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Make-or-Break Week for Senate Tax Plan

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Another make-or-break week for the GOP tax plan, Germany closer to a new government, and OPEC’s battle with shale heads for a reckoning. Here are some of the things people in markets are talking about today.

Counting the votes

Republican lawmakers are rushing to secure votes to push a tax plan through the Senate as early as this Thursday. Should the plan get passed, members of both chambers of Congress would then have to forge a compromise between their diverging bills. If everything goes smoothly, tax reform should be ready for President Donald Trump’s signature by the end of the year. Goldman Sachs Group Inc., meanwhile, warns the proposed changes could see New York losing some of its highest-income residents. 

Germany edges towards new government

Political stalemate in Berlin is showing signs of easing as the main opposition Social Democrats began haggling over the terms of a renewed coalition with Chancellor Angela Merkel’s conservative bloc, rather than seeking to block an alliance between Germany’s two largest parties. In a speech to the party faithful on Saturday, Merkel emphasized how well her Christian Democratic Union and the SPD had worked together in the previous administration. Elsewhere in European politics, the Brexit train rattles on, with U.K. Prime Minister Theresa May grappling with the Irish border question ahead of next week’s talks. 

OPEC v shale

The big question facing ministers at this week’s meeting in Vienna with the Organization of Petroleum Exporting Countries and Russia is how U.S. shale producers will react to any further production cuts. With the International Energy Agency predicting American oil production will equal Saudi output at the height of its expansion in less than a decade, OPEC’s position as the dominant force in the oil market is challenged. In markets, crude is slightly lower today, with a barrel of West Texas Intermediate for January delivery trading at $58.54 by 5:45 a.m. Eastern Time. 

Markets mixed

Overnight, the MSCI Asia Pacific Index fell 0.5 percent, while Japan’s Topix index closed 0.2 percent lower as technology stocks dragged regional gauges lower. Chinese shares resumed their decline in the wake of last Thursday’s plunge. In Europe, the Stoxx 600 Index was 0.1 percent higher, recovering from earlier losses in the session. S&P 500 futures added 0.1 percent, the 10-year Treasury yield was at 2.345 percent, and gold was higher.

Bitcoin surges (again)

The bitcoin frenzy reached new heights as the cryptocurrency surged towards $10,000, flirting with its latest milestone at breakneck speed. The digital token was trading at $9,545.03, a 16 percent appreciation over Friday’s price, after reaching as high as $9,747.49 earlier in the morning. While hedge funds still have their doubts about whether it’s a legitimate asset or a bubble waiting to burst, central bankers around the world are taking an ever-closer look at the pros and cons of digital currencies for consumers and markets alike.

What we've been reading

This is what's caught our eye over the weekend.

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