The u. S. , waiting for the house vote ahead of that mixed day in european stocks, down for the fifth day in six with luxenberg tying germany, Denmark Germany and the netherlands with the rep stoxx ,0 and the swiss smi, forex currencies rising against the dollar with big moves in the bond market for a second day in the u. S. And eurozone. Outside the eurozone, commodities lets talk about em volatility, the best year for emerging markets stock since 2009 draws to a close and investors experiencing more than just a 31 return with. Olatility staging a comeback price swings on the msci index declined to a oneyear high. Turbulence in the development of equities has dropped. Analysts warned that shares in the developing world do little more than tread water in a year as Earnings Growth set to slow as Risk Appetite will likely wane. Saudi arabia, investors who watch austerity masters, growth over the last couple of years with saudi arabia 2018 expansion. Ebudget yesterday a relief a group says it is a sign that crown prince reforms are going ahead. Marcus will probably rally according to a company. Markets will probably rally according to it a company. Saudi arabia individuals that sellers of stocks every week since april of 2016. Lets stick with emerging markets, the rand world beating rallied continues after losing steam earlier today. Rand implied volatility has plummeted since its victory, expected swings over the next month still the highest among 23 em currencies, followed by bloomberg, making it a risky bet for kerry traders who borrow in low yield in currencies to invest in highyield ones, typically those of developing ones adjusted for the expected volatility. The rand and flat returns lower than some of its closest peers, the mexican peso, the russian ruble, and the turkish lira. 90 minutes into the trading day in the u. S. How is it looking . Start with oilo prices since there was confusion around the release of the number 30 minutes ago with oil prices remaining higher. A little bit of bouncing around after we saw a big drawdown. The combined drawdown of crude oil from the Strategic Petroleum reserve, you get the biggest draw in four years of about 13. 7 8 million barrels. However, an unexpected build in distal its, that includes heating oil and that may be raising concerns, according to our Oil Strategist and could be raising concerns about this being soaked up. By the refined products. Lets look at what is going on with the major averages. We continue to see Little Movement in the wake of ahead of the final vote on the tax bill, the nasdaq falling a fifth of 1 . The tax winners are clear. Fedex, raising its forecast for the year and saying they could go up even more as a result of the tax bill. H r block, because, despite the description of this bill of allowing folks to file their taxes, does not overly simplified the bill and people will still need tax preparers like h r block. Jpmorgan paring some of its earlier gains but skills bring in the big banks still straight and the big banks. That strength in the big banks strength in the big banks. See themarting to outperform once again as we get closer to passage. The outperformance is not what it was on the hope for the tax bill in the wake of the election. A check of the tobacco companies. A reuters report that Philip Morris had experienced a regularity involving irregular it is involving Clinical Trials with the ecigarette product. It already sells out of the u. S. And is trying to get u. S. Approval and awaiting that from the fda. Through, itot get would be a roadblock and share step 3 . Shares down 3 . Lets get back to the latest on brexit, theresa may continuing to ask questions before the house of commons liaison committee. She has been talking about brexit negotiations, saying significant progress has been made. European Commission Said the u. K. Brexit transition time will come to an end on december 31, 2020 and the eu chief negotiator continuing to take a hard line in brussels. Oligarchannot be a transition, the eu Regulatory Framework at all of the eu policies will still apply. During the transition, the United Kingdom will keep all of the benefits and advantages, but will keep the obligations and duties of the single market, the customs union, and our common policies. Is ouring us from u. K. Team leader for Bloomberg News. On a different page at again. Theresa may holding her ground. You wantiator said services, forget it but theresa we are the bankers of europe and these things are complicated, if you think you can take it away, it will not happen. You need us as much as we need you. Mark a characteristic that Prime Minister may, she was form. On great moode was in a perky wearing the lovely blue outfit. She assembled and by the success of getting through phase one. Getting emboldened by through the success of phase one. Not may be like a whiff, despair, but the idea they were setting the agenda, now more of a level playing field. Mark a victory that may be a rebellion later by the proeu lawmakers in the tory party over plans to write a date of leaving the eu into law. She may have fended off that. Correct, an embarrassment last week, not the Christmas Gift she wants to give to herself. They reached a compromise. it is red meat to the brexiteers, they want to know that the brexit will happen. She could potentially take a hit. She is not out of power over it. This is the story of theresa may. She has to be many things to many people. The remainders have to be at these and prebrexit. Mark we have a transition date. This number 31st, 2020. 2020. Ember 31, agreeing on the fine points of the transition seemingly will be tricky. Can you do that before you move to trade or will it happen together at the beginning of next year . She has always said two years. Honestly,be hashing out a trade deal will be tricky. Is british point of view that it can be done in one year, with some people think its ludicrous. They will argue that there is a lot of Common Ground already and you are not starting a trade deal from scratch. Mark thank you for joining us. Vonnie fantastic stuff. Back to capitol hill, the senate narrowly passing the tax overhaul bill on a 5149 hardline vote overnight. You are watching the house which open one hour and 10 minutes ago with another vote today. A couple of things in violent of the byrd amendment and the President Donald Trump is only a white house event with lawmakers later this afternoon. Revote . Ose to the seems like we should be getting something this hour. Wase are close, the vote scheduled from 10 4511 15 but no big hole thats expected and they should be voting any second. Vonnie when lawmakers return to their constituencies, what will their voters be talking to them about and will it be positive . They are trying to sell this as a middleclass tax cuts and most middleclass families will see a tax cut in the first few years of the plan. The taxcut for individuals is temporary and the way they adjust the income brackets for inflation will mean that most families will be pleased to do higher income brackets earlier and that means the benefits a family see an early years will diminish by the end of the decade. Taxly suzy 1000, 2000 in savings could end up paying more at the end of the decade. Republicans will try to counter that message and make sure the constituents know a future congress will extend the tax cuts and this is not just a huge point for corporations as it appears when you look at how it is structured. Vonnie before they go, they have to pass a spending bill. There is a danger that all sorts of things will be stuffed into this and we know a lot was stuffed into the tax bill. What does legislation in the United States look like in the next few weeks . Well anyone know what is in their . It has been more interesting this week to report on the Government Spending bill, rather than the tax bill because the tax bill is a sure thing but on Government Spending, we do not know how they will keep the government open with the house and senate not able to agree on a strategy and an interesting dynamic with negotiations, not just between the parties, but with republicans in each chamber. House republicans want to do it a certain way and Senate Republicans say it does not have a chance and they are trying to play chicken with each other to see which one will cave defund the government before friday. Onnie our thanks to you you will be on duty all day in capitol hill. Lets get to the first word news. Congress will go straight from the tax bill to a fight over the must have spending bill as they need to pass the measure by friday to the government operating. Republican leaders are trying to avoid a shutdown and may have to make some concessions to democrats but cannot afford to alienate conservative republicans. The u. S. Ambassador to the United Nations warns that President Trump will be watching a key vote on jerusalem this week. Nikki haley pushing other countries to oppose a General Assembly resolution criticizing the president and his decision to recognize jerusalem as the capital of israel. According to undp much. U. N. Diplomats. Thesident action European Commission says poland uphold the block Democratic Values and were the first time the Member Nation triggered a process that could lead to economic sanctions and poland losing its vote in the eu. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. I am courtney donohoe. This is bloomberg. Mark coming up on the european close, and interview with bruce richards, Marathon Asset Management chairman and chief executive. This is bloomberg. New europeanom the headquarters in london, i am mark barton with the european close roughly 14 minutes away. Vonnie live from new york, i am vonnie quinn. To an exclusive interview, Erik Schatzker is here with one of the heavyweights and credit in credit. Bruce richards is the credit is the ceo of marathon. I want to start with the issue on everyones mind. Tax reform or tax cuts, if you prefer. You and your colleagues have done a lot of work on this and analyzed it to try to figure out what it means for marathons and markets and investors and what have you concluded . Blackjack, 21 is a winning number and for companies , 21 is a big difference to say, paradigm shift to have a 21 tax rate because it makes companies in the u. S. For the first time tax competitive around the world with the average tax rate around the world for industrial countries is 22 . 23 . You will start to see foreign operations of u. S. Companies shifted back and you may for the first time see Foreign Companies want to domicile in the United States. That is a paradigm shift. Drives a lot of profitability for companies who have to pay less tax, not Technology Companies that pay less than 21 taxes a but for most of the taxes today but ,or utility companies, banks they will pay much lower tax rate which goes to the bottom line for the companies and a major beneficiary. Erik how does it change your perspective and American Companies as an investor . You are a credit investors, does it make the copies more credit worthy and should these corporate bonds, whether highyield be trading up . Bruce this year alone, 1. 3 trillion in Investment Grade corporate issuance. That is a record which will not be broken in the next decade. Because companies here before have been able to write off or deduct interest costs and Going Forward they will not be able to deduct the cost. It will take three or four years to phase in. Itainst even the and will make it more expensive. 2. 5 twos will take the 3 trillion repatriated dollars to come back to the united they will probably buy back their stock along with buyback debt. We will see a lot less issuance on the margins and some debt reduction. True of investmentgrade companies that have cash they are bringing back and the highyield companies that will see their interest expenses go up because they cannot deduct Going Forward. We think the highyield market place starts to gradually over the next couple of years deleverage itself. Which means less issuance and buybacks were companies are able to do so. Erik what does it mean, you describe that liquid markets for u. S. Corporate debt are going to shrink. Bruce i am saying that erik less debt issuance. Bruce maybe that is a good thing because Corporate America is to indebted and that is not so beneficial for companies to love themselves up with debt to then go out dust load themselves up with debt and then go out and make a Dividend Payment or buyback stocks with money that has been raised. It rationalizes as opposed to set rules that causes companies to do things they otherwise may not have done. The simple negation for Corporate America is a beneficial thing for Corporate America. Erik is there a trade or is there an investment here . Is there an investment thesis inside the tax bill . Bruce investment thesis is a little bit of a stretch from this point forward. Equity markets have already responded because nasdaq stocks up 30 this year and dow up 25 this year. The market has gotten a little bit ahead of itself. This is very beneficial for Corporate America and good for stocks. Maybe not so good for bonds. We think growth will be accelerated. May be boosted by another percent or percent. 5 gdp in the next couple of years and we think the fed will be more aggressive in raising rates Going Forward. Going up in relation to the long and and the yield curve flattened. Higher rates has application for bond prices going lower. The money coming back, buying stock, paying out dividends is beneficial for equities. Is there a trade . Yes, a massive trade that will begin to affect Interest Rates. Erik you have done some work on the dollar. You are not a forex investor per se but you think about currency markets because you have to hedge some cases when you are investing outside of the United States. What do you think it will mean for the dollar, this tax bill . Bruce repatriation of the 2. 5 trillion to 3 trillion, not all comes back, maybe 75 comes back. Lets round up the number two 2 trillion and say it comes back. About 1 trillion of that is held offshore in dollars and 1 trillion is in other currencies like the euro or the yen. That 1 trillion in other currencies with the 1 trillion comes back which means the 1 trillion in another currencies has a big bid for u. S. Dollars and that is a pretty big bid because looking at 2004 in george w. Bush provided for repatriation of money coming back, we called it amnesty when the money came back. The dollar rallied 13 that year. I am not saying it was all because of the repatriation of that money, but a good part of it was. With 1 trillion coming back, we think the dollar will be the number one major market currency for next year. 13 . Will it rally bruce 10 plus. Erik you see the dollar up 10 plus against the euro and yen. Bruce because of the money coming back which is not coming back in 2020 and 2021, coming back next year. Erik emergingmarket currencies, you are active. Emergingmarket currencies will remain vibrant and not necessarily give up much versus the dollar. With emerging markets, number one, all 45 countries in the oecd this year are growing. Nd growing at a nice rate the last time we saw all 45 countries grow in the same year you have to go back over one dozen years and the trend continued for years. Growth is good for emerging markets and commodities cycle has begun to turn out which is also very positive for emerging markets. Emergingmarket equities have been the top equity performer this year and everyone has underinvested in emergingmarkets. Next year point forward in way you reallocate capital, are of people chase returns will say i am underinvested in emergingmarket equities and i will put some money into emergingmarket equity marketplace. For all of those reasons, plus a few others, merging markets generally will have a positive year next year and do quite well. Erik but you are a credit guy. Bruce they currency will be relatively strong. The big currencies that are volatile will be the euro, the sterling, the yen, relative to the dollar, not necessarily the emerging markets. Erik we do not want to call it an emerging market but it often looks like one, puerto rico, you are heavily invested in what we can debt and you have in excess of 600 million in general obligation bonds. General opposition bonds. Erik puerto rico was hammered by the hurricane and the bonds are trading in the 30s and the market is telling us that is where the recovery czar. What is your view and how long will it take . Bruce that is where the market is, trading in the mid 30s. Hurricanes, puerto rico is a proud country, a prostate. Comment proud state, commonwealth and they will do well. Fema is erik a puerto rico come back means the money is good . Bruce fema and the army corps of engineers is down there and the power is 75 restored and we think in the coming months will approach 80 , 90 and then be fully restored. The issue with prep the, 18 of prepa how we distribute our. Owna needs to build their liquid the case and plans to be more efficient and energy. They will get to that but it needs more of an investment and that is why we are there. Erik thank you. It is through his richards, the ceo of Marathon Asset Management f