middle of next month, despite a major setback. an agreement over the average border unruffled with president jean claude juncker. both sides say they will keep talking. put upopean union might to 11 countries on the blacklist of tax havens. eu finance ministers might sign off on the list today. among the countries that could be sanctioned are south korea, barbados, canada and the united arab emirates. subpoena deutsche bank for records on its relationship with president trump and his family. the president owes deutsche bank about $300 million related to

his role as a real estate developer. russia is cracking down on u.s. news media-based there. the justice ministry has declared voice of america and radio gear up as foreign agents. -- and radio europe as foreign agents. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i am taylor riggs. this is bloomberg. tom: thanks so much. let me go to the data right now. currencies,nds, commodities. 56.68 is a flatter yield curve. it's 142% because of a higher two year yield. the 10 year yield is static and the two year yield is higher, maybe ahead of the december 13

fed meeting. 11.46, showing an interesting volatility linkage to the market. christopher will join us in the next hour with his great technical work. the 30 year buy, showing the static long-duration, 2.78%. this is all about the two year yield. guy: absolutely. the curve continues to be something we should pay attention to. a lot is going on with the british pound and we have lori the discussed one of them, and that is the issue of politics with ireland, northern ireland and brexit. that is weighing on the cable rate this morning. services pmi, the survey dropping at 9:30 london time. the data was not great. the car sale s data, not great. we have weak swedish data as

well. bitcoin, heading for another record as well. take a look at the markets as well. we have seen some weakness in iron ore, and that has been affecting the miners. ore -- ok, i don't know which one that is. guy: singapore. tom: this is a chart that came up yesterday. we listened to orur guests, i hope you do, too. good morning, radio london. all you need to know is the spread of the mile wide. walkthrough,s comluding,s ments from alex pozen. guy: we are concerned about a

shortage is well from the text change. tom, i want to talk about the volatility surrounding the cable rate at the moment. this is the two week vol for cable. it catches the summit coming up, and that tells you what is going on. the market traded this higher, expect more volatility. let me show you the five year chart. see spike you can there, the brexit referendum. is obviouslyugh one reverberating around london this morning. heard around thell world, certainly around westminster. theresa may came close to a brexit deal. this is not the brexit deal, just a phase of the brexit deal,

but it stalled over the issue of the irish border and what kind arbitrage we might see across that border. i will start with you, peter. willu think arlen foster be able to agree on something that will let this story through, or anything that leo brassica says with him will not be ok with arlene foster and the d.u.p.? >> a deal is still possible, but it seems the break yesterday has made it more difficult there. and the irish prime minister made it clear last night that island had agreed. and as soon as lunchtime, that turned around and that fell apart. text in there is a

place will step they are happy to make presentational challenges, but they are not interested in remanding that text too much. at this point, it seems anything the government might conceive now will be feeling the concessions of the d.u.p., which will be challenging for the irish government. a deal is still possible of course, but it is more difficult today. it will be interesting to see exactly what happens in the cabinet meeting later on and how the whips are able to finagle something with the d.u.p. theresa may is going back to on wednesday, but how would you describe the u.k. 's credibility in brussels this morning? nejra: i would say, how would you describe the u.k.'s and eu's credibility at this stage.

as we went into this lunch, there were mp's saying that michel barnier, the chief negotiator for the eu, so i breakthrough as imminent. we know this did not happen and is phone callth happened around lunch and things unraveled after that. junckerd, jean claude and theresa may both struck a positive tone, saying they will continue talking and reaching a deal before december 14th. that is when they want the talks to move to trade. there is also the issue around the european court of justice. tom: everybody agreed to disagree. i liked what i saw in one chart, the creative ambiguity of it all. what is the immediate to do list for prime minister may?

nejra: i would say the immediate find list is to somehow to a way to square that circle between what the d.u.p. wants and what the republic of ireland wants. how she will do then is the big question. the scottish first miniature nicola sturgeon tweeted this morning saying, may be the answer here is to put the soft brexit forward and keep them in the single market and customs union. tom: peter, i am on the edge of the 17th century here, or at least 1703. everybody is piling on prime minister may. you are in dublin. what will be that delicious tension between northern ireland and the republic of ireland? why should they cave in to london? peter: that's it. for dublin, they are not quite dug in, but the position has clear that they want to

guarantee they want a guarantee there will be no hard quarter after brexit. they set a solution would be if the u.k. were to remain in the single union and the customs market. the big thing with the d.u.p. is -- they have said repeatedly, anything that flows into northern ireland supplies the u.k. overall. if there is any kind of distinction between northern ireland being less a part of the united kingdom than scotland or wales, that is not acceptable to the d.u.p. so, they need to apply to the u.k. as a whole. guy: thank you, peter flanagan and nejra cehic, joining us out of brussels. streetst host, state

global advisor. i described the situation as confusing earlier. are you confused? >> pretty confused, but that ambiguity is a good one. when you get into a situation like this, everybody has heart, legal answers. you have to push things to the nth degree. in reality, the only thing that works in a case like this is a case of ambiguity. it a hard quarter? it is not a hard quarter. rick: it is a border. there is a customs rate between the two, but it is somehow applied differently. ine way you do it practice as opposed to theory. maybe that is a british pride matted point. guy: that is not what the irish are saying. the average want no border. and the issue, if they concede

theyoint, would look like claim downward the d.u.p.. -- would look like a climb down for the d.u.p. rick: you don't want to poke it too hard. both sides need to step down and have that ambiguity and practice what we want to have, which is tarade. lacaille will stick around. the trump travel been coming into effect. what's the take on that? we'll find it out. that is next in this is bloomberg. ♪

taylor: this is bloomberg surveillance and i'm taylor riggs. it is a big takeover in the movie theaters business. cineworld has agreed to purchase regal entertainment for $3.6 million. the deal allowed cineworld to expand into the world's biggest movie market. discovery communications detained oprah winfrey's company, $70 million, to take a majority stake. discovery will own about 70%, what oprah winfrey will remain the ceo. one of the provisions in the senate tax reform bill could inadvertently lead to higher taxes for tech firms. the senate minimum tax that could prevent corporations from using tax breaks on intellectual property and spending on r&d. that will likely come up with negotiations. tom: thank you so much.

efe from "the washington post" has the most current article on the senate tax cuts. we are more aware of the civics 101 lesson we took a few years ago. news is thisthe idea of the house and the idea conservatives saying, let's delay. here it is, the idea of the house saying, slow down. my can't we slow down on all of this legislation? down, but the big issue is not the tax legislation, but the question the the bill to fund government, which runs out in a matter of days. they need to keep the government finance so it's can function and

the republicans want leverage to push back against the democratic desires to pass some sort of immigration bill to let the dreamers stay. right now the continued resolution requires democratic support. so, it is a legislative train wreck. tom: this is mr. meadows and the conservatives in the house. he is from north carolina saying, let us at least wait to itember 30, and not do all this week. why can't this wait until next year? i'm curious how this will play , where thehouse senate rushed it through. >> the big issue, the big clients in question -- it is about the military and spending cap's for domestic spending.

you don't really want to extend government funding for months without making any sort of a new without enacting policy that reflect the legislative reality. is it really is -- and it you havecause essentially what has become a one-party government. the republicans now need to go back to the democrats to get some support on the budget, which they are trying desperately to minimize the amount of leverage the democrats adows isich is why me trying to push is beyond christmas. sector has been selling off because of its concern about some of the issues about the attack stores coming up in the house and the senate and the amalgamation of the two. will we see fixes for some of these problems, which mean maybe that will get pushed away, or is this getting baked in now? >> incidents if you read between

the lines, that it might be getting baked in. this was the problem with the process. the big problem relates to the alternative minimum tax, which ultimately will prevent a lot of the media companies, tech companies, to did up, expenses they had previously deducted. and not just tech companies. ceo sayingg coal this would raise his tax bill $60 billion. you had the stories overnight saturday into sunday that fixes of the tax bill were being handwritten over lunch. it was not actually a printed bill. is this something they neglected to do, forgot to do, or thought they would slide in? there's a limit of how much revenue you can lose. the budget bill authorizes $1.5 trillion of spending or lost

revenue in the textax bill. so, if you put those deductions back in, you have to find the revenue somewhere else. you have to put this against the calendar trump wants to sign before christmas. it is a troubled piece of legislation. tom: jim hertling, thank you so much. we will come back with dr. rick lacaille. coming up later today, ronald williams. hour.or that in thae 8:00 this is bloomberg. ♪

guy: guy johnson in london. i am in for francine lacqua. tom keene, over in new york. still with us, rick lacaille. i want to get back to the floor and talk about the sector story in the u.s. this is the grr function for the last five days. ti -- it shows what we are seeing in terms of the rotation of the sector story. down there at the bottom is the technology, in particular the semiconductors, which but the pressure over the last couple days. rick, a, it shows you where you have got to market. my question to you is, how much

of this is end of year? the tech sector has done incredibly well this year. how much of this is down to what is happening with the tech story and tax story? >> i would say the majority of story ratherure than what is happening with the tax. 60-40. say it is the other thing it tells you is we have a lot of dispersion in the equity market. it's a great time for active management. at the sector level, dispersion means opportunity. guy: i would take that point, but add a copy at. aveat. add a c we are beginning to see the tighter sectors unwinding.

will we see more even distribution across the curve? >> i think it has already flattened out. in the u.s. you will see more top end. guy: rick lacaille will stick around from state street global market. coming up, a conversation with "" new york times" ceo. plenty happening in the media space. take overs and fake news. this is all coming up. this is bloomberg. ♪ manus retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. tom: good morning from new york and london. a guy johnson is in for francine lacqua. look at the blowup in brussels

yesterday and in washington, tax reform in markets modestly on the move. our first word news, here is taylor riggs. taylor: president trump has been handed a major victory. they will let his travel ban take effect while legal challenges go forward. the u.s. will be able to restrict entry from -- by people from 6 muslim majority countries. -- financial support behind roy moore. that comes after president trump endorsed him for next week's special election. several women have accused him of sexual misconduct. there's a changing of the guard at one of the euro area's key political bodies. thee will be a new head of region's finance minister group. to makeve the ability the euro area grow and for a longer period of time.

we will make the reforms needed. taylor: the euro area finance ministers group has turned into . of the closely watched groups president trump tweeted they should look at what 401(k)s have done since the election. fidelity says the average balance of accounts hit a record, almost $100,000. the fed says only about half of american families have retirement account. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. tom: richard is the state street global advisor and his work is in -- has a background in quantitative research. it means we can operationally migrate to 2018. in your important note, you look fat tail risk.

what is the skew worry, that odd part of the bell curve. what is the skew we need to talk -- pay attention to next year? tothe skew in relation insuring yourself -- volatility is low overall. if you want to buy emergency let insurance, that remains -- that has remained relatively expensive. there is little demand for emergency protection relative to the middle distribution. i think that is the point, a signal the investor may be concerned about that left tail event. tom: i want to go -- make sure this goes up on tv . it's my chart of the year, don't put up yet. the issue here, shorting the vix seems to be the single play based on perpetual quiet. will the quiet end next year? >> i think many would say many

investment strategies have an implicit short on the vix and i could be seen as storing up trouble for the future because of we have a rapid unwind of the vix and underlying, you have people scrambling to cover that. i think the implicit risk we should be concerned about even with positive fundamental macroeconomic backdrop. tom: here's the chart of the year and i zoomed in on it. this is the vix chart, an decay of in the normal the vix. it's a lot of mathematics we don't need to go into. basis,garde -- on a log it shows an acceleration of quiet. what is the signal we have gotten ever quieter in the vix of 2011? >> it's wasted money partly, but also really -- the relationship between the actual stock market and the vix and the volatility level of the equity market has

been low. you have enormous dispersion, so correlation is low and volatility is down and the two are linked. you've got an acceleration of this falloff in volatility that is worrying. guy: looking at a 3% drop on the vix -- any given day. what is the effect of that? bts are going to have phil and you will see big moves coming through. is the market ready for that? >> not enough to make a difference. if you have a series of those choppy moves over a couple of weeks and there was an underlying narrative that said something is changing -- maybe bond yields are rising or there's a recession on the way, then i think you would have trouble. one time 3% will not make any difference at all. guy: a lot of people are using volatility as a way of picking up extra to make their portfolio numbers look right.

there are too many people that don't understand the vix playing this market. do they understand the risks being taken? short take a look at the vix and how much money has slowed in there, is the market using relatively correctly? shouldn't it be there to just pick up a few extra pips. it should be there for another function. richard: we don't know what people are doing. they could be doing volatility arbitrage trade. guy: do you think they are doing that? richard: that's the point, we don't know. when you have a bit -- a very big move like in 1987, it fleshes out. there were many stories that came out after stock market correction. it needs to be quite a big one in order for some of these pieces of damage to become more evident. trades sinceparity the financial crisis and that

relies on this linkage between the asset classes remaining reasonably stable. do you worry that maybe some of these asset classes -- bonds, equities, start to get more out of kilter and you could end up with the quiddity problems? how do these volatility and risk trades work in a kind of period? richard: i think they require you to rebalance between things that have been more volatile and less volatile. that's a worrisome trade. i don't think we necessarily face liquidity problems. during risk parity, that strategy lived through a lot of different regimes of relatively quiet correlation between equities and fixed income. overmore money has gone in the past few years than has historically been in there. richard: you got this latent train -- trade. unfortunately, it's hard to down

the value of that potential trade. tom: this is extremely important and let's remind ourselves, state street global advisors know that there are billions of dollars exposed in this. ofguy's important question the 3% move in the s&p, if we begin with the model of the 11 vix and migrate rapidly and or and 18bility to 16 or a 1920 -- 19, 20 average vix, what is it mean for institutions like you? this is on -- unproven, infinite --isn't it? richard: we are not making bets on the vix. that's not part of our strategy in terms of asset allocation strategies or, if anything, we are using the vix rom and insurance perspective to an sure that if there is that tail event on the left side, we have a cushion. there are institutions that may be more affected, what it is

hard to pin down who is most likely to be impacted by this in terms of than clients. the important thing is to disclose -- try to be as clear as possible as to what the risks are. in 1987, do we know who is exposed or is there a shadow short vix market that you really don't know what's out there and what their nominal or derivative exposures are? to the extent that it is an exchange-traded market, there are certain data points you know about the vix. the ownership and how the dynamics would plan out if you had a sharp change, i don't think that is knowable. but we know we have a more regulated system and the contagion impacts on other actors like banks could feed into the credit system. that's in a very different space to where it was in 1987.

the systemic risk, that is very different to previous episodes. tom: this has been the single vix ionversation on short have heard in recent months. that was absolutely brilliant. guy: cool. keep up the good work, tom. lle joining us. he will stay with us. the tv function, it's not just tv , it's kind of radio into one.ll, wrapped access the fantastic functionality we have on the right-hand side of your screen. if you want to send us a message, please do. many more still to come. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. $67.5 billion deal andd be -- goldman sachs others could split up a $600 million in fees. being backed by a bridge loan. when shanghai, the coffee shop chain will open its biggest location ever, about half the size of a football field. same-store starbucks sales -- it has been a super year for supercar maker lamborghini. bloomberg spoke with the ceo. >> this year there will be

another victory year for the company. we just need to wait for the last couple weeks. the figures that we had for the end-of-the-year is something unique and spectacular in terms of volume. we are going to be over 3700 units, so we will have incredible growth year over year. playing antics -- being an exclusive rand, it's important to balance the growth. taylor: lamborghini just revealed high performance crossover. that is your bloomberg is this flash. guy: that is quite a lot of money. tom: it is in taylor yellow. guy: absolutely. i see no reason why not. something for christmas, maybe. i am told it is sold out for the first year. that's get back to another person i am sure is interested

in what lamborghini are up to. -- a street local advisors bond call. lacaille, your title seems to have migrated during this program. we like to do that here on bloomberg. the u.s. 10 year is trading at 2.3741 right now. d think it gets 3% by the end of 2018? richard: not likely. we were saying don't bet against bonds. demand for enormous long-duration assets. its accommodation of demographics and the fact that baby boomers have deep pockets and reach maximums when the yield curve is well behaved. i don't think we should

interpret the flattening yield curve as a sign of trouble in the u.s. economy. don't bet against bonds. i think thereause will be policy action at the short end that will put pressure on two years, maybe. at the long end, that could be pretty well behaved. there is latent demand for duration. i think the game change would be people revise their long-term forecast for u.s. growth. if that happens, real yield would rise and people would revise their forecast and it would be a good news, bad news story. guy: this is the bit i don't understand about this u.s. tax story. i am a u.s. ceo trying to figure out where i'm going to invest in this money that maybe coming down the pipe towards me as a result of this tax story and history tells me i should probably invest it in stock. why would i invest into capital goods or people when i don't see

any sign of inflation coming down the road and i don't see any sign of wage growth which will drive the u.s. consumer forward? i don't see how as a ceo i get over that line to make the decision to invest stuff in the improveh would productivity and allow the economy to run at a faster rate and improve the inflation dynamic. richard: firstly, i think many if not all ceos do not have a financial constraint on their ability to invest. the repatriation of dollars is important on whether they can invest. the substitution apart from hotspots. if you go to a restaurant in san francisco maybe you see people with ipads and less waiters because minimum wage is creeping up and you can't find laver -- labor. at the moment, the phillips curve is dead, maybe, i think it is just sleeping. getting ahead of that as a ceo and say we need to start the

process investing now so we can capitalize on global growth makes a lot of sense. guy: i am mr. ford and i need to invest in people and cars so people by my cars. richard lacaille stays with us. coming up, we will speak to alexander, the ceo of ir to -- looking forward to this conversation. this is bloomberg. ♪

♪ guy johnson in london in for francine lacqua. tom keene over in the big apple, new york. the international air transport association has upgraded the 2017 forecast and critics major gains next year. according to them, europe will lead the search as north american group -- growth starts to moderate. the middle east should see zynga begin gains despite the impact of travel restrictions. the u.s. supreme court allowed president trump's travel ban to take full effect while the case is on a. -- on appeal. for more on this, iata ceo.

he joins us from geneva. what effect do you think the travel ban will have on air travel in the united states? not see any operations -- operational consequences of the decision of the supreme court that has been taken last night, first of all. we see that the countries involved in this new ban represent a very small market in terms of travels between the u.s. and these countries. normally the consequences should be very limited. -- do youou expect expect -- in the end, no operational consequences. it is a tight group of countries being affected by this, but there seems to be a trend toward increasing security particularly around for those traveling in

and out of the united states. we saw that affecting carriers like emirates earlier this year, do you expect to this pressure will become something that affects travel into 2018? alexandre: no. we recognize, first of all, the to regulatee state our borders and the need for security measures because it is a government responsibility and we have to protect our passengers and crew. we think it is legitimate. what we think is that these measures have to be taken in consultation with industry to be effective, to be implemented properly and to limit the consequences of passengers and our in -- industry. for next year, we see security as an issue that is hovering above the industry, but we do not expect, at this state -- we

cannot recommend additional measures unless there is an exceptional -- situation. at the moment, we think what has been done is appropriate. guy: you used to run an airline in europe. we have political chaos surrounding the brexit issue in europe. do you think we will have travel or do youounding this think the airlines affected with sort of migrating to more european-based operating licenses will be able to find a way around this? all, one: first of advocated have always in favor of maintaining connectivity between the u.k. and europe and the u.k. and the rest of the world. that's a key issue. secondly, we are not a part of the negotiations so i am not tofortable and not able comment on the details of the

negotiation. tot we are aiming at is ensure that this connectivity is maintained. it means for the u.k.-based airlines, their traffic lights -- rights could be maintained in new york or other countries that have an agreement for europe and for european-based airlines, the traffic rights are maintained in the u.k. that's the key issue and we are urging governments in the e.u. to find a suitable and proper agreement and quickly because things have to be ready at the latest for october 2018, meaning 6 months before the date of departure for the u.k. because then -- after then, the program, the flights are ready and it's very difficult to modify and change. october 2018 at the latest, everything should be ready. tom: as guy mentioned, you ran air france for a good amount of

years. i want to talk about what i noticed, which was ever rising taxes and fees at airports. heathrow as, led by well. what is going to be the trend next year on governments killing your passengers with 15% and 20% all in taxes and fees? very --e: we are monitoring very closely the issues of charters and -- charges and taxes that governments are putting on passengers and airlines based on infrastructure and europe infrastructure are much too expensive. the three main airport in europe are among the five most expensive airports in the world. tom: thank you. alexandre: we say, please stop. tom: can we get on other

airlines the food like on air france? can you do something about the other airlines so it is as good as air france alexandre: --? alexandre: the food -- it's a point on which airlines are doing quite a good job. they are improved. what we think is that the key toue there is to be able give to our customers what they request and more and more you coming.e more customers tom: thank you so much, alexandre de juniac, we continue worldwide. ♪

♪ tom: this morning, new curve flattening and markets price

quantitative tightening for 2018. brexit woes, sterling weaker after a difficult lunch in brussels. there is modest insurrection in the house as conservatives question deficit growth and demand a slower pace to passage. the trend is your friend and the trend is expanding, just like my holiday waistline. good morning, everyone, this is "bloomberg surveillance." world live from our headquarters in new york. i am tom keene. guy johnson in for francine this morning. do you agree with me, it's still the most unloved bull market since time began? guy: it certainly feels unloved. there's plenty of people coming up with reasons it will fall apart and fall apart soon. as long as we continue to see earnings driving the story, i think the market largely remained on board. it will be interesting to see how we migrate into next year.

there's plenty of politics beginning to line up and maybe a factor in this as well. tom: we will really focus on this in the hour with one of america's great technical analysts. your first word news, here is taylor riggs. taylor: british prime minister theresa may hopes to host a brexit deal by the middle of next month despite a major setback. may's political allies say they cannot support the plan. both sides say they will keep talking. the european union may put up 11 countries on the blacklist of tax havens. according to a proposal, that you finance minister may sign off on the list today. among the countries that could be sanctions are south korea, barbados, and the united. u.s. special counsel robert mueller has subpoenaed -- on its records with the relationship with president trump and its family according to a person briefed on the matter.

the president owes them about $300 million related to his role as a real estate developer. u.s.a is cracking down on news media based there. the justice ministry declared voice of america and radio free europe as foreign agents. they could be banned from covering russia's parliament after the u.s. required tomlin-funded broadcaster rt register as a foreign agent under u.s. law. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thanks so much. we want to get to chris perrone as quick as we can. we got to do the politics out front. curve flattening, 56 basis points down from 61.60 2 -- 61, 62 and further flattening due to the higher two-year yield. screen, please. the vix, 11.64. the yield should be green on the

screen for the 30 year, one basis points higher yield, 2.77%. you can see the two-year yield getting out of the facility --vicinity of 2%. guy: what gets my attention is cable move.- down .4%. part of this due to the data. disappointing consumer data out of the u.k. i think it is a brexit story more than anything else. what has changed in the last hour since we got the board up is we see a selloff in european equities. are not seeing it in the fair values on my bloomberg in the united states yet. european equities are beginning to feel a little bit of heat. bitcoin, we talked about, potentially headed for another record high and the singapore contract down by 2.1% overnight. tom: in the last hour we were talking about the telegraph

writing about flows, real interest rate differentials, but also flows out there. bring up the chart if you would and this is the elephant in the room, the transatlantic room, the idea of the u.s. 10 year up here and the german ten-year comes down and keeps coming down to this very low yield. this differential is a huge determinate of dollar and euro flows in the next year. guy: i'm going to circle back to the pound. i want to capture a little bit of what is going on in the market at the moment and this is the two week volatility for the cable rate and this pulls in the , in theory,ch will bring in this european summit -- areay or may not beginning get two fails in terms of getting this deal done? is king.context the five-year version of this chart and you can see the move

we are looking at pales in comparison to the move surrounding what happened actually with the brexit referendum. you can see that big spike -- that was that event. tom: thanks so much. somewhere sunday night or monday morning, i said where is noah feldman? here it is. he has written some of the best books on 20th century supreme court history and he's really quite good in "bloomberg view." a tweet can't and should not be the basis of a confession of a high crime for impeachment. orienteds a publicly forum and what one says there may not need reflect their interstate. crime is different and twitter doesn't tell you what anyone is thinking. and i brilliant essay will get it on social, but i cannot say enough about professor feldman's work. we now go to our white house correspondent in washington today. twitter is twitter and the

president is tweeting. does he need a new legal team? is what we see in december is weak -- he gets a new team of lawyers to help them out? >> we have people in the white house advocating for the president to shakeup his legal team, the slip up over the last couple of days with the president's tweets basically confessing to knowing that general flynn lied to the fbi and keeping him on and telling the fbi director to let them go definitely made it more difficult for the president to say that he didn't have anything to do with this obstruction of justice charge out here and the lawyers are saying they drafted that tweet and they are falling on their sword saying they made a mistake doing that. tom: what a mess. let's get back to the clarity of tax cut reform. what happened in the house last night? congressman meadows -- was it like a mini coup or many

insurrection against the leadership of the house? >> that's a good way to put it. basically congressman meadow and the house freedom caucus decided they didn't like the way things were going, especially on the issue of the spending package, the two week deal to keep spending in the government until december 22 so they decided to hold the tax plan hostage and they can do that because there's only a slim margin and they had about 20 republicans looking to flex their muscles and they decided to get a little more time on the spending package to push it from december 22 to december 30 hoping they can get a better deal -- a tougher, more conservative deal when it comes to having a spending package that goes further into next year. they are worried that republicans are going to give away the store to get home for christmas and not have a government shutdown right before the christmas holiday. i'm trying toon, work out whether or not the last few days have been good for the president or bad for the president. tom started talking about the

tweets and the legal team and clearly there's a lot of noise around that issue. on the other hand, we have the tax win -- let's call it attacks win for the moment -- the tax win for the moment. on balance, has the president has a good few days or bad few days? >> it has been presidential whiplash going from positive news for the president with the tax bill, the first major legislative victory looking almost secure and then the really bad news with what is happening with his former national security adviser being indicted for lying to the fbi and becoming a cooperating witness. that's something you cannot expect that the president and his top advisers are happy about. they are having to deal with a little bit of emotional whiplash celebrating some victories and having concern that what is happening with the special counsel -- issuing subpoenas to to thee bank, talking

former national security adviser and cooperating potentially against of the president and his inner circle, there's concern that whatever good news is coming out of the white house and the legislation will be overshadowed by this russia cloud. tom: thank you so much. our white house correspondent from washington this morning. a trend.ona follows these are quite charts of substance about equities and bonds and joins us with an optimistic take a this morning. i want to first, go to the core issue. if you read dan clifton -- do you pay attention to dan clifton or can i make a banner that says chris ignores dan clifton? chris: he is the best on the street. tom: the you ignore him? richard: -- chris: never. all year, the market has divorced itself from what is going on in washington. still a resilient

bull market. people might he getting more optimistic here. i don't think they are euphoric yet and it is hard to want to bet against the trend. tom: yesterday the trust -- the president called for green marketing, came out and said stocks up. that'se clock ticking, always wrong. what would you advise the president about making a market call at 8:00 a.m.? tom: stay away. chris: if anything, this market has gotten broader over the past several months with financials re-accelerating and maybe even energy acting better. i think it's hard for us to say the classic ingredients that are found before a major top arm in place. tom: we will come back with chris verrone with an optimistic 2018.oing into the s&p 12 months trailing up 20%, 20. we will talk to chris verrone

about his favorite version. aetna.g at cvs- how about a former chief executive officer of aetna, ron williams? this will be on -- in the 8:00 hour on bloomberg television. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." i am taylor riggs. let's get the bloomberg business flash point of a takeover in the movie theater business. the u.k. in a world agreed to buy-- cinaworld agreed to

regal entertainment. it will allow them to expand into the biggest market. --covery communications oprah winfrey's company to make a stake in their channel, own. winfrey will remain the ceo. one of the provisions in the senate tax reform bill could inadvertently lead to higher taxes for tech firms and other companies. the senate measure keeps the alternative minimum tax that could prevent corporations from using tax breaks on international -- intellectual property and spending on r&d. all of this is likely to come up with negotiations in the house. that's your bloomberg business flash. guy: thank you very much indeed. phone call heard around the world yesterday between theresa may and the bup leader, arlene foster, which effectively lead phase 2rexit move to

not happening and a cabinet meeting taking place right now down in westminster that kind of has a crisis feel about it. whenever the dup is the party that supports may's minority government and getting them on board could be tricky. back inmay is expected brussels wednesday, we now think. the question is what is she going to take with her? let's join nejra cehic standing by in brussels to give us her take on all of this. theresa may is expected back in brussels. is there an expectation in brussels that she will bring a deal with her? nejra: let me just tell you there's a headline crossing the themberg right now that -- e.u. head will update us on wednesday. that is tomorrow. perhaps a little bit of expectation that theresa may

might come back with something. this is bloomberg reporting according to people familiar is that the dup leader arlene foster and theresa may are not meeting today. bloomberg reporting that there are meetings below the legal level happening between the u.k. government and the be -- dup. we had philip hammond arrived in brussels and it is business -- business as usual in brussels. he said as he went in that he was confident that we could move the brexit talks forward. whether we can is the big question because there's a question over how theresa may is going to square that circle and come to some agreement that will be palatable to the dup in the republic of ireland. guy: this is really interesting because in some ways it sets us up for next year. canirish have a veto they use and they have made it very clear that as a result of which, the language in this deal has to suit them in this deal.

are other countries in the european union have vetoes that can be exercised further down the road when we get to trade? is there a sense in brussels that this is a pre-shock in this and theexit process major shocks could come further down the road once we get into the trade story? we saw what happened with the canada deal. nejra: yeah. that's a really interesting question and i would say at this stage, a day after the break down in that lunch between junck er aunt may, a little too early to tell on the case we heard on the record because what we have been hearing from juncker and member isouncil there's a tone of optimism and they will be making progress to move the talks from divorce on to trade by that e.u. leader summit on december 14. everyone is still working

quickly towards that. theresa may, included. for the moment, all we are hearing is optimism, but it is a fair question to ask because we have had comments in the past that this issue is getting down to the nitty-gritty on how it will be resolved in terms of the irish border. that is a conversation that will move into 2018 and at the moment, certainly the republic of irish has been saying all they need is the parameters. what started all this was not the republic of ireland. they had an agreement before going into this lunch. it was that call with the dup and arlene foster that put an end to any possible breakthrough at the lunch yesterday. the u.k. was saying all along the lunch was not a deadline, just a staging post toward december 14. all is not lost yet, but theresa may has a lot to do in just a few days. guy: and the pound is certainly feeling the pressure. thank you very much indeed, nejra cehic, joining us from

brussels. what have we got coming up for you later on? chris verrone joining us and he will be sticking around. plenty to come from him and we have a conversation later on with mark thompson thompson, the former director general of the bbc. he also used to run channel 4 over here. this is bloomberg. ♪

♪ tom: good morning, everyone.

"bloomberg surveillance." guy johnson in london and we are glad to have with us christopher are going to dive into a pro chart. we usually don't do this on tv or radio. i will send it out to -- on twitter to all of bloomberg worldwide. this is the standard force 500 in a grim single digit world up 20% in the last 12 months and there's a trend and you've got moving averages and regressions and all that. we will zoom in on where we are right now and chris verrone, picked the picture. we are way off the mean, almost down to three standard deviations. what is stunning is to get back to the mean, the humanity, it's a 3% move back to the mean. you and i have never seen a constrained rift like this. chris: down three is like the -- down 10 in some

from the context of a lot of this move is computers. s get going, it's hard to reverse it. historically, the more extended a market is, believe it or not, the stronger that market's forward returns are. the fact that the market is extended, that maybe a technical concern. it's not a longer-term one and as we move into 2018, there's no question this year is proper -- next year is probably harder than this year was. tom: here's a statement and goes to his hard work. if i double-click on this chart, jason, bring up this puppy again. we bring it up, there it is, up 20% and everybody remembers real estate in 2006. is this the real estate of 2017? we knew we were going to revert to the mean. are we going to revert to this mean on this great bull market? chris: i think you will get some type of a shakeout.

the last time we had such low 1996 and 2014. you get a pullback. the bull market isn't over, just tends to get difficult and i think that is a fair assumption into 2018. tom: are you worried about the short vix train and the people out here with this huge bet on continued quiet? chris: i am not. i think the vix is a poorly constructed project -- product. they have been making that bet for the better part of the last 18 months and it hasn't paid. what i think is important about volatility -- volatility tends to rise before the bull market is over. the markets get inherently more unstable before they end. we'll see a lot of evidence of that yet. tom: i look at this, chris verrone, and let's tease forward to where we are going in the last block of the show, the banks. you have them under loved by you

and under loved by technicians s on the deatha' star. chris: i think, how can the banks work in this environment? historically, they have worked in all kinds of environment, sometimes when the curve is flattening and someone it's steepening. we think it is an unloved part of the market. tom: is that chart ok? did i do ok? chris: pro chart. on: coming up, chris verrone technical doing even better. weezer on fox disney and google facebook, brian weezer on advertising.

♪ tom: "bloomberg surveillance." good morning, everyone. guy johnson in london for francine lacqua. tom keene in new york. taylor: the supreme court has

handed president trump a major victory. justices will let the president's travel ban took effect -- take effect while legal challenges go forward. the u.s. will be able to bar or restrict entry from people from six majority muslim countries. the republican national committee has thrown its financial support behind roy moore. that comes after president trump endorsed him for next week's special election. several women have accused moore of sexual misconduct. there's a changing of the guard at one of the euro area's key political bodies, portugal. the nextteno will be head of the finance ministers group. the currency bloc is facing major changes following the worst financial crisis in its history. >> we have the ability to make the euro area grow a little bit faster and for a longer period of time increase the momentum of the reforms needed. taylor: the group has turned into one of the most closely watched decision-making bodies

in europe. egg has nevert been bigger. president trump tweeted investors should look at what their 401(k)s have done since the election. the fed says only about american families have retirement accounts. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thanks so much. on 2018.to be briefed we do that with chris verrone, strategist research partner and joining us, brian wieser. he is the one who links the media and digital into the advertising world like no one we speak to. brian, wonderful to have you here. what's the backstory on fox-disney?

is it just about mr. murdock's age? ryan: it has been a little perplexing and i know i am not the only one confused --brian: it's a little perplexing and i know i'm not the only one confused. trying to figure out why this company would all of a sudden expose itself, we do not have concrete ideas. one idea i floated was a way to solve the disney succession issue. in other words, james murdoch, the ceo of disney. classhis goes to class a, b, media is the play toy of the wealthy. murdoch started out somewhat basic although his father had done that well. in your world comic media monday, -- in your world, each media monday, media tuesday -- are we can have a great

transaction combination of these companies with three or four players? brian: it's possible. aside the diversity of voice argument that one should probably make as a society. from a is this perspective, are they better off as larger entities, sure. tom: i want to get in the next section to facebook and google and advertising world and all that. how is media doing right now chris: this movie goes down in flames and then there's this show -- what is the state of your world in content? brian: i think the media companies and many investors are more than a little concerned that the world is coming to an end. it's not without some justification that as these things are changing, it's hard to say it's changing faster than it was before. the media industry has always changed. i think there's concerned that when you have a netflix that

doesn't necessarily have the same profit motive or doesn't have the same sort of ,bligations to drive dividends they are competing, but that's a small factor. i think anyone in the u.k. could point to something like the bbc and say, you can survive as long as there's a noncommercial playing. tom: let's point to someone in the united kingdom, here is guy johnson. brian, i am looking at the media landscape in the moment and it probably feels more political than it has done for quite some time. is there a political discount? brian: that's an interesting point. i think investors were way too negative on the time warner transactions -- at&t, i also think that the deal goes through. i am not an antitrust lawyer. it just seems hard to imagine that it won't. investors have been behaving for quite a while --

i think the market is providing or has provided political discount. it has been overdone. guy: it's interesting. where do you think the growth story around the world right now -- you look at what's happening in the chinese market and that seems to have been captured by some of the chinese players, but here in europe you see growth and really strong numbers and consumers started to come back. where is the growth globally for these meet -- big media players? brian: i think certainly facebook and google are certainly able to continue to grow. ofy continue to take share the total advertising market. by the way, that highlights there are limits to growth if they are doing nothing more than taking share of the market. from a non-advertising perspective, this goes to a point that "the new york times" i think is experiencing. if they invest in content, they will see revenue growth.

it doesn't mean it's as profitable as it used to be. tom: we will come back and talk about facebook and google. chris verrone, you don't have much in media companies, the south side is kind of like brian wieser's fundamental world. what say you on the charts of these different media stocks? chris: they have not been leaders, we know that. disney might he starting to get a little bit better, you had about a 30% bear market in disney and it quietly stopped going down. i would look major for some opportunity into 2018. i think the bigger question is facebook and amazon -- this shakeout we have seen the last few weeks and how serious is it? we expect they have to take some time off. a lot of these stocks are up 30%, 40%, 50%. it would not surprise us that 2018 is harder than 2017. let me tell you about

bloomberg radio on your commute. you are captive in your car. the humanity, you are lost, it's terrible. you are in radio, what do you do? you could consider jonathan ferro, tim fox, "bloomberg surveillance." there it is, 8 hours a day. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance."

i am taylor riggs. let's get the bloomberg business flash. the blockbuster 67 and a half billion dollar deal between cbs and at that could be -- cvs could be -- takeover is being backed by a $40 billion bridge loan. -- oprah winfrey company to take a majority stake in their channel, own. winfrey will remain ceo. it has been a super year for supercar maker lamborghini. bloomberg spoke with the ceo, --, stefano domenicali. >> this will be another record year for the company. we just need to wait for the next couple weeks. the figure we are headed to is unique and spectacular in terms of volume. we are going to be over 3007

hundred units and we will have an incredible growth year over year. a being an exclusive brand, it support be balanced in the growth. taylor: ginny just unveiled a high performance -- lamborghini unveiled a high-performance crossover. it will cost about $207,000. that's your bloomberg business flash. tom: chris verrone with us from strategic research and we are proud to bring you brian wieser from criminal research as we look at the -- critical research as we look at -- i announced my book of the year, it is spectacular and a controversial book on where were going in our digital world. brian wieser has pushed back against a the ascent of google, amazon, apple, facebook, and joins us now. is advertising dead, are the traditional networks dead? brian: the traditional stories of advertising's will continue to lose share, but it doesn't mean that it beers off its

historical trajectory. if you look at global advertisers, it feels about right. domestically, it's probably closer to 3%. nothing changing from that. facebook, google, and amazon will bring up the chart. tom: it has been a wonderful supporter for our work at bloomberg surveillance and here is wpp down through all of 2017. let's throw it out on radio and twitter in a moment. is the market going to have a better 2018? >> the agency space is the world for 18 years and unfortunately i think agencies are going through a whole other level of problems. tom: is mark zuckerberg an ad agency? why is he not an ad agency. everyone else says he is. brian: if you are a marketer and you really want to get screwed, and your money over to facebook. tom: why am i may -- wasting money with fan -- with facebook?

why is sheryl sandberg a bad person? brian: i didn't say that at all. tom: i did. why is a devious to give them money? brian: it's not devious, but it's a poor choice on any individual to hand money over to them without having someone help them. -- chris verrone once to wants to beat down facebook further. brian: i think the kind of issues are much more subtle than what we have seen in the past. in europe, not enough people are paying attention tor gdpr tovacy, -- pay attention privacy. it will have significant impact on how advertisers target consumers and that could have a slowing effect. net neutrality is another example. that kind of a changed regulation probably adds to cost for facebook or google or amazon or netflix if they want to

deliver content to you. i don't know what the case is for breaking them up. i don't understand that. tom: guy? techs sold off- in the past few days and it seems to be tax related. brian: i tend to look at it individually, which is to say facebook, i have a sell rating. google or alphabet i think is fairly valued. that has fallen off. i think facebook has to come back to reality. it's not going away, but i think it has been too frosty this year. i think there's a bit of a reversal -- the trade is just going way too high this year. guy: stocks trading up overnight, overnight trade picking up nicely. i hope we can show the chop -- chart on this. this is the reason the stock is higher. barclays saying the worst is behind snap and likely to get

better in 2018. tom: scott galloway tore it to shreds yesterday. brian: i am also celebrating on snap. a south breeze could move that by 10%. any market -- any stock that is poorly understood can move widely -- wildly. verrone's go to chris at strategic research. do you see a soft breeze in the stocks right now? i know they are not appropriate for you, it's beneath you to -- we are asking, is there a soft breeze or is it a hurricane that will affect these? chris: i think it's a soft breeze and it's unrealistic to assume that last monday marks the top in tech in a bull market. i think the question will be on the next rally, is it all the stoxx working or only some of the stoxx working?

those because the patients get narrower into 2018 and a think that's a reasonable case to make after the 2 or three tremendous years we just had. tom: snap surged overnight -- surge overnight. guy: that would be the kind of meteorological event we are maybe talking about here. i would be interested to get your take. this is the chart -- this is the tech stock of the year and i bring it up, it's not a stock strictly, but it is bitcoin. is there's a line i can draw between this parabolic chart and what's happening in the tech space right now? brian: i think what is great about bitcoin is because there are no fundamentals behind it, it trades like the purest technical vehicle we have seen. it is something like we have never seen before. what strikes me, is i have never seen a bubble where wall street really has not gotten its hands on it yet. when we go around and travel the

country and talk to clients, very few people own any. i'm a little bit reluctant to say at a bubble yet. it may have bubble characteristics, but i don't think it's so widely adopted and owned where there is big, meaningful near-term miss. tom: i'm doing this up for bloomberg tv because wall street loves this chart. we did this for chris verrone. here is log bitcoin. what you need to know is it's not a hyperinflation chart because it's hyperbolic -- it's a hyperbola on an arithmetic axis and not a log axis. it to your point, i have never seen convexity like that chart. it's original. chris: i think what the chart underscores is the world is still awash in money. there's a lot of liquidity sloshing around and it seeks out stuff like this. tom: is this excellent to two bulbs?bs -- tulip

chris: i don't know the answer to that yet. we could make the same case for bitcoin, but what i think is maybe different here is it is adoption away from wall street. the people who own this are not goldman sachs and jpmorgan, it's the common person on the street. that is what i think is interesting. guy: i want to get brian's take on this as well. in a world where tech companies have been effective in arbitraging tax -- i am stretching here, but i'm wondering if bitcoin is ultimately a global currency and you kind of wonder where tech companies go. they are domiciled in the united states for now, but arbitrage tax effectively around the world. is there something -- do you think there's a team at facebook trying to figure out how to harness bitcoin? brian: it's a good question, and

i don't know. the way in which bitcoin comes up is through the lens of block chain as a concept. i think it has potential and a lot of people are exploring it in terms of transparency and going back to why media agencies and advertising agencies are having a negative moment right now because marketers and donors don't understand exactly how agencies make money and i think block chain as a tool can be helpful. in terms of facebook or google notding taxes in some way, aware of that. i do think that's an example of the kind of regulatory risk they face. i think it's -- it has always been unrealistic they can keep their tax rate as low as it is. what is facebook, 10% taxes or something like that? not realistic for the long-term. tom: brian wieser, thank you so much. we continue with mr. verrone can look at the trends out there. tv , you need to be briefed in the morning. keep the volume up.

bonus round, come over here to any block and you can look at bitcoin and you can steal my log bitcoin chart to dolls all the -- dazzle the rods and cones of your 10:00 a.m. meeting. ♪

♪ 53 minutes past the hour. coming up shortly is "bloomberg daybreak: america's." what is on deck? inid: what we have tucked behind the united states tax break -- there's a potential idea -- deal breaking. the leader of telecommunications this means fort some of his investments. tom, you and i are probably the only people who recognize that name. he is in fact the great nephew of general sarnoff. tom: it really is a magical name for new york city and the media business. looking forward to that. let me get to single best chart out of chris verrone's deck.

deck is what you say for a powerpoint if you are cool on wall street. hugell 2000 log with a consistency. everybody else, blue-chip, -- is that the value for next year? chris: it's free assuming leadership. september they tried to smell -- spell small caps and they couldn't keep them down and the end on a strong note. they try to sell them again to first couple months of the year and it ends on a strong note. they say when they can't keep him down, they are not down. that's the message here. russell 2000 is underweight in terms of client exposure. i think that's an opportunity as we move into 2018 to see this group reassume leadership next year. guy: in terms of the drivers , that's a bet on

america, right? if small caps do well, that's a bet on america. where else will i see that that showing up? chris: it's really a bet on banks. there's a lot of regional banks in the small cap index. we've seen a lot of macro factors that hindered that group over the past few years and they are not getting worse, leverages start to turn up and valuations turn up and regulation is less onerous. when you look at russell 2000, the sum of parts analysis is important and a lot of the parts are small-cap banks. is: when i'm seeing for 2018 pricing power. there may be a pop, but price consistency and inflation -- worried about a lack of pricing power? chris: what i'm -- what i am concerned about is liquidity. i think we need to watch credit closely. there has been modest weakening

and i think we have to watch the spread between two year yields and fed funds. i think that's the most important spread. so far, but we will watch it. tom: we continue with mr. verrone, jonathan ferro, and myself here on bloomberg radio. guy johnson, thank you so much. let me do the foreign-exchange report for you right now. dollar stronger, the president getting that dollar up with a tax cut affair with republicans. sterling a little bit weaker as prime minister may has a difficult lunch in brussels. this is bloomberg. ♪

♪ alix: new deal, the question of the irish border upends talks at

the last minute. unexpected consequence, a last-minute change sinks tech stocks. autsche bank in the hot seat, probe widens and robert mueller issued a subpoena to the bank looking into a $300 million loan to president trump. david: welcome to "bloomberg daybreak." i am here with alix steel. alix: here is a check on this tuesday. and little bit of softness all over the board, s&p futures flat on the day. treasuries unchanged. your oil down by 5/10 of a percent. the real mover comes in the currency market. sterling on the board, down 5/10 of 1%. low on the session, but brexit talk, lack of talks, reverberating through the fx market. david: time for the morning brief. the clock a.m., the senate banking committee will vote on jerome powell.