Keeptened to derail a you i u. K. Deal with the eu. Anna good morning. This is bloomberg daybreak europe. We have been tracking the tax story. Manus had a bear in what we saw in u. S. Equity markets. What we are seeing an Asian Session is where we are headed in the trading day. Heain and the key role plays. The dow over 24,000. You the equity story from yesterday. We are expected to go a little lower. Keep an eye on what is happening in asia. Thetax story also affecting dollar. The broader story for the week is different. Keep an eye on treasuries. We saw treasuries holding their side. We have the oil price up around a third of 1 . Expected, i suppose you touched on those equity markets. How broad is your rally . Futures are at the bottom of your screen. How broad is the stock market rally . Heve put together the breadt indicator. This is where we are on the s p 500. H ismeasure of breadt expanding and a is usually a sign of good health. The realized correlation, that is an indication of breadth. Saysof americas survey that their respondents say equities are overvalued. Anna coming up on the program, we will be joined by the lloyds ceo. Joins us at 7 00 a. M. U. K. Time. The white house is weighing a plan to replace wrecks tillerson with mike pompeo. Frustration with the top diplomats slow pace. A spokeswoman declined to say if trump had confidence in tillerson. The extension was beefed up with the inclusion of nigeria and libya. By keeping the 1. 8 million and returnay stockpiles to their fiveyear average. Although this is a scheduled event, we agreed to hold another meeting which will give us another chance to get together in a large group of countries and assess the market situation, and also give us an opportunity to assess what else needs to be done based on Market Conditions. The u. K. , the breakthrough in brexit talks that negotiators have been working to clinch next week is at risk. Is eight, question quote, big stumbling block. Northern irelands democratic allow primey minister theresa may to govern, and threatened to withdraw their support for her government if she fails to back their position. Lloyd blankfeins comments come after a roller coaster week for the cryptocurrency. Moves up andthat not feel safe. If it gets worked out and more established and trades at a store of value, and does not move up and down 20 , and it is liquidity in it, we will get to it. Global news powered by 2700 journalists and analysts in more than 120 countries. You can find more stories on bloomberg at top. Up here in thegs asiapacific, lets get a sense of how we are doing in the equity markets. It is a fairly forgetful week. It is the first week where we have seen declines on the benchmark. If things stay the way they are into friday, the magnitude of the drop is not so much. That being said, we are coming off what was another monthly gain, ill 11 straight for the asian pacific. China pmi is steady as she goes. Growth, have a look at south korea also came out today, it did justify the be oks rate hike. S rate hike. Of forces at work. It was up 23 until a week and a half ago. Komatsu getting an upgrade. Closing higher in sydney. That is the state of markets in asia pacific this friday. Manus thank you. The u. S. Senate has suspended votes on its tax bill after the collapse on a key compromise to win a majority. Republicans are scrambling to salvage the legislation. Mcconnell said voting would resume at 11 00 a. M. In washington. Schneider has been tracking this bill and all of its nuances. What needs to happen to get Republican Leaders to get the bill over the finishing line in the senate . Five people seem to be holding back. Thats right. They need 50 votes. They need them all to come from republicans because note democrats will vote for this bill. They got senator john mccain on board. They lost some ground when a deal that they hope would bring on people concerned about the deficit fell apart when a senate rulemaking body decided they could not go that route. They could not do the trigger, which would allow tax cuts to be rescinded. They could not go that way. Now, a trio of senators including senator jeff flake who is retiring who are concerned about the deficit say they are not sure they are going to vote for this. A have to bring them on board. Hasn collins of maine problems with the repeal of the individual mandate in obamacare. They have to figure out how to windows votes to get it over the finish line. A few votesy lose because there are only 52 republicans. There are different views as you highlight. Future for the secretary of state Rex Tillerson . Is President Trump likely to replace him . Many people are talking about the pellet about the possibility of a shakeup. Jodi several officials that bloomberg spoke to say the cia director mike pompeo is being considered for mr. Tillersons seat. Been cleared tension between President Trump and the secretary of state tillerson, a lot of it around north korea. Thepresident undercut secretary of states remarks on several occasions. In recent weeks that tension has grown even more. The white house is not saying they will replace him. The secretary of not saying anything. Ise and more, there discussion that he will be replaced, and perhaps by mr. Pompeo. Anna thank you, jodi schneider. Along, anticipate there will be some bill that got past. Again, it wasnt the driver of my argument for why it makes sense for Interest Rates to move up gradually. It was based on where the economy is. We will wait and see what gets past. We will evaluate that package as it gets past. Now, kitining us juckes, chief fx strategist, societe generale. The Sticking Point seems to be deficits. These are the deficits going back under obama, bush, clinton, and h w bush. Numbers do not equate to the deficit size. What does that mean for markets . Have we absorbed that risk yet . Markets are more worried that you are not going to get significant fiscal easing through the u. S. Administration to get it passed. Deficit, and so it is going to get watered down. And we are left in this slow growth world. Anna this is what the market is watching, whether we get the fiscal boost or not. Theyre talking about the strength of the u. S. Economy. How strong is the market . How strong could it be if we get this tax rate . You said this will move the dial on the u. S. Economy. Kit i just listen to the people who say this might boost the deficit. If you are not quite to boost the deficit with your tax plan, you are not going to add that much in terms of demand in the economy. It will tragic along a little bit. That is what we are used to. Up. Fed is moving rates we will see what happens when they get the 2 . Keeps on goinget on its weight. On its way. Not a lot is changing from the tax discussion. Agobond deals were a year when we were super excited about what trumps fiscal plans were. I am very pessimistic about europe. Not a lot has changed. Changed,t a lot has but you talk about bonds. The bond market did move aggressively yesterday. Iette up anna up to 2. 4 . Kit im excited about that. Should we be . There is a line coming through that the u. S. Needs to have a tax code where the wealthy lift others up. That is from the former president , mr. Obama. Moving to the upper. Nd of a range the upper end of that range has come down quite a lot. Said i am struggling, it correlates with that yields so closely. The idea that we can get to three deals like a pipe dream. I do not think we will get a tax plan that does that. Where do we had on the dollar . It has not joined in with the euphoria around what President Trump might deliver in the u. S. Tax lan. Tax plan. Moree seeing outperformance by tips. Do we think inflation is coming back and the United States . Weve taken tips yield above 50 basis points. Six times maybe now in the last year. Day, even at the the real yield week we will be under one. That is very low. Youre not going to get a super strong dollar out of a sub 1 yield peak. That underlines it. Ifthe moment, we are seeing this tax bill gets through. The fed is going to hike. But seek how far we go lets see how far we go. Anna thank you very much. Kit juckes. Woody johnson, the u. S. Ambassador to u. K. Joins us for at 10 30ive interview a. M. U. K. Time. Manus can we move, can we drain the global glut . Brexit breakthrough at risk with the irish borders, still a main Sticking Point. We discuss the impact this is having on the divorce deal. This is bloomberg. Manus it is 2 20 in the afternoon in singapore. Stocks are ashamed lower. We are waiting for the compromise on the tax deal in the u. S. Asia has its biggest decline in almost a year. Anna lets go to vienna. Opec and its partners have agreed to extend oil cuts to the end of 2018. A day of talks show the strength of the Unprecedented Alliance between saudi arabia and russia. Analysts said moscow was reluctant to keep going. 2018 will matter what we have done. We have seen an increase of Global Compliance from opec and opec countries. October are very encouraging, and we expect november to reflect this as well. Ours for more lets get to Bloomberg Markets middle east anchor. Good to see you this morning. Did we get a little bit of a surprise . Youve got libya joining in. I thought that was a surprise. You have libya and nigeria. Give us the lowdown. Yousef what is fascinating to see, these two heavyweights, russia and saudi arabia sidebyside sharing what they thought is a competent outlook for energy in 2018. Some have described it as a bromance. At the end of a very long day here in the ni, a little surprise. Got in terms of inclusion of libya and nigeria, what happens now is not a formal cut or cap. It is locking in a pledge to not use beyond 2017 levels, which shows you how opec nonopec is willing to refine this deal a little bit and push these expectations to the side. The russian minister talks to me earlier. Pledginguntries are for full conformity. It is very important to us. Andives us an opportunity assess the progress toward rebalancing and take actions which are needed to achieve this. Nigerialibya and combined at 2. 8 Million Barrels per day. There was concern that could strengthened 2018 and try to revive their respective industries. As with many things in the oil industry, this may depend in what happens in the United States. This could be an easy win for opec. Yousef absolutely. There was an expectation that we could get communication on what unwinding would look like as a strategy. They did not feel this is the right time to do it. Lets see how the broader strategy works in 2018, and we can talk about unwinding the agreement. Clearer timeline to make the necessary decisions. They are shrugging off the shale threat for 2018. He says it will be the same as 2017. Manus thank you very much. Yousef gamal eldin. It is almost as if the russians and opec members got what they wanted. Deal hands the shale producers on a plate the opportunity to lock in at 60, 62. Was it really that good of a deal . Dealit might be the best you could do. The reality is, the Global Economy is doing as well as it can. It is improving on a global basis. The reality of it Technological Improvement of shale means that you do not squeeze them out of this price or a price below this. Everybody has got to make do. There is plenty of supply of available if prices fall even marginally. Rangeg prices in our might be all the big producers can aspire to do at this time. And make such hey as there is while the Global Economy is this strong. Does this throw up opportunities in your fx universe . Kit not many because most people perceive this as temporary. There is not massive upside or downside. I think the Canadian Dollar is a bit cheap. Anna thank you very much. Kit juckes, chief fx strategist, societe generale. He is staying with us. I deadline is looming. Can the u. K. In the eu reach a deal on ireland. That is next. This is bloomberg. Anna this is bloomberg daybreak europe. The asia equity session is in limbo. The conversation on the senate floor is being pushed into friday. That is causing many markets to pause. We are flat on the fx story in tokyo. Lets get an update on what is happening in the markets. Markets are equity pretty much trading sideways. It is a mixed picture if you look across the region. Here is the picture on the world map. Closing. I australia rebounding after the losses yesterday. A mixed picture overall. 24,000. Hit the s p 500 on track for its longest run of monthly gains since 2007. At the dollar, a bit of weakness coming through. We had afford a winning streak. Weeklyn track for its gain. If we look at the next chart, we are looking at the 10 year treasury yield. Of 2. 43 in high yesterdays session. We are at 2. 4 right now. At a key level for the 10 year yield. The curve flattening in todays session. Sterling, has been gaining this week on optimism we will see progress in the brexit talks. White, to week is in yellow. You can see where the zero line is. It has been getting less bearish. Manus thank you. That potential breakthrough on brexit is at risk. The issue, the irish border. It is still a major Sticking Point. The u. K. Has been given to monday to present a solution which avoids a hard border. U. K. Wants an agreement before talks move on to trade. Is kit juckes, chief fx strategist, societe generale. Just when we thought we were going to make a breakthrough, there seems a tractable issue which is the irish border. You think they will get a deal done by next week . Is this the horse trading of politics . Kit i would be surprised if you got an allencompassing solution for a tractable problem by this time next week. If ever i can needed kicking down the road, we will sort out an agreement. We cannot reach a final agreement if we do not know what the arrangements are between the u. K. And the eu after brexit, but we will agree to find a solution. It will be a better way of moving forward. We wont get it. They are trying to kraft wording that is acceptable for both sides, some wording that makes enough progress for the irish but does not destabilize the u. K. Government. Is crunch time for u. K. Assets . Im seeing conflicting reports on how much the deadline on monday matters. Mondaye is no solution for the irish border, do we see a lot of canceling . Kit our starting position is to be gloomy, and pessimistic about what happens. The thought we might get a deal and move on to trade talks was positive. We are back to where we were, which is despondent. We will see sterling fall back. Reacting more to good than bad news, just because the plan is very low and cheap. The consensus is very pessimistic. Stanley put out a note about a potential labor administration. The risks of the labor government rises. Sayingstanley was dispute which you have had that favors capital and not labor, and Jeremy Corbyn says, you need to think about tax rates going up, nationalization which favors capital over labor the past 20 years. Jeremy corbyn says you should be worried if we are potentially coming to power. How much discussion is there in the trading rooms . Kit the discussion about the election risk, i would have to circles foround in a number of reasons. The first is, were we to have another election, that is almost , it throws all the balls in the air. Basiss are priced on the that the u. K. Will leave the eu, and it will do it in a messy and without a good plan for the future. A lot of has some is him around. An election can change that. That would be good for sterling even if it was not good for other assets. The dup could throw the government into turmoil, but with the dup do something that might bring Jeremy Corbyn power deliberately . Big is a stamp on your own toe. ,ost people end up thinking this is going to be messy and difficult. As soon as we talk about the irish border, we realize that , theg to please the dup irish, and the British Government is hard enough to get in the way of what needs to be done, which is to not go back and opened a can of worms that was closed with the good friday accord. Toa there is a lot of work be done to sort this out. Chart, it emphasizes how the markets are expecting volatility around the middle of december with the eu summit, the bank of england meeting. See a labor government looking more likely, what volatility that beat creating . You talking about the party that is talking about renationalizing utilities. That would be looked at with new eyes by the investment immunity if we did see it looking more likely that we end up with the Jeremy Corbyn government. Kit if someone mentioned the words, another referendum, or a brexit deal that tried to stay in the Single Market as much as possible, you trade sterling 10 higher. If someone said Jeremy Corbyn a hard brexit, policy economic kit if we go into an election i think all we get is volatility. What has happened over the past it is very weak and does not get up very much, and we get excited about moves. It does not take much to knock it back. Step forward to steps back. If we talk about europe in a broader context, we know what is going on here. If we look at the data from youve got this as it which is thatnce nice growth rates, nice unemployment, we are still not getting inflation on the upside. Iceland has had wage growth that 8. 5 . It takes a lot of wage inflation. The european story is, there is no reason not to let the economy run when inflation is this low. There is a debate in the European Central bank, do we have to get rid of negative rates. You have a similar debate in japan. Why would we normalize when inflation is way below target. Anna doesnt politically get difficult to justify extending into the future. We saw at the last ecb meeting, extending into the future. Now we have rhetoric from the usual corners, germany being one of them, about whether that qe program should continue. Is herdingdraghi everyone of his cats here. They extended because they were taken aback by how much the theyre trying not to let the currency run ahead of itself as they talk about normalizing. A few months of currency going sideways. Now,are in a better place but equally the commitment to ,eep on going at this pace until september of next year, seems a solid commitment. Were debating, do you have a hard stop, when you see