Live from bloombergs World Headquarters in new york. We are 30 minutes from the close of trade in the u. S. U. S. Stocks were on track for one of the best quarters in the air. Joe of course it is. Scarlet President Trump expected to sign a trait a orders on trade. Capping off a week of fed exclusives. We will share why build the lease is more hikes are appropriate. And why president jim bullardtis no need. Says no need. It is turning to a dud of a day. We have the three major averages of the dow, the s p 500 and nasdaq trading in mixed unchanged fashion. The nasdaq is higher which means it is at another record high having closed at a record high yesterday. The movement may not be big on the quarter, we have great gains for the major averages. We have the s p 500 and white up six quarters in a row. The longest since 2015. The dow the same thing, the longest streak since 2006. The nasdaq and blue, have to buy big tax. Underperforming is the russell 200. Since june ofain 2015. That may be one crack in all the bullish action we have. Another to Pay Attention to is ae ten year yield on quarterly basis trading down 2 . Price trades in verse two. This tells us that haven bonds are rallying on the quarter, the first time we have seen that since june of last year. The fedg move but raised rates couple weeks ago them muche had higher. Something to Pay Attention to. Rounding out taking a look at the commodity complex. Bloomberg dollar index on the quarter is down 3. 5 . On paper it is the worst since 2009 three and that is giving a lift to the metals. The Energy Complex down and agriculture down 4 . The dollar weakness is not helping out all of the areas. To see theresting diversification here especially the fundamentals around oil in terms of inventories and what is ahead for opec. Scarlet we will tackle all the topics home we speak with our guest. And hownds have emerged do things stand and where do they go . We start by saying President Trump will be signing two executive orders on trade abuse but there are questions about how effective he can be delivering off Campaign Promises related to tax reform and infrastructure spending. Is this uncertainty quietly killed inflation trade . Not so quietly. Om you look at the full bc index and what happened in soybeans and where we are going in terms of aggregate demand and the reflation trade is not over, is really close. Every single one of these policies ironically has the opposite effect. Lets add more coal, lets have the keystone pipeline, lets have the dakota pipeline, lets increase supply but we are not increasing demand because we have no fiscal stimulus, Monetary Policy is tightening, lets lower prices. The selloff wed are seeing in soybeans. The first time we started the show on soybeans. Of the the breakdown different subsectors of the bloomberg commodity index. The blue line is Agricultural Commodities which have dipped into the negative. Why does that catch your eye, the soybean selloff . Because it is the middle of the country, we think about the fact that if the u. S. Economy is going to go stronger we will export, that will help. If prices are going down that hurts the value of their land, they are leveraged up buyers. Credit markets and demand for caterpillar and for john deere and other industrial products. It used to be that in january 1 quarter smallcap stocks are supposed to do well. They have underperformed and there is this current underneath roughs telling you that potential seas are not that far off for the u. S. Equity markets. Scarlet can we still rely on the market timings to determine what will happen next when we have been unorthodox situation in the white house . If you look at history, every time there is a point of change everyone says this time is different and we cannot rely on it. I would stick with analytics, mathematics, and analysis and not stick with this time is different. Areou said rough seas ahead. Im looking at this chart about volatility across asset classes. We talk about the vix alltime but it is not just stocks, currencies, volatility is quiet everywhere. What will disrupt this . We wonder all the time what is going to be the thing that browsers markets out of slumber . What historically turns Something Like this around . Policies,are your they have not filled out the senior positions in washington. Policies are in conflict with what i would call traditional mainstream economists. It is going to sprout. The question is for a says traders and risk managers, what is the timing . In terms of being favor in favor of long volatility, we do rookie Portfolio Managers because rookies make mistakes. That is all we have in washington. Scarlet we are talking about inflation earlier and how there is a sense that it may be has rolled over a little bit. Joe has a breakeven chart. How Inflation Expectations had peaked and they have taken a turn especially the twoyear breakeven. That deflation concerns may start to crop up as well. The feded raised and year was at 220. At 240. The 10 year is i listen to markets, i try to stay away from no offense to my self and others and let the analysis do the work. The market is not anticipating expectations and the breakdown om suggested. If you look at the after the rally in 2016, youre looking at policies increasing supply. Mean more bined lower prices. Joe are you suggesting that the fed is making another mistake here hiking at a time when the market does not see the inflation that the central bankers do . I think the fed is in a super deep technical problem, it is called a pickle. The economy is not picking up but they were behind the curve, the should have started raising as we said repeatedly around the tapered tantrum and 11. They are almost irrelevant. They cannot tighten and they cannot really ease. The problem comes back to congress and washington. Theyre not doing anything. Scarlet you told us to keep an eye on wti. It would be a clear indication of what could come. And ita technical chart is flirting with the 100 Day Moving Average which is the yellow line there. It is below the 200 Day Moving Average. Could matters because it is the most broad indication of aggregate demand and Inflation Expectations. We saw a breakdown and you come back to the moving averages, they are heading down. This is the level where if i were trading and we are that you would want to sell in the last couple days going into the end of the quarter. Scarlet youre sticking with us. We will be talking about Consumer Spending and that the stress and retail. Credit problem. This is bloomberg. Consumer spending rose less than forecast. What does this week start to the year for Consumer Spending mean for the Retail Industry . Our guest is still with us. That consumereys confidence is high but when it comes to spending perhaps we not getting the followthrough. , thensumer confidence numbers tend to be coincidence with the equity markets. People feel ok and they respond positively. You see that in manufacturing, on the real estate side as well. The actual numbers themselves tell the story. Individual equities dorf volatility more than anything else in terms of [inaudible] a day. 0 in joe that was the till for you that it was over. He is. It was over. Scarlet retailers are dealing with a lot of political headwinds, you have the border it feels like and that is a cap on how far these we chilled companies can go. As long as the prospect of their margins being squeezed is out there. I find it ironic that thought there was uncertainty. The uncertainty cap is far larger. Wheres the border adjustment tax, are we going to do health care, we going to do tax adjustment, a we going to do infrastructure question mark we are not. In atlanta there wishing they did. They are wishing they did. Cities andrump towns devastated by unfair trade policies, one of the major reasons i am here today, trade. Nobody has ever made bad trade deals like our country is made. I saw the shuttered factories and spend time with the laidoff factory workers. I heard their stories and i promised them action and i allised them a solution and over america, you are saying that solution start to take place. Take a look at what is going on in michigan with ford in general chrysler, soat many more. The jobs and wealth have been stripped from our country. Year after year, decade after upon tradede deficit deficit reaching more than 700 billion last year alone and lots of jobs. Thousands of factories have been stolen from our country. Americansvoiceless now have a voice in the white house. Ther my administration theft of american prosperity will and. Were going to defend our industry and create a level Playing Field for the American Worker finally. Today, i am signing two executive orders that send this message loud and clear and that set the stage for a great revival of American Manufacturing and you saw that today, you saw what happened, you saw the kind of numbers we have. 93 ofvey showed manufacturers are optimistic about the future. A record high. 56 couple ofm months ago. Where going to build on that tremendous momentum. We are bringing manufacturing and jumps back to our country. Im signing an executive order to ensure that we collect all duties and [inaudible] cheat,ign importers that they are cheaters. Those who break the rules will face the consequences. They will be severe consequences. I am ordering the first ever come brands of americas trade deficits and all violations of trade rules that harm the United States and the workers of the United States just as a promised during my campaign. Bys review will be led secretary wilbur ross who is joining us here today. Wilbur is an outstanding success story. , a unbelievable businessman great but very fair negotiator. And on wall street, he is simply known as wilbur and everyone knows him. And now we have him on our side. Is k you, wilbur, it youre going to do a fantastic job. We will investigate all trade abuses and based on his findings, we will take necessary and lawful action to end those many abuses. Any not beholden to political or financial interest. I am here to do such hot. Im doing a job for the American Worker. I really do not care, i am not thinking about my business or anyone elses business. Wilbur is not, peter is not, we are doing a job. It is an opportunity like nobody has ever given and were here to do a great job for the American Worker and for our companies. Where the American Workers are employed. For the American People. Aer you are of republican or democrat are along to the party, i am here to represent you and her family. Well get these bad trade deals strained out, right, peter . You have been looking at it for years, right, wilbur . This combination of here. Beaten. That is why i defied the special interests and follow through on my pledge to withdraw immediately from the transposition Transpacific Partnership and that is why i am taking these very historic steps today. American ng of america and the American Worker is my north star. And these two orders will point everybody,nation and point to the World Next Week as you know in florida the southern , we are having the president of china and a large soup from china representatives. We look forward to it. Spoken to them numerous times on the phone, we look forward to it. It has been very bad whats been happening to our country. Companies and in terms of our jobs. We will start turning around, well turn it around fast, not going to take a long time, it is going to go fast. I want to end by saying that we have a team that is second to when everybody is assembled and fully in gear after these two orders i think it will be something very special. I would like to ask wilbur to say a few words and peter to say a few words and we will send our Vice President , i am speaking for both but i am not 100 sure, i will tell you one thing, he is one hell of a good marriage going. Thank you, mr. President. If anyone had any doubt about the president s resolve to fix the trade problems, these two should andrders h that speculation now and for all time. This marks the beginning of a totally new chapter in the american trade relationship with our partners overseas. Thank you. Remember during the campaign the president laid down a set of promises to the American People on trade and today, this is the beginning of the fulfillment of those promises in a grand way with theur ross at the helm and president being the grand strategist of this. Well get this done for him or can people, workers, and domestic manufacturers. Thank you. This is a great day for the American Worker and a great day for the american economy. President trump is keeping his word as you look for ways to expand exports from this country, and force to this country. We will have free trade and there is going to be fair trade and armslength negotiations with nations, holding them accountable to the promises they make, the review the president is initiating today and the work of members of this team on the president s behalf will ensure that we put America First when it comes to trade. We put american jobs and American Workers first. Trump thank you. You will see some very strong results very quickly. Thank you very much. The president speaking before he signs executive orders said are aimed at toughening trade enforcement. He says he is signing a bill to nullify Labor DepartmentUnemployment Compensation programs, looking to make sure other countries do not get the better end of the trade deal. He says he will get back trade deals bad trade deals strained out. Is thision to you action that the president plans, he will review trade deals. Is this something that requires an executive order . Henot necessarily but understands the optics. He was right when he said that trade is one of the major reasons he is here. In states like pennsylvania, and michigan he channeled peoples about joband angers loss going overseas with globalization and trade. Of this order, it is a comprehensive review of policies, it is not a significant policy change in itself. About who is all this is in and out, people talk about the gary cohn wing versus the navarro russ ring ross ring. When it comes to trade those are the guys that the administration wants to be identified with. There are a friday of opinions within the white house and the president people with contrasting opinions come a there are some in his strategic orbit including steve bannon who has similar views and antitrade views. What is doneis about this. Every action that is taken will have a counter reaction on trade whether it is retaliatory measures from china or increasing the cost of goods at walmart. Trust promises to bring jobs back, that will be difficult to fulfill. You like and the administration to rookie traders. You said your firm does not hire rookie traders. When you see that shot talking about wanting to renegotiate, what do you take away . I take away the 92 by my tongue and be careful what i say but being in new york and feeling that the loss of jobs of drawingat were horsedrawn carriages that we need to bring those jobs back to, we need to raise the prices at all commercial institutions where they bring in imports. And it is a great way to do with terms ofgn partners in saying that every single one of you cheat. Youll stick with us. What is next for the president on trade . He needs to get this done by what time, theres a 90 day deadline . I am not sure. This is the beginning stages. Republican senators want him to get going on this whether it is multilateral trade deals which he does not want to do. Thank you so much. The market closes next. Take a look at the major averages. The nasdaq at another record high up by five points. Good enough for an alltime high. The dow and s p following today. There bigtime gainers for the year. This is bloomberg. Scarlet we are moments away from the closing bell. Stocks in the u. S. And the world ending a strong First Quarter, gains for the s p in the dow. The dow. I am salivating. Joe if you are tuning in scarlet i am scarlet fu. Joe i am joe weisenthal. Scarlet we begin with market minutes. A meandering day for the man major indexes, the nasdaq closing down. We dont get a record high for the final day of the First Quarter, and the trading day and month. Fromt a bit of a come down what has been a blistering First Quarter. Joe we will go right to the end. Scarlet i will pull up on the bloomberg, give me a second, how the major indexes performed or the Industry Groups in the s p 500 for the quarter. ,his has been since december 30 2016, tech, discretionary health care, the best gainers renewed Energy Jumped 7. 3 . Down 5 for the time. So you had nine winners in terms of Industry Groups, to decliners, and two decliners, and financials up 2 . Surprising to people that expected bigger gains given the reflation trade at the start of the year. As for the daily movers, smp had its biggest year. It was the biggest in the s p 500. This company is going to entry trust antitrust clearances. They went with a pesticide maker. 2015. Erry, best day since the Software Revenue and Profit Margins are going to year way that the ceo promised. They outsource most of their hardware. It counts on being known as a Software Company now. And snap unveiling the first product since the ipo, a new way for users to submit videos and photos for stories that can be seen by a wider audience, good for 1. 4 advance. Joe lets look at the Government Bond market, yields lower across the board. 10year yield dropping below 2. 4 . We talked about this range going out the quarter at the lower end of the range. It had been around 2. 6 a few weeks ago. South african 10 year bond, yields shooting up. The finance minister said it was part of a major cabinet reschedule around south africa. They are demanding more. Lets take a look at the german 10year yield going back one month. We saw the yield declined, sort of similar in the u. S. , declining yield. And thinking that the ecb is in no particular hurry to taper or anything like that, so that is a theme the last several days. And into my terminal real quickly, venezuelan bonds, we are looking at cents on the dollar, they were already . 50 on the dollar, low, getting smashed. More protests and fresh concerns. Scarlet lets stick with that theme of political unrest, because the rant is plunging for a sixth straight day with what is political crisis. Zuma has fired his political minister in the deputy, and now a parliamentary coup is no longer in thinkable. Unthinkable. The current person has no business experience. The rams plunged. Rand plunged. I want to show you how big a surprise the dollar weakness we have seen in 2017 has been, because this is the dollar versus major currencies, and it has lost ground versus all of them. The biggest winner is the peso so far this year, up 11 . It remained fairly weak on a longerterm basis, but it gives you a sense of how things turned around. On the commodities front, lets look at oil and gold intraday, not a lot of action, but oil creeping higher. Almost at 51 barrels 51 a barrel. Lets look at the one month of texas crude. It shows the big stories, the diver earlier in the month. People were wondering if it was the start of something deeper, but now recovery. Scarlet it has been a saggy month. Those are the market minister lets deep dive into the bloomberg. You can find the charts using the function at the bottom of the screen. Lets go back to south africa, asset prices are tumbling overall, whether it is bank stocks, bonds, the currency. This is how it might look for the rant one month after rand one month after. Last june, we saw high volatility reach 25 . To home,ve a closer major cabinet reshuffle, questions about whether zuma can stay in power, and also doubts about Investment Grade credit rating. You can see it shoot up, but it hasnt reached the height of what we saw last june. It got to 8 , close at 20 . We are not back to those levels. Joe it is interesting. This is when people love em assets, so south america south africa has been a standout. I will pull up a chart with the options related to treasuries. You can see it is exactly at the zero line, not suggesting any bearishness or bullishness, really sort of gets to this idea that right now, treasuries are stuck in the middle with no greater no clear direction right now. Scarlet we want to talk more about how the First Quarter fared, and how a lot of trade that people may have come into the First Quarter centers around treasuries, a lot of people got it wrong. So my old boss and mentor says that sign behind his desk, what is obvious is obviously wrong. What was obvious in the First Quarter was Interest Rates had to go up, that the dollar had to rally. Of, youcan peso is sort buy the rumor, you sell the facts, that was the inauguration of President Trump. People thought it had to decline. None of these things happened. Markets trading is a difficult business. It seems relatively simple, because u. S. Equity markets have been strong, but if that changes, or you are in a wrong equity, it looks terrible, which is why there has been such push into passive index investing. That is a whole other our home a discussion of hour, discussion of how to behave. Joe it was clear going into this year, and a lot of people were short treasuries, long on the dollar. Very consensus views, and at the end of the First Quarter. What is your sense on how people are positioned . Our people long dollar or short treasuries, or have they adjusted . Peter people react to market Risk Management a fair amount. So they clearly paragraph their positions. You see that in the commitment data,itor data trader and you also see that as you go into april, volatility picks up in the market. What is fascinating about the llarh african randdo volatility chart, like most others, it declined sharply after brexit, after the election, then it spiked. That is why we are here. The issue of trading and Risk Management is not saying, it will stay low. The question is, is there a potential potential f catalyst to push it higher . What we saw from venezuela, south africa, italy, greece are countrytoms of each trying to look inward. There is a lack of operation. That will raise volatility. Scarlet with all of these countries and the u. S. Leading the way being protectionist in its approach to trade, what is the best way as an investor to trade on that . We talked about the longterm damage that could result in with , but how retaliating do you invest in the meantime . Peter it is tricky for me to advise on that, because our team timeframe is on the earnings cycle. Markets and a lot of time not moving, then they reprice. That is what we are doing with a poor job as well. But we are experts trying to sort that out and benefit from that. Risk reward says, if you made a lot of money, congratulations. There is nothing wrong with taking risk off the table, being objective. Your mind is much clearer when you do not have risk in the game. Joe another consensus view that we would see a Strong Quarter for growth, animal spirits would come back, all sorts of good stuff. But with the left block, the retail side does not look bad, company data, economic data. Where do you assess the economy . Peter i think the animal spirits have moved to the Republican Party and the Freedom Caucus and the leadership in the house. It is entertaining to watch them going at it. The seriousness, you have to look at the numbers. E are all optimists every time there is election and change, we want to be optimistic. That is good. Unless you can translate that into policy, it is unlikely to happen, we have not seen any indication of that happening. Scarlet we have the makings of credit and retail we have a lot under debt. If you look at samestore sales numbers, the foot traffic is not there. They get the cash flow but not to the extent it should be. Peter i dont like to use the term crisis, because the pessimism is easier to describe. I am always trying in the back of my mind, where am i too pessimistic . Scarlet well played. Thank you so much, peter porche. We will see you. A bloomberghave terminal, check out tv. You can watch it online, grab the charts, interact with us directly. Goto tv on the terminal. You see all the charts and stuff. That is earlier trump trade stuff. The announcement about his executive order. The best way to consume tv. Scarlet and we close caption, so you can hear what he had to say. This is bloomberg. Lets get the first word news this afternoon. President trump is vowing to level the Playing Field for American Workers. He signed two executive orders moments ago, promising to get the bad trade deals straightened out. The orders are aimed at cracking deal on trade abuses. A judge has approved an agreement for President Trump to pay 25 million in a federal lawsuit over his defunct trump university. It ends nearly seven years of legal battles with customers who claim they were misled by promises to teach success in real estate. Trumpthe terms, sandra admits no wrongdoing. People will get 90 of their money back. And the top democrat is warning republicans against joining the senate rules to confirm President Trump is nominee. s nominee. He is trying to block neil gorsuch. He lost a few people when senators of virginia and north dakota said they would vote for gorsuch. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am Alisa Parenti, and this is bloomberg. Scarlet we have breaking news, has filed itsnes ipo. It will be under ftr. Filing to go public. We reported earlier this week it was looking to go public estimate the second quarter. That has happened, and they have filed the paperwork for the ipo. Joe as we close out the First Quarter, volatility is close to its lowest levels ever, so are traders getting too complacent . There may be a turnaround on the horizon. We have the head of meckler strategy. Cap great great to have you back on the show. Stocks, currencies, bond, very low. People did not seem to be concerned about anything. Why might that turn around . Peter Everyone Wants to sell volatility. When i go back to the conversation, even last year, Everyone Wants to buy volatility. All of a sudden, i think we went through brexit, the election, volatility keeps collapsing, so people are overly complacent. Joe on twitter, i see a lot about the short volatility. I never saw so many people talk about that, but now it is a thing. [speaking simultaneously] peter everyone is talking about betting against volatility happening. So i think we are starting to see signs we like volatility finally picking up, and we have never gone through a spike in volatility with all of these new products. I dont know how they will respond. Scarlet i love your products. Allah to the is an asset class in and of itself. I love your products, volatility is an asset class in and of itself. This is a fiveyear chart, but if you look at the First Quarter, did not stray much. It has been very tamped down, last june. E as an asset class, if people are looking to get away from volatility, what does that mean for liquidity in these products . Peter etf is very high right now. Last year, two of them were in the top 10 of most traded stocks. It is strange you have this making the top 10 in terms of trade volume. These are very low to the market. Here, that is eight to 10 eight dollars to 10 in the product. Joe here is my question. I get that the stats show people being complacent, people taking an active that against volatility, but people seem what is concerned about what is going on with every little trump rally. We always talk about this, is it dead code word it does not fuel done. Hat that people are it does seem people are concerned people areoes seem concerned about the market, but they are not hedging the market. Scarlet you could be in equities if you want risk. You can go to credit as well. You are writing about ideals and leverage loans. Right now you prefer that. To like it. Ontinue what we like about leverage loans is the loading rate that , and they fed hike are hellbent it to hike a couple more times this year. If we get a problem, you see these are theres, 10 same company that will issue highyield bonds and leverage loans. It is safer now. It makes sense. Joe how does the Credit Profile of leverage loans compare to Credit Profile of highyield bonds . Peter you are seeing the capitalist structure, so you have more safety in theory. You give up some upside for that, but if you look at what was in the news, much better prices in the bond. You have got that safety element. It was around 2 trillion in billion. About 800 a very large market, but it does not get as much attention at the retail level. Scarlet what is the cost of leverage loans over highyield . Peter if we had a rally rate environment, it would give up some. You will not get the upside because leverage loans are callable. That is not my fear. I have scared we get some sort of term that this widens. Joe talk about this chart here. Peter this is when you are actively trading. At the start of the month, highyield would outperform versus leveraged loans. The dropdown more than 2 in the start of the month. Leverage loans were only down 0. 05 . When you talk about the yield environment, if you can avoid the drawdown, that is significant. And you want i would be very nervous about the shortterm yield. Get fury out of the short season. Joe the big picture, a lot of went into thear euro thinking rates would be higher. It looks like rates have sustained this oscillating between 2. 6 , 3. 6 on the 10 year. If we get a bout of volatility, that would imply a downside break. Peter it would, which is confusing, because we should be 250 to 275, so we are below my target. I would expect treasuries to rally a little bit further. Scarlet there is a glimpse of the 10year yield, getting to 2. 6 , but coming back. Peter there was a time to weeks ago where we were moving in sync, so that was the risk parity trade. Bonds and stocks moving in the same direction. First,ocks will widen and that will bring stock prices down. Maybe we can get them moving in tandem again. Onrlet one last question investmentgrade debt, but there is lots of issuance this week. You noted the problems, their trade was peter one of the indicators for the health of the credit market, we watch you issues that are weaker, old grade, and we see negative signs where what is happening is the issue comes, it does not trade up here this ipo does not really go anywhere, and volumes drop off rapidly. Supply, noting this getting sucked up properly. With any witness, weakness, that well push things out faster than otherwise. Scarlet all right, thanks so much. Peter thanks for having me. Joe has the market hit its peak . We look at charts with significant conflicting signals. This is bloomberg. Scarlet lets take a deep dive into the bloomberg. You can find charts using the function of the bottom of the screen. Lets focus on consumer confidence. It has been rising. It had a huge jump this week. This is in equities, the white line. Americans are bullish on equities good look at the jump up over the last couple weeks the far right. We put a box around it. What is interesting, you go back to the. Com bubble era to see this kind of sentiment. People are most bullish on u. S. Stocks since 1999. What is different is the outlook is different for earnings. That is the blue line, earningspershare forecast of the s p 500, 9. 3 jump in the past year. Look at the green box versus the 1. 2 drop in 1999, the red box. There is a disconnect, and is giving us a conflicting signal. For all of the people worried about the market and we prices, you have to have something backing it up your the earnings forecast is their contrasting with last time. Becauseis interesting we pride ourselves we dont, but other people tie themselves up trying to figure out why there are multiple expansions, wire people worried about trump or whatever it is. These answers are simple. Earnings are going up. Scarlet and we have the credit for the men on the bloomberg start team. Joe it highlights the problem with one iicator like consumer expectations. The bubbler whatever. Whats look at a chart that hits on what i would say is the theme of the show so far, and the First Quarter, which just wrapped up, and that is the event that goes back three years. The blue line is the vix, the yellow line is the average of each quarter. You can see the average of the vix throughout q1 was incredibly low, the lowest in over a decade. An equity this is index, a measure of implied volatility. You can look at any affect last right now. Government bonds, Interest Rates , it is all low. You have this tension where, it looks like there is a lot to be concerned about, but it never seems to pop up anywhere. And people keep losing a lot of money expecting volatility. Scarlet it is not very sustainable. Ou see backtoback gains the last time we had that was in june, september 2014. Since then, every time he goes up, it comes down. Joe maybe q2 will be more interesting. Scarlet we will get more insight on President Trump is ejected order on trade, and executive order on trade, and questions about the future of the tax cuts. This is bloomberg. Lets get the first word news this afternoon. The house intelligence midi held a preliminary conversation with Michael Flynn about arranging a discussion, but this did not talk about immunity or other fory the fire more more National Security advisor. U. S. Defense secretary james russiasys rosters history of violating International Law is documented. It could be a sign that the uproar over Election Hacking may have compromised the president s plan to establish Close Relationships between washington and moscow. Russias violations of International Law are now a matter of record from what happened with crimea to other inects of their behavior mucking around in other peoples elections. Francois fillon says if elected, his priority would be to fight islamic extremism following a series of attacks in his country. He is a major contender in the , and proposaltion to put in place a European Defense alliance led by france and germany. The Un Security Council is counting cutting 500 troops. This is a first after pressure from the Trump Administration for more cuts and reform. The u. S. Ambassor to the u. N. Accused the u. N. Of aiding congas corrupt government. Focus on to increase aiding civilians and a free and fair residential election. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Scarlet lets get back to politics with lots to cover, President Trump vowing to level the Playing Field for American Workers. He signed two executive orders on trade. We have a National Political reporter for bloomberg news. Trade is the top of his agenda, something he uses to measure whether the u. S. Economy is winning or losing, whether he is. What did he do today i would hoard today . Did he do he reviewed practices from things. D and other it is the first to step in his promise to initiate a comprehensive shift of the United States trade policy. Joe lets get to the topic investors are most invested in, and that is tax reform. You have been doing a lot of reporting. Your latest reporting suggested the possibility that whatever might come may not even be permanent. After the Health Care Meltdown republicans had, being unable to pass the obamacare replacement bill, a lot are questioning how far they can go, how bold they should be. You have the speaker of the house paul ryan and the house ways and Means Committee chairman want them to rewrite it permanently, but you have to find revenue raisers to offset the addition from [please stand by] sahil including Senate Majority whip the number two republican, john cornyn told me. Senator hatch, the finance committee, said a couple of days ago. Things moving in that direction. Scarlet is there a role for democrats in terms of revenue raising . Sahil only if they decide to play ball. A red light for them is any tax package not include breaks for upbringing people. The mcgrath will oppose it, and that makes it impossible for republicans to do it. , andmocrs will oppose it that makes it impossible for republicans to do it. Interested is the president interested in reform or cut . Sahil it is about a permanent rewrite of the tax code. They want americans to file taxes on a postcard. This is what they love to think about. They are thinking big. Notlet does the president mind the deficit . He can live with that, but it is House Republicans that headquartered he him. Have he is not that cornered him. Sahil once he is presented with these various paths, what will he choose . Will he assist insist republicans signed the border adjustment tax to raise revenues , or will he say, no, we will do something else. Joe you wrote a piece for republicans getting to the promised land, control all of washington now. They have discovered with that cos problems. What was the main thing . Sahil the big thing was moderates and moderate republicans are starting to flex their muscs. They will not global right go with the far right legislation. Ill have to go home and defend, so then you have the ultraconservatives trying to be very emphatic. Joe all right, thank you. Scarlet lets turn to the markets. The s p 500 ended its best quarter since 2014. Lets perspective in the market moves with kevin kelly, the financial analyst from bloomberg. He joins us from princeton. When we talk about fundamentals, we should start with earnings and how they look right now. You bring us a chart on earnings revision, the annual revision, and it is surprising. 723. The white line is the 2017 earningspershare revision. What is more notable is the drop in the blue line. The steeper decline in the yellow is the tenure average. 10 year average. This is common what we see with these. They start off a little more bullish, then where we end up, usually they come down through the year. We are seeing for the rhetoric, it may be stressed, the market ahead of itself. As joe mentioned, there are earnings gained that will be there. Analysts are expecting Earnings Growth in 2017, and the provisions, the perntage change is what we are looking at. It is not nearly as shallow as we have seen. You should say as deep. Joe that is a striking chart. It helps explain this market rally, since we are down with revisions, not normally what we see. Something else to point out as an interesting aspect is the here at back into tech him easily after the election, we saw the surge in financial stocks. That is the white line here and the selloff in tech. Since the start of the year, that rate has reversed notably. Rotation, getting a lot of attention, moving more into cyclical. When you look at infotech, that makes up more than 20 of the s p. If that continues, you could see gains continue. I like looking at this. You normalize the s p inlue. You are looking at how well infotech has outperformed the s p compared to financials. After the eltion, a lot outperformance in the financials really came in the one week following the election. Scarlet and one cant theme we have been hearing over the past week is how investorsare developedout of equities, particularly u. S. Equities and into europe or emerging markets, which is popular, because of that relative valuation. They look good on a relative basis, but it retus, their time has,. It feels like a credit trade because of how much we talk about it, but it is still intact. Lets identify here that yellow line is the ftse 100, not about emergingmarket, and the pink line is also not, but the white line, latin american stocks. The blue line, asian stocks. The yellow the light blue line, emerging markets in europe, all lobi is a you got low because of evaluation. Kevin if you look at the outflows, you see the shares and emerging markets index taking a lot of flow of our year to date, and for good reason. You have seen a lot of that because there might be additional opportunity moving forward for the gains because as you can see here, they are trading at a significant discount to the more developed marketeers like the s p or the ftse. Scarlet all right, kevin kelly. Thank you so much. Coming up, what is the feds path forward . Not one but two fed president s. This is bloomberg. New york fed president bill dudley says it is reasonable to expect three rate hikes this year. He spoke withur correspondent. In 2016 int happened the fall of 2015, the consensus was four hikes in 2016. We did one in 2017 going in with three. So far we have done one. Is, it ishe foc original place. A few more hikes seems reasonable. It is stronger than we expect, we could go through more, or we could do less. Reporter what tells you it is time to raise rates . It took you a long time to convince march, because people said nothing really changed between december and march. Nothing really changed, the economy was on the same trajectory, sturdy job gains, and we had been trying to say if we stayed on the trajectory, we lose Monetary Policy accommodation, so the move was consiste with what we have said previously because the economy was in line with what we were anticipating. You move in would may, or do you want time to see what happens with this rate increase, if there are changes in the economy, and there is no press conference, so it is difficult . The economy is growing just a bit of both trend above trend, and below target. If you look at the underlying pace of inflation, if you look at the personal consumption expansion, it is 1. 35 . So there is not a huge rush with tight Monetary Policy. At the same time, policy is accommodative, and we are close to full employment. It makes sense to gradually take back accommodation. We get Monetary Policy closer to neutral as we go through 2017. Scarlet bloombergs International Economics correspondent with the fed president. Joe lets get more perspective from another fed president , Kathleen Hays sat down with James Bullard earlier today. Economyld say the u. S. Is in a slow growth mode as it. As been the last two years in 2015, the economy was under 2 . In 2016, the economy grew 2. 1 . First quarter tracking estimates are now down below 1 at an annual rate for firstquarter gdp. This does not sound like a booming economy. So it is ok if you want to move, make 25 basis points move, but we dontthink at the st. Louis fed that you have to have a 200 basis point adjustment and Interest Rates in this kind of environment. The Unemployment Rate has come septemberit was 5 in 2015. Today it is 4. 7 , has not really changed in the last 18 months. We got the Inflation Numbers this morning. As expected, it hasup. Some of the ener prices and the headne, but if you lk at something more sensible like the dallas fed, pc inflation rate, that is about one point 9 , maybe it will pick up a bit based on the report this morning, but it is exactly what the committee was expecting, a slow, gradual rise in pc , andtion, Energy Prices that is exactly what has been happening. So we really have not seen a lot of movement in the hard data in the last 18 months or so, so i think it is ok to raise rates a little bit, but we dont need a major adjustment at this juncture to stay on track and keep inflation. Joe that was bloombergs Kathleen Hays with James Bullard. And up next, u. S. Commerce secretary wilbur ross criticizes china as one of the most protectionist countries. This after before trump meets with xi jinping. We bring you that. This is bloomberg. Scarlet david gura spoke with wilbur ross earlier today. He began by asking whether the white house plans to work within the confines of the World Trade Organization. The World Trade Organization been in being for a long time, and there is modernization needed on some of there processes. Also, their mindset. If you read their annual report, it describes almost universally anything by way of countervailing duties or any sort of trade remedy as protectionist. It does not talk of some of the ideas that the reason there are more trade cases is that there are more countries practicing violative behavior. So i think their attitude, their mindset could use a little refinement. David we are expecting a review of chinas market economy status in a few days. What can we expect from that review . Wilbur i dont think it is quite that the wto will review it. What it is is china has brought an action seeking to be granted normal market status. They brought two litigations, one against the u. S. , one against the you, and the one they are propelling foard the most is the one against the e. U. Apparently they think they be they have a better shot because the e. U. Rules, and the way they have gone about it, is a little bit different from the way the United States have. Or not one is a nonmarket economy is a very important question because it dictates the ease and the quantity of fines and countervailing duties you can impose on that country. It is an important item, and it will have a lot to do with a lot of people trade balances. When the president goes to maralago next week to meet anh xi jinping, how big agenda items trade going to be, and what wilu hope to accomplish . Wilbur those negotiations as to the content, the exact content, are still underway, but suffice it to say that i will be an active participant. David the president characterized meetings as difficult. Are there particular things that showed difficulty . You know it will create controversy . Wilbur my view is that United States is about the least protectiont of the major onetries and that china is of the most protectionist. There is an inherited class between those two clash between those two, even though china uses a tremendous amount of freetrade rhetoric during we would like the behavior to become more congruent. David do you think currency will, . Wilbur if it does, it will be with steve mnuchin. Currency manipulation is the provin of treasury, not commerce. David the president dispatched the Transpacific Partnership when he took office. Two elements of that trade bill still exist . Will you build off the trade bill, or you are you starting a new scale . Wilbur there were some improvements to the tpp relative to nafta and other free trade agreements that we have. We are obviously not going to throw the baby on with the bathwater out with the bathwater. We view the concesons in the tpp by the countries at the starting point from ich we will attempt to build. David you mentioned the reluctance to go with the Hippity Hoppity approach. You talked aboua more bilateral approach to trade. How do you square those . It is wide reaching a global, yet deals that are twoway. Wilbur there is no impediment to developing a set of ingredients that are essential to any trade agreement. It is not inherent in negotiations that you must start every time with a link sheet of paper. Blank sheet of paper out of nafta, the first thing on our agenda, we hope there will come not only agreements from some of the components of the trade deal that we can then roll out into other agreements with other countries. Imagine you listened to the speech that the u. K. Prime minister gave in Parliament Earlier this week, perhaps listened to the Council President earlier. Have you been in touch with your counterparts . What happens next with the u. K. And u. S. Trade deal . Wilbur the u. K. Technically cannot negotiate with a thirdparty until they are a t further along in the brexit. Right now, under the rules of the e. U. , the e. U. Is the bargaining agent for them. So that is one issue. The second issue, since the u. K. Have not had to do a trade agreement for many, many years, namely since they became part of the e. U. , they are just staffing up and trying to develop some bandwidth. So i think for the immediate president , they will be fairly occupied just trying to sort things out with the e. U. But we would be eager to engage with theat the earliest possible moment that is both legally and practically feasible scarlet that was wilbur ross speaking with david gura earlier today. Joe what you need to know for next week. This is bloomberg. S. Stocks ended in a lackluster First Quarter with a bit of a letdown with the terms of the index levels. They kind of lingered and quiet. Quiet drift into the close. In terms of what is coming up on the first day of the second quarter, there is this weekend. We have march madness. The final four on saturday, the finals on monday. Dont forget to check out information on the bloomberg practice for a cause. Joe i will be looking wednesday for minutes for the fomc meeting. We have a hike. Dovish and it was a hike, but we will break down who thought what. And President Trump will be hosting chinas president xi jinping at maralago on thursday. Joe and on friday, u. S. Job data dropped. Expected. It could be the best day of the month. We have two great days of job creation. Will we see pullback . Those are weathered distortions from the february data. Well find out. Scarlet that is all for whatd you miss . Thank you for watching. Joe alisa am Alisa Parenti and you are watching bloomberg technology. Playing field the for u. S. Workers, President Trump signed executive orders today aimed at cracking down on International Trade abuse for the directives will enforce penalties for potential violators. The white house says it will soon share Financial Information about top Staff Members on its website after concerns the president has start his team with some of the wealthiest people ever to serve in government. Congressional investigators rebuffed Michael Flynns offer. The Committee Says it is too early to discuss a deal. Congress is investigating russias meddling in the election. State rextary of tillerson and james mattis are overseas and stressed the importance of nato. Tillerson called nato the bedrock for transatlantic security. Convicted South CarolinaChurch Shooter dylann roof will plead guilty to murder charges to avoid a second death sentence. He has been awaiting state