the dow had been up about 1.6%, on pace for its best day of the year, nonetheless up 1.2% now. 500 up a 10th of a percent, both indexes with record highs. yesterday,down 1.3% rebounding nicely today as investors are buying mthe dip on the confidence of the mentality that we have seen some much this year. take a look at the dow. something else happening. earlier, when it was up 1.6%, and it had been the best day of the year, at this point the second-best extending all the way back to february. after the election we had lots of big rally days, that was one of those days. a very strong day for the doubt and again of the five days in a row. and let's take a look at some of the stocks helping the s&p 500. kroger up 7.5%. earlier, up more than 10%. their best day since 1993. very positive. they put up a strong quarter and they beat earnings by 11% and comps rose. everybody thought that kroger would be decimated by amazon, but they are doing with a do best, selling groceries and investors -- they are rewarding them for that. and -- up, after they posted down comps. they say that december will be flat and then up slightly. this is a company that missed a turnaround. victoria's secret turning around. and take a look at hca holdings, up 6% and jpmorgan upgrading, saying that tax reform will disproportionately benefit hca holdings and it could add as much as $.23 to the bottom line. when we take ah, look at the tech sector, yesterday it was all about the divergence that we saw, but now we see the big decline, a little bit of a comeback today for the tech sector, but over the last couple days we are still down 1.7%. the big rally today helping us to forget yesterday, but tech still down. on the year, different story.. will figure look at the chart quickly. blue, health care. pink, s&p 500. financials and other sectors. take a look at tech, we have the technology sector up 37% this year on paper. their best year since 2013. perhaps some of the selling off we saw yesterday is what we usually have near the end of the year. julie: taxes are becoming more and focus as well and is june a martin adams told us yesterday, they tend to be lower taxed, so maybe not benefiting as much from the tax cuts if they do go through. now first word news with mark crumpton. be onrex tillerson could his way out as secretary of state. white house officials say they are discussing a plan to force rex tillerson out and replace them with the cia director, mike pompeo. tom cotton would take over the spy agency. it is not known if president trump has signed off, but it is said he has soured on rex tillerson and is ready for a change. the president says theresa may should mind her own business, but may is making it clear that what she thought about the president's read tweeting anti-muslim bodio's -- videos. >> the fact that we were together does not mean that we were not say something when we think the united states has gotten something wrong, and i am very clear that the re-tweeting from britain first was the wrong thing to do. mark: earlier, the president tweeted that prime minister may needs to focus not on him, but on the threat posed by islamic terrorism. the u.k. and european union are trying to reach a compromise on the irish border that will allow a breakthrough in the brexit talks at a meeting next week. they need to find a way to promise the european union that brexit will not mean a hard border between northern ireland and the republic of ireland. that is the last major obstacle in the negotiations. president trump today welcomed the crown prince to the white house. the unitednt said states and bob crane are doing a lot of business and he called the relationship long and great. peoplewn prince says the of both countries have benefited from the relationship, which has been building for over 100 years, he added. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. julie: that the coin frenzy continues. $11,000y, soaring past before crashing back down below 10,000. up as much as 5% today. lloyd blankfein, the ceo of goldman sachs, and michael bloomberg, sat down with alix steel. they did not make the mistake, they discussed if they see value in the cryptocurrency. lloyd: it is not for me, but there are many 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, but based on everything i know i am not guessing that it will work out. but i cannot say. i will not say that it is fraud, because it might work out. michael: people confuse bitcoin with blockchain. there is a technology where you can have different access to different data and people can control it, you can see who is doing what. there are places where it is useful. in fact, the bloomberg system is a blockchain. instead of having the users control it, we control it, but it has all the attributes. bitcoin is different. bitcoin, and a whole bunch of cryptocurrencies, every day you have a new one, that is very different and whether or not the governments of the world will lose control of monetary policy, i am skeptical. they are not going to let it happen and they shouldn't. lloyd: something that moves up and down 20% every day does not feel like a currency. currency, butt a maybe a commodity. you grew up in the commodity business. talk to me about what are the unregulated trade world of bitcoin, where will the fraud come? concept, firste of all -- alix: is it price discovery? where is the risk? lloyd: it is for perpetrating fraud coming cannot trace it. alix: so is cash. lloyd: it is hard to a julie cash sometimes -- harder to accumulate cash sometimes. michael: look at time, everybody is paying with their smartphones. they are getting rid of cash. people begging in the streets have a little bi sign, begging for money, and they have that sign with a code on it. if you want to give them money you point your cell phone at the code, you hit a button and they have a bank account and that is the way that they get money. china is going in that direction and they have -- india is doing the same thing, getting rid of cash. then you can stop the black market and drug dealers and contract were all the currency is going. we will not going different direction. america may not be ready to go there, although we will be left behind if we do not because this is a much more efficient way of paying for goods and services. lloyd: they will know everybody is doing with their money. michael: everybody already knows. question, raises the you have to be thinking about investment banking strategy at this point. i cannot believe you are not. lloyd: no i am not. alix: you are telling me you are not hearing it? lloyd: we will see. if it works out and gets more established 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 for things people want to buy, business planning. julia: that was the ceo of goldman sachs and michael bloomberg with alix steel, talking about bitcoin. a barrel of bitcoin. alie: debating whether it was commodity or currency. julia: we are getting a check of markets. we are in the green. the dow jones passing 24,000 for the first time ever and that is actually the best day we have had since last november. the tech sector in focus yesterday. julie: recovering today to some extent. julia: yes. there is your picture. and we have to mention it is onth's end.-- m this is bloomberg. ♪ ♪ julia: this is "bloomberg markets." julie: let's go to washington as senator mccain's support brings the tax bill one step closer to passing. jennifer epstein is joining us from the white house. obviously, his support is a big help, but where do we stand overall? there are still holdouts. jennifer: about half a dozen or who haveican senators not yet said whether they are going to vote for the bill and have a voice reservations, including susan collins. we are at a point where there is a lot of negotiation going on to get those people on board. the republicans can only afford to lose to members -- two members and we have no indication that democrats will be voting for this bill, so this is about getting those people on board with various promises and tweaks. and we expect that to see -- that to be going on today and tomorrow. julia: where are we as far as the revenue triggered is concerned? kennedy from louisiana saying that you would need to be drunk to vote for a revenue triggered. lines inot drawing any the sand. you can see the confusion that they face, the conflict, that the senators face where are we on that point? jennifer: it sounds like it is still being negotiated. it sounds like we will be getting something. that is how these negotiations work in the final hours, you might get a piece of text, or a notion of something late into the night and you are expected to vote on it the next day and that is probably how it will go with the trigger. people have basically made it clear that they are on board and that is the get those last couple of votes. .ulia: it makes sense i want to ask you about rex tillerson, the rumors again that he is set to be replaced. what are we hearing? jennifer: we have heard from the white house a couple of different things. the president trump says he is here now and he is not going anywhere for now. we heard the press secretary say the same thing. we will hear from her later. but you have this plan that some confirmed theve news organizations that it could involve bringing in mike pompeo as the secretary of state, perhaps centered cotton -- and perhaps senator caught in being otten being-- c brought in for the cia job. the names have been out there a little bit for weeks now and to see is solidified a little bit more is something that is actually being considered, suggesting that we are going toward that they that we were calling rexit a while ago. julia: it makes sense. well done. jennifer epstein at the white house, some of the joys of being out in the field when somebody is talking way letter then you are in your ear. julie: we are bringing in the senator from my home state, maryland, joining us from capitol hill. senator, thank you for joining us. i want to dive into it and talk about what kind of comes next. the tax plans, if they do pass, they could trigger a provision, which according to the cbo, 15 signed, that being congress would have to cut medicare by $20 billion, congressional spending by $111 democrats do the decide to waive it so that is not happen? >> good to be with you. the best way to make sure we do not reach that point is to not pass a big tax cut that primarily goes to corporations and will increase the federal debt by $1.5 trillion. the good news, even at this late hour you have a number of republican senators who still care about the damage of increasing the national debt by $1.5 trillion. that is the way to avoid triggering that statutory provision. julie: i am curious, as someone in the opposition parties said to speak, how do you, i mean, do you have leverage to try to assure that the tax bill does not go through? >> that is what we have been working on right up until this minute, conversations are ongoing and as you mentioned there is a trigger proposal and i have no idea what the mechanics are at this point, it is changing by the hour. if you want to avoid facing those cuts, which as you said would include billions of dollars in cuts to medicare, the best way is not to cross that pass thatand not tax bill. julia: i'm sure many people, many voters are concerned and they would agree with you at this point, but would you vote to waive that? if you do not, we will see medicare cuts, in particular, like where do you stand on this? yes or no? >> i am not in favor of allowing the cuts to go into place in order to pay for a huge tax cut for big corporations, that would be financed by middle-class taxpayers and people on medicare, that makes no sense to me, which is why the decision is right now. if republicans care about the debt, they have two choices, they can either stop the tax bill now, or they will have to look the seniors in the eye and say, we voted for this tax cut, the law says now we will increase, or we will cut medicare, and we will stick with our -- with that. i do not think that is the right way to go, i don't think seniors should have to pay for the tax cuts for big corporations. julia: i want to talk to about the brink act, i know you have been instrumental in these sanctions on north korea. why do you think it is so critical at this moment and it is a direct -- is a direct hit to china and russia? >> i think that is right. it is clear that all these conversations that president trump apparently had with the chinese leadership and the emissary that was sent from china to north korea, that is not making any difference, it is falling on deaf ears. we need automatic sanctions and it includes the secondary sanctions on chinese banks. that is why i teamed up with a republican from pennsylvania, the banking committee in the senate has unanimously passed the legislation and we are trying to get unanimous consent from the senate to move forward and get it over to the house, get it to the president -- we need to be serious. we need to have very tough economic measures. julie: the administration has been resistant to these banking sanctions in the past, because there were concerns on what it would do for diplomacy. do you have any of those concerns, is there a risk to the relationship between china and the u.s. as a result of these? >> i do not think so, because china is saying that they are doing everything possible to make sure that north korea does not use these banks. i am not sure how they will turn around and say, do not penalize our banks, when they claim that it is not happening. and president trump keeps saying he wants maximum sanctions, but they are not applying them, so we needed bipartisan bill right now. julia: do you see this act being directly on the path toward diplomacy with north korea? they said in the last 24 hours that they could directly hit washington dc. that feels like a game changer at this stage, so how do we make them freeze technological progress and actually fundamentally work out what kim jong-un wants? is this part of diplomacy and doesn't need to be part of diplomacy? >> absolutely. sanctions by themselves does not turn off their nuclear program. the purpose of the sanctions is the squeeze them hard enough that it makes them more likely to go to the negotiating table and talk about freezing, and ultimately denuclearizing the peninsula. it is the same model that we use with iran. the sanctions way of proposed, that passed out of the senate banking committee are modeled after the iran sanctions. it took time, but they finally tightened the screws enough to bring them to the negotiating table, so this must be coupled with a diplomatic strategy come up that you need that pressure. as teddy roosevelt said, speak softly, but carry a big stick. that includes an economic stick. julie: thank you so much for your time. unfortunately, we have to leave it there. thank you so much. quick check on the markets as we continue to see records, at least for the dow jones come about thing back from declines yesterday in technology at the nasdaq moves 7/10 of a percent. from new york, this is bloomberg. ♪ ♪ julie: this is "bloomberg markets." julia: it is time for the bloomberg business flash, a look at some of the biggest business stories right now. american airlines says they have solved their problem i could've grounded thousands of flights. in scheduling glitch a lot of pilots to take days off during the last few weeks of the year. as a result, some 15,000 flights lacked pilots. they have now found pilots for all flights. and -- finance giving you the ability to track cryptocurrency. according to a report, more than 100 -- for cryptocurrencies will be available across the platforms. it will include information on profiles, data and coins outstanding. they are also hosting their first consumer event in february. warren buffett doing this at bandwagon with fruit to your door. you can order a six pack along with other products. and you will have a 30% discount. is seen as arvices way to move younger shoppers -- woo younger shoppers. [laughter] julia: not allowed to giggle during the business flash, it makes me laugh. julie: if you can get razors to your door, why not underwear? it makes sense. still ahead, as support gains for the senate tax bill, we look at what impact it could have on the economy with the david malpass, the undersecretary for the treasury. he joins us next. this is bloomberg. ♪ >> this is bloomberg markets. commodity markets are closing in new york and the focus is on oil as opec agrees to extend production as expected. a rose initially and then sell down. the deal they made today extends the cuts and in addition nigeria and libya exempt from the initial supply curve. . group will be a on our toes and will respond depending how events may come forward. wrapping up with a check on metals, gold is falling again. positive economic data. >> on the commodities market, let me give it a look at some of the action we are seeing across the board. dow jones passing 20,000. as far as the tech sector, just over 1.5%. from new york. this is bloomberg. >> the u.s. economic picture continues to brighten today. division in line with president trump's goal. said it could boost gains beyond 3%. to heavy you on the show for it even more reason to have you on because we been talking endlessly about the prospect of tax pools taking place. will affectves this growth going forward. when we missing? >> it is clear that this business and people respond to taxes so if the government is taking most of the money, you are not going to work as much and not many new people are coming in to be labor force. also, very importantly it would lower the rate for small businesses and lower middle class rates as well. >> as julia mentioned, we have 3.3% growth in the third quarter . thereeems to say there is relatively healthy backdrop already. our tax cuts a good idea no matter the environment? >> i think it is good when we .ave glaring problems we have a 35% rate, the highest in the developed world trade it is clear there should be a major change in u.s. taxes. in addition, i think some of the growth has been because of the tax cuts and regulatory reform. reporting 3% growth was well .bove what people had expected >> at the same time, we have heard from corporations pulled on decisionsback seeuse they are waiting to the outcome of the tax reform debate. we have also talked to strategists who say tax cuts are not priced into the stock market. i think there has been some holding back, so that is good news. i think we will go to a faster growth rate as the tax bill becomes reality. in the third quarter, we saw strong investment data. i put that together and said it will be a good year for business. machine,mpany buys a they get people in and back in the labor force. the participation rate is too low and the president has put a high priority on getting all back to work. third quarter data will be better in 2000 -- 2018. >> if the revenues stuck in, the tax cuts have to be phased out. do you worry about the importance of discussing tax cuts? is that a worry for you? >> we would like to see cuts to so i'mual tax rates and not so daunted by the point you make because a lot is going to -- the bill. bell >> i don't know will be in the bill. congress is working on it. >> i wanted to talk to you about managing international relations with regards to china. ortalk about slowing reversing. on was reducing tariffs number of immigrants and also opening up to limits. are you disregarding fees? those are factored in so china is making some forward progress, but they don't go as far as what they said they were doing or where they should. the bottom-line, we would like to see china do well, but they are moving away from markets. doingies that are not market oriented reforms are backsliding. you named some small steps forward. just not making that kind of progress anymore. >> people say it could be critical as far as foreign ownership. points -- theyl have not been clear on the timeline. they never get to the endpoint where they do the reports they are talking about. that really is going to be done best if they get a market oriented economy. we know that what they are doing is not really working for u.s. workers. >> thank you. patty make that happen? how does that move the needle and what other pressures are you using? >> sometimes in their mind, they think it is business as usual. the reality is that the process has stalled. the wto is one of the areas that is simply not working. it doesn't have the tools to push back. agencies ist another area. way is just not a workable to make of the economy run. of things,olicy side there are reports there may be a .hange in leadership how does that affect the process? on statet comment personnel. the don't want to go to hypotheticals. the u.s. government has lost of cohesion and is working better and better. the results are showing up every day. the president just got back had a very successful trip to asia that is one so example of how the process is continuing to work. >> talk about the president's decision to reach week some videos from a far right party nd u.k. -- in the u.k. does that complicate relations? >> i'm not going to comment on that come about what i want to put together is the strength of the economy is tied to the strength of our national security and vice versa so what we recognize is that in the world there are threats to national security. my thought is that this is working for us so we should applaud that. >> we saw the prime minister of the u.k. issue a pretty strong rebuke. obviously with brexit negotiations going on, critical for the u.k. to figure out a strong trade agreement with the united states. a precarious position for her to be in. strongly supportive of the u.k. and european union funding away to move forward in a way that works for them. the u.s. is heavily invested in europe and once to see a good outcome. >> just as you are traveling messagend selling a new , i want to end on a positive note. remarkable.lly i'm not sure that the public sees that the u.s. has been a leader for so long and continues to be a strong leader. in our own media, you often just see the criticisms. setting, people are looking to the rest for good leadership. that means freedom and property rights. we have the biggest economy in and it is now moving forward with better economic policies. time for our select support. >> we take a look at the financial sector, 1% off the highs. the financial sector up three days in a row number getting a tuesday as the senate appears to be making progress towards tax reform. let's take a look at the big banks moving higher. the clear winner up 3%. we hopped into the bloomberg and take a look at a three-day chart for goldman sachs. the best three days of the year, very impressive. .omen sacks has lagged they've had some issues from fixed income trading. -- theythe other banks think goldman sachs could move ,igher in the next three days so perhaps a winner at the end of the year. up, rev up your engines. we're bringing you an interview america -- knows north america. >> what is your health look on whether the company will make its way to wheelers? to have you on the show. market.your largest the u.s. specifically is largely brand.d by a specific when that brand get to sniff for, the industry seems to get the flu. >> we find ourselves find a premium manufacturer. people are looking for ways to express themselves differently. we attracthing writers. >> so how many new writers? forecast. have a new will increasewe our market share in find an increase in volumes as well and that is usually driven by product. we have a new superbike coming to the market next year. >> talk about some of the product launches. us, it is really exciting. we raced all the time. what works its way to what people will experience on the street, there has been never -- the technology is not just for performance, but increased safety as well. these technologies have enabled .s to deliver the experience on the end of -- on the other end, we have increased our entry level as well. products under $10,000. that an offer so many things, this is what excites us. it is not just a product, but how we bring it to market. >> describe how the brand fits in and how you are doing it. >> ducati's core visor style, sophistication and performance. it is less intimidating. for us, it has brought back returning writers. it is also brought a lot of new writers that are caught up in horsepower. >> that is really important if we will continue to grow. when we saw with the scrambler, it helped us bring more women writers and for us, that is excellent. where does your brand fit in that space? >> we are leaders in innovation and a lot of that comes from what we have learned in the world of racing, but we're looking for ways to improve the customer experience so there's a lot of talk about autonomous vehicles and electric vehicles. economy, there's but itogy we can learn aso defeats the purpose of motorcycle. >> and electric? deliver ano essential to our brand in at this time we don't they are so far. -- there so far. banks in new york. this is bloomberg. ♪ julia: it's 3:00 p.m. in new york, :00 p.m. in san francisco, 8:00 him in san francisco. julie: i'm julie chatterley. i'm julie hyman. welcome to "bloomberg markets.". ♪ julia: we are live in bloomberg world headquarters in new york. here are the top stories we are covering on the bloomberg and around the world. tax reform in d.c. today with the senate beginning 20 hours of floor debate. republican leaders one step closer to passing the overall with john mccain. the federal reserve in focus, michael mckee has an exclusive interview with fed president -- cleveland's fed president moments away. we speak with the ceo of pd bank about earnings, the canadian economy, and more. julie: before we get to the exclusive interview with michael mckee, let's get a quick check of the markets. we are seeing a rally today at its highs in the session. the dow having its best they since last november -- it's best day since november. . the s&p and nasdaq rallying, as well. what caught my eye is the russell 2000, we have been talking about one of the motivating factors behind the rally today has been the tax debate. the russell 2000 is not participating in the gains we are seeing. let's take a quick look at the imap on the bloomberg for the sectors. 1.5%, in the top spot at even though oil prices, energy prices have been bumping around in the wake of the opec meeting. investors are also rallying. on.a: let's move fed.es of foot at the today we learned that president has nominated economist marvin goodfriend to the board of governors. that means three seats are still up for grabs. the fomc voting members will rotate to include new york cleveland, richmond, san francisco, and atlanta. michael mckee is bloomberg economic economist respondent standing by with one of those members. we welcome the cleveland federal reserve bank president to bloomberg television and radio worldwide. thank you for coming in. the news for the fed is jay powell, let's talk about something he said. " i think the case for raising rates at our next meeting is coming together." do you agree? >> i do agree with that. i have been on that case for a while that we really need to be moving gradually, given where the economy is. growth is that a sustainable pace, labor markets continue to improve inflation is below our target,, but it is on a path to moving up 2%. we have been an interest rate for the very low for quite a while, it makes sense to start bringing it up gradually. we respond to data as it comes we will change off of that. this tragedy of moving straight -- the tracks -- the strategy of moving up makes sense to me. monetary policy has to be preemptive. i don't have concerns about moving straight up given how low it is,, even though we haven't hit 2% inflation yet. >> in the last two days, governor powell and chair yellen said there's a possibility that inflation models are wrong and that we won't see it rise to 2%. >> we always have to be open to the fact that the models could be wrong. one of the reasons it has been a gradual is because we have been recalibrating things overall given the evidence. take a look at the summary of economic rejections, you will see some of those structural aspects of the economy have moved in relation to the data. my own industry path i have adjusted, it looks like inflation was going to remain lower than longer than i thought. i think we are all open to models being wrong, that's why it is prudent we take a prudent approach. we want both risks, upside and downside. weighing those risks, i think interest rates should remain on this upward path. >> we are talking gradual, not a strong upward path. >> where would you put the neutral rate now? >> the short run is probably around zero in terms of the real rate. the long run, if you look at the svp's, they take a nominal fed funds rate and those estimates are below 3%. again, i think the significant thing is the fomc has moved to evidence that we may have a lower industry environment for a long time. >> as your estimate of where the neutral rate is given the economy fold in your economic outlook, are you moving it up or down? >> in the long-term neutral ray, i have moved mine down over time. i have not adjusted it recently, i don't anticipate to adjust it in the next submission. >> how much weight do you put on the yield curve these days? are you worried it has narrowed so much that belonged in has come down, the short and has gone up? >> i think that's part of the economic and financial conditions have taken into account. i read that as being financial conditions are very accommodation -- accommodative. that's trying to move that interest rate up gradually back to eight normal healthy stance. >> people look at the yield curve and say when we get an inversion, we get a recession. we are very narrow, is there anything for investors to worry about? >> i think there is a correlation, i don't think it is causal. interest rates have had to go up on a short, very aggressively. perhaps as we have missed on inflation targets, we are not in that environment right now. we are moving it very gradually in order to sustain our covering and expansion, not to do something because we are missing one of our goals. iss is why this upper path consistent with sustaining expansion. >> some people say the fed messed up the yield curve, because you took the term premium out, and at the thing time we have the global movement of capital we never had before, so it's not a useful indicator. >> i have never really used that as saying a causal thing, if we see that happening, it's going to be what's the reason the yield curve is the shape it is? we have taken steps to reduce our balance sheet, i think that's a very important step. part of this bring policy back to a normal stance. we are shrinking the balance sheet in a very predictable and gradual way. i think that's part of this idea that the economy has recovered, it's expanding its on firm footing,. we really need to be moving your monetary policy to continue on this path of normalizing the policy. >> the news of the week. he going tohow is do as the head of a couple hundred phd economists? >> he's a known quantity>> at the fed, i certainly respect him. i think he will be an excellent chair, i enjoy working with him, he has been on the subcommittee of communications, i was very grateful to be a part of it. he is also on the committee that oversees the federal reserve bank. he will be on a chilling chair -- he will be an excellent chair. >> the word on wall street is that jay powell is janet yellen mike do you anticipate that,? >> he has been supportive of the policy that the fed has been doing. in, they chair comes are going to put their own stamp on the organization. i expect him to do that. he is a very thoughtful person, i have enjoyed working with him. he listens to alternative viewpoints, then he makes his decisions. i think that's how he will operate as german >> would you anticipate any methodological -- chairman. would you anticipate any methodological attainments? >> i think the federal reserve has always been open to reconsidering how we do things. we are not a group think organization, we try to guard against that. i think we are open to rethinking how we are doing things, certainly the lesson over this period is we had to be activated -- we had to be innovative. i think we have done that. i think we are always open to investigating how we are doing things, whether we should change what we are doing, what's best for achieving the goals congress gave us. >> in the building pictured behind you, they are doing work on tax reform. i know you don't have a final version of the bill, for a particular score, how are you incorporating the tax bill into your thinking? bit,have included a little anticipating there will be some bill that got past. it wasn't the driver of my argument why it makes sense for interest rates to move up gradually, it was based on the momentum of the underlying economy and where it is. we will wait and see what gets past, we will do more evaluation of it as it gets past, then we will give you a better answer. >> the administration argues you can get 3%-4% wrote rate annually do you think that's close to reality,? >> it would be nice if we got higher growth rate. inm what i understand analysis based on the past, that would be hard to do. , but i think higher numbers are hard to do. it would be welcome, but it is hard to get up there. >> the other argument they make is this will unleash a wave of corporate investment. head of a bank that talks to business people all the time, you are also in the center of the area that donald trump has talked about meaning to help bring back the jobs. what are ceos telling you about what they would do with any additional cash they get from lower taxes or refrigeration or expensive provisions,? >> local businesses we have talked to have said they have their plans for investments, they welcome some tax relief, but that is not going to be driving their plans. they already have plans to increase their investment and expand. looking at where the economy is, and where it is going, they have been positive. they have positive viewpoints about the economy, anyway. they are already thinking about it. >> you don't see a big jump in the economy in 2018 because of this that the fed is going to have to respond to? >> i think the economy in 2018 is on a firm footing. it is going into that year, i think it will continue to be strong. the fed is focused on our goals of price stability and excellent employment. we set our policy to achieve those goals. there are a lot of other things, global conditions effect us, financial markets affect us, we have to look at the whole environment. fiscal policy is one part of that. and then keep focused on our tols to try to keep policy maintain those goals. it's not if we get that then we do this. >> on the labor side, are we going to see more hiring? will employees be getting big raises because of the tax package? >> firms have told us they are looking to hire. they have had trouble finding qualified workers, that has been one of their struggles and challenges. firms are telling us that they are already increasing wages in order to attract and retain workers. benefits have also gone up to try to retain workers. that'shappening now, part of why the labor market is tightening. >> we have seen wage gains of 2.5% over the last couple of years, roughly around 2.5%. how much higher cannot go? -- how much higher can that go? >> i think we are seeing productivity move up, it's hard for me to believe we are going to see the same kind of wage increasing that we saw in the 90's. some acceleration here, until we get activity up it will be hard to see it accelerate greatly. what kind ofrk on policies we can do to increase productivity growth, investing the capital investment in technology, that will help on the productivity side. >> governor powell and chair yellen were asked about the tax package and dodged the questions, since you are not testifying before congress maybe you can answer. one thing that was a concern was the rise in deficit, crowding out will raise interest rates. do you believe in the theory? >> i doone think we need to be worried about that. e on ag our fiscal sid sustainable path will be really important. we know we have challenges on health care expenditures, challenges given the population aging, that's going to be a very important thing for us to tackle as a country, how do we get fiscal house in order. i think the concerns are justified. you don't have to leave your job as president of the cleveland fed until 2024. there are a lot of changes going on within the fed, have you given any thought to how long you want to stay around? >> no, i have not given any thought to how long i want to stay around. this is a very interesting job that i have, i feel honored to have it. can onto do the best i behalf of the public that i can do. >> president of the federal reserve bank of cleveland, thank you for coming in and joining us today. we will send it back to you in new york. julie: thank you so much. now let's turn to canadian banks. toronto million its first-quarter earnings missing analysts, but remains optimistic about its lending business. tv bank president and ceo is joining us from toronto. thank you so much for joining us on this earnings day. it's fascinating what has been happening with your u.s. business in particular, you now have more branches than in canada. i believe you are the eighth largest in the u.s.. that business lost quarter, hit a couple of bumps. you saw average loan growth declining, a sequential decrease in average. what accounted for that and how are you trying to improve upon it? >> we are very happy with the results. overall bank and earnings are up 14%, they surpassed the $10 billion mark for the first day. the u.s. business you are talking about also had a fantastic year. we are up 15% in that income. issues,ome loan growth we want to say that's a new trend that is emerging. we have made very good growth through the year. towards the end, you see some companies perhaps not drawing down as much of the lines as we have had before. very happy with how the business is evolving. bank, the eighth largest earnings are excess of $2.5 billion. julia: in terms of scaling that business, can we make a comparison between organic growth versus inorganic growth? do you still have m&a opportunities within the united states? >> our key focus is organic growth, we are one of the few banks that continue to open new stores. we are right through the east coast. we do notnot mean look at an acquisition very seriously. the southeast of the u.s. is very interesting for us. we are building out our footprint there very aggressively. -- if anpportunity opportunity came across, we would look at it. a point ofa that is interest is the credit card space, we have grown that business substantially the past 2-3 years. we are the issuing bank for target, nordstrom, those deals are very attractive for us. it was a similar type of proposition -- if a similar type of proposition were to present itself, we would look at it. julia: i look across the spectrum of u.s. earnings this quarter, the rising credit card charge-off has been a bit of a concern. what do you think there? is there anything that makes you more cautious in that business in particular? >> no, it's still a very attractive space. for us, we are in the super prime type of business. for us, looking at the long-term, it is a good business. we think we have more room for it in the u.s. balance sheet. frankly, if we can find quality partners like we have in target and nordstrom, that would be welcome. i like the business, good return metrics, it mixes well with our balance sheet. julie: i want to jump back to canada. if you compare it with other canadian banks mortar drove, -- mortgage growth has been a mess. are you concerned about the housing market? or is there something else going on? >> we are one of the largest country.lenders in the in the real to space, we have very good market position. we have been consistent through the cycle is what our underwriting standards are. in any probability in which we operate. for mortgages, that's how we have looked at it. under indexed in certain markets, we are not growing as fast as perhaps the market is growing, particularly in vancouver and toronto, but that is not a bad thing given the age of the cycle. overall, mortgage business continues to grow for us, in the single-digit growth year-over-year. quite happy with how we are making progress. we do have fantastic products in that area. a hybrid where you can have a mortgage and any locked together. julia: i want to speak about a specific issue, how concerned are you buy some of the tones of the conversations that we appear to be hearing about progress, and what damage what a collapse of nafta mean for your customers? >> nafta is very important. if you look at its history, it is amazing how well each of these participants have done in nafta. grown,ee economies have mexico, united states, and canada. it has worked very well. net the requires a modernization, we have different technologies than when it was put in place. -- ink it's a monetization think a modernization is appropriate. there are a lot of ups and downs, i think it's probably premature to start panicking on saying it will end badly. on the other hand, it is not positive, a lot of headlines you hear, the rhetoric is negative. in the bank, we look at that, a lot of scenario planning, what will happen, what will not happen. any part of those scenarios would look at a transition, and if it did, it would be a manageable situation, particularly 14b, is that the business we are in. i am not yet about to give up on nafta, but should something dramatic happen, we will make sure that we position our bank accordingly. julie: it has been a rocky road for those negotiations. thank you so much. tb bank president and ceo. still ahead, we have options insight, looking at how a child latest software company ahead of its december 5. we will be right back. ♪ ♪ julie: it's time for options insight, scott bauer out at the ceo. we talk about what has been an interesting phenomenon. we have been talking about it, the dow is trading at a record. it's nots also higher, even 11. direction lead both are higher -- directionally both are higher. what is going on here? that,typically don't see if you look further into the vix, we are looking at this week, next week, two weeks, those futures are the ones that are actually up. . going beyond that, january, february, we're not seeing the fixed bleachers -- the thick -- the big futures going up. investors, there is concern may be the next couple weeks of a pullback. may be something doesn't happen with tax reform over the next few weeks. the fact that the vix futures are not moving growing up january and beyond, tells me that the fear subsides quite a bit. julie: i want to get to your trade of the day, you are looking at economy called viva. what do you think we are going to see after earnings? alonghad a nice pullback, with many of the stocks in that space. it came down with some major support. i love the upside, they have new initiatives, i am buying the 6065 call spread, it can go up dollars. i like the particular spread because the option market is predicting a move of about five dollars one way or the other. if we get the move up, it's near that target. my risk is a dollar 50, my reward is $3.50, i like that momentum even after the pullback yesterday. julie: those earnings on december 5, thank you so much scott bauer. bitcoinsill ahead, long rise, we get the digital a of the land with ceo and cofounder. from new york, 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. i'm mark crumpton with first word news. paul manafort has reached a bail agreement with special counsel robert mueller. if he sticks out, he would have to forces properties worth $11.7 million, if a judge approves, his home confinement with end and he would be allowed limited travel. as part of mueller. ' rush investigations, associates were indicted last month on laundering and other charges. discussingouse is whether to replace secretary of state rex tillerson with cia director mike pompeo, that's according to white house officials. s.llerson' mr. trump has said to have told advisers that secretary tillerson might be gone by the end of the year. state department spokesperson said tillerson serves as the pleasure of the president, and still has a lot of work to do. a lawyer for congressman john conyers is rejecting calls from nancy pelosi, the houses top democrat for conyers to resign. multiple former staffers accused the michigan democrat of sexual harassment. congress, -- conyers denies the

Related Keywords

New York , United States , Louisiana , United Kingdom , Iran , Washington , China , Whitehouse , District Of Columbia , Toronto , Ontario , Canada , Michigan , San Francisco , California , Germany , Arizona , India , Maryland , North Korea , Libya , Pennsylvania , Ireland , Britain , America , North Korean , Chinese , German , Irish , American , Bloomberg Julia , Susan Collins , Warren Buffett , Scott Bauer , Lloyd Blankfein , Atlanta Michael Mckee , Mike Pompeo , David Matas , Michael Mckee , Bloomberg Julie , Chris Van Hollen , Rex Tillerson , Julie Hyman , Francisco Julie , John Mccain , Jennifer Epstein ,