Starts to fray. We will speak to the governments key Economic Advisor at 8 30 gmt. We are less than 30 minutes away from the start of european cash trading. Futures are up and running. It is likely we will see a positive start, but we are looking at the fair value calculations a little later on. Lets take that and put it into context. Gmm, as ever, good context. The consumerof staple stocks doing well, chi as market up by 1. 56 overnight. London had a good day friday. We see the brexit story there, but nevertheless, it was interesting to see how the pound traded through. The s p, surging on the back of that jobs data. Keep an eye on the aussi dollar story. That is fascinating as we watch economic developments down under, and whether we will get a rate hike or not. Check out this data on gold. I put this up your because of what is happening with bitcoin. Lets look at what is happening across the gmm. Here we go. Gold, up by. 1 . The cftc data shows a huge pickup in shorts on gold. I put that sidebyside with what is happening with bitcoin. Crude, not a lot doing there, but we will continue to keep an eye on what is happening with crude throughout this week. A lot of centralbank meetings coming up this weekend they are likely a big factor in terms of what is happening in all these asset classes. Lets catch up with what you need to know with the bloomberg first word update with juliette saly. [no audio] guy ok, we apologize for that small mechanical outage there, but lets carry on. Bitcoin hit wall street with a bang, just hours after the cboe exchange,tures on the it climbed more than 25 , triggering two Circuit Breakers along the way. At the same time, the stock above dipped. Heading 16,000 as the cryptocurrency gains more credibility. Will be growing pains continue . Ed robinson joins us now. What did we learn last night as the future started trading, about what is going on here . That demand continues to so ar. It is not ebbing at all. As you pointed out, guy, where are the shorts . Guy we were excited that the grownups, the financial executives, would come in. At least not in the first flush of this thing, but i think you will see miners come in and put on short positions. You know, time will tell, of course in the next 48 hours how this will shake out, but the frost is overwhelming. Guy how many people actually as you said, we have not seen the miners come in yet. Is the initial indication a useful indication . Ed initially, it is hard to draw any conclusion from what we see now. It is too soon and the only theme coming out is there is as much euphoria about the contract as last week. Guy is that just marketing, or useful or is there a Business Case for being first here . Ed i dont know if there is a market share issue, but there is a great Public Relations issue. You have planted the flag. The contracts are running there, but in the long run, i dont think it will matter. Guy so, the next evolution of this is what . As we increasingly legitimize this as a product, at least in some peoples eyes, how does the evolution work . Ed the etf story, that is what the market will anticipate. Thats the next chapter. But how do Asset ManagementCompanies Get comfortable with all the money laundering, all the illicit stuff . They are being used for a lot of illicit commerce on the dark web. So, how does the fidelity and the vanguards of the world that comfortable with that . Guy i dont know. In every other asset class volatility is getting crushed. In this asset class, it is not. From a trading point of view, that is advantageous, but from an Asset Managers point of view, you cannot handle those price swings and generate a decent risk model around that. Ed no, i dont know how you would do that. This is an example of as pure an instrument of speculation as we have ever seen. There are so few fundamentals to grasp onto, to inform how you will form an investment thesis around this. It is purely speculative. Guy how do you expect it has developed . Do we now say, we will get more futures in place, we look at more contracts up and running . Given the halflife of this story seems to get shorter and shorter, what can we expect this week . What can we look forward to . Becomeshink, as it clear the contracts are working, people will start shorting this, and what will that mean in terms of the price action . Ed i think the big question is, can the infrastructure handle it . You saw they had to throw Circuit Breakers over the last 12 hours as this thing came on. The quality and exchanges have had trouble keeping up with demand and there has been a lot outages over the last week or so. Can the infrastructure actually keep up with the soaring demand here . And then we have to look at the cybersecurity question. If there is a major hack of a wallet or exchange, all of a sudden security of the infrastructure becomes a big question mark for investors. That has got to be a factor as well. Guy ed robinson, joining us. Lets go to singapore now and figure out what mark cudmores take on this sis. On whatve us a sense the initial start of futures trading means. We did not see people shorting the product, which i thought was interesting. Mark it is important to remember that these futures contracts are cast settled. You dont actually get a bitcoin when you body future. That is interesting because if you have the futures contact for oil, you get delivered a barrel of oil, but it is harder to deliver a bitcoin than a band of oil, which shows have ridiculous the underlying concept is. We had this massive dislocation in the market. Again, because the exchanges of bitcoin are quite expensive and quite inefficient. So, we are seeing the futures market quite separate from where it was, trading on a lot of exchanges. I think there is an important time to reflect with the launch of futures. This is a massive bubble. Arguably, nearly a ponzi scheme. I think it is a very dangerous market to be involved in. I do think prices will continue to rise in the shortterm. D robinson said, it is one of the most speculative areas we have seen. People of speculating, gambling and betting. Because of that, people want to buy in. All i hear on the streets with friends is, i dont have any yet, i want to buy some. They will continue to buy to hold until it collapses. The futures market will eventually add liquidity, but because it is cash settled futures and not bitcoin settled futures, it is not a great instrument. Which is why i think the large financial veterans who are suspicious of this will not try shorting it through the futures market because that is dangerous. You cannot drive the underlying price by selling the futures. You will be stepping in front of the steamroller. Guy how does the downside manifest itself . Because coming into this, there was the expectation that futures would allow this to take place. But you are telling me that is now an incredibly dangerous thing to do. Mark i think it is absolutely dangerous. Look, the bitcoin bubble will not stop until basically we get more marginal sellers and buyers. That might sound marginally trite, but it is very important because people are buying bitcoin to hold, not to trade. There is a little element of trading, but the underlying asset is bitcoin and people are buying bitcoins to hold. Is to buy bitcoin and hold, but reverse. So, that means we have to wait until everyone is a believer in this, has invested all of their savings. Its going to be terrible. I am actually scared of the consequences of this. There will be lots of people that are decimated. Some people will make a lot of money. It is a transfer of wealth. Basically, it will only fall you hear all those people asking about bitcoin once they have put all of their savings into it. Guy on that note, we talked about this a few weeks ago and i was wondering if there would be a portfolio affect. This is going down and i have to sell something else. Your argument at that point was, this is not held by mainly Financial Investors, as a result of which that is not going to happen. But we are saying it will manifest itself, whether it is in Consumer Spending or elsewhere. Mark i think they will be real Economic Impact. It will have to it will depend on when it crashes. I am someone that still thinks the public can inflate much further before the pain comes. I think what we need to do is analyze who is holding at that stage. We might get to a stage where Financial Investors have piled in. And that is where the losses are and the retail momandpops have sold out of their holdings. I would be happy if that was the case. I am worried that wont be the case. We will have to see who is holding it down the line. At the moment, it is mostly held by some large whales. Of course, they have incentive to keep on helping out. They dont want to become a sellout too quickly and scare people away. They seem to coordinate and they might start hedging some stuff in the future, but overall, they will control it to allow more futures in. Retail community, the impact will be real and economic, as opposed to the financial. If its in the financial world, it will have a portfolio effect. They arement, i think a smaller part of this. Guy clearing up a few critical issues, mark cudmore. I think the survey is still. Unning on whis the ceo of Cboe Global Markets is going to be joining us for his first interview of the day. Thats happening at 4 30 p. M. U. K. Time. Coming up, trumps tax speech. The president will make Closing Arguments on the proposed republican overhaul this week. How close are Senate Negotiators to finding an agreement . That is the conversation we are having next. This is bloomberg. Guy 46 minutes past the hour. We are awaiting the start of trading. Donald trump will deliver a Closing Argument for the proposed republican tax overhaul wednesday. That is according to a person familiar with the matter. The house and senate will negotiate in their versions of the bill, which they passed in their respective chambers. The goal is to have the legislation on the president s desk by the end of the year. Geoffrey yuon set is , Kathleen Hunter is also on set with us. The wednesday speech, how much will get done by then . Kathleen the Senate Passed their tax bill a week ago. The house and senate have been working together to negotiate the differences. Once they reach an agreement, that agreement has to be agreed on by both chambers. The question is, will they have it in hand when the president speaks. Closingcases, the argument would make the most sense. It is unclear if that will be the case. Just getting up and making an argument for a theoretical tax bill. We might not know the details at that point. Guy the sticky points are becoming clearer now and one of those appears to be the high tax stake there is a lovely piece on the bloomberg talking about the fact that wall street is getting behind this as an issue because it will end up affecting new york, new jersey, etc. Chances how does that get done . How do they fix that issue . Kathleen there is so much momentum behind this tax bill right now that some of these details there is a difference between how they would theoretically work it out and how they would actually work it out, given they are under this insane time pressure to get something done this week or next week. Guy basically, they are just sacrificing the detail. Were accusedocrats of doing something similar when they passed obamacare. That was a similar situation when they came up to a christmasy deadline and had a vote at 6 00 in the morning of christmasy to pass it through the senate. It wasnt the final vote. They had to go back and reconcile. You know, it is a similar type of situation when they were backed up against the christmas deadline. Theres truth to that. There is the emphasis politically on republicans getting something done because they have created a high expectation. That working out things like the state and local sales tax reduction, which is a huge deal for republicans, in states like new york and new jersey and these are more moderate republicans where if they do not get this, the state and local s ales tax deduction, that could come back to bite them in the midterm elections, which are around the corner. It is important, but it could get lost in trying to get something done before the end of the year. Geoffrey i think compared to the beginning of the quarter, they are doing something that has not been done in a few decades, i think momentum is with them. Its been priced in. They are looking ahead, reinvesting in u. S. Equities. Guy is equities the way to play it . Geoffrey i think it is. How do you play the bond market . Focusing on the debt side . Guy i can just bring this up. Its amazing how the pricing change has happened over the last few days. Wass 100go there basis points between where the market was and where the fed was in 2019. Is that a tax story, a data story . Geoffrey it is a combination of everything. Fridays payrolls are not exactly convincing in full speed ahead for a rate hike, but maybe there will be this hope in the market. Tment on propel invese the corporate side, but it is a wait and see story. Stay safe on the equity side. Guy that is the investment advice. Kate, you talked about the fact that the details are yet to get done. Praising this becomes an important aspect of all of this. How much volatility can i expect around this . Further down the road, how many changes will there becauseb, presumably, they will have an Economic Impact . How easy or difficult is this . Kathleen one thing that is instructive, or maybe demonstrative of what we will see in the coming months, after the senate rushed through their proposal 10 days ago or so, they had to go back and fix some things in it. There were unintended consequences because things got changed around at the last minute that they really did even the folks writin the billg did not understand what was i in it, and they had to go back before the negotiations in the house and senate. That shows the complexity of rewriting tax policy. It is not unfathomable where Congress Passes a piece of legislation, the president signs it into law, and then we realized the unintended consequences. And then they have to go back and fix aspects of it. Does the fe itgnore this for now . Geoffrey the fed will hold the line because when it comes to Central Banks, treading on fiscal and Clinical Affairs becomes dangerous. Guy someone has to do that. And that will impact growth. They can say, we have looked at the data. And unless we get a gdp lift, the on the markets best case assumption. The missing piece in the payroll data friday, there was no wage growth. Geoffrey the argument, if you believe in the latter curve or not, it generates wealth over the mediumi in the longer term. On this matter, on wages, the fed is going to be reactive rather than proactive. Guy we have got a rate meeting this week. Edsing into 2018, the f Event Horizon seems to get shorter and shorter. Its getting very reactive. This idea the policy works with a lag, how does this fit into the environment . Geoffrey that is where expectations management comes in. It does not matter how you think about forward guidance, there needs to be some fed conditioning in terms of expectations. Going back to your point about wage growth, how that has been disappointing, the fed is talking about a phillips clouds now, rather than a phillips curve. Reactivet pays to be and wait for the underlying momentum to come through. Guy thank you. Covering our political story, which will be interesting this week on both sides of the atlantic. Yu will stick around. Lets talk about the Economic Data and what is happening with the stock market data. Five minutes to go until the start of european trading. Yyou better be watching for bae systems, getting good news on Aircraft Sales and to qatar. The eurofighter, what you are looking at there, its being sold to qatar. Qatar is continuing to make its point internationally as we see the Saudi Led Coalition working against it. That fits into this. Keep an eye on bayer out of germany. The monsanto story will come back and be a factor this week. We are expecting regulatory push back. We will figure out how regulators will be positioned on this one. They are trying to change their calculation on the possibility of this happening and if it does happen, what kind of exposements will be made . At the moment i have a fair value calculation on the bloomberg which points to a positive start in europe, up about. 3 . It looks like we will see a positive start in europe. A very solid day on friday as well. Four minutes to go until the market open. This i bloombergs. Guy welcome. We are a minute to go to cash trading in europe. It is start with the story that is dominating. Bitcoin. Let us take a look at where it is trading. It has driven the price of bitcoin higher. Cboe. Remember, this contract does not settle in bitcoin but in cash. In many ways, this cements these two in an important way. Looking at futures. Systems. Ok at bau london does not look like it is going to open significantly out of the range. Keep an eye on the pound. There is a Cabinet Meeting later this morning. And the market open looks like it will open 2 or 3 higher. Here we go. European cash trading this monday morning. Let us look at the details of the story. Here we go. As expected, a little bit of an upside. Not much. We are clearing the 74 level. 74. 08. Systems. Ye on bae up 0. 2 of 1 . An interesting to see how that story traits. That is the market. 0. 3 . Up by let us look at the sectors. In aggregate come up by 0. 3 . Financials. Look at the financial sector. We are going to be talking about taxes and the regulatory clarity provided on friday. Energy looks like it is softening up. Materials are a factor this morning as well in the mix. Tradingee iron ore overnight in asia. Materials trading to the upside. Industrials look reasonably well bid but energy is softening up. Not much price action in the crude overnight. Looks like energy will be softening up, particularly in the london trade though it does happen though it does affect what is happening in the ibex as well. Let us look at these markets. 74. 19 for the ftse. The cac is trading up by 0. 2 . We will have to wait for the dax claritysmi to get some otherwise, the markets are