cable up by .3%. hit sofutures, tech got hard yesterday, we are getting a bit of that back. david: oil traders around the world are heartbroken. you have thrown them over for going. it is all jonathan's fault. ok, parliament is debating president trump's controversial tweet. the president was wrong to retweet anti-muslim videos from a far right group, britain first. earlier, the president tweeted that prime minister theresa may's focus should not be on him but on the threat posed by islamic terrorism. the synod is moving toward a final vote on the massive tax overhaul bill as early as today. lawmakers voted along party lines to begin the debate. that doesn't necessarily signal that republican leaders have the authority votes they need. theenate republicans passed tax bill, they still have to hammer out differences with the house version. oil prices are edging higher hours after opec meets. the cartel and russia are ready to extend production curbs until the end of next year. the goal is to from a prices by ensuring global stockpiles fall below the five-year average. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. david: president trump has moved to fill another slot on the federal reserve board by nominating a friend. cinch has known marvin since they were in grad school together at brown. you have known marvin goodfriend for a very long time. till is your reaction to his going to the fed. what would you expect them to do once he's on the fed? >> good morning, folks. in general, this disappointment is creating a lot of relief amongst the folks who really focus on these things. the president is filling out the board. there was concerned they may not fill out the board. eminently qualified --n it comes to monitor poli monetary policy. marvin is one who's lived his life in the world of monetary policy and theory. incredibly qualified. the initial reaction will be that maybe he is a bit more hawkish, he believes in monetary rules. i would point out that during crisis, those monetary rules were calling for extremely aggressive monetary policy. marvin has done a lot of work on what you do at the zero bound, zero lower bound for interest rates. he is a strong academic, he holds a chair at carnegie mellon, actually named after allan meltzer, one of the giants of monetary policy we lost recently. he brings tremendous experience, qualifications. the markets may jump a little bit too much on this issue of rules thinking it puts them squarely in the hawkish camp. david: a lot of people talking about the taylor rule. he has said we should go back down to zero or extend with negative interest rates. >> he is an honest academic. at times, those rules would have called for negative rates and marvin has explored that issue and discuss that issue. practically, it is a problem in the u.s. because of the large amount of money that consumers hold. this is who he is. he has studied monetary theory and policy for at least four decades. scholareen a visiting at central banks all over the world. the world, around he's explored these issues consistently. there are times when rules would call for rates to be even lower and there are times like now wil that call for rates to be at higher. wall street likes to say a hawk or a dove. they have difficulty with some of can honestly change their mind depending on conditions. another person we are seeing in that context recently is president kaplan from the dallas moreet some point has been dovish and at other points been more hawkish. david: hawk end of his one way to divide it up. another is colleague versus loner. you know him as a person. jay powell is a team leader. what is he like as a colleague? that the good thing about how this board is being shaped his you have different people different areas of expertise. powell will be a terrific leader. he gets right to the point. his testimony is refreshing. we have others who are steepen the regulatory side, which is an increasingly important part of the fed process. now, you are getting in marvin a very accomplished academic monetary theorist who can work very well with the staff and thinking about how to address any issues that may come up in the future. whether it's intentional or not, it's good to have not necessarily everybody who's the same on the board but people who have expertise in different areas. david: thank you so much for joining us today. jon: let's bring in mark haefele , ubs cio. i want to get your thoughts on the year ahead for the federal reserve. there were some concerns about how the president would populate the vacancy. mark: i think you are right to start with this issue. when you look at the year ahead, what happens with inflation and what happens with the federal reserve and interest rates is really what investors around the world are keying off. let's take up professor goodfriend. it's important to have economics on the board. taken professor and focus on one element of their policy to infer what is going forward. negative rates would not work in the united states because the great lesson from the financial crisis in the united states was we recapitalize our banks first and early and negative rates hurt the banks. short periodsfor of time in economies like switzerland. jon: what you are seeing in , growth richnomies and inflation for. what is the prudent monetary policy response to that? mark: i like what they are doing now. it is good to build up a bit of an interest rate cushion because trees don't grow to the sky, the economy won't always be rosy. as long as the hikes are gradual and they are not forced on the federal reserve by inflation picking up, we think this could be a good year for equities and risk assets. alix: what does that wind up meaning for the yield curve? mark: the flattening of the yield curve is something that everyone is looking at. for us, we don't think it will go negative. there are some technical factors that are bringing it down. one of the things we would look at, if the yield curve turned negative come everyone would be on inflation watch. we are certainly a ways away from that. alix: later on, the cleveland federal reserve president will sit down for an exclusive interview with michael mckee. coming up, an exclusive interview with lloyd blankfein and michael bloomberg. we will start discussing goldman's 10,000 small business program. we will probably move on to some bitcoin conversation. oil market seeing a move higher here. opec is agreeing to extend oil supply cuts to the end of 2018. now, they are saying that talks had moved on to details at midyear review. how will they detail it, hobbled how will they review the cuts? this is bloomberg. ♪ david: the senate debates its tax bill today and probably may take it to a vote. what will they be voting on? for some answers, we turn to kevin cirilli. welcome back. thatems like the trigger has just come up in the last two or three days is key. kevin: yesterday, senator bob questioning janet yellen during her going away testimony and saying whether that's asking whether or not she was concerned about national debt. you going fed chair said she's extremely worried about such debt and then senator corker used it as an opportunity to suggest that he was working with republican leadership on a trigger point in order to activate a source of revenue for the united states government should there not be a form of revenue coming in to pay for the $1.4 trillion tax reform package. later yesterday, senator corker working with pat toomey to reach that so-called deal. all signs would suggest the republicans are building a aalition -- coalescing behind unity of purpose with leadership led by leader mcconnell to get this done. david: i think i can understand why politically it may make sense to go back to constituents and say this is what i did for you, i took care of the trigger. makest understand why it sense to increase taxes if growth is slowing down. how you can have this uncertainty injected into the whole process. kevin: there is much uncertainty. i have spoken with several sources who are saying they are now pointing to next spring as a potential fix it period of the legislative process. the president except entitlement reform, they could pass some legislation that would address any of the problems in their first go around here. meanwhile, in terms of political uncertainty and political volatility, they still have to pass a partial government funding bill in the month of avert a government shutdown. all attention will turn on that partial government funding bill. that could make the month of december quite interesting. that is the one democrats refused to meet with the president on. reform, the back of tax this is what happened in the market. the nasdaq suffered its worst the drop in three months. the worst day for those guys on record. the blue line, the kbw bank index wound up having a nice rally. the tax rate is already low. still with us is mark haefele of ubs. thaou by that -- do you buy t? mark: i don't think that tax reform is fully priced into the equity markets. in this global growth environment, banks should do forward.g we like tech because the earnings have been strong and they will continue to be strong going forward. this trigger is something of a gun to the head because it is procyclical that you would be forcing higher taxes at a time when the economy is slowing. let's hope they work through that in a constructive way because it would dilute a lot of the effects that we are hoping the market will see if they pass some tax reform. alix: great point. we are seeing a lot of estimates morein that you will see -- that will see more you will see more cap x. will company earnings start to get a boost should the tax rates come down. what happens around this tax tol is something of a signal how republicans will do in the midterm elections. one of the key things for the u.s. economy from the business people and the clients we speak to is getting more certainty around regulation and reducing the regulations so business confidence can return. david: i want to give you a flood here. -- a plug here. you say you are looking towards a earnings growth overall for corporations next year. but, if the tax overhaul goes through, it will turn into something stellar. take us why you think this will be so important. mark: i have hit most of these factors. running a great year into a stellar year next year. on the one hand, corporate profits could see a real boost. on the second, it is a signal that the regulation will continue for the u.s. economy. third, to the extent that that gdp growth breaks out of this percent range that we have been in, that will be a real game changer that people say a 3% growth rate maybe isn't impossible. rate, a in that gdp change in productivity now can give people more confidence that all of these measures that we look at will stabilize out eventually. jon: a growing view that next year could be as good as it gets. after next year, things could slow down. maybe a small recession in the back end of 2019. do you need to start thinking about late cycle allocation at this point? mark: for the majority of markets in the global economy, we are still midcycle. into lateition period cycle can be one of the best times to be invested in risk assets like equities. i don't think it is time yet. you hit on something important. our clients tell us at the same time markets are doing really welcome that they haven't fully brought into this rally. this is the most uncertain time to invest that it's ever been in the history of the world. we try to unpack that a little and say what are the factors that we would be looking at with technological disruption and and this flux central-bank policy that would lead us to move from midcycle thinking too late cycle thinking. jon: thank you for joining us. bitcoin, hours for $11,000 briefly yesterday and then plunging 20%. >> bitcoin is successful only because of its central or circumvention, lack of oversight. it seems to me it ought to be outlawed. ♪ david: today marks the second of our six part series on cryptocurrencies. volatile, we watched yesterday as bitcoin blew past the $10,000 mark and then dropping 20% and then came back again to hover just under the $10,000 level. some people call it all a bubble or even farther. others equated to gold. look at bitcoin come it's gold.ch different than i don't see why there's all this hostility toward it because it fits the mold of many other c commodities. it is even mined. david: you agree this is something akin to old? >> not really. i work, get to serve at a swiss bank, we know a lot about gold. gold has been lusted after for thousands of years and it's held by central banks. bitcoin doesn't fit either of those criteria. you alwaysnvestors, have to have been a strategy. when would it be time to exit this? when it's falling yesterday? people could have lost a lot of money. those are some of the reasons it is different from gold and other investments. a great investment, if i got a dollar every time a distinguished journalist asked me about bitcoin, that would be a great investment. david: what are your clients asking you? bitcoinngle day is -- our clients coming to you asking about bitcoin? mark: they are interested in the topic and they want to know what's going on. arethat many of them investing in it. they certainly aren't putting a lot of money in. what is interesting to them is the underlying blocking technology up and going. are savvy enough to understand there's bitcoin but there's thousands of other cryptocurrencies out there, we could start one today. what is bitcoin going to be the durable one that lasts and retains value? jon: are you offering a supply chain to the point? mark: we have a lot of longer-term technology themes around disruption. we look at the companies that are trying to deploy block chain to improve their processes. just eliminate costs. direct exposure at this time is very difficult. jon: thank you very much for joining us. after up, oil gets a pump opec is set to reach a deal to extend output cuts. we will get the latest out of vienna. the s&p 500 well on course for an eighth straight month of gains. a winning streak that is unmatched since 2007. the dow up by 80 points. treasury yields unchanged at 2.39 on the u.s. 10 year. the dollar does nothing against the euro, but weaker against the pound. this is bloomberg. ♪ jon: as we get ready to close out the month of november for another month of gains on the s&p 500, would you believe the biggest months we lost so far on % all&p is just the -.04 the way back at the end of march? futures up .3%. dow futures up. dollar strength the story against most of the g10 currencies this morning with the exception of the pound. a stronger sterling story continues, up about .4%. after the selloff in the treasury markets, some stability today. wraps things up with a bit of a bid as opec moves to an output cut extension. let's get some headlines outside the business world. emma: the u.k. and european union are trying to beat the clock. the need to reach a compromise on the irish border to allow brexit talks at a meeting next week. the u.k. needs to find a way to promise the eu the brexit will mean a hard border between ireland and the republic of ireland. the pie minister of russia's has relations with the u.s. are in a disgusting condition. the atmosphere around the relationship is the worst in his memory despite president trump's desire to improve it . matt lauer is speaking out for the first time since being fired by nbc news amidst allegations of inappropriate sexual behavior. the former today show host says there's enough truth in the stories to make them feel embarrassed and ashamed. he says some of what is being said is untrue. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. oil ministers meeting in vienna today. oil spiking on the news that we will extend the production cuts for all of 2018. the question now is how they review it in the middle of the year. adjust to's time to normal production levels, we will need to do it gently. we would need to do it in a very thoughtful and considerate way and in consultation amongst the participating countries and those countries with spare capacity will gradually bring back their production to meet market demand. >> there is a potential for a good deal this year. at the same time, like in every countriestween opec and now we have an even bigger group, surprises could happen. we could see different views. we willident that arrive at a conclusion and a good decision for the market like we did last year. >> opec is monitoring the situation and the effect on the stability of the market measures will be taken according to the changes in the situation in the market. $60, opecve around producers are satisfied with around $60. one of the questions that's what are the questions that still need to be answered? >> the main thing, a nine-month extension is pretty much done. the key now is going to be the non-opec meeting at 3:00. russia does agree on a nine-month extension. the energy minister saudi arabia has also said there is a june meeting. at any opec meeting, they will review the decision. there will be some questions asked about that, if there were to be a review, what is that review going to be? the critical thing right now is the fact that opec ministers have clearly said they are extremely committed towards getting that overhang down to the five-year average. they are not saying this will be done in x amount of time. they will see how the market performs in the coming quarters and then take the decision. this is a deal for the full year. the questions that will get asked now is about russia's involvement, which will be for the full-year. opec no one can agree that hasn't done its job it. still needs to normalize inventories. rise rest of the question mark? what are the issues there? russia isstion around less about the fact that russia is saying we are already there. even russia does agree that the job isn't done yet. russia is seeking a bit of clarity around when we do get to the five-year average, what is the strategy? there are certain domestic considerations such as an appreciating ruble does hurt the domestic economy. stronger ruble also has oil companies -- hurt oil companies. the overarching difference, it is not a difference in strategy, russia just wants a bit more clarity around once we get to the five-year average, what happens? this is not a wide divide. i expect to hear from them as well that they will extend the deal for 2018. alix: is $64 brent pricing in over tightening? >> not at all. this is saying the crude market is in backwardation. i think this is very much reflective of fundamentals and a bit of expectations that opec will extend the deal through year-end. alix: great to spend time with you today. joining us now from houston, which will take a look at the shale response, dan pickering. what is the shale response if we do see an extension through 2018? it's really the individual shale drillers and producers thinking about this current price. certainly an opec agreement gives them more comfort that prices will be decent. we will see an uptick in activity. there's a recent discipline that is developing amongst the shale producers here in the u.s. we will see a measured response but an upward response. alix: the new hedging contracts in the third quarter were 897,000 barrels of oil a day somewhat immune to an oil price slide. that says there's an aggressive taking advantage of this rally. dan: no question that the current environment is take advantage of the price while you can. door guys were on death's 18 months ago. the hedging is reflective of an industry that is nervous and an industry that has decent economics at the current high 50's oil price. alix: how much will shale grow? you have 500,000 barrels a day to 1.7 million barrels a day. that is the whole opec russia cut. what is your expectation? dan: the number for 2018 u.s. production growth will be somewhere between si 600,000 and 700,000 barrels a day. it has been hard to ramp up in these companies expected. -- it has been a harder to ramp up than these companies expected. alix: i want to take a look at what it winds up meeting for the companies. goldman sachs expects more m&a. this takes a look at the oil price, the white line. the blue line is the s&p versus the sector. m&a, big oilore coming in and buying up the likes of ug and continental. it will help corporate returns. what you think for the target? that's what the you think for the target? somethinglidation is that happens when things are really bad or really good. we are headed back toward really good. i don't think anybody wants to give away the farm at $58 crude. and energy stocks that have dramatically underperformed consolidation will happen when people feel better about the oil markets. as stocks pick up, that will give companies confidence. when that occurs, that is when you will see consolidation. it feels like a late 2018 issue. coming up, representative jeb hensarling. colleague,e into our tom keene, on the radio on "bloomberg surveillance." this is bloomberg. ♪ emma: this is "bloomberg daybreak." hour, we in the next discussed cryptocurrencies -- we discuss cryptocurrencies. another marathon week in washington with tax reform at the top of the agenda. other issues also in the spotlight. things like the fight over who will get to run the consumer protection bureau. kevin's really is on capitol hill with one of the decision-makers, jeb hensarling. the senate is likely going to vote on this tax reform package this week. will it go to conference? rep. hensarling: it absolutely is going to go to conference. that is the way the system is set up. there are great similarities between the two bills but there differences, too. kevin: including this trigger issue as a potential form of revenue. what do you make of these potential differences? rep. hensarling: it's important ,o a number of our members c what we call the sales and local tax reduction. in some form or fashion a portion of that will have to be preserved. those of us in the house aren't all that thrilled with the tax trigger. i find it to be a uniquely bad idea. i think it is bad public policy. we need to be able to tell corporate america and our small businesses this is your tax break. this is something you can count on. this is something you can go ahead and do capital expenditures and count on. what we know is it is not just economic theory but frankly economic history. having anence between economy grow at 3.5% versus 2%, the bottom line is we will be able to fill able deficit -- any deficit cold with additional revenues. we saw the same during the reagan tax cut and the kennedy tax cut, all the way back to the coolidge tax cut. the answer would be less spending, not more taxes. kevin: there's a lot of conservatives trying t basto the cipher how worried they should be about the deficit. rep. hensarling: if i thought this would exacerbate the deficit, i would not support it. everything i know about this tax package is that this will help bring about an extended era of pre-3.5% economic growth. 3-3 .5%d an area economic growth. the most important thing we can do with respect to the national debt, the greatest crisis we see , we need to reform current entitlement programs for future generations. that is a heavy political lift. so far, we haven't had any help from the democrats. the second most important thing we can do is grow this economy and bring in more revenues. i believe we will get more tax revenues than the static cost. bet my quite ready to soul were firstborn on it, but a money,decent sum of yes. kevin: i caught up with senator warren -- let's play what she told me and then i will get your response. >> when the american public gets what wells fargo did and the investigation that the cfpb conducted into this, all of a minute,hey say, wait a we are on the other side of that argument, you should have found it faster, you should have been more aggressive. kevin: what is your response? rep. hensarling: i'm glad she colleges the cfpb was essentially asleep at the wheel. it's curious to me that a former law professor doesn't appear to know the law because the law is that the president gets to appoint the acting director. that is the position of the justice department and the legal counsel at the cfpb coul julieb. the ninth circuit, traditionally a very liberal circuit, they have said the president can appoint an acting director. senator warren is on the wrong side of the law. what we need is a body that will enforce our consumer protection law, not make it up. what we have here is the single most powerful -- kevin: a rogue regulator, as you call it. rep. hensarling: we have a body that is congress, prosecutor, judge and jury, all in one. it tramples on due process. able,ve one unaccount unelected individual -- there is a fight over who will lead the cfpb. how do we best protect our consumers? an organization that enforces the law, doesn't make up the law. kevin: i want to play this forward into the next couple of months. that the regulatory financial reform will be something we talk a lot about. you have passed several laws out theour own committee -- chairman on the banking committee releasing some framework. are you confident that in the first quarter of next year or when does community banking relief -- rep. hensarling: kudos to the chairman. he's made a lot of progress in putting together a package. they will mark that up next week. i would hope that they would take it to the full senate shortly thereafter. i look forward to going to conference with him. i have no doubt that the senate will get their way on a number of matters. i would expect the house to get their way on a few matters. we are still losing a community institution a day in america. that is unacceptable. we have too many regulations clogging up the arteries of capital flow. the fact that entrepreneurship that'sl business a small business lending banks are at a generational low -- jon: great work. kevin cirilli down in d.c. credit suisse rising to its highest level -- alix: check out tv . you can watch is online, and track with us directly. this is bloomberg. ♪ alix: kroger reporting earnings, and it looks good across the board. sales were a beat. if you include fuel, up 2%. the company still sees a year cap x excluding mergers at $3 billion. a pretty solid quarter for kroger. we will be speaking with the cfo later in the show. being squeezed from both sides by walmart and amazon -- individual in six months ago come a credit suisse's ceo was asking shareholders to invest 10 billion francs to strengthen the bank's capital buffers. now coming he's talking about cash buybacks -- share buybacks -- --ning us thise market seems to like -- the stock is up quite significantly. this is a continuing stories and beginning of the year. executing on the strategy 2015, lessn tw trading and more study wealth management. today, the key is the new probability measure. investors are getting some bank cance of what the achieve in terms of profitability. divisionalion of the target for 2018, there had been some doubts over credit suisse's targets which seemed quite ambitious in the first place. now, it seems everything is on track. the signals for a dividend , this and share buybacks is a positive sign to the market. alix: i remember it many years ago sitting down with the former ceo and we always used to ask him what are you going to do with these investment banks. he was very reluctant to do what ubs has done. are they just replicating what ubs did five years ago? >> that is a good question. the strategy, it is a whole different strategy. they are using the investment banking capabilities for wealth management. the judge is still out on that. can they achieve these cross revenues from corporations between investment banking, global markets and the wealth management part of it? even say some investors would like to see the investment bank or global market being sized down further. overall, it seems this strategy is working out. key to these returns, the allocation of capital toward wealth management. jon: what is the mood with an credit suisse? we heard from the ceo earlier this week saying pay as good this be year. >> that is a good reminder that he is just two years through this restructuring plan. -- costs will remain consciousness will remain a significant part of this strategy going forward. this will be reflected into pa y. i don't know how this will be reflected at the end of the day in pay for investment bankers. you can assume that credit suisse will remain cautious about cost going forward. jon: thank you very much. prime minister of the united kingdom is speaking as she begins her middle east talks. we will bring you some of the headlines that come from that in just a moment. alix steel sitting down with lloyd blankfein and michael bloomberg. that is coming up. this is bloomberg tv. ♪ ♪ jonathan: deficit hawks turned up the pressure. president trump continues to make his mark on the federal reserve. opec sealing the deal, ready to extend production cuts in russia. from new york city, good morning, this is bloomberg: daybreak. i am jonathan ferro alongside david westin and alix steel. the picture, a firm one. all looks quiet and calm on the surface. in the fx market, a tale of two inflation stories. eurozone coming in a bit softer than expected. in the united states, we will get pce in about 30 minutes. treasuries have developed. alix: what is happening in europe, they are continuing to say -- see a selloff in u.k. gilt. also cable up by 4/10 of 1%, right around the highs of the session. we had that really steep slide from the faangs. now we are seeing futures up by 3/10 of 1%. brent because we are at $64 and i felt like it was worth it. the question being, how are they going to monitor? david: she is over bitcoin so quickly. time for the morning brief. half-hour, wea are to get some data about the u.s. economy that will include jobless claims, personal spending and core pce numbers. at 12:30, we will hear from robert kaplan. has afternoon, david mel will be discussing the trump administration's economic agenda. alix: president donald trump nominating -- to the federal reserve board. we talked about the nomination. getting a very accomplished academic monetary theorist who can work very well with the staff in thinking about how to address any issues that may come up in the future. whether it is intentional or not, it is good to have not necessarily everyone who is the same, but people who have expertise in different areas. alix: joining us more is michael mckee -- joining us for more is michael mckee. what do we know about how good friend will affect monetary policy. michael: is a very well regarded economist with interesting views , more about process. he is pretty mainstream in that. they told us in march that interest rates were too low. you will love expect to see him pushing against raising rates. -- you will not expect to see him expect -- pushing against raising rates. when you get to the zero lower bound, he does not love qe. he does not like mortgage bond buying. he supports negative interest rates. what might be the most interesting aspect is he thinks andfed should be preemptive raise rates as quickly as possible. if you get a tax bill that gives us a quick boost to the economy, then he might suggest the fed raise rates sooner. alix: where does that leave us with the board? it seems like more of the same. what are we looking at, now? michael: still fairly balanced under current conditions. the fed runsif into a situation where the economy slows significantly or speeds up significantly and inflation or deflation becomes a problem? we don't know what powell will do about it. we do know that goodfriend would take action, but the actions he would take are not out of the playbook that janet yellen would use. how old is got have any intellectual counter like -- counterweights on the board. with goodfriend, he might have some influence. jonathan: michael mckee, thank you very much. joining us around the table in ,ew york, jurrien timmer fidelity investments director of global macro and ashish shah alliance bursting lp head of fixed income -- alliancebernstein lp head of fixed income. jurrien: the fed is doing what many people thought was unthinkable, which is just to normalize policy. we thought the fed was painting itself into a corner. the fed is doing exactly that and under the current leadership, they really paved the way forward and as was mentioned, the real question is what happens if and when investment goes above the fed target? how preemptive will they be? policy will they push and will that trigger a yield curve inversion? we are still a fair way away from there. before we think about and overshoot, let's talk about the here and now. how are we going to reconcile? ashish: i think data is going to become more important. one of the key issues for the coming year is that the fed has become quite predictable and the market has become a low volatility market which is a challenge for the fed because the fed is raising rates. they want conditions to be tighter and they have not gotten tighter. yields are still below where we started the year. i think you're going to be seeing the fed increase volatility, uncertainty in the market and that is going to be healthy. if you look at the change in nominal yield, real yield since the fed started tightening, the changes are all within 10 basis points. there is little going on, on the rate side and of course earnings and stock prices are way up. liquidity has really eased this fight the fed tightening 100 basis points. it is a remarkable juxtaposition. we havene of the things talked about repeatedly is what the fed says it is going to do and what the fed actually is going to do. we have what -- had to say to surveillance back in march. >> we have seen wage growth strengthening. we have not seen the kind of wage growth that is explosive, but the economy is getting strong, operating on all cylinders. the key point is that interest rates are too low. david: you heard it, interest rates are too low. does that make it more likely that the fed's predictions will prove right? jurrien: the pricing beyond the rate hike that is coming with a 98% probability, the curve is pricing in two more hikes in two more years. $1.25 of that, we have a trillion balance sheet and how much is that worth? is that worth another 100 basis points? the market in the fed are quite a way away from -- quite a ways away from each other. repricing that will need to take place. the truthsh, what is that needs to take place? ashish: it is becoming a concern. i would have been the last person to expect that the curve would be flattening at this pace with tens at 2.35. we bring up an important point which is if we are going to go from this relatively predictable time to a unpredictable time, you not only have to worry about volatility, you have to worry about it on the equity and risk asset side. i think this is an important time for investors to be balanced in their portfolios between duration and equities, high-yield. what we have been seeing is investors are taking more risk in order to maintain income. that is dangerous. you have to stay balanced, especially when we are going to see rising volatility. alix: good stuff. jurrien timmer of fidelity investments and ashish shah of alliancebernstein, you are staying with us. coming up later today, i will sit down with lloyd blankfein, goldman sachs chairman and ceo and michael bloomberg. we will start but -- by discussing goldman's 10,000 small business program. we are also going to talk about bitcoin. this is bloomberg. ♪ emma: this is bloomberg daybreak: americas. i am emma chandra with your "first word news." opec is extending oil cuts to the end of next year. opec needs to get russia on board and is meeting with other countries, today. they're looking to firm up oil prices. in the u k, parliament is debating president trump's controversial tweets. -- retweet anti-muslim videos from the far right group britain first. demands thatg president's invitation to visit the u.k. be withdrawn. in the u.s., the senate is moving towards will could be a final vote on the massive tax overhaul bill as early as today. lawmakers voted along party lines to begin the debate. that does not signal that republican leaders will have the votes they need. if senate republicans pass the tax bill, they still have to work out differences with the house version before sending it to president trump for his signature. global news, 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. david: we may have a final tax bill as early as today and although there are a lot of important details being hashed out and a few compromises being worked on, we have a pretty good sense of how likely it is to come out. still with us are jurrien timmer and ashish shah. let me start with you. you said right now, it looks like it is between a robust 18 and a disappointing 19. ,f this tax plan goes through does a push it toward the robust 17 or the disappointing 19? jurrien: it is a good question. we have been in this midcycle expansion for years now and it looked like we were going into late cycle back in 2016 and then china related and we got this shot in the arm. continuingke we are -- looks like we are starting to go into late cycle again. when fiscal stimulus comes so late in the cycle, eight years into an expansion, the multiplier on the --lars you get back is this it is really very small. certainly not the types of numbers of 3.5% real. you really need to boost productivity for that it may that is what this tax plan will do. if it just boosts demand, the fed could offset it with more hikes. david: what do the income markets tell us about what to expect from the tax? ashish: i think it is going to be relatively muted when it comes to macro markets. the amount of upfront stimulus is going to be limited and that stimulus is unlikely to accelerate growth when we are so tight, particularly in the u.s.. if you look at the market, we have seen a tremendous amount of issuance. if you are a high tax market investor, to go into munis. supply had a dearth of the entire year. on the high-yield side, there was a lot of concern around this interest rate the deductibility. -- interest rate deductibility. instead of just going in the corporate's, which are negatively impacted by interest rates, come out of your high-yield portfolio or you can take it vantage of securitized mortgages, cm bs, as well as emerging markets that are likely to benefit from that growth that the stimulus will create. jonathan: ashish, growth is about to pick up. when we look at the broader high-yield market, it comes down to what part of the high-yield market do you want to be in? do i like subordinated banks? i absolutely do. financials are going to that of it from a lot of things going on but there is a lot of that issuance coming to the market. the where else can you see that than the bank loan market. are rising, bank loans are safe, what kind of return do they give you? you have one in three quarters. high-yield, you could have gotten five and three quarters but if you had gone into a product like our high income strategy, seven and three quarters and that is the value of diversifying and going toward those assets. jonathan: i was looking at alibaba, $7 billion. this demand is going nowhere. ashish: there is a tremendous demand for yield and it is lacking out there. it is creating this dearth of yield and duration. when investors say i am afraid of duration and rising rates, first, they have been wrong for seven years and i think it just reminds you how tough it is to predict these markets, so why get into the prediction game? run a balanced portfolio. bonds are there for a reason. i think stocks have been working really well, so maybe it is a good time to have some protection. alix: what if we get a trigger in the tax bill? those of us in the house are not all that thrilled with the tax trigger. i personally find it to be a bad idea and bad public policy. to tellto be able corporate america and our small businesses this is your tax rate, this is something you can count on. alix: now you have to deal with the fact that in 10 years, we might have a automatic trigger either way on spending. how do you deal with that? i agree that if tax cuts are not permanent, it may not change corporate or individual behavior. it is a valid point and if you are a company, you see this with brexit, nobody knows what is going to happen. companies are sitting on their hands. i would be skeptical to think that those triggers may actually end up in the bill. i think ultimately, it will be dynamically scored away. fiscal coming this late in the game puts the fed into play even more than it would be. my favorite metric is the natural rate and we are talking about the yield curve and i am not worried about the curve inverting. the real fed funds rate is just below zero. they are completely in sync. in history, there is a defined pattern that when the fed pushes rates above the natural rate, the curve inverts. you spark a deleveraging cycle and you get a recession. it happens time and time again and we are a couple hundred basis points away from that happening. i think it is still a pretty good landscape. a balanced portfolio makes a lot of sense, but i think the market is still pretty solid. jonathan: jurrien timmer of fidelity and ashish shah of alliancebernstein, staying with us. warnings to stay away from cryptocurrency are multiplying. >> bitcoin is successful only because of the potential for circumvention, lack of oversight. it seems to me it ought to be outlawed. ♪ jonathan: if you are searching for volatility, in the past 24 hours, we saw bitcoin surge past $11,000, drop more than 20% and now hovers around $10,000. >> bitcoin is successful only because of its potential for circumvention, lack of oversight. it seems to me it ought to be outlawed. >> authorities have not yet focused on the development of the scam. when they will, i think some people will get hurt. if you break down the world, there is tangible and intangible investments. to me, bitcoin is the ultimate -- is the ultimate intangible. there is nothing backing it, other than what somebody else will pay for it. >> it feels frothy. the real issue is not that coin, the issue is the disruptive nature of technology. the things we are doing in greece, the things we're doing in italy over time. the banks operating across south africa, all of them recognize the disruptive nature of technology and whether it is the application of block chain or core processing or delivery to customers and clients, financial services is being disrupted by technology. jonathan: still with usjonathan: -- jonathan: still with us is jurrien timmer of fidelity and ashish shah of alliance. i would like to know what happens with a 500 euro note in the eurozone if you can track it. fidelity, i want to know when i can get exposure to bitcoin from your shop anytime soon. the person tonot answer that question but in my i think the concept of a digital currency store value block chain, i think that is clearly a real thing, it is disruptive and it has a lot of potential. that does not tell us about what these actual instruments are worth. think back to the mid-90's during the internet revolution. how'd you distinguish the google from the pets.com? there is a price discovery process going on and i don't think anyone has the answer and that is why by definition, you see these wild swings were a goes up $2000 or down 20%. we are in that very chaotic discovery mode where even the insiders don't know where it is going. it is going to take some time. for the average investor, buyer beware because you need to do your homework. there is a very high learning curve. jurrien timmer of fidelity and ashish shah of alliance. numbersonal consumption are next. this is bloomberg. ♪ is this a phone? or a little internet machine? [ phone rings ] it makes you wonder. shouldn't we get our phones and internet from the same company? that's 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. choose by the gig or unlimited. and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. jonathan: we have had seven straight months of gains and we are about to get eight on the s&p 500. futures are firm by about a third of 1%. ,s we await some economic data let's just went through the bond market. a bit of a -- whip through the bond market. the dollar doing not a whole lot against the euro. in, even with inflation coming in below expectations. in the united states, here is the data drop. in line with expectations. back in line with the estimate and with the previous number. core pc month on month also online. initial jobless claims come in better than expected -- expectations. personal income, 0.4%. personal spending coming in at 0.3%. revisionall downward to the previous month. that was a mouthful. joining us from new york, michael feroli, chief u.s. economist at jpmorgan. 1.4%. what does 1.4% mean for the debate at federal reserve? michael: it probably does not change too much. it is in line with expectations. we are seeing a little bit of an improvement, but not of much -- not enough for some of the doves on the fed. the last three months, it is looking better but not improving asked enough to ease those fares -- those fears. alix: personal consumption came in and was not terrible, .3%. the saving rate rose 3.2%. you were a little more pessimistic about consumer spending, but these numbers seem to imply we are holding up ok. michael: consumption looks good and that is after a strong september. the fact that we are seeing strength continue in october is a good sign. i think consumption in the fourth quarter getting off to a good thing. we will see how auto sales are. alix: what about the 2018 -- what about for 2018? michael: we do think growth cools off a little bit, but is still good enough to keep pressure downward on the unemployment rate. we do think it is a year above trend growth and we will see how fast tax reform moves through congress. in the bond markets, inflation is not going anywhere and you mentioned the doves. i wonder when the doves can really assert themselves on the fomc because so far, there is not much evidence they have. michael: it sounds like we are setting up for a december hike and we think they continue hiking for next year. there are some doves that have been worried about the inflation undershoot, but most of the committee including the leadership are keeping an eye on the falling unemployment rate and that is leading them to be more forward-looking. we think they continue hiking once a quarter, next year. jonathan: it has rebounded in the last week or so, but the minneapolis fed president says the time to worry about that is now. when you think the fomc starts getting concert? in terms of the spread, the curve. michael: in terms of the level we are at, what we were seeing in the late 90's when the fed was hiking, they are not looking at that spread the way the market is and i think their job is to continue tightening as long as they think the risk to unemployment or inflation is there. you can look at this in another way in that the fed has hiked several times since last year. that is arguably something they have to lean against and continue hiking. david: might the hawks get a little help from congress? janet yellen said it depends on why you get growth and if you get it wrong productivity, that is just fine. from you get it productivity, that is just fine. what happens with taxes? how does it affect your view on inflation? michael: the sooner we get a tax package, we do think that pushes growth a little higher, next year. process seemsthis to moving faster than we are anticipating, i think that does add some tightening bias for the fed. alix: michael feroli, great to see you from jpmorgan. still with us, jurrien timmer of ability and ashish shah of a be -- of ab. ashish: i look at the overnight and you needar five hikes assuming the 10 year does not move, to get the curve to flat, so that would be december plus 14. clearly the market is not pricing that in. the way this has been working for the last three years or so is the fed wants to do something, it floats a trial balloon in the market either accepts it or reject it. -- rejects it. you look at the odds for a large height after december, it is about 65% after that, there is nothing above 50%. this is very much a quarter by quarter conversation we are going to keep having. abouterminal median. is two and three quarters -- median dot is about two and three quarters. if the market is under fed, -- under pricing the i think that it a strong argument to say next year we could see -- see this play out quite strongly. 2018, north of 2.1%. if the federal reserve move towards that on a policy rate, when -- what is the two-year going to be by spring? we are going to be 30 points south of where the 10-year is trading right now and if the federal reserve gets more to buyive, the bias is the long end and sell the short end. it could happen literally in five months. jurrien: it comes down to whether the market is perceiving the fed to be making a policy ever. if the market is like they are creating a policy ever, the new long end will be big because it is looking past that. towe get inflation back up 2% and the economy is overheating and we get fiscal, at that point, the long end is going to go up in yield and that may offset some of the flattening. ashish: we have to remember that the policy ever is going to have a lot of impact -- error is going to have a lot of impact on equities. looking at yields and sitting back and saying that is where our concern should be, we have to remember this is a new fed. you have to medication challenges. it takes them time -- communication challenges. it takes time to understand what the market is saying. you shooting -- you should expect an increased level of volatility. that is going to impact stocks. david: i wonder if there is a certain hypothetical nature. if there are going to be four hikes next year, it is because they have seen data that is not consistent with what we are seeing now. janet yellen testified she expects wage pressure to increase. if it doesn't, do you expect them to go ahead, anyway? ashish: i don't think they will. the fed has proven themselves to be very forward thinking in looking at the conditions. nott of the models have incorporated the fact that there is a tremendous amount of debt outstanding. i think that the policymakers, themselves, understand that if they crash the stock market, that there are going to be economic implications. while the key planning on having more hikes that are likely -- likely, what actually transpires is they don't go enough because they are not tightening into the market at a reasonable pace. jurrien: i agree with that. ultimately, inflation is what killed the cycle. it is what that kills the cycle -- kills the cycle. the availability of credit goes away. in the absence of inflation, the fed has the luxury to continue to normalize policy. something that seems unlikely a few years ago, so why upset the apple cart? keep going at that pace unless inflation forces are hand. david: jurrien timmer of fidelity and ashish shah of ab, thank you for being with us. bitcoin has been on a wild ride. some are calling the cryptocurrency a bubble. we will hear what an important regulator has to say on that, next. you can hear tom keene in new york, boston and the bay area. live from new york, this is bloomberg. ♪ emma: this is bloomberg daybreak. hour, an in the next exclusive interview with lloyd blankfein, goldman sachs chairman and ceo and michael bloomberg, bloomberg lp founder and majority owner. this is bloomberg. now to your bloomberg business flash. sears is soaring in premarket trading. the retailer reported a narrower loss than a year ago. the company lost two thirds of its market value in the last year. kroger is finding its stride in the face of stiff competition in the grocery business. posted same-store sales that beat estimates. they are facing doubts they can survive as amazon.com expands into the grocery business. the fight between the london stock exchange group and an activist investor continues. ceo wasot happy the pushed out of his job. the board has refused. whether it is the banking system or cryptocurrencies, we too often focus on the federal government's role in regulation, overlooking the fact that states play a vital role in structuring and policing the markets. first among equals and state regulations is right here in new york. we welcome the woman in charge of that regulation, maria vullo, the superintendent of the new york department of financial services. what the roleyou you have as a regulator is in licensing things like coin base because we had this huge fluctuation, yesterday. a drop of 20% in bitcoin because of reported problems with point base and gemini. maria: as you mentioned, new york is leading in regulating bitcoin and virtual currency in general. we keep on top of the companies that we regulate. we knew what was going on, yesterday. they areking sure that doing the things that they need to do so it does not happen again. we also impose capital requirements to protect consumers. that is why regulation is so important and why new york took the lead three or four years ago with the bitcoin license that we now have six companies. david: you require certain capital requirements. what other things do you require? maria: our application process is vigorous, lengthy, deep. we want to know who owns the company, who the officers are, antilock -- it's a minor a lot -- anti-money laundering, cybersecurity protections, we want to make sure they have the appropriate capital and liquidity. just as you would license a bank or insurance company, you want to make sure that they are safe and sound and that they are appropriately responsive to new yours consumer protection laws. -- new york's consumer protection laws. david: when did your staff start to do as soon as this crash? maria: we were in contact with our companies, we were on top of this and we will have more interaction in the days to come, to ensure what happened does not happen again. obviously those types of things can happen once in a while. the currency went back up, afterwards, but there was not a lot of traffic and that is showing the growth of this currency. as regulators, we have to be on top of that but we also have to foster innovation. the consumer financial protection board, it is not clear who runs it, that is being litigated. what is your relationship with the cfpb? since the agency was created with dodd-frank and my agency has had a terrific relationship with them and with the first and only director, to agency and his senior staff. we worked on matters, together. i believe strongly in the importance of a federal consumer protection agency. the states have a critical role to play. my agency for new york, we have robust consumer protections. we have the ability to bring cases and claims under dodd-frank. we will continue to do our work, perhaps more so because we will have to fill gaps if that robust enforcement does not continue. david: exactly my question because this administration has been not to shy about saying they have skepticism. mr. mulvaney who has come in as the acting director has been quite critical of it. if they really change the do youon of the cfpb, have the wherewithal to step in and supply with a have been supplying? maria: we will do what we can in new york to protect new yorkers. i think it is an incredibly important agency. it has 50 state jurisdiction and i am a strong supporter and i would hope that whoever leads it in the future has consumer protection. if that does not happen, we will fill whatever gaps need to be filled in new york. we have done a lot of that in the past year. we have done it in health care, lots of different areas. the banking industry, the insurance industry, wherever it is needed to make sure our markets and consumers are protected. vullo, new york state's department of financial services superintendent. thank you. alix: coming up, the largest supermarket chain in the u.s. versus amazon versus walmart. we will speak with mike schlotman, the kroger cfo after they had a killer quarter. -- ou have a you can go to the blue bar and ask us a question. this is bloomberg. ♪ alix: kroger shares are up in premarket. the company reported earnings that beat estimates across the board. you also had margins coming in 22%, better than estimates. on the whole, the stock had been under pressure after amazon's takeover of whole foods. joining us now is mike schlotman, the kroger cfo. great to see you. mike: happy to be here. alix: can you keep maintaining 22% margins when competing with amazon and walmart? mike: the margin growth this quarter was fueled by several things. a very strong quarter for our brands which carry a higher margin. it softens the type -- the top line a little bit. the growth in units of that and contributions to the market was quite strong. folks are buying larger packs at a slightly higher price point and those often carry better margins as well. a lot of people converting from traditional products to natural and organic products which has a better help only as well. the last item is we have been diligent about making sure we partner with our cbg partners on getting the right cost of goods and you are seeing all of those come together and flow through the income statement. we like the mix of what we are seeing. alix: how do you deal with the pressure from discounters? you have other areas, other companies entering the u.s. market. aldi is expanding. how do you manage that? our associates wake up with one thing in mind and that is to give a great shopping experience and a great value to our over 9 million customers. we have a undying focus on our customer, knowing what they want, knowing the price points they want, knowing the assortment and selection they want, knowing whether or not they want to shop online and pick it up at the store or come to a brick-and-mortar place, we are trying to address what the customer wants and needs. we have seen everything. any company who justin still and does not change would not be around 134 years. changingtinuing lee and chain -- and adjusting to the marketplace. jonathan: how are the convenience store sales going? mike: the process is unfolding. there has been demand. that is about all the update i can give. we have been happy with the demand we have seen for the asset. i want to remind the folks how much we appreciate their diligence and the value they have created inside that entity as we go through this process. jonathan: shareholders seem to like it. i'm wondering what kind of time horizon you have to get this done. mike: as we come into the holidays, this month, i don't , ank we would see anything transaction that gets signed until after the first of the year and then depending who the winner of the process is, that will determine what kind of process that will or won't be with the ftc. i would say early next calendar year. it would certainly be earlier, next year. alix: mike schlotman of kroger, thank you for joining us. coming up, you don't want to miss my exclusive interview with lloyd blankfein, goldman sachs chairman and ceo and michael bloomberg, founder of bloomberg lp. i may ask them about bitcoin. jonathan: looking forward to it. 34 minutes away from the opening bell. we will bring you that. in terms of what the action is happening, it is not inequity markets. -- not in equity markets. the story in the bond market, a little something like this. yields up by a basis point. the dollar showing a bit of weakness against the euro. the opening bell, coming up. this is bloomberg. ♪ ♪ jonathan: deficit talks turn up the pressure, senate republicans hassle for the vote to get the bill approved this week. president trump making his mark on the federal reserve, nominating professor good friend to the board. and investors turning bearish on tech. the biggest decline in two years. and for our audience worldwide, good morning to the third hour of "bloomberg daybreak." i am alongside david westin and alix steel. we are looking at market action. futures down by a third of a percent. yesterday, the headline numbers spelled out calm. it was anything but the need the numbers. vicious on the s&p 500 in the last 24 hours. fx market, the euro is firmer. even with numbers coming in below expectations. in the bond market in the u.s., u.s. treasuries unchanged after the selloff yesterday. 239 is the yield. and let's get you to the movers ahead of the open. alix: take a look at kroger, up 10% in the free market and heading toward their best day since march 2009. the second straight quarter of better than estimated sales. over 1% positive now for two quarters. earnings around 10% better. we spoke with the cfo and he seemed optimistic about his battle that he will come from between walmart and amazon. they got a lot of boost from homemade store products. and -- taking it on the chin. nokia in talks with the juniper, or that they are preparing a takeover bid -- it was on a nine day losing streak. wasrumor was nokia interested and they want to help the network unit that has been struggling, but apparently that is no longer in play. take a look at tech, paypal and nvidia, what they are doing, about up 1%. these are the winners and s&p tech index. and 69 tech stocks in the index lost a 140 -- lost $145 billion in one day. this is their worst slide ever. now we have a modest rebound, up by 1%. and the question, why? we will tackle that later. jonathan: we have spent so much time talking about this, and not the processing companies. david: that is right. jonathan: wow. david: growing astronomically. jonathan: another big story, how the percent -- present will populate the federal reserve. he is nominated good friend. we spoke with his college earlier about what do -- his college earlier about what to expect from a nominee? >> the initial reaction will be that he is more hawkish, he believes in monetary rules, but i would point out that during the financial crisis, those monetary rules work only for extremely aggressive monetary policy. in fact, marvin has done a lot of work on what you do with the zero lower bound for interest rates. righthan: joining us now, michael and ashish. i am struck by how balanced this board is shaping up to be given about nine months ago we were worried about the individuals that would populate this. they seem like mainstream guys populating the board. is that your take? michael: at least with the chair, i would say yes. i had assumed they would go outside the current board in making the new nominations, so jerome powell is a vote of consistency in that regard and obviously with testimony in front of the senate that appears very balanced. goodfriend is outside of the mainstream. that is not mean he will be volatile in arguing for wildly different things, but the role of the governor is different. he has been critical of the fed's policy in the recovery and asset purchases, and feeling like the monetary policy was moving into fiscal policy. he has different thoughts and i expect them to be aired out at the table, but at the end of the day he will hue the line. jonathan: any reason to believe that the federal reserve will be different next year from the one we have experience through 2017 so far? michael: initially, no. why have been saying is in the near term this is a continuity situation, so the data would have to materially differ. that means -- in terms of the progress and the perspective rate hike path, i think that is more or less in line with where it current of fluency sees appeared in the inflation data this morning, very consistent with a rate hike in december. the three-month annualized rate to 1.6e pce is related grade we will see more as the committee expects and and and that is more about a gradual pace of rate hikes going forward. very much what you would hear from janet yellen. david: so what the fed does will depend on what is happening at the time. at the same time, from what we know little bit about on what professor good friend has a said in the past, he will not be extraordinarily dovish. he said to our colleagues last march -- >> we have seen wage growth strengthening, but we have not seen the kind of wage growth that is explosive yet. the economy is getting strong. it is running on all cylinders. the key point is the interest-rates, they are too low. david: that is pretty direct. maybe it will look different once he is sitting there, but is this at least on the margin making you think that we may be more hawkish? fed think in aggregate the in 2018 will be modestly more hawkish than it was this past year. that does not mean that they will hike more than two or three times. i think the first thing the market has to wake up to his we might get more inflation next year and if we do get higher inflation, we will wind up with core pce running back at 2%, then you will have members who are going to say, hey, three hikes at least, if not for of them for 2018. i think the market is not set up for that. hikes nextng in two year and we start pricing in a third or a fourth, you have more curve flattening, more gaps in the market that get a little bit squeamish at the fed is hiking too fast, especially since we do not have the realized inflation picking up significantly at this point. david: how do you see it, michael? what is likely and what would be the likely reaction from the fed? michael: i would echo the comments just made. the november moments assessments were taken as dovish. several things have happened now. we have an unemployment report the has put the rate of 4.1%, that is where the committee has it at the end of 2018. solid pce and cpi reports. we have had jerome powell nominated and making his way to be the next chair, so if you put taxes stimulus and the tax cuts on top of that, i would agree that if you are sitting at the end of q1 and this comes out, that is a three have before hike outlook. jonathan: we are running at 1.4 club of growth -- 1.4, but growth is running a 3%, are you concerned about financial instability that could build if we continue to be growth rich and inflation poor? michael: that is a broader concern. that is why, the idea of what do you mean by inflation and should include asset prices or just consumer prices? michael is not necessarily to get things tight, but to get monetary policy neutral. not restraining the economy. in the back of their mind, that is what could happen with financial stability if we do not do that. i do think it is a component in their thinking. jonathan: michael, where do you see the neutral rate? we are: at the moment estimated at zero, so maybe 2.25 if you had to get there today. jonathan: looking at the situation in the bond market, the treasury market is a saying you are making a mistake, in the eyes of some. in the as of others, that is not what it is saying. you think it is the former and not the latter. ira: i think curve flattening has also do with the fed at this point. if the federal reserve is going to make the policy error, which some people worry that they will, if they get more hawkish. the curve will be the vote of confidence on the market. david: why do they need to get more hawkish? the statute says price stability, it is not actually say 2%. what, how does that drive them? ira: you know, from their perspective has to do with future expectations. we do not want to inflation to get out of the way. i think behind the scenes they also want some ammunition to deal with another slow down. if there is another slowdown, maybe not next year or 2019, but at some point they want their first move to be in the fed funds rate, instead of doing any extraordinary measures like quantitative easing, which is some members of the fed would probably be against doing again and i think that that is one of the things in the back of some of their minds. they want to get away from zero. david: may have gone away from it a little bit. how far do they have to get in order to have something in their toolkit in case of a downturn? butael: at least above 2, in a normal downtown they are cutting about 400-500 basis points. they will be thinking about unconventional policies at some point in the future. i do nothing they can do it based on rates alone and that is the missing component of the senate testimony, how committed is the fed committed to using unconventional policies and what might that look like. jonathan: we have had inflation data from the eurozone and the u.s. today. 1.4% ineurope and 0.9%, the united states. the spread on 10's is north of to roger basis points. on 2's, it is even wider. take the economic data in europe and compared to the economic data in the united states and look at how the bond markets are behaving, it is hard to add things up. ira: instead of looking at the all right level of the u.s. 10's versus europe, look at the shape of the curves. the curve in europe is extremely steep. when you have -70 basis points and 10 year notes at 40 basis points, that is a pretty big spread and in terms of the ship of the curve. in the u.s., we are flatter. i think it shows you the difference in both the outlook for inflation and the outlook for monetary policy, at least in the near term. jonathan: we really appreciate your time. michael and ira, thank you. coming up, alix steel has an exclusive interview with the chairman of goldman sachs and michael bloomberg, the majority owner, to discuss 10,000 small businesses program and how they are taking it to washington. we are 19 minutes away from the opening bell. yesterday, it was calm on the surface but volatile beneath with an aggressive rotation away from tech and into everything else. futures up a third of a percent, dow futures up 126. treasuries doing not much after the selloff. and a weaker dollar starting to creep their against the euro at 1.1858. for our viewers worldwide, this is bloomberg. ♪ ♪ jonathan: this is "bloomberg daybreak." futures of this morning, of the 10 points on the s&p 500, and positive on the dow as we go toward and eight strength -- a straight month of gains. i want a crossover to alix steel who is standing by with special guests. alix: welcome to our bloomberg radio and television audience. washington dc is on the cusp of tax reform, but does it help the right people? small businesses is the engine of growth for the economy and goldman sachs and michael bloomberg are leading the effort. goldman sachs's 10,000 small businesses coaching program has helped the graduate raise revenue and almost 50% have created new jobs within six months after finishing the program. now they are taking the conversation to washington dc, in february hosting their first ever 10,000 small businesses summit. the big power of small business. joining me now is lloyd blankfein, ceo and chairman of goldman sachs. and michael bloomberg, the founder and majority owner of bloomberg lp. really great to talk to you again. >> good to see you. alix: coming about this in february. >> we have had the program for quite a while. we have made it subgroups. we are in a couple dozen series -- a cities and everyone can while we convene to again catch up with the people who we have helped train, but also to bring them in and hear from them, what are the problems, opportunities, and what are there challenges that they face. we started to do this thinking that we should do it on a bigger scale, so we we are going to invite -- so we are going to invite our graduates come almost haveof them by now, and we over a couple days some seminars, breakout sessions, we will communicate what we think would be good information. we will listen to them about their concerns, whether it is regulatory, access to financing and other things. that will be the first day. on the second day we will take advantage of the fact that we are in washington and we will communicate with political leaders and have are presented us there from our group of almost every state, and we will invite their politicians to listen to their concerns. alix: that is an excellent point to get into, michael, which is small businesses be asking for from the regulators? they would clearly like lower taxes. if they had lower taxes they would probably use it great more jobs and expanded their businesses. if you look at the big businesses, i think surveys have said most the ceos have said they will not create more jobs, they will give the money back to stockholders, so the leverage of reducing taxes for small businesses is exactly what we need. we have a problem in this country, we do not have enough jobs for those people that do want to work and we do not have enough new companies that will give us the big companies of the future. we need them. and that is what i love about goldman's 10,000 small businesses, he is feeding the next generation of jobs and big businesses. alix: first of all, is that true? is that what you hear? ors will be more on buybacks a different kind of investment? lloyd: we decide that based upon the opportunities. i do not see it as such a big schism. if we return, you know, if we have access money more than we thought we could invest properly and returned to shareholders, it is not like we are putting it in a bonfire. we give it to shareholders and they invest it. they invest it where they think there is going to be growth. it inhout we could deploy our business profitably, we would invest it in our business. if we have access capital we were tended to -- if we do have some excess capital, maybe we will going to shareholders and they will put it in their own small businesses. it does not evaporate, it moves to the place where it is most needed. where it is leased to needed is probably in government waste. i would prefer taxes to be reduced and of the government made more efficient, but whether or not we can deploy it or whether we give it back to shareholders so they can deploy it, it will go to the right place. alix: michael, the tax reform on the table now in the senate, does that make small business people happy or not? michael: i do not think anybody knows what will come out of negotiations going on in washington. the tax bill should require the great minds and lots of study and lots of discussion and getting experts and creating something that fits together and has the right balance between helping one part of our economy and another part of the economy, encouraging certain kinds of behavior and discouraging other kinds. this tax bill is being written in a committee where they say they will add anything to the bill to get another votes. this will not be a tax bill, it will be a vote on whether you can carry guns, on whether or not religious organizations can lobby congress and spend money to do it, a lot of social issues that are getting added in, and that is really dangerous about what is going on in washington. alix: you said you did not know if this was the right time for a thatill a few weeks ago, deregulation could have a better benefit to the economy. if small businesses cannot get access to capital, or they cannot access it 100%, what are the d regulations that could help? lloyd: some of the regulations on banks, we are not presently a lender we are mostly an investor bank, but some of the regulations, licensing requirements, the bureaucracy directly impedes small business and there, is virtue and some of the regulations so we do not think you should eliminate everything, but we should look at it as efficient regulation and not redundant regulation. and regulations that impede lending, that force banks to hold more capital against the loans they make, that make lending to small businesses at lower scale in a margin on profitable, so it gets withheld and there is less liquidity. those are in the first order, the consequences on the financial institutions, but the second order effect they of apps -- they of consequence is on those that use financial institutions. alix: if we get some sort of deregulation you will be lending more to small businesses? lloyd: this is something we have a perspective on, but look, the cheapest form of stimulus that you could provide is peeling away the redundant in excess of relations. now, what is redundant and what is excessive is often in the eye of the beholder, but i would say after many years of just compounding regulation upon regulation, it would not be a bad time to take a look at it and say, what really has been effective,, what has not, what is redundant what is necessary, etc., so this is not a call to end everything put into place over the last few years. alix: come on. we have to make news here too. michael: let me say something about small businesses. and taxes if the tax rate is the difference between you growing and not growing, you do not have a business. let's get serious. it is like a worrying about your rent. it is an expense. the bottom line is if you have a business where you can create products people want to buy and they will pay enough for you to cover your costs, plus have a profit, that is where you will grow. alix: for small businesses and businesses in general, when do they have to have a bitcoin strategy? michael? michael: not in our lifetime. alix: really? michael: forget about whether you think it is a game or a fraud, small businesses have to worry about how they will attract five people to produce a product, how they will figure out how to sell it and keep the door open and clean up at the end of the day. small businesses are aware that the rubber meets the road. they are not dealing in extensive transactions, they are try to create products people want to buy and it is one person selling to one person more so the in the things that we talk about. alix: ok, you have not rejected or endorsed bitcoin, but when does goldman sachs have to have a strategy? lloyd: not today. alix: when? lloyd: i would say life must be really rosie if this is what we are talking about. alix: ok, i was talking to jeff currie the other day and he said the only thing people are asking him about his bitcoin. you are a huge investment bank. lloyd: yes, i am thinking about it because i get asked about it. look, where i am is it is not for me, but there is a lot of things that were not for me in the past that worked out very well. if it was 20 years forward and it worked out i would tell you why it did work out, but based on everything that i know i am that guessing that it will work out. i cannot say, i will not say it is a fraud, because it might work. michael: i think people confuse bitcoin with blockchain. there is a technology where you can have different access to data and different people can control it and you can see who is doing what. there are places where that is a useful thing. the bloomberg system is a block chain, but instead of having the users control it, we control it, but it has all the attributes. bitcoin is different. there is a whole different array of cryptocurrencies, every day you see a new one. that is something very different and whether or not the governments of the world will lose control of monetary policy, i am skeptical. they will not let that happen and they shouldn't. lloyd: it does not feel like a currency, it does not feel like a stored value. it is quoted up and down. alix: maybe not a currency, but a commodity, and you grew up in the commodity business, so talk to me about what are the unregulated trading world of bitcoin. where is the father going to come? -- fraud going to come? lloyd: first of all -- alix: is it price discovery, buyer, seller, where is the risk? lloyd: one of the main uses is for perpetrating fraud, because you cannot trace it. alix: so is cash. lloyd: it is hard to do millie cash. -- accumulate cash. michael: look in china where they're basically getting rid of cash. everybody is paying with their smartphones. people begging in the streets have a sign next to way they are sitting on the streets, these people need help from society, they are begging for money and they have a sign with a code on it, a qr code. you point your cell phone at the code and you hit a button and they have a bank account. that is the way that they get money. they are going in that direction, and they have gone a long way. india is doing the same thing, getting rid of cash. then you can stop the black market and the drug dealers and contract for all the currency is going. we will not go any different direction. america may not be ready to go there, but we will be left behind if we do not because there are more efficient ways of paying for goods and services. lloyd: they will know what everybody does with their money. michael: google already knows. alix: amazon, by the way. that is a good question, you have to be thinking about investment banking strategy at this point. i cannot believe you are not. lloyd: no i don't. alix: you are not talking to your guys about it? lloyd: no. it is just, we will see. if it works out and it trades like a stored value and it does not move up and down 20% and there is liquidity in it, we will get to it. the original question was, when do small business people have to think about their bitcoin strategy? i would worry about opening the doors in producing things people want to buy, dealing with their business planning. alix: if i'm a client and i say i have to get exposure to bitcoin, what do you tell them, not yet? lloyd: let me make a call and see if i can help you. alix: what would that kolbe -- call be? what is that? lloyd: when you say you need to have a strategy -- do you have bitcoin, is that why you're asking? alix: no. [laughter] alix: i have to say. no. [laughter] lloyd: there is not a question -- he does not have an answer because there is no question. : michael this is -- michael: this does not really have a utility other than maybe to try to hide a few transactions. even that my drug dealers cannot use bitcoin -- even that, drug dealers cannot use the coin. it reminds me of how on bloomberg television and radio, every day i listen to people who are very smart and they talk about whether the fed is going to raise interest rates by 25 basis points in the next six months. what are you going to do? i'm mean, what are you going to do with the information? i hope the fed -- [indiscernible] michael: then i want you to do that. alix: ok. i want to end with the piece for the new york times, really interesting extras a of harvey schwartz -- lloyd: i do not read these papers. alix: i can quote it for you. planned to dine at his desk for 11 years and then 10 years exceeds those of his recent predecessors and guessing his replacement has become a parlor game. goldman faces a choice between two distinct characters, harvey schwartz and david solomon." is it a done deal that there will be one ceo when you decide to retire? lloyd: i could not hear anything past of the dine at your desk thing. i do know what to give anybody false hope. i just meant it was not going to happen soon. alix: is it a given that there is one ceo want to leave? lloyd: no, i do not know. these are decisions -- michael: this is a tradition. alix: you have done it before. lloyd: yes, in fact i have been now.for 11.5 years my predecessor was a co-ceo. and he had john weinberg and john whitehead. hasoldman sachs as a firm had a long tradition of co-ceos. it can work if it works and people get along, but it does not necessarily have to work. there is -- that is not a guarantee and it is something that the board would work out. alix: any timeframe for that? lloyd: we are closer to that then we were yesterday. [laughter] alix: ok. really great begin with you. the chairman and ceo of goldman .achs, lloyd blankfein michael bloomberg, think of very much. jonathan: let's go to some of the action. stocks opening up firmer in the united states, the s&p 500 up 4/10 of a percent, the dow over 110 points up. and the story in the bond market looking something like this. the treasuries, unchanged through the morning with core pce coming in pretty much in line with what you can't miss were looking for -- what the economists were looking for. treasuries flat since then. yields at 238, 239 on the u.s. tenure. fx market going nowhere. some euro strength and some sterling strength as well. now we will go to our bloomberg intelligence chief economic strategist around the table with us. calmt looked very yesterday, but beneath the surface was a vicious rotation taking place. what were your takeaways? >> a couple things going on. it started yesterday, but really they did before with the regulatory wins potentially shifting with the new fed chair, and then it extended into a rotation out of tech yesterday, so i think it is a lot of end of the year rotation. it is the season, you tend to see rotation going into december and january. we looked back at 2009 and you have never seen a sector that are performed in january to november, at performing in the month of december, so this is customary. this is what we tend to see at the end of the year. it is turning. no fundamental news really for this. i think it is rotation related to policy potentially, but that is all. jonathan: is this what that was yesterday? >> yes, think about the massive run. you look at the stocks in particular, you had a tremendous monday,iday, cyber but i view this as a blip. we are in the middle of the names running up and if you look at core growth and multiple expansion, you will see this is the, not some is a start of a trend but the sellers out there that we are continuing the rally into the year and. -- end. jonathan: as you have allocated toward tech this year, it has been a growth story, maybe related to what is going on in washington dc. as we go into next year, start thinking a little bit more about the latest cycle, is tech a part of that? >> i think it is. i think you have to be more careful about where you allocate within tech. we have noted small-cap tech offers a tremendous valuation discount and faster earnings growth. some shelter from what is likely to be a big sector rotation because of changes next year. i think it is still a story and a secular growth story, the rates are strong. but i think you want to start to really pick your allocation differently within tech, and that will be important for performance. you know, clearly google and facebook, and microsoft and apple have done quite well for the last several years, especially this year. maybe the areas within tech that have not done as well will offer good opportunity. david: she makes a good point, tech covers a broad territory. b toay i think of it is b, instead of b to c. i am looking at the cap x. as you look at 2018, what does that tell you about the sectors in tech? you canu look at b2b, look at amazon and obviously microsoft, google, further down the chain, but that will be a huge a shift from a stickler perspective. aree are comments -- there some like cisco that are getting their game moving, but to your point on a small cap perspective, looking at some secular shift, you look at business to consumer i think that there will be a winner, specifically in the ad space. and you look at other areas with increased cap x, that will be huge for these names. i think it will be pinpointing who the winners are, it is not just a rising tide. that will be the difference between 18 versus 17. david: if you look at the ship to the clouds, you are suggesting there is more to come. we know amazon will benefit, we know microsoft will benefit, who else will be the beneficiaries? who will there be more demand for? >> you look at names like cisco, making the cloud shift. i think with cybersecurity -- there is going to be a next up that benefits in terms of spending. you have seen the huge cloud deployment, now it is how to protect it. i think cloud security and cybersecurity, there will be a lot of benefits. out there. jonathan: i was looking a big names, facebook. are you looking up pullback as a big opportunity to get back in? >> that is how i view it. when you look at facebook, it is an investment year, 2018, i think this is ultimately a name that when you look at the numbers next year on growth, overall underlying spending, you could see numbers individually higher. jonathan: that is something that has dominated conversations, the change in mood in washington dc and their approach toward these companies and has not mattered so far for investors or analysts. you look at the year-to-date performance for some of these companies. but what about next year? >> i think it will start to matter. i think investors have sort of shunned it, but now it is how does it affect the company's positive or negative, do you see the regulatory start, and the big bang will be repatriation and tax implications, because we estimate that to be about $400 billion up to $600 billion coming back in. and you have pros and cons. i think investors are really focus on what is happening on the beltway. david: spend time in the beltway and talk about time warner. when a lawsuit was filed, it was reported on the bloomberg that there were shivers that went down the spine of silicon valley, because what my this prevent in terms of consolidation. is that right, could this have a cooling effect on tech? >> it could and it has had a cooling effect on the broader tmc grouping. it is not only potential for mergers not going to and not adding support to the sector, but it is potential for greater regulation, which is in contrast to the rest of the s&p 500 where you have improving potential for m&a and for regulation to sort of scale back the impact on the sectors. tmt has potentially the opposite scenario, where i think it is a relative gain they are trying to weigh out. at&t and time warner is one instance, we have had other news on the m&a and we do not know if this is a harbinger of doom, but i think it is something investors are trying to weigh out and watching carefully. david: even as we look at tech, we are also keeping an eye on financials. they have been on a tear this week with the s&p by financial posting their highest in a decade. investors anticipate that the banks could be among those the benefit the most from a lower corporate tax rate. we welcome over the telephone charles peabody, who covers the major u.s. banks. is the analysis right that the reason why the financials are being driven up is because of the anticipation of a lower tax rate? charles: i think it is a competition of liquidity from central bank excess and the concept, a function of both the religion and tax reform benefiting the banks. i have questions about the reality of that, but that is the concept driving the stocks. jonathan: why do you question the reality of that? charles: the core underlying business dynamics have not improved this year. i have espoused three or four teams that so for the fundamentals have not really disproved, and those are that financial activity is decelerating, not accelerating, and you see it with trading activities and the loan growth. you are at an inflection point in terms of credit quality and you have started to see deterioration on the consumer front and i think next year you will see it on the corporate fronts. and you see diminishing returns from higher rates. in the sense that yes, rates have helped, but we have not seen yet the negative impact from the deposit data and you know, the impact on leverage of higher rates. so at the end of the day what you had this year's earnings really going sideways, d profitability was seen in the first quarter for this group, and investors are essentially paying multiples on peak earnings in the sense that they have not adjusted the earnings through the cycle with credit costs, yet they are putting in the benefits of deregulation and higher rates. jonathan: a lot of moving parts, but at the very beginning you mentioned the loan growth. i'm interested in what you think underpins that given what the consumer confidence is, and where business confidence is, and any reason to believe it could turn next year if the tax packages delivered? charles: i think it depends on what is in the tax package. if there are triggers, i do not think it will turn loan growth. it is hard for a ceo to make five or 10 year capital decisions on a tax package that may not sustain itself. we are seeing improvement in the card borrowing space, but you are not seeing broad-based improvement. what is worrying to me is the space, demand in the cni because that is a critical indicator of the end of cycle type activity. david: charles, break it down between business loans and consumer loans. we hear that cap x is picking up, to acn increase in the growth rate for -- do we see an increase in the growth rate for the business loans? charles: no, we started the year in the single digits and now we are running around 1.5% year-over-year in terms of the demand. if you look at senior loan officer surveys it is not showing the demand picking up. i think, one could argue that it is the shadow market banking system and it is the capital market taking that activity away from the bank and i think there is truth to that. but, i was talking to a portfolio manager of loans this past week and he was saying that the covenants that are being allowed now are disastrous, in terms of the leniency. so there is pricing competition, there is loan covenants being waived, this is typical end of cycle stuff. jonathan: charles peabody, always great to get your perspective on things. thank you very much. gina, obviously we always appreciate her insight. thank you for joining us. 12 or 13 minutes into the section -- session. the s&p 500 up 11 points. and pretty much ready to close out the month of november with another month of gains. we could have 8 straight at the close today. from new york, this is bloomberg. ♪ ♪ >> this is bloomberg daybreak. emma: i'm in the green room. coming up, the federal reserve president -- hits down finance was the interview with michael mckee. this is bloomberg. david: opec has been meeting in vienna to decide next where to head on production and our colleague is on the scene with jpmorgan executive director and head of oil research. over to you. jousef: yes, so we are still waiting to hear the final announcement in terms of what opec and not affect has decided going forward. expire inent will march. we want to get more on the story. thank you for coming on the show. extension, with that fit in with your expectations? >> yes. that is what we have in our scenario. i think the market is pretty much prepared for nine months of extension, pretty much from the middle of this year or someone on september on words. it is not surprising, to be honest. jousef: are you looking to hear things like nigeria and others to be included in this agreement, to show a stronger signal that the group is here to stay? >> yes. i think there is a chance of a selloff, just to make up for some of the gains we have seen in september, but really opec if they want to move on words they need to see things from libya and nigeria, and even other countries. jousef: it has been fascinating over the last 48 hours, one data point showing oil production at its highest level in three decades and you say that will be the key going into 2018, that perhaps opec is not taking seriously. >> it is not that they are not taking it seriously. they are looking at u.s. producers and managers, so they are clearly engaging with them, but the chances are that u.s. production will remain a challenge for them, especially with the current rise in price in the last quarter and what we're seeing recently with the opec talks it will lead to and at thisdges time of year they are already higher at 40%. and for the companies we look at, versus last year -- if they remain at the current level, we will have higher u.s. production next year which could challenge of this. jousef: how do you expect russia to really speak to a lot of the developments. the nine-month extension, they have an important election theyg up, so how witll position themselves? >> they are unlikely to rock the boat at this point. the habs during the next and perhaps during the next meeting, if it is the be confirmed for june, that will probably be the time russia might want to reassess the situation and at that point probably also it will be beyond their lower production numbers and they will be going to ramp up, so they might want to find a proper exit strategy at that point. jousef: a delegate telling bloomberg news that over the summer they will consider in review the output levels or opec and -- for opec and the non-opec. i just see more -- to to the real-time developments in the u.s. and the stronger production levels and of course with geopolitics? >> although they have those two key meetings during the course of the year, one in summer and one in november or december, they are ready to meet on a more technical basis. what we know as -- meetings. maybe we could have one of those meetings if production was the rise so quickly and rapidly between now and the next june meeting, but perhaps i would still think they will keep the key decision of any changes on anything to do with exit strategy, or whether the -- on what the extension means, for the june meeting. jousef: there is a standoff currently underway between qatar and the rest of the gulf states, there is tension between iran and saudi arabia, but we have not seen anything in the negotiated room, but that could still materialize. >> i agree. they are trying to price in geopolitics and it is becoming more important, because we have seen the strategy work with the balance in the market. so when we had price -- we thought at that level the nine-month extension was priced in and when it would to 64 and 55, we believe that is where the geopolitical influence is coming from, saudi arabia, and even from iraq, being disrupted. this kind of premium is going to become more and more important for sure in 2018 and adding to -- jousef: we will have to leave it there. thank you very much. this is the head of oil market strategy at jpmorgan. jonathan: thank you very much. over the opec meeting in vienna. the markets in the united states, the dow growing 24 k, there we are up another 86 points on the session, record highs in the s&p 500, up 4/10 of 1%. next up, we wrap up the program and bring you highlights from the interview with lloyd blankfein, ceo of goldman sachs. this is bloomberg. ♪ ♪ david: earlier in the program, alex steele spoke with the goldman sachs chairman and ceo, lloyd blankfein, and michael bloomberg. here is what they had to say. lloyd: not today. alix: when? lloyd: i was a life must be really rosey if this is what we're talking about. alix: ok. i was begin with jeff currie and he said the only thing people are asking him about our bitcoin and eb's. you have to be thinking about that. lloyd: yes, i am to get a better because i am asked about it. it is note i am is for me, but there are a lot of things that were not for me in the past that worked out well. if it was 20 years forward and it worked out i could tell you why it worked out, but based on everything that i know i am not guessing it will work out. but i will not stand there and say it is a fraud, because it might work. michael: people confuse bitcoin with blockchain. there is a technology rate can have different accesses today that people can control it, you can see who is different what -- doing what and there are some places where that aziz full thing. in fact -- where that is a useful thing. in fact, bloomberg has blockchain. bitcoin is different. there are a whole bunch of cryptocurrencies that have been started, every day you have a new one, that is something very different and whether or not the governments of the world will lose control of monetary policy, i am skeptical. they will not let that happen and they should not. lloyd: something that moves up and down 20% a day does not feel like a currency or a stored value. jonathan: just getting breaking news. the white house has set a plan for pompeo replacing rex tillerson as secretary of state. the white house is planning for pompeo to replace rex tillerson and secretary of state. this coming from the new york times, reporting that the white house is that to replace rex tillerson with pompeo. this one, maybe not a surprise. it has been gathering momentum david:. it shows that the rumor mill in washington is not always wrong, because it was said that mike pompeo is very close to the president and it was said that rex tillerson was trying to make it through the end of the year. he was very unhappy. jonathan: here is my question, does it change foreign policy and it does it change anything from the recent reports we of heard about that tillerson has been gusting the state department? and moving away from diplomacy. david: if i was going to speculate, i would say it is not changing foreign policy. and the state department was being directed at of the white house as well. that would be my guess. jonathan: that is in for us, 26 minutes into the session. potentially throughout the day. and more record highs this because, up 4/10 of a percent on the s&p 500, reaching 24,000 on the dow. more records. this is bloomberg. ♪ ♪ >> it is 10:00 a.m. in new york, 3:00 p.m. in london, 11:00 p.m. in hong kong, i am vonnie quinn. mark: from a european headquarters in london, i'm mark barton. welcome to "bloomberg markets." ♪ vonnie: here are the top stories we are covering from the bloomberg and around the world. as you might imagine it is all about tax reform in washington with the senate beginning 20 hours of debate potentially and republicans still have internal differences are they strong enough to stall the bill,? in vienna, the opec ministers agreeing on extending production cuts and that is sending oil a little bit higher, but will it be enough to keep the momentum going? and bloomberg's 50 is out, the world's richest man on the list. some others could surprise you. we will explore, coming up. last -- in washington, 30 minutes into the trading day and i imagine that washington is setting the tone today.

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