Bill. The majority of them were from hightax states like new york and california. The Senate Must Pass its version, but the margin is thin and republican senator ron johnson of wisconsin says hes currently a no vote. The gop only holds a twoseat advantage in the senate. They can only lose two people. If it does pass it will go to conference to sort out differences with the house version. But despite a big day thursday, markets still ended the week mixed. Walmart saw its sock sore 10 after it reported the strongest gain in years. General electric is buying shares of the stock as it continued to trade down. Reports that comcast and verizon are kicking the tires on acquiring a large portion of 21st century fox. The general consensus has been the tax bill will be freight for stocks but my next guest says we could see a shortterm selloff. Whats your take once in fact the tax plan moves forward . You buy on the rumor, sell on the news . I think you have to reposition yourself for upward trending markets. Any mini selloff you get is off of earnings. Earnings have been great. We had a profit recession in 14 and 15, movement up in and 17. Its three to four times gdp growth. Thats what Earnings Growth has been particularly in the united states, not to mention whats happening oversea. The gain theory geopolitically around the world and whats going on in washington politics could cause a mini selloff which is what our expectation is heading into december and ultimately in december you get that move back up again. Maria you are a bull over the long term. The bedrock of being a bull is not just feel good about the upward trajectory of markets. Thats the paradox of lower Interest Rates. Lower Interest Rates are feeding on itself. The world is aging, if you get higher credit growth and you get gdp growth it feeds on itself and you get the feedback back into corporate profits. Maria they were 7 higher for the third quarter. Its pretty much across the board. I know people are focused on one corner of the technology spectrum. Energy is taking over. This time around its pushing prices down. Its not necessarily feeding into productivity. Maria im going to ask Robert Kaplan about productivity coming up. What sector should we be exposed to . Everyone is focused on the united states. Fed is leading other Central Banks into a socalled rolloff phase. But the real story is the he morning markets. They got out of bear markets. They have a profit cycle. They have a vibrant middle class, particularly in asia. China is moving toward a service economy. So the real story is overseas. Better valuation, better Earnings Growth, and still have them figure their credit backdrop. So they have a ways to go. That doesnt mean if the u. S. Starts to roll over it wont be exported overseas. However from a valuation Earnings Growth perspective and where they are on the cycle its still u. S. Equities. Gentleman pains really forget whats going on with the bank of japan. Think about the share older activism. Maria do you want to buy individual markets or etfs . Its a combination of both. Its actually easier as an active manager to outperform than in the recent past. But a hybrid approach in our opinion is a more effective way. It keeps costs low and you build around that with active management. Maria do you think the tax plan goes through . Yes. Maria there is an expectation this is going to happen. If it doesnt happen, what happens to market . If you put a collective basket of hightax companies together and see whether it outperformed the broader market, the answer is no. So when people say the thanks plan is in the return of the market, it really isnt from our perspective. And small caps outperform and would be the bigger beneficiaries of the tax plan. Maria thanks so much. Good to see you. Dont go anywhere. My interview with Robert Kaplan is next. Announcer one of the most of doveish voices in the Federal Reserve, Robert Kaplan. Is he in favor of a rate hike . Bar report Federal Reserve is phasing in a 90 chance of an Interest Rate hike. My next guest voted in favor of the first two Interest Rate hikes. Joining me is the president and ceo of the Federal Reserve bank of dallas, Robert Kaplan. Thank you for joining us. Can you characterize the backdrop . You are actively considering voting yes for another Interest Rate hike come december in the december meetings . Give us a sense of why that is the backdrop in terms of the economic story today. Robert kaplan here is the backdrop. Our own forecast in the dallas fed is well go 2. 5 in 2017. Sluggish by historic standards, but sufficient growth to drive down the Unemployment Rate which is 4. 1 . But more importantly, i look at unemployed plus diskowrngd workers and people working part time. Thats 7. 9 and thats at a prerecession low. We think that will continue to decline. So we are getting near full employment. On the inflation front, a lot has been made that we are running behind our 2 target. A lot of that to me is structural head winds. Thats not going away. So we kind of have a situation where one element of the mandate and not the other, we are at 125 basis points. My own view is if the degrieve the overshoot of full employment is going to be big enough, even though we are lagging in our inflation target, that alone might be enough to convince me that we ought to take the next step in removing an accommodation. But thats the background we are struggling with. And thats the things we are wrestling with. All of this as you are about to get a new leader of the Federal Reserve, jay powell. Is there any reason to believe powells mentality towards the backdrop in terms of what drives Economic Growth are different than what janet yellen has been doing . The good thing about having jay the last five years is his views on monetary policies are well known and well articulated. I think it suggests well have a continuity in approach. Against the backdrop we should be rereviewing our governance, whether we can operate bert. We should be doing a regulatory review. And i know jay has spoken up about that. And i think we need to give relief to Small Midsize banks as a priority. So even though people around the affluency table will change, well have that consistent approach, good rigorous debate and good decision making. Maria Alan Greenspan used to say watching where markets guys important. It adds to the backdrop in terms of decision make on Interest Rates. How do you see the Current Situation where the market is up 4. 5 trillion in value since the election. I think they are manageable, number one, u. S. Market cap to gdp is 140 now. The last time it was at this level was 19992000. We have gone 15 months without a 3 declient u. S. Stock market. That basically is unprecedented. The last market you can go to was the japanese market of 8889 before it went down substantially. I dont think we are japan. By the many worth noting that. March general debt is high. The other thing i look at, what concerns me, trading volumes are lower than they were 10 years ago. Part of that may be low volatility. Part of it may be impact of regulation including the volcker rule. So im not sorry if we do a thorough review of the volcker rule and connect that with is that part of the lack of trade liquidity. What im watching for is not so much are valuation levels too high. Im looking for excess debt buildup. You know there will be ups and downs. You want to make sure we can handle it in a way that doesnt cause a rapid tightening of financial conditions which in turn could cause Economic Conditions to desteerate rapidly. Those are things im watching for in terms ofism balances. I think we are manageable today. But i think we would be wise to monitor this. Maria lets take a break. Stay with us, we have a lot more to discuss when wall street week comes right back. Announcer the fed says to expect several Interest Rate hikes next year. But could tax reform change those plans . [music] [music] [music] [music] [music] [music] or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Maria we are back with dallas Federal Reserve president and ceo robert cal land. I want to talk with you about elements of the tax bill. We had a big victory for the gop when they passed their version in the house. But bill why air bond king ripped it. He said its a cosmetic tax increase its a cosmetic tax decrease baits means increase for some people. Whats your take on the fiscal policy coming out of washington . Robert kaplan given my seat as a central banker youll be appropriately distanced from the political back and forth. In terms of growing the economy, i have said regulatory review if its thought any done will be helpful. And yes i have talked about the fact that tax reform if its reform, which encourages businesses to be more likely to locate in the united states, to do Capital Spending in the united states. To hire and do their businesses here. The level of u. S. Government debt days likely unsustainable. Public holds 75 of gdp and u. S. Government debt and 39 trillion in unfund entitlements. I would be concerned about elements that create a tax cut financed by increasing debt because my concern is yes well create a shortterm bump in gdp and well trend down to trend growth, then there will be more leverage when its over. The reform elements that create sustainable changes in behavior could be positive. The tax cut parts that increase the debt i would be concerned about. Largely a big portion of it is a cut for the corporate rate. Its 1. 5 trial. And 9. 5 billion are the biscuits. So i dont know. Is it reform . Robert kaplan ill be careful about getting too deeply in this given my role and trying not to overstep into fiscal policy. But the gross numbers are 5 and a fraction of tax cuts and 4 and a fraction of offsets or payfors. You are right the corporate thanks part is a part of that 5 and a fraction trial. Its just a part of it. Again the hard part here is the for elements could be helpful. The shortterm tax cut may create a future head wind for Economic Growth and not improve sustainable Economic Growth in the united states. Maria you have been talking about telling and the skill sets required to actually thrive in this economy. Give us a sense of what has happened. People are worried about robotics and Technology Replacing them. There are two big trends. Ill mention one of them first. Aging population, slowing work force growth. Thats a head wind for Economic Growth in this country and well have to address it. Getting people to work longer may be encouraging which we have been doing for years, women into the workforce. And its controversial. But immigration, immigrants and their kid and children and then half the workforce growth in this country its likely to be a bigger share. Native born workforce is slowing. Thats one element. But the second thing thats happening is the economy is restructuring. And Technology Enabled disruption is accelerating. Technology replacing people, that isnt new. The rate of it is new. And consumers can use technology to shop for lower prices, greater convenience, and so you are seeing Pricing Power of businesses is less than its ever been which is cause for them to even more want to invest in technology to lower their cost its also one of the reasons why you are seeing record merger activity. People need to get more scale to maintain margins because they dont have Pricing Power. Ththe impact on the workforce is another part of this which gets to productivity. If you have got a college education, all the statistics show, its painful at times, but you can navigate through this restructuring. If you have got a High School Education or less, its likely your job is getting retruck tiewrd or eliminated. And unless you get retrained, which is not easy to do. You are likely going to see your productivity decline and income decline. This is going on through the country. While 15 years ago your job dislocation might have been due to globalization, that was probably true 15 years ago, date probably not due to globalization its much more likely to do with Technology Enabled disruption happening in industries and we can come bad it and help people, but we have to improve Early Childhood literacy, College Readiness and beefed up skills training in the united states. It probably has to be done locally. But this is a big challenge for the country. If we improve educational levels, well improve productivity and well grow faster. Maria the president and ceo of the Federal Reserve bank of dallas. Building a website in under an hour is easy with gocentral. From godaddy in fact, 68 of people who have built their. Website using gocentral, did it in under an hour, and you can too. Build a better website in under an hour. With gocentral from godaddy. I let my mistakes kind aof take over my life. I was pointfive credits away from completing high school and i didnt do it. Angela i got pregnant and i was the main one working so, i did what i had to do to survive. Jocelyn sentia que la escuela no era para mi. Karim most of my family they never graduated high school or even let alone go to college so im trying to break that barrier. Jackie my family never stopped pushing for me to be better because they knew what i could become and who i could become as a person. Karim everyday after work i went straight to school, studied hard, and it paid off. Jocelyn sentia como que si Quiero Cambiar el mundo tengo que cambiara mi primero. Group surprise surprise surprise angela i could not have gotten my diploma without my family. Jocelyn mi consejera, ella fue lo maximo para mi porque me ayudo mucho con todo. Jackie ive been given an opportunity and im just thankful for it. Angela yeah its hard, but keep on going and keep on trying. Karim the High School Diploma has just added to the confidence and now i feel unstoppable. Narrator find free Adult Education classes near you at finishyourdiploma. Org maria its time for a look at the big market events in the week ahead that could impact your money. We still have updates on Market Movers. Consumer sentiment and the purchasing managers index. These are typically Market Movers so they are worth watching. A short week for earnings. Hewlettpackard is reporting its quarterly numbers. On the political front, congress is in recess all week. But monday nebraska will decide whether to allow the construction of the keystone xl pipeline. Coming up next week, hope you will join me. Wall street week airs at a special time on black friday. Martha stewart my special guest next week joins me for a special thanksgiving event. Tune in for our special programming at 10 00 a. M. Eastern on fox. Thanks for joining me. Well see you again next time. Im bob massi. 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