wanted, which could wreak -- trigger tax increases that could whena risk for the senate it goes for a vote, possibly as soon as tomorrow. we speak with kevin cirilli. what is the danger that conservatives will go against the bill based on this trigger? kevin: mitch mcconnell is saying they are our -- will move ahead with the motion to proceed in order to have this vote on the tax reform package tomorrow. a deal being reached could mean the public and leadership as coulds senator corker, resolve. should the tax plan not be able enue as aenough rev mechanism for economic growth, there would be an austerity trigger that would drive up revenue for the government to collect, still being deciphered as we speak. all systems are go for the senate passing this tomorrow. president trump is going to be back in missouri this afternoon and he will be trying to drum up support. hery: that satisfies defecity hawks, buteficit what about senators like ron johnson? kevin: those folks are moving toward getting to a "yes." there is much more concern about people like senator corker then there was about people like senator johnson. democrats are suggesting this is only going to benefit big , because they are not going to share their tax cuts with the middle class, but rather with shareholders. ceo talkedris's about what he thinks of the growing tax debate in washington. package, wed a tax shouldn't even have to worry about this trigger. it will slightly increase everyone's taxes across the board, but doesn't really address one sector of the economy, a fallback in terms of the added deficit. if we get hard times in a recession, we raise people's taxes, i share that concern. we will have a more informal conversation next time. david: that was a little bit of a mishmash. we had senator ron johnson and the phillip morris ceo. let's go back to johnson. you are hearing from the ceo how they are looking for signaling coming out of washington. they are looking to plan for the next calendar year about what they should be looking for as they start to make decisions. shery: what happens to those other issues, like repealing the individual obamacare mandate, or tax deductions? probably getting any more clarity on the senate bill? -- i be getting any more clarity on the senate bill? kevin: senator mccaskey has concerns about the repeal of the individual mandate -- senator over the has concerns repeal of the individual mandate. up --tell you this looks momentum is on the side of being passed tomorrow. it sounds like you will stay there for another day. thank you. shery: we are joined by the of thechief of staff u.s. export-import bank. georgetowns for the institute of politics. you have been part of multiple negotiations like this in congress. do you usually see this momentum before a bilk becomes law -- bill becomes law? >> you are seeing a straight vote counting exercise. you're either at the table or on the menu. unlike health care, they are all saying they want to get together. but there are real concerns with this bill. show it is tilted toward the corporations more than the middle class. the vote counting really matters in terms of the momentum enough to carry it/ . david: does anyone know what is on the menu right now? given the number of changes being made at the last minute. >> what you are seeing is these frantic fixes to try and get bob collins, steve daines, and other critical swing members on board. every hour of every day that changes. having been in these rooms, it is tough. once you go in one direction, something pops out the other side. paul, butenator rand you almost lost senator collins. get youade-offs can members and losing members. -- lose you members. you have to get to 50. watching members who are quiet would worry me, like john mccain. shery: they could come on last minute with a "no" vote. where are the democrats in office? -- in all this? do they have any influence? they were waiting for a moment when the president would reach out to them -- >> which didn't work out. scott: democrats are waiting for a bill they think is more tilted toward the middle class. they are looking for things like , rather thanest pieces of the bill they feel are tilted toward the wealthy and corporations. there have not been a town of overtures in their direction. overtures in their direction. david: john mccain is a special case. his big issue is procedural. he wants discussion, the normal course. would he consider this regular order? scott: with regard to regular order, he has seen enough to get what he wants. the bill going to committees in the house and senate. john mccain, much like jeff flake, not a particular fan of the president. he really is weighing the substance of the bill. what leadership would tell these menu -- what leadership would say is, keep your guards closed. he has been talking to a host of policy experts to gauge the bill. order, butregular does he have enough insight? no one knows. shery: president trump is preoccupied with what is happening with p on non- -- pyongang. we have heard additional major sanctions will be imposed on north korea today. how serious are the presidents of china and the united states serious and writing in -- in restraining north korea? scott: they want to make sure nothing at that changes the balance of power, but they are nervous about how to handle it. they typically do just enough, not as much as other global powers would like. degree, but ite doesn't work with north korea. it is hard to get kim jong-un to listen. , butions work and pressure so far the tougher we get, you haven't seen that much yield from him. when the two presidents are talking, it is the best. the only strategy that will work in north korea includes getting china involved. dav finallyid: -- finally, there is a china to push without collapsing the regime. scott: it is hard. engagement works. you have to take every method you can. there is a better process been -- than taunting, for professionals to have a real conversation. shery: scott mull hauser -- mulhauser, thank you. tech shares are weighing down the markets. igail: it is a truly interesting day here. take a look at the major averages. the dow is up three kinds of 1%. take a look at the s&p 500 index. the nasdaq is down 1.3%. making it even more interesting 2.9%, dow transports, up the best day of the year since the elections last year. let's go into the tech selloff. let's use the imac function on functionq 100 -- imap on the nasdaq 100. four of the six sectors are higher. tech is down 2.8%. if we go a little bit deeper into the tech sector, we are going to see the semi conductors down the most, -- most, 4%. let's take a look at one name on paper, its worst week of the year, since january 2016, western digital. says we stanley analyst could be seeing the first downturn since 2016. sharply.wn cryptocurrency demand could be less meaningful in 2018. --ebook and amundson facebook and amazon, there doesn't seem to be a specific cause behind this. lots of the shares up huge this year. rotation,y, a sector out of growth and tax and into value. -- out of growth and tech and into value. comments from janet yellen about a strong economy, which -- really helping the banks we heard comments from janet yellen about a strong economy, which are really helping the banks, and helping the markets overall. shery: a balancing in the markets. jong-un claims the missile he watched yesterday could reach anywhere in the united states. live from new york, this is bloomberg. ♪ shery: welcome back. this is "bloomberg markets -- balance of power." david:a let's check on the bloomberg first word news with mark crumpton. a spokesperson for theresa may is criticizing trump over his tweets, saying the president should not have retweeted videos from a far right group that shows anti-muslim and comments.ration reportlican majority will conclude there is no evidence of russian collusion with the trump campaign based on what they have learned so far, according to officials learning -- familiar with the matter. democrats are likely to say there is plenty of evidence, but they weren't given enough time to investigate. nations security council has scheduled an emergency meeting this afternoon on kim jong-un's latest missile launch. the pentagon said this was an icbm. has already council imposed sanctions on the north korean government. the u.s. and japan are likely to seek even stronger measures. we will have more on the story in a moment. says matt lauer , her cohost, has been fired by nbc. a detailed described complaint about lower from a colleague concerning inappropriate sexual behavior in r from aplace -- laue colleague concerning inappropriate sexual behavior in teh worhe workplace. guthrie says as she is and theken for lauer call he could the courage to come forward. global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. trump said hent will announce major sanctions against north korea. kim jong-un declared he could hit the entire united states with a nuclear weapon. let's get the latest from bloomberg's senior analyst. he was also stationed in north korea as an air force intelligence officer. you have been following this for years. claims?ible are these claims about being able to hit the united states are very , if you put this missile at a more depressed angle it could hit every facility in the united states. vicinity in the united states. put ar or not they could nuclear warhead on top of this thing is open. fasterthis happened far than the public expected. it befficult would two-minute tries the warhead and put this on a missile -- to m iniaturize the warhead and put this on a missile? rob: it is somewhat difficult to get the warhead down to that size and be able for it to withstand the stresses placed on it in launch and coming back down. it is a complicated task. militaryuth korea's stage its own -- staged its own missile exercises minutes after the launch. what is the potential here for a potential war to break out? rob: there is always that challenge. lines of communication, how both sides proceed. north korea has done this before. this is only different in terms of the altitude of the missile. south korea has reacted. it is on a fairly predictable course. we will see what happens with the security council. the key response is what the u.s. plans to deal. -- plans to do. david: is there anything the security council could do to sway kim jong-un? rob: i am not sure there is. there are pretty tough sanctions right now, and they could try imposing more. if the chinese are willing to put a lot of pressure on kim they may be able to move him. unless wee only card, sit down and talk with him face-to-face to see what might happen. shery: what is the likelihood of that, given that president trump put north korea back on the list? rob: general hayden said yesterday, north korea list? may have completed their testing regime. in terms of the missile, they don't need to test anymore. the might be willing to sit with us and negotiate for stopping something they of already planned to stop anyway. that is a possibility. that might be a little bit of a silver lining up. shery: thank you so much, rob of bloomberg government. david: we have the goldman sachs ceo joining my colleagues live at 9 a.m. eastern time. don't miss it. this is bloomberg. ♪ david: this is "bloomberg markets -- balance of power." plan has to do with marco rubio. senators rubio and the -- and proposed the corporate tax rate going up to 22%. been proposing a special treatment of the childcare tax credit. president trump says he doesn't like either idea. shery: let's get a check on the markets. yield curve at the against the dollar. the dollar is using -- losing ground. the senate tax bill could get past as early as tomorrow, but the dollar is not getting back up. a bit of a mixed market in terms of the s&p 500. the small caps are doing pretty well, up 3/10 of 1%. nology,ogy calmly -- tech semiconductors, the yield curve may be taking the dollar down. converted, it could mean a recession coming into the markets. plenty more coming up. this is bloomberg. ♪ shery: this is bloomberg markets: balance of power. i'm shery ahn. david: i'm david westin. here's mark crumpton. >> majority leader mitch mcconnell says the senate will vote today on beginning its tax bill debate but there is still concern regarding potential fiscal trigger that would impose tax increases as the proposed overhaul doesn't meet revenue targets. recently through support behind the bill and spoke today to bloomberg television. >> we actually craft a progrowth tax package we shouldn't even have to worry about this trigger. hopefully it will be designed just slightly increases everybody's taxes a little bit across the board and doesn't really address or attack once after of the economy. just as a fallback in terms of at a deficit. i share your concern. the last and you want to do is raise people's taxes. >> trigger being proposed by bob corker. disagreements with congressional democrats over key elements in the proposed legislation could still trigger a government shutdown. president trump says he has spoken with chinese leader xi jinping about north korea's latest missile test. china's promising penalties against pyongyang. made clear "the determination of the united states to defend ourselves and our allies." envoy nations syrian arrived in geneva today ahead of continuing peace talks. yesterday he met with syrian opposition leaders and representatives from permanent members of the un security council. incalled on the rival sides the war-torn country to "get down to business in upcoming peace talks." the vatican has acknowledged a protocol violation when pope francis met with myanmar's military chief before the civilian leadership. officials in the ministration believe it gave the impression the military leader was more in charge of the country. the meeting had originally been scheduled for wednesday after francis was officially welcomed. the military requested it be moved up. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. shery: with congress wrestling over a tax reform plan that critics say would explode the , fednment budget deficit chair janet yellen says she's also concerned over the surging level of public debt. >> i'm very worried about the sustainability of the u.s. debt trajectory. our current debt to gdp ratio of is not frightening but it's also not low. when you look at for example c po's long-term budget projections it's the type of thing that should keep people awake at night. for some more insight into janet yellen's testimony, representative john delaney of maryland is a member of the joint economic committee and part of the house financial services committee. he was also at the hearing. he joins us now from capitol hill. always great to see you. thank you for joining us. do you have any fresh insights into the feds plans for me -- from yellen's testimony? >> she has been a great chair. she described an economy in pretty solid shape. you just played her quotes about warning the trajectory of the which is concerning in light of the tax reform proposal is moving through the congress which is projected to increase that debt without any independent kind of objective analysis showing that it will which is concerning in light of the tax reform proposal is moving through theproduce eco offset that. that's very concerning testimony. i drilled down on a couple of points of her testimony. is the fed starting to look at data on a disaggregated basis because if the condition of the economy for the average person is good we continue to see most of the gains going to 40% of the country and its very troubling economic data coming out of the bottom 60%. her testimony described an economy in pretty solid shape. david: let's start with the overall debt. in fairness, that debt has been growing under democratic administrations as well as republicans. when was the last time congress took a serious look at the debt and try to do something about it? >> it's been too long. chair yellen talked about 75%. we know the number is going to grow. 20 to 40 rangee unless we do something about the long-term drivers of our debt. good target for what annual deficits should be. some people on my side of the aisle don't care about deficits. my colleagues on the republican side think deficit should be zero which is also terrible policy. at -2% you would have an economy year and you every would see the debt as percentage of the economy go down. that is something we could do long-term planning to achieve. tax reform should be an opportunity to do that and we are actually going the other direction. to growings turn income and wealth disparity in this country and what it's doing to the economy. i think sitting back and looking at the democrats and republicans, democrats want to tax the rich and give it to the poor. the republicans just want to grow it all. are those the two options and where's the preferred route? the preferred route is to diagnose what's wrong with the economy right now. i think it's been a lack of public investment in things like infrastructure and an ideal opportunity to do a large-scale infrastructure program. have 40 democrats and 41 public and's it went to the floor of the house it would pass. we need to start creating some of the incentives to make economic growth viable that says if americans have appreciated stock and they sell them they can to further capital gains for 10 years if they invest the proceeds in parts of the country that are left behind based on changes in parts of the economy. that's using tax reform in a way where you are getting at the problems in the economy and dealing with and balances -- in balances we are seeing. looking at why some of these very alarming statistics are occurring and why half of our population hasn't seen their incomes grow. life expectancies are going down. what can we do to actually start getting at some of those issues using tax reform as an opportunity to do that. a greatrm is opportunity to address some of these issues. shery: chair yellen talked about fixing income inequality was the congress's job. do you agree with her or is there more that the central bank should be doing? >> the only reason the fed should be thinking about this is they make decisions about rates. they have to look at the average person in the unit states and how that person is doing because in fact the average person isn't actually very representative of what's going on in the united states right now. they're spreading quite far from the average. i think the fed should be looking at that when they make their decisions. fiscal policy coming out of the progress, infrastructure programs. things to encourage investment in human capital. that is the job of the congress and those are the kinds of things that can get at some of these issues that can grow our economy faster and make sure the economic growth is more broad-based. shery: thank you for your time, john delaney representing maryland. we have breaking news on alibaba. we are now hearing it has set its side of the five dollar bond offering at $7 billion. we were waiting for the size of this huge five-part dollar bond offering. we are now hearing it will be at $7 billion. this would be one of the biggest u.s. dollar bond yields by an asian corporate issuer. maturities at 5, 10, 20, 30 and 40 years. we know the size of that offering will be $7 billion. david: i bet there will be some desire for that. shery: we are seeing the stock move a little bit. it is still down given the tech route. he was president trump's favorite billionaire, carl icahn's pirate capitalism nearly tour in ohio town apart. that's the claim being made by brian alexander, the author of glasshouse. we will hear his side of the story next. this is bloomberg. ♪ david: this is bloomberg markets: balance of power. i'm david westin. shery: i'm shery ahn. our stock of the hour is walmart. shares rising after an analyst upgrade at rbc. emma chandra is here. this is helping the stock of .8%. >> it's interesting because there is now only one cell on walmart. all the other analysts recommendations are either hold or by. it tonalyst raised underperform and many of the changes we have seen over the past few months and years including investments in acquisitions and in e-commerce and putting in a very good position longer-term. he said investors are increasingly viewing it as a consumer staple company and as a true competitor to amazon. if you take a look at my shows howhis kind of the retailing sector has been doing against the s&p. the top is amazon and walmart is not too far behind considering the rest of the retail sector is much further down the way. david: this is quite a turnaround for walmart. it was only three years ago they said there were going to invest in online and they got hammered by investors. have they earned this? >> they absolutely have. that was evidenced by their last earnings report in which we saw these investments had really paid off. i posted 13 consecutive quarters of sales growth in the u.s. and their online sales growth is skyrocketing. that's another chart i wanted to show you here. you can see the online sales growth has been steadily going up. since the first quarter of last year. it is hitting over 50% over the last three quarters. they are sort of a laser focused on the digital growth. that has happened since they acquired jet.com last year. tidbit on how well they are doing they just had a big holiday sales weekend. were outve analysts and about and they said that when it comes to toys which are big doorbuster items on black friday and cyber monday walmart really widened the price gap with competitors like target and amazon. they are really making sure prices are lower as well. shery: all right. i will have to check that out. david: from the american dream to a nightmare. how private equity and carl icahn got wrapped up in the faith of one ohio town according to brian alexander. jason to toss it over to kelly. brian, your book is glasshouse: the 1% economy and the shattering of the all-american town. it's a fascinating read. a really intimate portrait of politics and economics. as david mentioned, you get into the whole story of this town and how it had some misadventures to say the least with private activistd aqueous -- investors. what did you learn about finances culpability in our current political system. >> i came into this is a financial business reporting eyes were opened. the financial position of the american economy has had dramatic effect not only on lancaster ohio but hundreds of other towns across the country. i have been working on leveraging up a company and effectively handcuffing that company so that it's difficult for it to maneuver and if they don't play their cards exactly right that company ends up in bankruptcy which is what happened to the largest employer in this town. >> one of the things you talk about is the economic implications that have in many ways really hurt this town thinking about the news today and this tax bill working its way through washington. how do people in towns like lancaster stand to benefit from your estimation or not? >> i think they are hoping they are going to get a tax cut. ultimately a lot of them will not get a tax cut and i think that may be a rude awakening. unseenre a number of implications for the new tax law as i understand it. currently carried interest is not really dealt with. it is left mainly status quo. be an esoteric thing for most people who are working but it matters a lot for the financial position of the economy. >> and carried interest is a key a private there's equity playbook. how private equity managers derive a lot of their profits at a relatively low price. >> they end up paying a regular sort of something like 50% less than if it was regular capital gains. carrieduntered as interest. this creates an incentive to do this kind of financial engineering because it's profitable. >> one of the things you talk about in the book that is so , you talk about how the ceo who was coming into one of these companies in lancaster wasn't responsible for or to lancaster. he was responsible to shareholders. there seems to be such an reallyting tension and a important tension between who a company owes its loyalty to. in my view there was a time in the late 70's early 1980's when economists like milton friedman or preaching the concept of there is no social responsibility that business carries other than to its shareholders. that's it's only social responsibility. the old model used to be that you were integrated into the town. we were part of a town, community, nation. shareholders were important and they deserved to get a profit out of the company. but there are other responsibilities. went by the wayside and we are reaping the result of that and we have been for the past 35 years or so. >> you touched on the whole movement to the gig economy and the repercussions of that. talk about that. i'm very the things concerned about is the social contract and our sense of community. if we are all going to the gig workers, are we just ourselves? do we know anything to our town? are we all just individual actors self agents? is that all we are going to be back out if that's true i think we are into some very -- in for some very big changes in the country. >> the book is last house. -- the book is glasshouse. thank you for being with us today. david: that was jason kelly. shery: coming up, with cigarettes on the decline in the u.s. we will assess the surprising move one of the biggest companies in the sector is making to future proof their business. this is bloomberg. ♪ shery: this is bloomberg markets: balance of power. i'm shery ahn. david: i'm david westin. philip morris international is betting on smokeless products. now the fda has to decide whether to approve it. kevin cirilli talked with philip morris international ceo andre calantzopoulos in washington, d.c. the important thing here is that these products are made -- iable under specific think from a consumer for spec is we need to avoid exactly confusion of what these products are. thatnk we need regulators if value eight their development manufacturing and also the marketing once they are in the market in a way that is not misleading for consumers and it's very clear what the theycts are doing because are not zero risk products and they are addictive. there are differences between the product from our side in front of the fda that is a tobacco product. it heats it, it doesn't burn it. and you have taste and satisfaction and the ritual although different from cigarettes is as close as possible to cigarettes. electronic cigarette use a liquid. clearly there is enormous interest from the 40 million american men and women that smoke in this country as we have seen already. smokers that of try electronic cigarettes. i think there is potential if approved. by the fda for the product in the commercialization. it's going to be done by all clear. this going to is have on u.s. businesses in particular as the next calendar year in the regulatory approval process continues to move forward? we will commercialize the product when and if it is approved by the fda. what is in front of the fda today is a dual assessment. the assessment of the potential of the product to reduce the for a smokersk that switches to the product. is other part i think important is to evaluate impact on the population. obviously the policy priority should for an approved product be to maximize use. there is also to evaluate anyarket and post market unintended consequence. smoking prevalence trajectories change because of this project -- product. our more underage people using this product. is it a gateway to cigarettes. our smokers that have quit doessing and what impact it have on people who want to quit. which i think is a legitimate concern. >> that you know your critics are going to raise. au feel confident you have strategy and research to back of your research. >> correct. it is also a concern for us obviously. we take this very seriously. we have done premarket evaluation of all of this use oral unintended consequences. in actual use in japan where the product has been commercialized we have already 3 million people that have permanently switched so we see absolutely no red flags. and the mechanism that the fda can guide and people in public health and if there's anything we can always correct. i think it's of primary importance to understand how you can address these consequences but not if you the product from being made available to the 40 million smokers just because of some hypothetical problem in the future. david: that was philip morris international ceo andre calantzopoulos. it is a little ironic sitting at bloomberg to hear about him and his smoking business. because mike bloomberg has changed that business by banning smoking in new york. shery: i have actually heard that in new york if people want -- police want to smoke, they just take off their badges. sign up for the balance of power newsletter at bloomberg politics.com. get the latest on global politics in your inbox every day. coming up on bloomberg markets, part of our interview with chris aleman. why markets are making him uneasy. that's it 2:30 p.m. eastern. david: you can catch all of our interviews on the bloomberg with the function tv . that's it for today. this is bloomberg. ♪ scarlet: this is bloomberg markets. we are moments away from the release of the federal reserve's beige book. a summary of 12 districts. i'm scarlet fu with julie hyman. we have a bit of a selloff especially in the big cap tech stocks. not seeing much movement in the 10 year yield. in chris with the headlines. >> quite an upbeat beige book report from the fed today. this won't do anything to discourage expectations for a december rate hike. we are hearing modest to moderate growth reports from every one of the 12 regional banks and a slight improvement in the outlook reported from business contacts. one other thing that is quite a bit new in this report, price pressures are strengthening and several of the district. that is not something we have seen in previous beige book's. in particular there is reports of companies taking