Bloomberg skip today. Robert mueller, the u. S. Special counsel, is said to be expanding his investigation to look into president Donald Trumps financial dealings. His new approach to the probe could trigger a response from the president , who told the New York Times that any digging into matters beyond russia would be out of bounds. However, we have been hearing from lawmakers on capitol hill today. Just listen into what democratic senator Amy Klobuchar said earlier. Mueller has the right to investigate this. He was given that authority by the justice department, and he reports to the justice department, and not to the president of the united states. Julia joining us now, one of the reporters who broke this story. Great to have you on the show. You called it a follow the money investigation. To what extent really is this now about russia, and to what extent is this about other dealings that donald trump has had . The whole thing is about russia. This portion of it, though, deals more with trumps business dealings and capital he got from russia for various Real Estate Developments over the years, as well as some other projects, like the Miss Universe pageant that was held in moscow in 2013, and even the personal sale of one of his homes, in florida. Scarlet who is investigating here . We know Robert Mueller is the special counsel, and he is operating outside the purview of the fbi, but in the story you talk about how fbi investigators and others are looking at russian purchases of apartments in trump buildings. Mueller was appointed by the then acting attorney general Rod Rosenstein to conduct this investigation independently, and he hired a team of prosecutors from around the country washington. Scarlet they are not linked to the fbi . Fbi agents are also involved in the investigation, working for the special team that mueller has assembled. And part of the investigation that mueller is taking on also originated with the Southern District in new yorks federal prosecutors office, and fbi agents that had already been looking into trumps former campaign chairman, Paul Manafort. Julia does russia have to feature in anything that they investigate here . Or does this leave them down a path where those other irregularities, for example, or transactions that looks suspicious on price basis, or whatever it is, will they continue to investigate . I guess what im asking is, the point donald trump made to the New York Times last night if it is not russia related, it is out of bounds. Is anything truly out of bounds for the fbi . Christian the mandate for mueller when he was appointed special counsel was to investigate the russian interference in the 2016 president ial election. But if you look at the rosenstein letter appointing , there are, you would call them catch all provisions toward the end of it that say, essentially, investigate anything that has merit and is related. So you could interpret that letter as giving mueller a pretty broad mandate to follow the investigation where it goes. Trumps comments seem to suggest he thinks that there should be very narrowly defined interpretation of, you know, what russias involvement in the election was. Scarlet how are the fbi investigators or the special counsels office responding to the president s, you could say warning that this investigation should not go past the Campaign Involvement or ties to russia . Christian they have not commented on that yet. And they did not comment to us for our story, and there has been no response from them since. Scarlet all right. Certainly something that broadens further. Think of bill clinton and how white water turned into Something Else very quickly. Julia we kept it toward trump, but it is much broader than that, surrounding Jared Kushner as well. We will wait to see on this one. Great work on this. We will continue to talk about this, no doubt. Scarlet meanwhile new revelations are casting doubt on President Trumps agenda. Earlier today the Congressional Budget Office came out with a new us met that could estimate that could present a new obstacle for Mitch Mcconnell. Kevine latest, kevi whitelaw joins us from washington. So many cbo scores, i cant keep track of them anymore. Which one is this . What does it cover . What does it not cover . Kevin this is for the revised repeal and replace bill that Mitch Mcconnell release. And it doesnt at this point have the votes. But what there is a renewed, revived, slightly back from the debt negotiation going on right now, with the white house involved, republicans involved, trying to figure out if there is some way to add perhaps a little more money into the bill to try to win over some of the moderates who are worried about curbs. The medicaid cost mcconnell needed this analysis so that he knows how much money he has to play with before he starts offering extra funding for coverage. Here, the cbo score is incomplete, it does not include cruz amendment, something conservatives have been wanted aiming to allow cheaper insurance plans. The new cbo score has another thing in it which is quite interesting, suggesting that deductibles in some of the various plans that would be out there would go sky high within a decade under the way the bill is written. Some people could be paying just crazy amounts of money. Half or even more than their income in deductibles. Julia the bill the cbo analyzed did include an extra 17 billion for the cruz amendment. Itn though it included that, did not have the amendment within the analysis it did. I am confused that they did not look at it themselves. If they do want to vote in some way, as the Senate Majority leader has talked about next week, how do they go about this . Where else can they assess this . I have heard the department of health and Human Services analysis is out there. Can they use that . Kevin the administration has the analysis hhs went out of how the cruz amendment would work. Cbo said it will take a few more weeks for them to figure this one out, so they could use this. It is sort of at the discretion of the Senate Budget chairman as to how they do that, but that would really violate all kinds of congressional tradition and would really obviously anger the democrats. It also might not satisfy republicans. The cbo, at one point or another, will come out with something, and it is almost certainly going to contradict this hhs analysis, probably very dramatically, because some of the assumptions in the hhs analysis dont really stack up. You are looking at a situation where they kicked it out of the latest analysis, just because they are not ready to score it, but Mitch Mcconnell once a number. It has left republicans saying, what are we voting on, the repeal only bill, which is what we thought we would do . Our we voting on a bill are we voting on a bill we dont really understand the consequences of, some additional changes to it . Is a lot of uncertainty. Some people like Susan Collins of maine, a moderate, are starting to get a little fed up with all the backandforth, saying we should start over. Other senators say, this is going in the right direction, we are making progress, trying to deliver on our promises. They are under a lot of pressure to try to deliver on seven years of promises to repeal obamacare that they have made. It is not really clear that anything that is happening right now is changing the fundamental dynamics and bringing on the handful of conservatives and moderate all thats. Julia i think that the tone says it all. Great to get your insight, Kevin Whitelaw of bloomberg news. U. S. Stocks initially fell on news of the probe into trumps businesses. We saw a slight selloff. We also saw a take off in volume. Now things are pretty much flatlining. Averages. Major if the s p and nasdaq are able to eke out a gain it would be a record close for the averages. The nasdaq continues to outperform by a slim margin. Take a look at the yeartodate performance of the nasdaq versus the dow in white and the s p 500 in blue. This is not yeartodate, going all the way back to 2005. So yeartodate it has accelerated after hitting a speed bump after the election. In terms of movers we are watching today, some on analyst recommendations. Royal caribbean upgraded to overweight from neutral at jpmorgan. The analyst looking at his recent channel check, saying they continued good operating momentum. Johnson and johnson upgraded at Credit Suisse following company earnings, a reinstatement of coverage with an overweight rating. There is looking for opportunities in growth in some of its drugs. Nike upgraded to overweight at morgan stanley. The analyst says earnings per share and sales in north america, the growth rates are bottoming out. Also the air vapor max, one of their new shoes, could become the next 1 billion shoe for nike. Scarlet julie hyman, think you so much. Lets get to bloomberg first word news. Has told asimpson nevada parole board that he wasnt aware when he and others went to two hotel rooms to talk to Sports Memorabilia dealers that one of them had a gun. Simpson has spent nearly nine years behind bars for Armed Robbery and assault with a weapon for the robbery, and in asking for parole, simpson told the panel, i have done my time. Just session has no Jeff Sessions has no plans to resign as attorney general despite President Trump expressing regret about appointing him as the top Law Enforcement officer. Sessions spoke today in a News Conference to announce a International Cybercrime enforcement action at the department of justice. I have the honor of serving as attorney general. It is something that goes beyond any thought i would ever have had for myself. We love this job, we love this department, and i plan to continue to do so as long as that is appropriate. Mark President Trump told the New York Times, sessionss recusal from the russia investigation was extremely unfair. Sessions, a former alabama senator, was the first to officially endorse the trump candidacy. The kremlin says President Trump did not tell Vladimir Putin the u. S. Was ending aid to syrian rebels. A russian spokesman confirmed the two leaders had a second conversation after their first formal encounter at the g20 last week. But he said that there was no secret meeting. French president Emmanuel Macron has announced an increase in the budget of the armed forces for 2018, part of an effort to limit criticism over his decision to cut funding this year. Frances military chief stepped down wednesday because of those cuts. Ay president macron the ministry will receive an extra 2 billion. No other budget except the army gets an increase in 2018. Global news 24 hours a day powered by 2700 journalists and analysts in over 120 countries. This is bloomberg. Scarlet thanks so much. Coming up, the one and only bill gross warns central bankers to proceed on tightening with caution. Has he changed his tune . From new york, this is bloomberg. Julia this is bloomberg markets. I am julia chatterley with scarlet fu. Scarlet bond guru bill gross is throwing a bit of a curveball. He previously argued for the Federal Reserve to hike rates, but today gave a go slow warning for janet yellen and other policymakers. In his outlook today, gros wrote central bankers and investors should view additional tightening and normalizing of shortterm rates with caution. Bill gross, fund manager at Janice Henderson janus henderson, joins us from newport beach. You have been vocal in urging the Federal Reserve to raise rates because a low rate environment hurts individual savers and banks and insurers, and distorts asset prices and markets. Sounds like you are now adjusting your view. What specifically prompted the adjustment . I dont think i really adjusted things, scarlet. I think Interest Rates should be raised to a more normal level in order to favor Business Models that are currently being hurt, such as Insurance Companies and Pension Funds and so on. I simply warned, based on the historical knowledge of a yield curve flattening, between threemonth treasuries and 10 year treasuries, we may not have to flatten as much as historically in order to produce a growth slowdown or recession. I actually think, scarlet, a growth slowdown or recession would do the economy some good. Wood. Forest with dead you clear out some of the deadwood and prevent forest fires. So a slowdown is fine with me, because it produces in the longterm a healthier economy, a s was proved five or 10 years ago. Scarlet a slowdown would be good for stability. Howain a little more on slowing the yield curve to stop the onset of recession is flawed thinking . Bill going back 25 years, there have been three recessions. I used the one starting in 1990, and in the 20002001 recession, and of course the Great Recession in 2008 and nine. All were preceded by flattened yield curves, meaning the yield on a threemonth Treasury Bill was the same or even hire than a higher then a 10 year treasury note. Currently the spread between those two is 85 basis points, with the 10 year being higher than a threemonth treasury. Private economists, fed officials, may be assume we need a flat yield curve to produce a recession. I would say commonsensically, based on higher leverage in the private economy, and based upon what i call proportionality in terms of an Interest Rate increase, that we dont need a flat yield curve to produce a recession, and perhaps we have come a long way already in order to induce a growth slowdown. Scarlet the historical models may not be the best president for what we are experiencing now. Obviously every economic reversal, every economic slowdown, every financial crisis, is different than the last, why are borrowers with shortterm debt at the front edge of risks to the economy right now . Bill well, they always have been, going back to the subprimes, when the subprime rates were increased on junk mortgages and junk houses so to speak in terms of overpricing. Basically that was it, in terms of the ability of an economy to withstand higher shortterm rates. It is always the higher shortterm rate and the flattening of the yield curve that produces a slowdown. Borrowers, which are sensitive to shortterm rates, which are dependent upon libor plus types of Interest Rates, are the first ones to feel it. Those with longerterm rates, 30 year mortgages, dont feel it basically because the rate stays almost the same. The shortterm rate, as it rises, basically threatens an economy. Historically as i have mentioned, flattening the threemonth Treasury Bill to the 10 year treasury, you know, has induced a recession. I dont think we need to go to flat in order to produce a growth recession, simply because we are a more highly levered economy, not only domestically but globally. Scarlet so what would you advise the fed to do . How would you urge it to perhaps finetune its approach . Bill well, i think they should, you know, begin the tapering of their treasury portfolio. That would produce a more steep yield curve, in my opinion, by not buying more 10year treasuries, by not buying more fiveyear treasuries, as the current portfolio matures, and then ultimately, you would think treasuries in the longer term would move higher by 10, 20, 30 basis points, and produce a more steep curve that would allow for higher profitability in terms of banks and would not threaten those with shortterm Interest Rates in terms of their Interest Rate cover. So i think the fed is beginning to move in that direction. They are beginning to think that perhaps raising Interest Rates, from this point forward, should be done differently, and that a tapering of the portfolio, of the current portfolio, would be the more logical step. Scarlet done differently is the key word here. As the fed talks about this, without giving an exact timeline, and as it continues with its rate hike path, financial conditions are still fairly easy, even as the fed titans policy or talks it up. What does that reflect . What does that say about the state of the economy and the level of influence the fed has over the economy . Bill well, i think the fed has a significant influence on the economy, as do other Central Banks. We are in a financebased economy, as opposed to 30, 40 years ago when it was more real economy oriented as opposed to paper oriented. So to the extent that, you know, financial conditions are easy, and i think they are, i think for instance highyield spreads are very tight, i think Interest Rates are very low. To the extent that financial conditions are easy, it leads ultimately, stability leads to instability. When does that occur . When does the music stop . Its hard to tell, but ultimately, i think a more balanced interestrate environment, if only through reducing the feds portfolio, would be more appropriate measure. Scarle