A 30 discount. Yousef it is 8 00 a. M. Across the emirates. I am yousef gamal eldin in dubai. Here markets in hong kong have gone into the lunch break. Have a look at the broader picture across the asiapacific. This gives you a simple look at how asia is doing. More red than green. India has just opened up. Southeast asia feeling more of the pan. Malaysia and singapore leading declines. There is not a lot of conviction to the upside here. Yousef some other assets showing downside pressure. Brent crude extended declines. U. S. Crude inventories probably shrank for a second week according to a bloomberg survey. Gold, flirting heavily with 1300 an ounce. U. S. Tenure paper, choppy trade, the curve steepening and dollarlira there. U. S. Equity futures showing a decline. We have been in the sideways grind for some time. Lets check in on the first word headlines. Japan has raised its alert level after getting indications north korea may be planning a new missile tests. Kyoto news has said radio signals have been intercepted that suggest preparations for a possible launch. Satellite images showed nothing abnormal. There had been concern the north would fire a missile during president trumps recent trip, but nothing happened. Jerome powell expects the raisingbank to continue the Interest Rate. In the text of remarks he will protect he pledged to Financial Stability, while refining post crisis regulatory reform. Indicating hep intends to take a prominent role in the tax reform debate. Senate republicans are hoping for a vote on the legislation this week. Lawmakers have not have anything committed to supporting phil. To supporting the bill. The gates has praised of a leadingrk saudi prince. He says i am only aware of what i have read in the press and cannot speculate. Has been an important part of my work. His commitment to philanthropy is inspiring. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. David a big week for investors. Trump is scheduled to address Senate Republicans ahead of that potential vote on tax reform. Janet yellen also testifying before the Congressional Joint Economic Committee in washington. Also do is the confirmation hearing of Jerome Powell. Among all those things, lets try to flesh out what is important and get a sense of risks investors need to be paying attention to. U. S. , the fed,he and the potential for tax reform. What do you think is more important. Tax reform is more important on a monthtomonth basis. There is a lot of focus on the Federal Reserve and the likelihood they will hike in december. That is pretty much baked in the cake. Potentially much more longlasting impact on u. S. Yields. Gets that long and much higher. Ive seen you raise the probability of the passage of. Ax reform what has changed for you . Were pricing in a 25 percent chance this year and have increased at the 40 recently because weve seen strong momentum in congress in terms of trying to get this year in. Particularly in the context of an alabama election which could impact our congress looks. Is given our base case is given the hurdles Congress Faces in trying to get a unified bill that both sides agree to in a relatively short best case is we will have u. S. Tax reform early next year and something markets are not pricing in. Yousef we put this up on a chart, 2153. Trumpws the move after tweeted his optimism that tax up. 1 in going well, terms of u. S. Dollar strength. The conversation around the Federal Reserve, Jerome Powell taking over, what is this going to do for the world postdecember in terms of rate hikes . The emphasis from jerome recent comments seems to be policy continuity. We would disagree with the idea that powell is automatically a dove. If you look at his voting record, he did not want to vote against the chair. He always voted with the consensus in with the chair in both cases. We dont know whether he is a hawk or dove, but from his the emphasis is policy continuity and gradual normalization of policy settings , gradual reduction in the Balance Sheets, and a watchful eye on growth and inflation. Yousef Morgan Stanley is warning investors that i completely flat yield curve is just around the corner. They are making it clear that the spreads between fiveyear and 30 year will continue to narrow. Do you agree with that outlook . And what will it mean in terms of rates . The normal message in terms being flat0s is the u. S. Economy will slow and with an inverted yield curve a recession at some stage. Beenield curve has significantly distorted by the legacy of quantitative easing. Also we are seeing a lot of tension Fund Activity at the long end ahead of u. S. Tax reform in terms of buying longer there are a, so number of distortions in that yield curve which suggests the normal message is not necessarily the correct one. From there is a question one of our viewers. If tax cuts are passed, what are the prospects we see bilateral tax adjustments plug the cap . I gap . From both bills we have seen so far, and those could change, but it seems likely this will be deficit finance, so it will increase the deficit and the debt burden. As such, that is something the u. S. Treasury market is likely to respond to buy pushing up yields. David they do still have to agree and perform the single uniform bill. With us and we will continue our conversation in a few minutes. If you have more questions, send. Through tv this this is for bloomberg subscribers only. Check it out at tv. Check it out at tv. Yousef this is Bloomberg Markets middle east. I am yousef gamal eldin in dubai. David our guest is still with us. The bond story in china gaining traction. Given wherely so yields have climbed two. Chances are this moves higher. Do i stay worry free outside china . Short answer is anything that happens in the second biggest economy in the world is going to have spill over affects. We would have to take aways. There was a huge easing of monetary conditions that is starting to reverse and will have a real Economic Impact next year. In the 19th Party Congress there was a focus on the quality of is theare expectation Chinese Government will tolerate a lower level of growth focusing on quality rather than pure numeric targets. Less good news for those used to the old model of digging things out of the ground. Affectthe followthrough is perhaps we get more corporate defaults. That being said, do you think china will allow enough defaults without being disruptive . , butwant to do something you do expect beijing to step in if it becomes a little messy. It could get messy. In china we have managed markets. Au will not be allowed to see huge wave of defaults. It will be very selective and specific and the will be greater pricing of market risks and companies will have to incorporate that. Fromll not see a big bang one day to the next in terms of a wave of defaults. Yousef you are quite anxious about this escalating in the months to calm, arent you . Thats right. Just because the north korea situation has been quiet, it does not mean it has gone away. Is north korea will test fire another missile ahead of the Winter Olympics to show its icbm capability. Wonou look at the korean market, its as if it has been resolved. That is not our view. Ideal what would an Investment Strategy look like around this key themes you talked about . Year has been a positive here for emerging markets and asia specifically. Next year will be more challenging. Countryspecific, sectorspecific focus next year, focusing on how far rather than long beta. You will have china slowing down, u. S. Tax reform, more intermarket volatility. News for active management rather than passive management. Be focusing on individual stories rather than buying the market for most of the year. Inid it is hard to imagine an etf you get 30 again next year. I have to bring up bitcoin. Up, if it keeps going guess, but theoretically if this comes crashing down, is there a hint or slightest hint of theemic risk baked into cryptocurrency were of that spills over into other Asset Classes . Hard to tell. If it goes from 9,700 to one dollar, those losses, there is no safety net. Bitcoinand the con of or fellow travelers is that it is relatively opaque, but there is seemingly no safety net. This is happening because people have concerns about fiat currencies and centralbank policies, but the idea you are going into an investment which is going up exponentially every day seemingly could well come down. When it doesnt has a major correction, there will be no one there to save you. Yousef the struggle here appears to be that there is no accepted or mainstream way to quantify a proper valuation. The traditional metrics might not apply here. Upside toe is more this story than a lot of people give it credit for. Who knows how far this could go. Comparing it to the two look crisis 200 years ago seems to be a bit out of place. Ulip crisis 200 years ago seems to be a bit out of place. Many investors have concerns with the existing financial system. Where investors should be are two areas. There seems to be no safety net in terms of the potential for downside. , win or if authorities get concerned about the threat in my post to the financial system, they will crack down on it. When that happens, there will be no safety net. David moving into 2018, is there something we should be talking about that has not garnered enough attention in your of you. In your view. Tax reform, china slowing down, the italian willion come all of these cause more volatility across markets family have seen so far this year. David germany, should i worry about it . You shouldnt. There seems to be a likelihood of a coalition and an economy doing pretty well. David thank you very much. Coming up, softbank looking for a cyber monday discount on uber shares. Find out why they are driving a hard bargain next. This is for bloomberg subscribers only. Check it out at tv. David lets get a check of the business flash headlines. Toray falsifying data at a unit that makes car tires. It makes carbon fiber for boeing. The company is not affected by the fake data. Fiat chrysler denying a report that it it manipulated diesel test. Its of the vehicles comply with the law. It appears in a report from a fraud office, but the carmaker has not been charged with any offense by french authorities. China, eight 2 billion company to dominate the sector. It is remarkable uturn for companies a month ago accused each other of underhanded tactics. And will now seek funding expansion in an industry said to be worth 750 billion in china alone. The other top story, softbank may offer to buy uber shares at a lower price than expected. 30 ces say it could be a discount from the most recent valuation. Peter l stremme has the latest from tokyo. Peter else from uber has had a challenging year and softbank with other investors who are putting in money see an opportunity to get in at a price much lower than the last round of fund raising. Investors arether tender for existing investors and beginning 30 below the previous price. They have said they want to get a substantial stake in the company, at least 14 . Theyre supposed to get to board seats also. They need to see whether investors will take a substantial discount. Successful,ey are what do they plan to do with it . It is a good question. Softbank is run by Masayoshi Son and has its roots in telecommunications and runs a wireless business in japan and the u. S. , but has been investing aggressively and startups. To invest 100 billion in startups and has put money into Ride Hailing Companies around the world. There are opportunities for these Ride Hailing Companies if this deal goes through with uber , opportunities for them to elaborate through softbank. You may see some combinations between the businesses and certain places. They are aggressively recruiting drivers. They may be able to play matchmaker in some of those cases. Yousef thank you for coming on the program. Lets get a recap of the middle east markets. A lot of markets trading sideways. What response are we going to get from Foreign Investors to the events over the weekend . We did see negative reaction on monday. Sunday. Monday did not bring the selloff that was expected from investors thinking the government can contain the security situation in the sinai. Region, somehe e ji downside and barely above the flatline for saudi. Staples and industrials featured on the upside with pressure on energy and consumer discretionary. Lets get a preview of what is to con. Goldman sachs warning of a slide in oil prices. We have more on that very important start next. This is for bloomberg subscribers only. Check it out at tv. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Yousef 8 30 a. M. In dubai. The bloomberg dollar index is flat. Aboutts from shinzo abe the target of 2 being appropriate when it comes to inflation for now. No need tos there is revise the joint statement made with the boj. Specific policy measures should be decided by the boj. The yen has been in focus for the last several hours. Lets get to debra mao for first word headlines. Expects thee powell central bank to continue raising its benchmark Interest Rate and trim its Balance Sheet under his leadership. In the text of remarks he will deliver to the Senate Banking committee, Jerome Powell also acknowledged to protect Financial Stability as the banking regulator while refining postcrisis regulatory reform. President trump intends to take a more prominent role in the tax reform debate. Senate republicans are hoping for a vote on legislation this week. Several gop lawmakers have not publicly committed to the bill. Passes, partytion leaders will try to reconcile differences in their two bills. Authorities have been warning that the volcano is about to explode with 100,000 order to evacuate. Thousands of tourists are stranded with the airport closed until wednesday morning. Indonesia raised its threat warning to the highest level. Travel and tourism account for 10 of gdp with a bali as the most popular destination. Ireland is facing a growing political crisis that could bring down the prime minister. Y faces a noconfidence vote over the handling of a police whistleblower. More about thewn plans to discredit the source than it appeared earlier. The controversy could mean a snap election. Turkey remains on course to avoid inclusion on the European Union list of tax havens after addressing issues brought up by the block. Eu experts have concluded that turkey does not meet the definition of a harmful tax regime. The blacklist is still subject to revisions and updates before the eu finance ministers approve it on december 5. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. David thank you for that update. Two days into the trading week, two days of losses. Ession lows lets get over to juliet than singapore. Please seem to have taken a cue from the s p 500. Another day of jitters. Staples,s and consumer utilities, and flat on health care. Dragging on the overall benchmark index after that warning from Morgan Stanley yesterday although we have seen a turnaround in samsung which would be expected after that you selloff in korea yesterday. The energy space under pressure, down. 9 as we see crude fall for a second consecutive session ahead of that opec meeting later this week. If we look at individual markets , new zealand and the philippines coming under pressure, but once again hong kong on the lunch break, down. 9 . Tencent amongst the worst performers. There had been concerned ares that china could limit investor flows. We are seeing largecap stocks in china being sold off again, a selloff that started thursday, a recovery on friday, then a big selloff yesterday. We were speaking to bnp paribas on bloomberg radio. They were saying the fundamental aspects of China Remains intact. This is profittaking from big names. They have been strong performers over the coast of the year. In terms of foot else has been a strong performer, we cant get away from the bitcoin story. Bitcoin could narrow in on 10,000. This chart shows a big verizon bitcoin which has risen by as much of 17 during mondays session and up again in the Asian Session today. Have a look at the blue line, which is gold. It has been rising this year, but nowhere near what you have seen in the bitcoin price. Ayving a look at tor industries, the latest with a data rigging scandal. Yousef lets get back to one of our other top stories, crude oil, the Energy Complex trading lower. Just above 63. The markets have been calm in terms of volatility. The consensus trade is towards a ninemonth extension of the supply cuts between opec and nonopec. Hit is not clear whether russia is fully 100 he hide a ninemonth extension. Also, how the geopolitics could play out in the negotiating room. Tension ine ongoing standoff between iran and saudi arabia. That could make it more difficult to get that kind of agreement that saudi arabia is striving for, pushing for an extension. As toget more perspective how these meetings later this week could unfold. I guess joins us now. Welcome to the program. Lets dive right into your expectations for this meeting. Will we get nine months . It could be geopolitics more than an extension of the good mood we saw last year. I expect it may be less than nine months. Seen canure we have extend. Yousef youre seeing disappointment from these meetings . There if wenside is get six months for example . The market is in a goldilocks area on the oil side. If you want to make a list of all the risks from external factors, it is unlikely we see a Common Ground in this opec meeting. It would be interesting to observe how the negotiations go ahead when the meeting starts next week. Your note