♪ ♪ >> inflation eases in china, which gives policymakers another reason to take a soft hand. president trump told by dslicymakers that he nee to make a final argument for a cut. drivers tellsxit bloomberg that the government is losing control.

♪ heidi: welcome to "daybreak: australia." betty: over the next hour we will be looking at how all the action in wall street is going to play into the asia-pacific trading day. the fed meeting later this week. on friday, we saw the jobs report. the economy is heating up and that's it u.s. stocks to rec ords. we saw the late day push for the s&p and the dow. let's show our viewers what happened in u.s. stocks. s&p higher. dow adding 100. aimlessres a little but still rising by .04 percent.

bitcoin futures will be trading for the first time on the cvoe global index. one step towards legitimacy? this year one of the things has been the debate over bitcoin. and it legitimate for an option for those wanting to have control over the world's money supply. we have been talking about bitcoin futures and one of the twins saying we're going to see a 17 fold increase in bitcoin due to volatility. a record session high in the u .s. probleme did see the

with wage growth. to new zealand for a quick check of the early trading action, looking like an bubble. a lot of commentary from the establishment urging caution when it comes to cryptocurrency. kiwi dollar down. we saw a bit of selling in the u.s. dollar because of that tepid wage rate. features in australia, these are how they are shaping up. up 23 points. 75.10. dollar holding at domestic activity indicators coming out to paint that picture. policy leaders in dealing with softening inflation. commodities, we

saw the bloomberg commodities index lift from oil and base metals, gold up. ore putting on nice gains, which bodes well for the miners ahead of the sydney open. o>> consumer and factory inflation in china is modulating. giving policymakers and other region to make top financial regulations to tackle debt. 6.9 percent.rom consumer prices climbed slightly slower than forecast. are findings that the state bar is illegally, undermining beijing's drive to

tackle debt. several cities inflated revenue levels by almost $250 million. the fraud included state ownership. japanese investors say positive stock and inflation means it is time for the boj to reduce equity purchases that may be distorting the market. daiwaalth management and expect them to cut by a third from the current $53 billion. owned 74% of the market by the end of october. the acting governor of new looksd said bitcoin remarkably like a bubble and it is never clear how far it will

go before things start crashing down. bitcoin has soared as investors pile in, having it becomes a legitimate alternative to gold or traditional money. bitcoin believers claim the dramatic gains are just the beginning and are expecting a 20 fold rise in the price. to price will continue climb. oss and his brother are thought to be the biggest holders of that coin. this is bloomberg. ♪ haidi: thank you so much. we will talk more about what happened in the job market on friday and what the latest data means for the fed when they me

et. betty: later, a look at cryptocurrencies. bitcoin futures start trading in more than an hour. this is bloomberg. ♪

♪ this is certainly a solid report that the top line number was spot on. the data has been solid. >> we are starting to create jobs but we are not creating enough decent jobs. >> at least it is moving in the right direction. >> this is another example of positive, real growth where inflation remains tepid. >> people have not talked about that the employment to population rate went down, 3% below where we were in 2008. that is why there is no wage

growth. there is lots of slack in the economy. >> there is hidden labor. the participation rate is down significantly. >> we need to allow workers in this country to a. keep what they are and more importantly we need to drive more wages to our hard-working citizens of this country. we believe tax reform will drive wage growth. haidi: pretty diverse views on the state of the u.s. economy after that payroll report climb more than expected. we saw more than double the number of jobs created in the manufacturing sector. let's bring in the chief marketing strategist for his vie w. after you saw the jobs report, what were your thoughts? does the economy have any chance

now that we are admitting big tax cuts? >> those tax cuts will come through in the gdp forecast for the fed but i do not think we w ill get significant -- we may get 20 or 30 points in uplift but there is still enough slack in the unemployment market. have ansts we will not economy that will run far too ho t and then if we do, the fed will call for more rate hikes. haidi: doesn't puzzle you that we are pushing through this tax package at a time when the economy is doing quite well on its own? this is why

financial markets are where they are. been fiscal response. an overheatingad economy next year. we're getting to the point where we are seeing peak growth and some of the metrics next year will tail down. next year, the equity market like the idea that next year, with the economy starts rolling over and becomes mature -- then we get the tailwind from fiscal response. investors love that scenario. it is like a goldilocks scenario.

been a situation where financial conditions were tightened far too aggressively. haidi: how the ecb meeting this week? see the do you meeting this week? >> if we look at the cpi numbers, which come out at the same time, it looks like headline inflation is ticking up to 2.2 percent. the inflation language will be more positive, but the other aspect is this projection. the market will be looking at this quite intensely. incorporatingbers

that into their assumptions for the first time. 1ou may see gdp coming up at 3. percent. four, thent go up to the u.s. dollar will rally. yieldsill be underperforming. credit might start underperforming and financial conditions may react. the dollar against the yen will stay up. we see it fairly firm against em. haidi: you say one of the caysus is going to be hard to find. this is likely the last move of

the yellen administration and going into jay powell. do you think it will be yellen 2.0, will continuity be the same? >> under the helm of the fed for sure. one thing will be is neel kashkari and trial evidence look to defend. will loseindividuals their spots next year. they will be replaced by more hawkish members. we see a more hawkish shift to the federal reserve. willlobal growth story remain with us at least through the first half of 2018. if we see price pressures

kikcing--kicking up on a global basis, will be looking at the ecb and if negative policy rates 2018.ccur in at the moment, it is business as usual. equity markets will stay where they are. if we see this late cycle shift rolling over and we see inflation picking up and they have to be more aggressive, then i believe implied volatility kicks up and we are sure those structures will be unwound quickly. at the moment, more of the same. haidi: you write in your notes that it will be hard next year to generate bigger returns. the expectation is, particularly

in equities, you'll have to make do with lower returns. it is driving people to seek alpha. it is driving people to bitcoin. in less than 45 minutes, we will see the first trade of bitcoin features on the global index. the global index. what are your expectations? back, itaking a step think this has been a perfect year for active investors. people taking a global mandate on a multi-asset. most data returns on most bases. i do not think that can be replicated for 2018. they coin, just to go into that question, --bitcoin, just to go

into that question, i think liquidity is the reason we are seeing such a massive price fluctuations. if you have the risk tolerance, liquidity is something that will drive the bi g moves. i do not expect this to be anything that is a highly liquid market. you have to price it into the drawdowns. the amount you will need to cover those divisions is going to be fairly punchy. i think this is one for the brave. i think this morning's open is g oing to be a non-event. go inot expect people to have this avenue to start shorting --i think price needs to roll over and be more

vulnerable. then these funds will have better downside moves. the argument that we are having some kind of institutional legitimacy, does that make sense to you given that we cannot decide what the currency is. is it a bubble or something that has fundamental value attached? >> this is a question we will be answering for a while. knowing can put a full value on full valuean put a on it. let's notrue but forget there is a reason why the market decided to do this. ted companies lis

and the ability to make money from trading this product is true. is cost of trading bitcoin quite expensive. we expect them to get a hit on the bottom line when they report numbers down the line. when there is demand, and where they can make money, they're going to do so. we have the fed move priced in. we have the ecb meeting. what are you watching? >> it will be somewhat interesting but it will be overshadowed by the e.u. council meeting. they are demanding some sort of trade deal to getting there divorce settlement. that is something we are watching. currency is a tough

because it is a thoroughly political currency and we are the holden to headlines. ecb is the idea that we will get the 2020 economic projections for the first time. given that they only recently announced that they are bringing that package to 30 billion, it is going to be a low tier event. we have seen spreads in u.s. treasuries blowing out in the 1 0-year. we are looking a the german currency. the euro dollar has been faded. the dax had underperformance compared to the s&p, and if you prices in u.s. dollars, it has performed well this year -- if dollars, it in u.s.

has performed well. the pound is more beholden to those political headlines more than the boe. betty: thank you for joining us. you can get a roundup of the stories you need to know. go to the bloomberg anywhere app. and tweak think the only get the news you care about. this is bloomberg. ♪

♪ haidi: i haidi lun in sydney. betty: you are watching daybreak australia. president trump is said to make a closing argument for the republican tax cut in a speech on wednesday. he will be speaking in

washington as house and senate leaders plan to agree on a combined plan from the president's leaders. the details of the tax bill seem to be changing minute by minute. right now, where are the leaders coalescing? what are the big sticking points? >> correspondent: there are a lot of big sticking points. we have people like susan collins, who has been very specific about elements of the future of healthcare she wants included in the joint tax bill. there's questions about where the corporate tax bill will be placed. president trump wanted at 20%. it can possibly flight up to 22 percent. there is a lot of discussion about state and local tax the

functions. --deductions. there is more daylight between the two plans than a lot of congressional leaders have led us to believe. we had the number two republican in the house saying we will wrap this up by next week, but it looks like that might be a little bit ambitious. haidi: possibly. what i have heard is the senate version of this bill might be the one that wins out in this compromise. the majority is so slim on the senate side. correspondent: that is right. with just a two-vote margin in the senate, republicans have to hold their coalition together. in the house, they have a bigger margin of error. there are republicans in your, new jersey and california --new

york, new jersey and california who are not happy but will have to take the fall from their party. trump tweetd this saying the end result will not only be important but special. what are we expecting from his speech on wednesday? correspondent: it is a good question. what makes a tax bill special? he is both going to be talking to the nation and he has given a lot of speeches. he had a big rally in florida on friday night talking about what regular taxpayers will get from this bill. be speaking to his own republican coalition to keep them together.

the more this goes on, the more opposition they face. haidi: thank you for that. coming up, australia's supporters of brexit are slim.

>> it is 9:30 a.m. in sydney, markets are set to open in about 30 minutes. an open up 4/10 of 1%. i'm haidi lun. betty: and i am betty liu in new york. it is 5:30. you are watching daybreak australia. ggp is said to have her ducted oakfield -- set to rejected brookfield properties $15 billion bed. -- bid.

the price appears to be too low. as you know, these small operators in the united states have really been hit as of late, we've seen more and more mergers of mall operators. i imagine a lot of analysts are saying this will be lengthy negotiations, the industry has really been struggling as you say, about $23 per share bid was seen as not close to fair value. i'm sure we will get more on this story as it develops. in the meantime, let's get to the first word news with haslinda amin. haslinda: president trump is said to be planning the closing argument for the republican tax cut in a speech on wednesday. sources say he will speak as house and senate teams try to iron out differences in the two

plans. the present tweeted the bill is moving ever closer. republican leaders plan to have the agreement signed and ready for the presidents signature by the end of the year. u.n..s. ambassador to the says israel and the palestinians must decide the status of jerusalem. nikki haley said she was reintegrating official american was reiterating official american policy. tosident trump's decision call israel -- the coach was limit the -- called jerusalem the capital sparked protest. to recognizesion jerusalem was said to be a danger to peace, according to the french prime minister. violence --all

rejected all violence. and its allies may end their production cuts before 2019, if the crude market rebalances by june. russiarg was told that wants to ease the cap as early as possible. last month tod cut production until the end of next year. china's drive to tackle air pollution has been given a reality check by nature. plunging temperatures have forced officials to allow cities to resume burning coal because of a shortage of natural gas. media said freezing northern provinces have been told to prioritize keeping people warm despite plans to restrict coal burning over the winter, keeping pollution under check. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm haslinda amin.

this is bloomberg. ♪ haidi: thanks so much. let's get a quick update on the markets. australia and new zealand, in new zealand we are at thepretty much a flat moment. futures in australia, just recap, we are looking at a positive open, taking the positive open, taking the positively with u.s. stocks hitting record highs and the buoyant payrolls report, futures up in sydney by about 32 points. more broadly, head of the tokyo open, we're seeing positivity when it comes to japanese futures, japanese yen holding at 113. some of these progressive indications that we will get more progress when it comes to the brexit negotiation, boosting sterling. we're also getting a little bit of a recount when it comes to the u.s., given a very

supportive set of numbers when it comes to the u.s. labor market. with the fed move essentially price and by the market, there's also a forecast for the ecb, and a lot of data coming out in asia as well. let's get a look at what we should be watching with global markets editor adam haigh. we have the situation out of china, looking at pbo and ppi looking moderate. where does that leave investors? probably welcome news to a lot of people, and it bind.olicymakers in a they want to continue with some of the policies they have been doing in terms of tightening certain areas of the market, but it means they can continue to focus on that in a sense. inflation is easing slightly, it helps them in that respect.

ppi ticking up 5.8% in november, cpi just shy of forecast at 1.477. that means policy makers, they are willing to ease off a bit, it leaves them in good stead at the moment. it means they don't have to massively changed policy. in effect, as we were looking into the first few months of next your, it is -- next year, it is as it was. betty: what about the bond market in china, we of seen this huge route around fears in rise of computer -- rise of prices? inflation creeping back had been a big worry this sparked a selloff in the chinese bond market. we have seen a little bit of a rally off of the lows, the tenure -- 10 year not looking as precipitous as six weeks ago.

essentially this allows for some of that rally we have been seeing to continue, in essence. it could help give that rebound, in the sense that growth now becomes a real target for the growth number they are expecting in the next two or three weeks, and the industrial production numbers and retail sales numbers we will get later this week, it puts the focus back on those economic numbers now that we have had this latest development on inflation coming back a little bit. it could mean a little bit more of an easiness in this rebound were saying in the chinese bond market. betty: thank you so much. we will talk more about china's economy and the latest inflation data on "daybreak: asia." an economist joins us. sayi: reports from italy

theresa may use brexit as a separation, not a divorce, because one is merely temporary while the other is final. the president of the european parliament said he had spoken to theresa may before friday's deal with the eu, and says it does not recognize the deal. sterling rose in the run-up to the deal, but later fell back somewhat. nigel farage told bloomberg that the government is only a reluctant driver of brexit. a surrender.like we are paying a huge sum of money, allowing a foreign court to have jurisdiction over country, committing ourselves to make you -- to regulatory similarity, so we can be compared it. we have done all of this in return for nothing. they will now just talk to us about perhaps having a trade deal. brexit, and this is very much for the business community to think about, we voted brexit because we wanted to be able to be more

competitive with our european neighbors, to make our own laws in our own sectors, we voted brexit because we wanted to be able to go global. the problem with the timeline we are on is at the earliest, the first time we can sign a trade deal with the usa or anybody else, the end of 2021, a full six years after we voted exit dude -- voted brexit. n you make the u.k. more competitive if you have a trade deal? >> of course you can. there are countries all over the world that deal with each other without trade deals. they have to pay tariffs but they are competitive in other ways. obviously we are in massive net importer from the european union. if a tariff trade deal is a logical thing to do. but we are dealing with a

political project, the european union, that is under massive strain. i'm not just talking about brexit, the growth of rebel movements on the right, center and left all across europe. rather than say on day one, let's have a trade deal, what the eu have done is ask us to pay a lot of money for it. >> in they've always said this was the money that was owed to them. was it not more important to get a trade deal than to focus on the divorce money? >> the sum of money we are agreeing to is very, very much more than we legally owes them. then we have a government undertaking brexit with a deep reluctance, because the truth is they don't actually leave in it. -- actually believe in it. of course i want a trade deal but i don't want to pay an exorbitant price for it. betty: that was nigel farage speaking to bloomberg. we will be talking more about

brexit in the next hour. still ahead, coins futures -- a coin futures begin trading in the next hour in chicago. just because you can trade cryptocurrency, should you? we will be discussing bitcoin, next. this is bloomberg. ♪

♪ anything that goes from one dollar to $16,000, actually $20,000, the neck to $16,000, with nothing behind it, i think it is very dangerous. >> we watch it with interest. we try to figure out what it means. to me it is a little bit like the early 2000 when the internet took off and we were trying to revalue companies and the economy are the number of clicks you would have in a site.

interesting,in is but it is not clear enough the value, the storage of value and what is driving its value at the moment. >> the cftc has approved some futures contracts, we will see what effect that has. there has never been a transparent market in bitcoin. you will see what goes on. it is an evolving market. ♪ decision-makers just as confounded as everyone else when it comes to bitcoin. is better or worse, it official, with returns more than 1500% this year, about 85% in the past two weeks alone, wall has announced bitcoin futures.

the contract is poised to kick off as we speak. also another will start trading on december 18 in chicago. what are we expecting? just in time for christmas. >> it's hard to know. this is the third exchange where the ceo has said maybe we are stupid for waiting this out, they could create an exchange. they're going to wait and see how things go. not being first could be an issue. it is not clear. mania forear is the bitcoin is unparalleled. those who are big supporters point out this is the millennial's currency. they are the first adopters. this is the way they will spend money, although it is pointed out that bitcoin investors are according -- are hoarding at this point. let's listen to head of research who says he would put his money

in bitcoin over gold. >> millennials don't have much trust in the existing financial system. they are the first generation that has grown up on technology. they are the ones who will be leading the adoption with respect to cryptocurrency, and bitcoin in particular. given that we are having cryptocurrencies, three days ago, it was $300 billion, 80 we are approaching half $1 trillion, that you create a value. you have to find a way to have the value work its way into the real economy. it has worked its way into wall street, and that's where we going to the bloomberg, 3101. what you are looking at is bitcoin soaring to almost 20,000 on the corn-based exchange. coin-based exchange. it is a consumer exchange, unregulated. we saw the chart really taking off down below here, we have the

spread. we see a very different move in the futures exchanges on wall street, because big money will come in and arbitrage the difference between the actual bitcoin price and the future, and that will change the curve. we are also having a lot of hedge funds dying to get in and short this thing. there is a big belief the whole thing is a bubble. that will make an difference, as well. betty: they will make a market to shorted, it depends on the liquidity in the beginning. look, nothing divides people more in the financial market right now then talking about bitcoin. the major concerns about bitcoin , you have been talking to a lot of bankers and traders. su: we know the jamie dimon was one of the first major six, he is been calling it out a long time. for the short-term, the rally has proved him wrong. many banks share the concern

about bitcoin. it's talking about, how does the six exchange work? not see people rush in, the professional investors are different in the way they take positions in the information they need to do so. however, there are those who are officially going on record saying it is a bubble. let's take a listen to this governor on his view. >> it looks remarkably like a bubble forming to me. we have seen them in the past over the centuries, we have seen bubbles, and this appears to be a classic case. , with a bubble you don't know how far it will go up before it comes down. su: let's go back into the bloomberg, 1057, volatility is a big question. if you're trading on the futures exchange, there will be curves, and they will stop trading.

going into the future, this chart shows that bitcoin positivey would trend and future contracts. if you look at the volatility we have seen recently, each time it spiked, it would halt trading. the good news is bad news, many traders on wall street are bored by the fact we have seen relative calm over the stock market, dying to get into this game, and get the volatility could be a problem in catching many in these halted trades that make it very difficult to manager position. there are again so many questions, probably more than answers. betty: there are certainly people getting rich off of bitcoin, the legal loss -- wink levoss twins. there are now bitcoin millionaires in silicon valley. where do we go from there? su: you have to remember the twins were the very first to

sort of come up with the idea for facebook. they have really been talking about how they see it has so much further to go, 20 fold in fact. ifill pull up the screen, you could just hold on with me, 811. this shows one of the more safer exchanges, where bitcoin is said, latin america. the latin american currency index shows you have a huge shoot up in the currency, but in latin america, were so many countries have come to this as a way to protect their own currencies, which have their own problems, the tech savvy middle class has been adopting it, they started a few years ago. latin america's wealthiest investors want in on the action and the growing interest could

propel the currency going forward. is a currency or commodity? exchanges in the u.s. say a commodity. betty: thank you so much. su keenan on bitcoin. those futures will start trading in about 10 minutes time. coming up, a watchdog issuing an update on australia's clozel gas market. -- wholesale gas market. that is next. this is bloomberg.

♪ haidi: i'm haidi lun in sydney. betty: and i'm betty liu in new york. -- gas companies in australia are struggling to get long-term contracts. asianre, here is our energy reporter perry williams. australia has threatened to cut toe of its exports this year

free up gas for the domestic market. it seems there are problems for local users. what is going on? perry: exactly, that is what we are hearing. it has been sort of a roller , theer year for australia lng industry has been growing apace. there has not been enough gas left on australia's east coast for local users. the prime minister threatened a few months ago to restrict some of the exports. that has not come to pass. ultimately those producers said, look, we will produce more gas for the domestic market. there is definitely more gas coming in, but not really enough to solve the issues. that is what we are hearing coming up christmas. haidi: is there anything else

the government is actually doing about this? perry: what's happening this week is the competition regular -- regulator has been tasked by the government to provide a set of regular reports every couple of months on the market. using their powers to find out about how gas contracts are being offered in the market, at what sort of prices. that is traditionally not very transparent. i think what they are finding is prices are coming down, but perhaps not quickly enough. haidi: what has been the impact on businesses? perry: we spoken to some businesses for the story, and saying it isy are typical, they cannot buy gas for more than one or two years, they traditionally like to buy five-year contracts. it's not giving them what they need to push ahead with their business. you are hearing that a lot on the east coast.

and, look,re saieh you need to be patient and in 2018 that will be even more. haidi: difficult to do, i guess. perry, thank you so much for that. asian energy reporter perry williams for us. that is it for "daybreak: australia," but coming up is "daybreak: asia." yvonne: we have a chief economist coming up to talk with us. there is a probability the fed will raise rates, it is pretty much a done deal, but we have the ecb, thanks -- bank indonesia, philippines, a lot of data, the boj. plenty to digest in the coming days.

and we will talk about all of that with an economics profession -- professor. he had a labor report on friday, talking about further slack in the labor market, when you look at the lack of waitrose in the u.s.. we will dive deeper into the jobs market. plus, brexit. cannot wait to hear what he has to say on all of those topics. haidi: he is always very colorful and insightful. inflationng about the numbers out of china, the moderation is continuing, not just consumer prices, which we have seen in the past few months, but ppi also started to come off. we will be speaking to the hong kong chief asian economist about what this means for china's policymaking. it gives a little bit more of a buffer, to not titans -- to not

tighten financial regulations to quickly. they are battling an ever-growing mountain of debt. that is about it for "daybreak: australia," all of the action is up next.

♪ we are live from bloomberg's asian headquarters, i am yvonne mann, welcome to "daybreak: asia." markets look set for a strong start to the week. strong flows also on wall street, and inflation in china gives policymakers another reason to maintain a tough line as they try to deal with that. i am betty liu in new york, it is just after 6:00 p.m. on sunday evening. president trump turning to taxes this week, were told he will make the final argument for cut this year. and bitcoin faces the future.