Battle lines we talked to gina miller and helena mors morrissey. In less than a half hour we are less than a halfhour away from the start of trading. Lets take a look at how the equity Index Futures are trading, down across the board. We see on the continent bigger losses than in the u. K. , but the ftse futures are down 0. 2 . Almost double that in frankfurt, and the cap is down by 0. 3 . Bulook at treasuries and nds, but today i have bitcoin in my terminal. Thes edging ever closer to 10,000 mark. Let me put the onemonth chart in here because it has been a bit of a rocky ride. We had that but almost an immediate recovery, and climbing ever higher. Guy lets take a look at the gmm and find out what we are looking at in asia and europe. Lets see with the asian section has look like. Background. Ing that is interesting. To see be interesting how that feeds into the european start this morning. Two major markets dominating in technology. How will the Technology Sector react to what is happening . A bit of a selloff coming through. The korean won is trading down as well. The chinese currency also just giving back a little bit of grounds, but it is a huge week for u. S. Politics. It is opec week as well. Take a look at what is happening with the oil trades. So much surrounding cryptocurrencies. Lets get a bloomberg first word news update. Here is juliette saly. In the u. S. , republican lawmakers are scrambling to lock up the votes to finalize a tax bill that can make it to Donald Trumps desk by the end of the year. A new analysis by the Congressional Budget Office released yesterday estimated the extent the bill would it greece would increase the deficit over a decade. Hadthe cbo says it has not time to fully analyze the likely impact on variables such as Economic Growth or unemployment. Must u. S. Federal judge now decide which of the two People Holding competing claims to temporarily run the Consumer Bureau hasrotections the authority to guide its oversight of American Financial institutions. Land in greatest land a eandra english asked a judge to name her the director. Theresa may has a week to find a compromise on conflicting brexit demands from the north and south of ireland. The irish Prime Minister once assurances that brexit will not mean a return to checkpoints and towers along what will become the eus new land frontier with the u. K. Meanwhile, the Unionist Party rejects the eus proposed solution and says the future of the border can only be settled in tandem with a final trade deal. In china, confidence among the countrys Sales Managers waned in november, matching the mood among them in at international investors. Sentiment among Small Businesses improved. The countrys leaders underlined a shift to more sustainable Economic Growth and pushed through reforms to cut pollution and curb financial risk, the worlds secondlargest economy is on i longterm slowdown, even though out push in 2017 has exceeded expectation. Score hascas debt been cut to junk by s p global ratings. Service alsotor threatened to slash the rankings to the same level, risking a selloff. Moodys opted to keep the their lowest grade, both of them on review for the of possible downgrade. Iraq has set up plans to return to the global bond markets next year to raise 2 billion. The Central Bank Governor made the comments in an exclusive interview with bloomberg. There is the 2018 budget, 2. 2 2 billion . 2 billion. Juliette global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thanks very much indeed. Just mentioning what happened in south africa on friday. We are beginning to see a reaction in south africa. Lets get more on the downgrade. Have a credit analyst from s p and he joins us on the phone. Thank you for your time. Why didnt you wait for the conference coming up . I didnt you wait for the budget before making this decision . Watching theen fiscal and the growth story and south africa really deteriorate for quite a while, and having looked at the latest numbers, it was clear it was hard for them to turn the fiscal ship around. What we have seen was very weak gdp growth, which has further deteriorated south africas public finances. We could wait for the conference and the budget, but our idea it is that it would be hard for it to turn around and we are you fiscal trajectory right now. Guy S South Africa decided to do what you would like it to do, if south africa decided to do what you would like it to do, they start to put the pieces in place, how long would it take south africa to get it on the right trajectory. You say we are on a different paradigm. How long would it take to get back in a better paradigm . Ravi at the heart of the problem is the growth story. We have seen per capita, gdp go down actually on a per head basis over the last few years. It is a case of them pushing through reforms that would turn around the growth story. Then we could see the dynamic story change because of that. But for a few years now, we have not seen that. Growth has been very weak. Weaker than our expectations at times. The question is whether they will be able to do this turnaround on the growth story. Ravi, matt miller here in berlin. Do you see the National Treasury still have institutional strength percent africa, or has the removal of the management changed there . Ravi fundamentally, i think the treasury is still very good broadly at controlling the expenditure line and controlling expenditures. The we have seen actually, recent problems have been on the revenue side, where because of the poor growth, the revenue has not been up to expectations. They are still good at controlling the expenditure line. Iswill have to see if there any turn away from that. The issue around how much they are going to support the contingent liabilities is Something Else we will look at. But so far, they are still pretty good on the expenditure line. S p, when you consider a downgrade, do you also think about the effects that downgrade will have on the currency, the bonds . A selffulfilling prophecy thing. If moodys follows, a lot of investors will have to exit. Fundamentally, we look at the fundamental analysis and we have a criteria and we work with that. Trade and fiscal growth trajectory having changed, and that informs our decision. Yes, we also look and consider what might happen in the markets. Fundamentally, we look at the growth story and the fiscal and the criteria that informs our rating. Guy i will just pick up on that point. We have a chart of the bloomberg this morning talking about how random volatility remains elevated. Volatilityow rand remains elevated. What is your expected outcome there . Ravi the core story is the growth story and the fiscal. On the external, things have not really been that bad. We are concerned about it as well, but the current account deficits have fallen recently. There is a concern around a big turnaround and financing issues around their external accounts. Something else we watch, but fundamentally, it is being driven by this very poor growth and the impact on the fiscal. Guy what you are saying is you what this is a reaction to you are talking about rather than the action you have taken. If south africa were to be excluded, and maybe there is another ratings decision to come that could affect this, but if we were to see south africa be excluded from some of the key funds as a result of the decisions you are making, how does that factor back into your thinking . You could see capital flights as a result of that. Ravi yes, we could. Probably, as i said on the external accounts, because of the narrowing of the accounts, the situation may not be as bad as expected a few years ago. But it is something we will watch. The growth story turns around, then the whole story could turn around. Quickly, what are the other state owned companies you consider to be a problem . Vi one of the largest is as scom. Around the south african post office, but fundamentally the biggest is scom. The biggest concerns are around them. That poses the biggest contingent liability to the government. Bhatia talking with us about the south african rating. Now lets talk about bitcoin. It has shown no signs of slowing its meteoric rise. The cryptocurrency is now more than 800 this year as it gains greater mainstream attention. The asset may be lended further legitimacy. How much further can bitcoins run continue . Lets bring in mark cudmore from singapore. Let me ask you about that legitimacy with the futures contract. Could it lend a little more stability to bitcoin . Mark i think it should have a little more stability. That will help ease the volatility. Someone gave me the other angle today, saying it could be more volatile because people are buying bitcoin to buy and hold. They are not buying it for any trading purposes, they just want to live the stream. When you have the futures, many people might be on there because they will trade it both ways, and that could increase of volatility. I dont necessarily buy that argument. Happens if wet get a decent sized correction here . Are people buying this on margin . What is the market set up around this that could have an effect on other Asset Classes . I have a margin call on this, i need to sell it and get out of that . Mark we have been trying to work this out. I think ultimately, the spillover of fact is not too is not spillover effect too large. It seemed like the whole point of bitcoin is there are many believers who have a small share and want to buy more. They would get wiped out and but it is and burned, unlikely you will see other assets have cataclysmic moves as a result. As a fan oree enthusiast of bitcoin, i would notice, and i dont see anyone taking an exchange for goods on the street. Ech . What about synt how much of this undermines the strength of bitcoin . Mark the reason i think bitcoin shorttermher in the is it hasnt properly seeped into the mainstream yet. It has been on the fringes. Shorttermthis year is where is into the mainstream. Orple are starting to use it more everyday purposes, more established investors are starting to look into it, look to invest. That provides a bit of underpinning. Icos, veryused for popular. I am suspicious of some of the business plans. There is a lot more followers who want to set up investments. Matt mark, thanks very much. Cudmore, bloomberg strategist. There is more going on in markets today other than bitcoin , but we thought because it is priming so high and it was said it would go to 10,000 this year, he may be correct. You can follow more insights on the bloomberg at mliv. A group has outlined a list of merkel,for angela according to suddeutsche zeitung. This includes higher payments to retirees. Merkel and the spd are planned to meet in a summit organized by the president of germany. Thet right now, we have cross asset strategist at Morgan Stanley with us to talk about a number of things, but this first. One of the most interesting stories for europe, especially because the spd would also underpin resident macrons immigration strategy. What do you think about signs that we are moving toward a grand coalition . Somewhat think it is encouraging, and it is coming on the backdrop of very strong growth in europe that we think continues into 2018. The fact that the discussion here is around potentially more more stimulus, which is going to be met with what is already very easy Monetary Policy is pretty encouraging for the growth outlook. I dont think germany is going to be the main driver of change in the european story next year, but i think it presents and backs up a strong outlook for europe. That is our view at Morgan Stanley, and it is one reason why we have become increasingly constructive on european equities with our 2018 outlook. Matt the german domestic economy has been firing on all cylinders, so to speak. Are you concerned about any hopes in the road up about any bumps in the the road if the spd comes in with higher tax demands . These seem like large things to put into place. Andrew i dont think we do. There are two elements important here. If we look at the eurozone overall, it remains relatively midcycle. Upre is still a lot of pent demand that is not fully recovered from the crisis that will continue, and we can see that in corporate and Household Debt levels. Even if you have some level of political noise, there are strong reciprocal forces on the surface which are powerful. Secondly, when it comes to the discussion around tax, the truth of the matter is there is very little relationship between top marginal tax rates and the level of growth. We have seen that in the u. S. Over the last 50 years and a number of other countries. I do not think changes will change the underlying cyclical story. I am buying europe on a hedge they says. 22 , 28 if i , am a u. S. Investor. If i am a domestic investor, i have made half of that number. We think on an unhedged basis, the euro will perform quite well. I think it will be up a little against the dollar. More against currencies like the canadian or Australian Dollar, the british pound. This is a market that you rightly point out is a currency the year where the currency was very strong. Guy are we underplaying the ecb . You think about the data getting kicked out at the moment. It is strong. Germany is producing strong numbers. There manufacturing is in the low 60s, and it feels sticky there. Andrew that is the fascinating thing about 2018. 2017 was a goldilocks market, and 2018 is about the tension. It is on unsustainable dynamic. Guy the ecb should be theoretically timing it. Andrew what is interesting is the ecb is actually going to have an easier time maintaining that easy policy in relation to growth because of it mandates than the fed or the bank of japan will. We think that helps europe over perform. Sheets come across asset strategist joining us from Morgan Stanley. We are moments away from the european open. Wewill look at stocks will be following, including resignation including the ceo of boris collardi. The open is now minutes away. Matt welcome back to Bloomberg Markets european open. From thenutes away start of live trading. Lets look at the stops you will want to watch. First, it is see bk in frankfurt cbk in is it is frankfurt. There is a possible acquisition according to a swiss newspaper. Bank,s is looking at the including buying pieces of the business if they become available. This adds to media speculation that other companies are interested. The German Government owns bigger than 20 stake commer zbank and wants to get rid of it. The question is how much they are willing to sell for and if anyone is willing to pay up for the whole thing or pieces. Guy lets continue with the bank. Collardi calling it quits. It looks like at this point in time, as if the bank is going to be opening softer. He is going to pictet. Lets show you what the anr looks like. The stock has been on a real tear. Analysts have been matching that on the way up. This could come as a nasty shock to the Analyst Community this morning. There are no sells on julius baer. That tells you about Market Positioning coming into it. Coming up next, the market open. This is bloomberg. Is this a phone . Or a little internet machine . [ phone rings ] it makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And ask how to get a 200 prepaid card when you buy any new samsung device with Xfinity Mobile. A new kind of network designed to save you money. Click, call or visit today. Guy lets take a look at what we need to know and what we need where we are going. Eurodollar flatlining at this point in time. The nikkei traded down into the close and the other thing you have to watch is what is happening with crude. This opecnd short of story, we are going to wait and watch crude catch the back end. Lets take a look at where the futures are this morning in terms of the fair valley calculation. This is what we are learning. We are looking at a negative start in europe, down by a little bit. There are some key stocks to watch out for. European banks are going to be in focus. Baer is going to be the main focus. A negative open is anticipated. Lets see what is coming through in terms of pricing. Here is what we are looking at. London markets beginning to trade softer. What we are looking at is a situation where we are expecting other markets down, as well. The ibex is coming through, underperforming a little bit. It is down around. 3 . The european is open softer, but not by much. I suspect it is in the stocks. A look at theing first trades here and we can see the movers, mov is the screen obviously. The losers at the start of trading, it is arranged by index points. Stocks,at the heavy British American tobacco one of the losers. A defensive stock. He wondered if it is because people are unloading defensive stocks or they are more concerned about the Norwegian Sovereign Wealth Fund that is getting more activists and reducing its stake in Companies LikeBritish American tobacco. Losers, also among the rio tinto, as well. Minors and Oil Producers among the losers here. Couple others to note are fire, sanity, and drugmakers also losers. Winners side of the column, Commerce Bank is also up more than 1 . This is just the start of trading here. Fiat, chrysler are interesting to note as well. Let me switch over here to the monitor and take a look at what is happening on the index level. The ftse is down. 2 . You are seeing the sea of red on your map. The cac is down. 25 . The dax is down. 25 . There is a trend. It is definitely down across the