such as a regulatory rollback. critics say the report lacked rigorous analytical back in. at a news conference, three women who have accused president trump of sexual misconduct called for a congressional investigation into his actions. two of the women, jessica leads and rachel crookes, said mr. trump made sexual contact with them without their consent. the third accuser says mr. trump behaved inappropriately with contestants in the miss usa pageant. thetrump has denied allegations since they were first reported ahead of the 2016 presidential election. movie theaters are coming back to saudi arabia after a 35-year absence. that is seen by the latest attempt by crown prince mohammad bin salman to reform the country. saudis shutdown movie theaters in the 1980's as part of a wave of altra conservatism. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. julia: live from bloomberg's world headquarters in new york, i am julia chatterley. scarlet: i'm scarlet fu. joe: i am joe weisenthal. julia: we are 30 minutes to the close of trading in the u.s. the s&p 500 is on track for another record close. joe: the question is, "what'd you miss?" scarlet: bitcoin has landed on wall street. the futures delivered a wild ride. we break down today's moves and what to look ahead to. plus, it is crunch time for tax reform as we near the end of the year, but will the middle class notice the tax relief if and when it gets it? the labor market is set to end of the year on a high note. chiefk ahead with the officer at indeed. julia: the s&p 500 is on track for a record close. how long will investors be able to keep riding the bull market? it all depends on what stage of that bull market we are actually in. here to answer that and give his outlook for 2018 is the chief market strategist at counter fitzgerald. great to have you on the show. you said in 2016, the theme was going to be central-bank accommodation, and that feeds through to 2018. is different this year, and to what extent is that accommodation and the growth it is producing? >> there are some things that are different and some things that are the st. pete are the fed has started to act more aggressively on the short end i raising interest rates in the united states. extent, in response to that, it is my contention that other global central banks. more aggressive. , they tried to offset the fact that the fed was going to raise rates, and in doing so, they provided $4.1 trillion of quantitative easing since then. scarlet: net-net, you have very accommodative central-bank policy even if the fed is tightening. in the u.s., we see a flattening yield curve. 0'm looking here at the 21 spread. the vix is the blue line here. you pointed this out, because we are in the late stages of the bull market. it has implications beyond what we are seeing in the u.s. peter: that's right. if we can start with the u.s., let's call it 60 basis points, roughly wheres, we are today, you can have another 18 months or two years activity, and even after the yield curve inverts, you can have six months of positive economic performance. we've got some time left before we see the volatility pickup, and that chart shows that. joe: the yield curve aside, what do you make of the fact that we are seeing some of the best global growth in a long time? what people would say it's pretty close to full employment we can'ts., and yet have any kind of lift on the long and in terms of expectations for meaningfully higher inflation going forward. peter: it is all interrelated is the zen way to look at this. at the end of the day, you can't separate the amount of global growth we are getting from the tremendous amount of accommodation we have been getting. central-bank policy has been focused on lifting asset prices and force an into markets like emerging markets. access to capital. they make investments. on emerging markets account for 60%-plus of global gdp growth. you can't separate accommodating policies from the growth. the question is, when you start to dial those back, what happens? julia: you are saying at that point, the data doesn't justify the asset prices. peter: the question becomes, does it become self-sustaining? will growth start to fuel itself without qe? scarlet: is 2018 the year when we might see that come to fruition? peter: i think it is a key year for that. the edges ofd on global monetary policy, the boj, ecb. think they continue to do qe for a long time because of the demographic issues they have, but looking at the ecb, when will mario draghi start to pull back? his most recent move was an incredibly dovish paper. we will be bullish going into 2018. peter: another thing you have been looking at in the economy is the rate of productivity growth. it's one of my favorite debates. as your chart shows, it has been lower, but it is near the bottom. it raises the question of whether productivity is cyclical, or whether we are in some sort of deeper structural malaise. what is your interpretation it interpretation peter: if you look at average productivity growth in the last few recessions come it was two points at percent after the 2002 -- 2.6% after the 2002 recession. our productivity growth since the most recent recession was 1.2%. that is a very low productivity growth, and there are lots of which may behat, we have time to discuss, but that is clearly an issue with respect to the self-sustaining nature of any recovery. if we are going to have a self-sustaining recovery, we need productivity growth. which may be we have time to discuss, but that is clearly anjoe: what is - explanation? peter: the same globalization that led to these "populist election results" and developed market economies is the same reason we are not getting the same productivity growth in the u.s. all the investment is being made -- that is hyperbole -- much of the investment being made is being made in emerging markets, not in the united states, and that means we are under investing in productive capacity in the united states while our competitors abroad are making that investment. julia: that is not going to change anytime soon. peter: i don't think it will. if demand continues no onetrong and there is more to higher, they could say, we have to start building some robots? peter: even though the unemployment rate is low, there are two things that are different. labor force participation is very low, although it is better in the 25-52 category than it has been for some time. that said, the job creation has been in the lower wage, less-skilled part of the marketplace, retail, for example, and you don't get a lot of productivity growth by definition out of those jobs. want to get your views on some of the themes we have been seeing in the u.s. periods, which is traditional for late stage bull markets -- to what extent do you expect one of those at some point to be a more forceful retrenchment from growth stocks into value? peter: the timing of that is difficult to foretell. those cycle turns are the holy grail for folks like myself, and we often get them wrong. when we do see it, it's going to mean something. gettingw, we are rotations. they seem to feed on themselves and build on themselves. when i think we start to see correlation to the downside pickup, that is when we will have to worry about of the cycle having inflected. scarlet: peter chicanery, senior strategist at cantor fitzgerald, thank you. coming up, international fallout from president trump's decision to recognize jerusalem as israel's capital. we will hear from former u.n. secretary-general ban ki-moon on this. this is bloomberg. ♪ scarlet: "bloomberg markets: americas -- "what'd you miss?" nikki haley, slamming to what she referred to as "israel bashing" at the u.n., defending president trump's decision to recognize jerusalem as the capital of israel. former secretary-general ban ki-moon spoke earlier to shery ahn to defend his legacy at the u.n. israel bashing? as a former secretary-general who had been working hard to facilitate a two state solution, and also as a member of the elders of the world, i am to say thate voices this issue should be settled between israel and the palestinians. i have been urging prime minister netanyahu and president solutions soe on ,hat there will be two states israel and the palestinians, living side-by-side in peace and harmony and security. prime minister netanyahu and the have beendent must hearing all the voices from around the world, including the european union, not to mention .rab countries finally, let's go back to your home country, south korea. north korea has very much been fewssue over the last months. as you look at the situation with north korea, what is the path? withere a path to peace north korea that does not include a nuclear-armed north korea? ban ki-moon: i believe there is a possibility of addressing this in a peaceful way. we have been hearing many , but this statements military action will not be sustainable. concerned deeply about what north koreans have been doing. north koreans are looking for a way to a solution from dialogue. at the same time, the underlying message of president trump and the u.s. -- my interpretation is that their message is also for a peaceful solution rather than a military solution. the military solution can easily be initiated, but it is never sustainable, as we have seen in many different places in afghanistan, iraq, and syria. solution. a peaceful >> mr. secretary, the first time i ever met you was more than a decade ago, and that was when the six-party nuclear talks were ongoing. when you are talking about a peaceful solution, are we talking about a multilateral framework, bilateral framework? will it be u.s., north korea, and china? ban ki-moon: there may be many , but we may also , the united korea , all thesena political functions can be worked together or separately. we must use all of our tools. >> why isn't china doing more? i met chinese month.nt xi jinping last he also said the chinese government will be faithfully implementing the elder council resolutions over north korean sanctions, and as a neighboring , it takes an overwhelming share of north korea's external trade. china can still be the only country who can play a decisive and overwhelming role. we count on china's continued engagement. scarlet: that was the former u.n. secretary-general ban ki-moon speaking on "bloomberg markets" with shery ahn and david westin. it's now time for stock of the hour. disney, one of the bigger point gainers on the s&p 500. the company could announce a deal as early as this week to acquire a big piece of 21st century fox's assets. paul sweeney follows media companies and joins us now. this is the latest step in this won't they dance that they have been negotiating for a couple of days, a couple of weeks. paul:paul: the dam broke when it became clear that the murdoch family, against everybody's expectations, decided they were going to break up the company. clearly, they see the writing on the wall. they see a strategic opportunity to sell. disney has been the preferred bidder all along. it looks like a transaction will be announced this week. joe: if a transaction comes out this week, would you expect somebody else to come in and out of bed this business? paul: it's possible, but it want like the murdochs their assets to be with disney. it looks like there may be a wall for james murdoch within disney, which may entice the murdoch family to do the transaction. joe: we see disney shares up 2.2%. from the perspective of disney investors, what is most exciting? paul: a couple things make this exciting for disney shareholders. one, it increases their national -- international exposure. it is relatively underexposed internationally, and that is where the faster growth is in the media business. number two, it gives them access to the fox television studio and film studio, which creates a tremendous amount of content and has a great library that can fuel the direct to consumer library bob iger has been and it gives them a controlling interest in hulu, an erstwhile competitor to netflix. scarlet:scarlet: one thing i didn't realize until i looked at this chart is the extent to which the revenue growth has slowed down. the share price, of course, in white. a lot of this is predicated on disney combining its content offerings with 21st century fox. i almost said news corp., but that is asap -- separate part. paul: you could view it as a defensive acquisition. if this deal gets done, it is a bold bet by bob iger, betting his legacy, quite frankly, that disney can compete against the netflixes of the world, compete in a digital world where media companies have a direct relationship with consumers, not simply through a cable company or satellite company. this is a huge bed that disney can offset some of the weakness they have seen in cable networks, most notably espn. will "thehe titles -- last jedi" revive revenues in? julia: how quickly will regulate is be on the back of this? paul: this would be a horizontal deal that would bring the regulators in. vertical integration deals like at&t and time warner would sail right through. they haven't. the trump administration may not be as pro-business as some would have thought. intelligence'berg s paul sweeney will be all over this and will be covering the disney meeting and announcement that has to do with "the last jedi." i know alix steel is very excited. she's a big fan. coming up, sweden jumps into bitcoin mania. we are going to take a deeper look into the global bitcoin market. this is bloomberg. ♪ scarlet: i'm scarlet fu. "bloomberg markets: americas the launch of bitcoin futures in the united states has led to switching out of bitcoin etf's listed in europe. we are talking about coin at pt, which is listed in the sweden. it got hit with $100 million in outflows the last two trading days as bitcoin futures began trading. 2017, youk back over can see no matter how much inflow or outflow it's gone, the etn does a good job of tracking the underlying price of bitcoin. the blue line is the net asset value of the etn, the value of the underlying asset scale. basically only see one line, which shows how closely the etn tracks of bitcoins price. i will be speaking with ryan radloff, the ceo of coin shares, which represents well as the xpt, as world's first bitcoin-regulated hedge fund. what we are looking for is synchronized global growth, and we keep talking about whether or not that is supporting asset prices. i always like looking at these economic surprise indexes, and if you look at what has been going on for the united states and europe, you have to focus on the blue and purple lines. you can see since june, we have seen a steady increase, but what has not been so clear is the fact that japan and china have struggled. they have been trading in negative territory. rebound, a this huge number of elements coming in. we have seen moderation in inflation, as well. they can continue to be supported without seeing signs of overheating. good signs overall. joe: all of them above zero still. if you lookrare over the last year. here is some u.s. data. we got that report that looks at the rate of quits, and people quit their jobs when they feel confident about their ability to get another one. this white line has been really stuck lately, 2.2%, 2.2% quitting their jobs each month, about the same it has been for a while, but construction industry levelat 2.5%, the highest it has been at since the crisis. if you think about home builders and infrastructure, there might be a labor shortage for those industries. julia: someone thinks it is coming. scarlet: take a look at the market numbers as we head towards the close. this is bloomberg. ♪ . . ♪ julia: "what'd you miss?" higher withclosing the dow and s&p 500 at record highs. i am julia. scarlet: i am scarlet fu. joe: i am joe weisenthal. if you are on twitter, we want to welcome you to ou closing bell coverage. the dow and s&p were on track to close at their record highs. gains and 56 points for the doubt. s&p gaining .3%. it will be a busy week for banks beginning with the fed tomorrow. joe: so much central bank activity i cannot week to cover it. i am not being facetious. julia: you don't have to qualify that. scarlet: let's look at individual names in equities. we have to start with disney. bloomberg has found a fox deal is coming within days in which fox would require a big chunk of 21st century assets. 21st century would likely keep fox sports and fox news. everything else would presumably go to disney. apple shares moving by 2% because it declared its acquisition of shazam for about $400 million. bloomberg bio up the most 18% -- bloomberg bio up almost 18%. trials show it getting more effective over time. cme we included because when tradingfutures began next week. joe: let's look at the government bond market ahead of the big week for central banks. not much as action in the markets today. a little bit of flattening with those moves. julia: the dollar struggling to gain traction reiterating the pact central bank schedule. very little movement. sterling cannot catch a break down .4%. this is interesting. i have a great chart showing how volatile sterling has been. it is the eighth most volatile currency across major economies. more volatile, the rand, turkish lira. the argentinian peso is slightly less volatile than the u.k. sterling. watch this space. fun and games has not begun. moving on to the philippine peso, it was the lead gainer among asian currencies. long-term foreign default rating going to triple b-. others also rallying in line with the peso. joe: let's look at commodities starting with west texas oil up 1% today. just a hair shy of $58 a barrel. in europe with a crack found in a pipeline, brent up 2%. gold selling off modestly. for at the terminal commodity we don't talk about enough. it is having a monster year up 375% this year. it is used in hard drives and other technical applications. congrats to all of you who have ruthenium.n there you go. those are today's market movers. scarlet: newly launched bitcoin features show the expected digital currency to keep climbing. bitcoin surged as much as 26 percent in their debut on global markets. here to wrap up the bitcoin action is julie hyman. it happened. julie: we did not see any explosions after the spikes. what was supposed to happen happened when we saw the spikes you had trading halt with the spikes. we have them circled when we saw the rapid spikes. trading is halted for two minutes if prices rise or fall 10%. someone online asked if there are limits up or down. is there only a certain percentage it can move in a day? i don't see anything that limits that. breakers have circuit as far as i can tell on bitcoin features. joe: one of the most fascinating things today is the gap between the futures price and spot price. spot is a composite of various exchanges. even that is kind of fictitious. in a typical mature futures market, you never see a gap like this because if short one and by the other. i guess it says something about the market structure there is this gap. julie: there are a couple things that could be contributing. president said it may take time. look at the spread. part of it is that. part of it is the volatility that is difficult to our bit -- arbit away if both are moving much. it is still small. maybe not enough to move those bringing them together. also, there is the idea with this being a new regulated market, you might have participants willing to operate in that market but not in the underlying. joe: especially given the exchange risk. julie: exactly. that may be part of it. futures are cash settled and not with the queen. that is one reason it might be difficult to arbitrage the two. futures are cash settled and not with bitcoin. scarlet: initially bitcoin futures trading last night at 6:00. trading days. began, it has been quiet. julie: we have a graphic showing volume on the bottom and price on the top. you saw the initial bouncing around in the price. the price has stabilized to some degree. just over 3900 contracts traded. it depends on who you talk to. it is all relative. it is smaller than the overall market for bitcoin and copper or oil. they have said they are content with this introduction and the size of it. it depends on how you look at it. youlet: julie hyman, thank for that overview of what happened today. let's stick with cryptocurrencies. gurbacs' firm recently launched 16 cryptocurrency indexes. we will explore cryptocurrencies overall. bitcoin is the first and most popular. is it going to stay the leader and winner? is this just the beginning of the revolution where we will see someone else overtake it? >> it is hard to say. we don't know the winners in this space. it is important to look at a basket. bitcoin has gained steady recognition and market cap. if you look at other digital assets like the index on bloomberg, you will see contenders such as ether and ripple. some of these are more cryptocurrencies. some of them are more like technology investments. julia: you are an expert. what do you make of what happened in the last 24 hours watching the action and frenzy? what do you make of it? >> we are excited to see the market mature. when institutions and regulators participate, that is generally a good sign for any industry. cebo futureon the contracts are smaller than you see on other exchanges. it is definitely a good sign we see volume shifting toward a regulated environment. joe: as you mentioned, volume is pretty thin. i have a chart here. it is probably a little past that now. not a lot. you have an index of various cryptocurrencies. the vision is this becomes a basis for etf's and funds and a benchmark against which managers try to out beat with their own portfolios. how much interest do you gauge on the institutional side for money to come into these vehicles? >> we are seeing tremendous interest. 90%digital assets base is to 95% retail. there has not been a regulated way to participate. as we have more regulated instruments, there is a higher likelihood and interest from the institutional space. scarlet: what are your projections on how that will be shipped to? 50/50 over the next year? >> it is hard to say. it is important to keep a basket stick withd try to digital assets. everyone you ever seen on retail got there first and wall street was the last? >> this is the first one when wall street is catching up to main street. think bitcoin has real potential. if it were to become digital gold, it might have tremendous space to grow. julia: were you disappointed by the lack of volume? a lot of people expected higher volume. i get it is the first day and the challenges and institutional point you are making. are you surprised by the lack of volumes? >> broadly speaking, there is a lot of volume on non-u.s.-based digital assets. i think institutions are experimenting and figuring out ways to participate in this space. julia: what is the reason for the difference between the two? what would bring you to the united states instead of operating on an exchange elsewhere? >> there are advantages to using regulated exchanges. you have protective mechanisms, not upf-the-art systems to par on the digital assets. julia: there is already volumes traded elsewhere on exchanges. that is the justification for why there was not much on the u.s. exchange. i appreciate it is early days. but why would someone want to come to the united states and why did they not already? >> it is the regulated part of it. some institutions look for a regulated environment where they know how to trade and where they have protections and more governance julia:. julia:it is a reason for some people to stay away. scarlet: it is always a reason for people to stay away. so people canse compare and contrast. the digital asset index we have constructed so it looks like a stock index. it has selection criteria based on market cap and liquidity. it meets exchange listing criteria of minimum traded volume. forks and other blockchain corporate actions to make sure they meet the listings criteria such as stock indexes. joe: here is my big question about institutional money. in a typical futures world, you have two types of participants. you have farmers and others with reasons to trade. in digital currencies, you would have speculators clearly. the users are people who want to make financial transactions outside the purview of regulators and banks. drug dealers, things like that. how do companies get comfortable with the idea they are providing liquidity to economic activity fundamentally about avoiding what banks and governments want them to do? julia: or even unknown. >> that is one of the angles that one hears in the news very often. is somer angle blockchains were designed to be radically transparent. , you canin blockchain crimes on thethe internet as opposed to any cash only economy it would be hard to trade. transactions. julia: thank you for joining us. coming up, president trump has repeatedly promised take tax cuts for the middle class. will they even notice if they get them? we explore a recent study that says they may not. from new york, this is bloomberg. ♪ mark: i am mark crumpton with first word news. a 27-year-old man is hospitalized in police custody after the pipe bomb he was inside theonated times square subway station during the morning rush hour. the suspect along with three others suffered non-life-threatening injuries. authorities are calling the incident and attempted terror attack. is we are aty target by many who would like to make a statement against democracy, against freedom. we have the statue of liberty in our harbor. that makes us an international target. we understand that. mark: the suspect is identified as from brooklyn by way of bangladesh. investigators believe he after alone and planned the attack after reading one of the terror group publications online. the department of homeland security admits he was admitted to the united states in 2011 a passport with a family immigrant visa. the pentagon will allow transgender people to enlist in the military as of january 1. two federal courts have ruled against the ban on their service proposed by president trump. potential transgender recruits will have to overcome a strict set of conditions that make it possible, although difficult, for them to join the armed services. the supreme court has declined to review whether lesbian, gay, and bisexual employees are protected from workplace dissemination by civil rights law. justices refused to hear hey case filed in georgia by a security guard who said she was fired because she is a lesbian. companies such as apple and google took her side and a friend of the court brief. they have signed deals to build the first nuclear power plant in africa. vladimir putin met with his egyptian counterpart in cairo to make the $30 billion project official. the move will increase russia's influence in the region. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. julia: "what'd you miss?" the clock is ticking on tax cuts. toublicans have one week reach agreement if they will get a bill to president trump before the holidays. let's get the latest from the national political reporter on capitol hill. i read your article this morning and loved it. we have heard for political reasons the g.o.p. needs to get overhaulverall haul -- signed and sealed. you looked at history when people did see a tax cut. in some cases, they thought their taxes have risen. talk us through the numbers. >> in 2009, which was an instance where president obama and congress passed the stimulus included a tax cut for 95% of working households, it was about $800 for married couples which is roughly the same amount households making $40,000 to $100,000 would gain under the trump republican tax plan. these are working-class voters, president trump's base he has promised tax cuts. we looked at a hole in fairbury 2010. it showed just 12% of americans correctly believed their taxes have gone down. a much larger percentage incorrectly believed taxes had gone up. this is probably going to be the major piece of legislation they can campaign on in the 2018 elections. people's perceptions of whether they are getting a tax increase or cut aside, let's say americans were rational and saw exactly what was happening with their finances. what is the soonest people would see a benefit to their paychecks? >> during the withholding tables, it would begin to show it in january. this is going to be a tight timeline for the i.r.s. and treasury department to set rules. they will have days to figure this out between passage and when paychecks start coming in. i think that will be where they see the changes. $800 a year is about $15 a week. it is not an enormous amount. scarlet: part of it is the expectations going in. the public is not excited about the tax cuts now. polls show support is not high. how do the white house and congress reconcile that? do they believe the polls and are they responding? >> it is a huge messaging challenge for republicans if this will be their signature achievement. if it is unpopular, that is a bad sign for them. reflectingay not be a full package of what they are proposing. poll betterposals than the package overall. margin, americans believe their taxes will go up instead of down. about 53% of americans do not expect taxes to go down. this is a messaging challenge. believe themericans wealthy will get the biggest breaks. if we are heading into a an election where they believe the wealthy are getting the breaks, they could turn on republicans and the president. scarlet: could turn quickly. sahil kapur. fantastic story. will the middle class notice the cuts? julia: they think taxes will go up. scarlet: in places like new york, it probably is. julia: but two out of three people believing that. scarlet: he will close the argument on wednesday. we will see how it goes. coming up, we bring you a conversation with the french finance ministry on president plans's ambitious an for europe. this is bloomberg. ♪ julia: "what'd you miss?" president macron's efforts to reform the french economy and overhaul of the eurozone arteaga part of the same strategy according to bruno le maire, the french economy and finance minister who spoke to francine lacqua in paris earlier today. >> it will take time. but i think the key point is the political goal of what we want for the eurozone. do we want the eurozone to remain only part of the union or do we want it to become as strong and powerful as china or the united states? that is the political goal of macron. we are of the view we have to go step-by-step. for the first step, i think we should try to reach the banking union, to reach also the capital market union, and to try to improve the convergence as far as the corporate tax is concerned. i am of the view it would be possible for france and germany 2018,e a convergence by the end of 2018. there should be the improvement of the european monetary fund. with to try to have a european monetary fund which would help us -- we could try to have a european monetary fund which would help us resist crisis. there should be the creation of an open budget with a finance minister. these are the three steps i have presented and that president explain tos to his partners before the end of 2017. julia: that was bruno le maire. labor market closes out 2017 on a strong note. where are the potential pitfalls next year? this is bloomberg. ♪ mark: i am mark crumpton with first word news. the department of homeland security confirms the suspect in this morning's pipe bomb terror attack beneath times square was admitted to the united states lawfully in 2011. he presented a passport displaying a family immigrant visa. authorities say he benefited from extended family chain migration, the specific item president trump has called a weak point in u.s. immigration policy. four people including him suffered non-life-threatening injuries. he is hospitalized in police custody. a police official said suspects told -- the suspect told him he is a follower of islamic state that investigators believe he acted alone after reading one of their publications on the internet. the european foreign policy chief says the e.u. reiterated its position on jerusalem during talks with israeli prime minister netanyahu. he has joined many e.u. leaders expressing disapproval of the u.s. decision to recognize jerusalem as israel's capital. >> during the exchange with the prime minister for almost two hours, myself and the 28 foreign thatters underlined lasting peace between israelis and palestinians remains a priority for the european union. we have a united position. mark: that knocked out -- netanyahu on the first official israeli the u.s. by an leader in 22 years said it was merely stating the reality on the ground. a one-page analysis was released ready treasury department today. the report did not include specific calculations for the effects offered by elements of the presidents economic agenda such as a regulatory rollback. critics say the report lacks critical analytic backing. the new york governor and puerto rico governor have announced plans to rebuild the island's electric power system which was severely damaged by hurricane maria in september. in an email statement, governor cuomo says the new system would be less dependent on fossil fuel imports and use more wind and solar power. the system would cost the island more than $2 billion a year. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ramy: let's get a recap of today's market action. the s&p and dow closing at record highs the dow up 57 points. you don't have any real economic data today. we are all looking ahead. the fact announcement due wednesday. julia: the u.s. labor market forged ahead in 2017 as job growth continues and unemployment is at its lowest since late 2000. despite the momentum, there are pit walls looming in 2018 as we continue to discuss the lack of wage acceleration. joining us from san francisco to discuss is chief economist of indeed, jed kolko. think to a certain extent, the jobs numbers are underestimating wage gains. why and how? >> is right. the numbers in monthly jobs report show no acceleration in wage growth over 2.5%. but there are other data sources that ask people directly how much they are earning that do show some acceleration over the last year. it depends on which number you are looking at. there is probably more acceleration than the monthly jobs report number shows. scarlet: he say the headline unemployment rate -- how does this get reconciled? >> we are already seeing improvement in broader measures of unemployment and labor participation. we are seeing more people of prime working age come in off the sidelines who are now looking for jobs or finding jobs. that is good news. we should see that more as the labor market tightens. there are still a number of people not working for hard to solve reasons. because of illness or disability. and a small increase in wages and labor market may not be enough to get them back in the market. joe: why are we not seeing the pickup in the headline average hourly earnings? i know some regional feds have their measures. it has been said average hourly earnings would pick up. the signs are there. what is it causing that number we watch to not accelerate faster? >> composition may be part of the story. i think bigger reasons are measures other than the headline rate suggests there may be more slack than the headline number suggests. the headline unemployment rate is down to where it was at the end of 2000. other measures like the share of people out of work long-term or who dropped out of the labor force are still above those late 2000 levels. those folks still might represent slack that could be holding back wage increases. the other is productivity. there was a strong productivity number in q3, but productivity has been increasing more slowly over recent years than in the more distant past. that can hold back wage growth unless we see a big shift in income from capital to labor. joe: how confident are you that economists can identify where full employment is? >> it is hard to do. it can change over time. it changes depending on the economy and how mobile people are. what is clear is there still is some room. we have seen a lot of momentum in recent months with the broader rate falling and the participation ratio increasing. those continue to improve and are likely to continue improving next year. julia: talk to us about 2018 and the expected improvements you expect to see in the markets. how do you expect employers to react to changes in the market at the lower end of the pay spectrum in particular? >> as the market continues to tighten, some employers are likely to raise wages. others might invest more in or lower job requirements. we are finding on indeed an increasing share of people searching for jobs using terms like "no background check." people who might not have expected to find a job a year or two ago but in a tighter labor market may find more opportunities. scarlet: you're seeing formally unemployable people seeking jobs. talk about how people in threatened industries are looking for new opportunities using the indeed data. for example, truckers looking to make a switch to mining. >> in some sectors like trucking and retail, we are seeing people looking for jobs outside the sectors that are working in today. we are seeing truckers looking for jobs in other equipment operation fields, mining, heavy manufacturing. we are seeing people in retail looking for jobs in customer fields and other related but outside the traditional retail experience. i expect we will continue to see this on the retail side as more retail moves online and there are warehouse jobs opening up. retailers compete directly with online commerce. those are the ones seeing job declines. scarlet: thank you for joining us from san francisco. coming up, the latest meetings to revamp nasa are set for this week. we will address the most sensitive issues. for the president, we know it all comes down to a trade deficit. this is bloomberg. ♪ julia: "what'd you miss?" investors remain on alert over the threat of nafta talks failing as negotiators are set to meet this week in washington seeking minor victories unless contentious issues. joining us to discuss from washington is senior fellow caroline freund. let's start with the basics. my understanding is they want to shrink the u.s. deficit. my understanding of economics is clearly not as good as years. my understanding is you want to shrink the deficit. americans have to spend or borrow less if they want to shrink it. is that right? >> that is absolutely correct. we have a trade deficit because we consume more than we produce. just as you would have a trade deficit if you spent more than your income on going out to movies and restaurants and buying things, the only way to reduce that would be to spend less. you cannot blame the car companies or the movie theaters. that is kind of what they are doing blaming mexico or china. but really to reduce that trade deficit, there is one way to do it. and that is to save more. julia: if you want to reduce the trade deficit, you also need to shrink the fiscal deficits. a tax overhaul that adds to the deficit is not helping either. am i right? >> you are absolutely right. taxes and running a fiscal deficit, that is boosting demand. that is putting money in people's pockets they will spend. some of that money because the government did not cut expenditures is still spent on imported goods. people are spending more. that will increase the trade deficit. we saw that under reagan when he cut taxes in 1981. the trade deficit ballooned. julia: now we have established the backdrop. we can get back to talking about nafta. joe: in light of negotiations, numbers aside, is there any sense in which the current relationship between the u.s. and mexico is unfair? >> know, there really is not. was, it would be unfair to the mexicans. the mexicans have a higher average care than the u.s. does. it is about 7%. the u.s. average terror is 3%. when they export to the u.s., they are getting 3% preferences relative to exporters from other countries. tocontrast, when we export mexico, we are getting a 7% preference. that is a bit more. if anything, it has been very good for the u.s. scarlet: nevertheless, there is this sense that person's -- persists that the deal needs to be updated. if you were to take that case, what is the best way to update nafta to make it more advantageous for america? >> that has to do with the fact the world has changed since nafta was negotiated in 1994. there is this new economy. things like e-commerce, data flows that are not in the nafta agreement. we might want to adjust nafta to address these. the u.s. is a big service reducer -- producer, service exporter. we would want to adjust nafta to open services trade more. there are areas where it could be modernized but not really the areas this administration which has been focusing on which are closer to old-fashioned goods and not services or data or e-commerce. line and pull the the threads together on the conversation, there are domestic things that need to take place for the united states to tackle this issue and things that can happen with trade deals. can this be a win-win for canada, mexico, and the united states? how would that be achieved? a win-win-win. >> absolutely. i think what we had any trans-pacific partnership was a win-win-win and included other countries as well. there is a lot there that was agreed upon that was good for all of the countries involved. some of that text could be incorporated if mexico, canada, and the u.s. could agree on better border facilities, things like allowing trucks to go 24 hours to make for a smoother production cycle. there are a lot of things that can be up dated in the agreement -- updated in the agreement and make it better for u.s. exporters. opening canadian dairy would be great for american exporters of dairy products. there are many ways. it remains to be seen if they will be able to achieve it. scarlet: airline freund, thank you. southahead, why the deep red state is turning purple in the special election. we will get the latest from alabama next. julia: this is bloomberg. ♪ scarlet: "what'd you miss?" alabama has become an unlikely swing state. the senate race to replace jeff sessions is a tossup. the special election has attracted national attention over sexual misconduct allegations against republican roy moore and millions of dollars of outside money for his opponent, doug jones, who just got a last-minute boost from alabama's other senator. >> i could not vote for roy moore. alabama deserves better. we have a lot of great republicans that could have carried the state beautifully and served in the senate honorably. us byevin cirilli joins phone from alabama. who is going to win tomorrow? kevin: greetings from the peanut in alabamathe world where judge roy moore is expected of a final campaign rally couple of miles away from where i am later tonight. looking at the polls, it is a tossup. i've spoken to folks on the ground and they are being .nundated from both sides you have people like former secretary of state condoleezza thinkaying she does not folks should vote for roy moore. on the flipside, president donald trump urging folks to back roy moore. this has been a high profile special election. whoever is elected tomorrow will only be elected for a three-year term. but this has taken on much more meaning at this moment in american culture, to say the least. julia: turnout is going to be critical. i was looking at some of the poll readings. onkey says you can go from a nine percentage point lead for more to eight point lead for doug jones. have you spoken to anybody saying, not voting? kevin: great point. i literally just spoke with someone who told me she is a small business owner and has voted in every election in her adult life. she said she is not voting tomorrow. she does not like either candidate. last night at the republican national committee, they are wary of these polls that have given either candidate the upper hand. it will come down to turn out like anything else. if you are an investor, this could have applications on how smooth sailing the president's tax reform policy is. yes, this is going to conference on wednesday with the public meeting. president trump will give a speech. the margin of the republican majority could be down to one should roy moore lose this seat in a deeply red and conservative state. suspendedhe r.n.c. support and funding until after the president endorsed roy moore. now that the r.n.c. is endorsing roy moore, what do you see as the result? what is the infrastructure around the candidate, especially since roy moore has largely been absent from tv and radio since the scandal broke? kevin: we have all seen the interviews from the surrogates, to say the least. here,n our flight down sheriff david clark, republican attorney, african american attorney, he was on our flight. he will be with steve bannon tonight with roy moore at the final rally. they are bringing in a lot of conservative all-stars that appeal to a certain faction of the conservative movement. other flip side, you have folks on the democratic side that are not sure what to make of it. is trying to run as an outsider from the democratic party. this state is very conservative on a host of issues. should he be able to win tomorrow, he will have to walk a very centrist line running as anti-roy moore but also running away from the democratic party. this is a special election for lack of a better word. we started with senator shelby saying he does not support roy moore. he said he was going to write in a name. do we know who is most likely to show up as a written in name? kevin: there are a couple of folks week circulated. , the bigy moore win story will become whether democrats are able to put enough cominge on republicans if he wins, it will be whether or not they will seeat him. some are suggesting luther strange could take over the seat. voters in alabama will decide. that is why senator franken's resignation matters because it is a form of leverage in a weird way. that is kind of where this fight could be headed. julia: election times give me goosebumps. great work, kevin cirilli on the phone from alabama. thank you for that. we want to bring you breaking news from boeing. they are boosting the quarterly dividend by 20%. were more like $1.58. a big surprise. they also authorized a share buyback. it is not as flashy as it sounds. it is replacing a $14 billion program put in place a year ago. $4 billion increase on that. in 12 months. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪ the fomc begins their meeting. washington and you are watching bloomberg technology. the white house says a pipe bomb explosion shows the need for immigration reform. a bomb in a subway and injured himself and wounded three others. sevenived from bangladesh years ago. the pentagon will allow transgendered people to enlist in the military. federal courts have ruled against the ban on their service. transgendered recruits will have to overcome a set of physical and mental exams. will send american astronauts to the moon and back to mars. did not provide details on how the work would be funded. wildfires inf the california is moving north. 360 square miles has