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tv   Bloomberg Markets Balance of Power  Bloomberg  November 17, 2017 1:00pm-2:00pm EST

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gop leaders prepare for a fight as a public and senators push their tax bill through the finance committee hours after the house passes a different version. president trump is now paying for his own legal bills related to robert mueller's pressure pro. trump also was to pay his staff in legal fees. could this influence the testimony of those who accept? we will get a laundry list of million dollar home improvements president trump's former campaign manager paul manafort made his various homes. the numbers don't add up. ♪ david: after a tax overhaul package sailed to the house by a wide margin, republicans are taking a different set of challenged -- basic a different set of challenges on the senate
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side. yesterday democrats accuse republicans of just wanted to give tax breaks to the rich. orrin hatch of utah lost his temper. >> i just think it would be nice tonight before go home to just acknowledge what this tax cut is not for the middle class, it is for the rich. and a higher think about higher wages is a good selling point. companies don't just give away higher wages. visible c -- this bull crap gets old. it is not right. it takes a lot to get me worked up like this. david: but he did get worked up. in the end it made it out of committee but there is a lot to sort out to get support of the full senate. joining us now is craig gordon and kevin cirilli. greg, let's start with you. is is unusual for orrin hatch to get this angry? it was a long session. criag: it was a
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long night any definitely got under his skin. harvick is because the chairman is speaking the truth. it is actually quite unpopular out there in america. people have figured out most of the benefits dollar wise go to the wealthiest americans, and a little less goes to middle-class americans. orrin hatch can pound his fist, but he is facing up to some uncomfortable truths that will hang over this plan as they try to get into the senate and reconciling with the house plan. shery: kevin, given the pressure on the gop to get any legislative wins, could this help the tax bill? kevin: a lot of people say they might get a win, that is of the right one they want? if democrats in states like virginia, michigan, wisconsin, pennsylvania, key battleground states were president trump performed well in, if it is not the right win, that could come back to haunt them in the
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midterms. what i got up to capitol hill i was speaking to sources in the senate. we should know about the storied past between senator brown and chairman hatch, earlier this year senator brown was part of the driving force that led a boycott to break the koran m so they wouldu not be enough votes to move forward with the nomination process. they have had a back-and-forth and that clearly bubbled over last night before the senate finance committee ultimately moved this bill out of committee, sending it to the senate for a vote likely the week after thanks giving. we should note vice president pence speaking last night at the conservatives trying to drum up support. they are focusing who they want to address their concerns to. people like senator ron johnson --sons earns over the past as well as senator susan collins who has concerns about the individual mandates. i would also note that
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senator john mccain of arizona who has frequently but has with this administration has said several times he is concerned now this is not following a process known as regular order. all of that could spell potential problems for one lawmakers -- when lawmakers get to the point where they are ready for that note the week after thanks giving. david: it seems fair to say probably orrin hatch will not get brown's vote, but what about getting to 50? the magic number is 50 votes. then the vice president can cast the 51st boat. they only have two despair until the alabama election. as we went to the senators that kevin just mentioned, and others like jeff flake and bob corker who have been hostile, how do they get to 50? aig: that is the fundamental problem with this bill. ron johnson is upset that the
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tax cuts are not as big the overall corporate tax-cut. take care of senator johnson, but now you have senator collins because he had the over the obamacare repeal to pay for it. every time you take something, you take subbing out that hurt someone. that's an important point distress. the republicans had a good day yesterday. they passed the bill in the house, it is onto the floor. kevin cirilli just rattled off the senators and he could probably name sixth more that are not supportive of this bill and have a long way to go before the gets a yes. mitch mcconnell and president trump have their work cut out for them on this bill. shery: there are no senators from high taxed states but there are lawmakers in the house that need to approve the repeal of the salt reduction. how will that happen? the staff members of the house financial services committee had a meeting earlier today.
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most of their bosses are out and joined the weekend already, but they were talking about that issue in particular. there are several republicans who are concerned about that. let's take a step back because at the end of the day the republican having controlled congress does past this and he gets to the president's desk, ultimately middle-class americans in states like california, new jersey get a tax raise, that could really spell trouble in 2018. even if their 401(k)'s are going up. if they see a deduction because the tax break. -- theal observers denver -- the republicans were able to hammer that. this is a much more volatile time. i can tell you if you are an investor in watching this for what is coming next what is going to happen after tax package, the groundwork is being for inday as we speak
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the first quarter of next year lawmakers to get to some type of the regulatory initial reform. -- deregulatory financial reform. david: thank you both for being with us. shery: we are now heading for a second week of losses for u.s. stocks. let's get the details from abigail doolittle. abigail: at this point we are looking at small moves through the major averages. mixed trading averages. the dow and s&p 500 are down. the tech heavy nasdaq up fractionally. if those gains hold, another record close. dow transport down weighed down by some trucking related shares. this as amazon announces an app to say truckers time. it's amazing all the markets amazon is entering into. this follows yesterday's big
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rally, the pullback on wednesday. we are also looking for mixed performances for the major averages. this is 5917, the weekly gains or losses. in theek we see those first down week for the major averages in nine. this week the tech heavy nasdaq and white is up for 710 to 1%. in blue at the dow, down to tens of 1%. if it holds down on a weekly basis in the s&p 500 is between gains and losses, august is the last time we have seen two weeks of decline. t momentumear shifter stockserm. perhaps it will work itself out a bit. lets the was happening with the commodity complex. looking at a nice rally. commodities have suffered this week, but we have oil, gold and copper all higher. helped out by the fact the dollar is weaker.
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the bloomberg commodity index is down. at the lows it was on pace for the worst week since june. grounding it out with a few movers. homebuilding stocks trading higher. new home shares came in at an annualized rate of 1.2 9 million, rising 13.7% and forward-looking permits rose 5.9%. there could be some solid building activity in the future. homebuilding shares getting a bit higher on that activity. shery: abigail doolittle, thank you. david: we will stick with tax reform. we will talk with shawn golhar, head of public policy at barclays capital. we will see how markets are rising in the latest of elements. this is bloomberg. ♪
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♪ back. welcome
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this is bloomberg markets. david: let's check in on the bloomberg first word news this afternoon with mark crumpton. mark: president trump has started to pay for his own legal bills in connection with the russia investigation. up until now the republican national committee covered the fees. the president wants to pay legal expenses for his staff. while there is no law against it, critics say that could influence the testimony of people who accept the payments. the white house has requested a $44 billion hurricane aid package to help recovery in texas, florida and puerto rico. that is smaller than demands from the areas. this is president trump's third request, bringing the federal commitment close to $100 billion. former caracas mayor has escaped house arrest inflated columbia. the high profile opposition leader was accused of plotting
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to remove venezuelan president nicolas maduro. after a few months in jail, he was released for health reasons and placed under house arrest. the highest level chinese envoy to north korea in two years arrived in pyongyang today. tensions between the two nations have risen over beijing's tightening of sanctions of president trump's calls for more pressure on north korea to abandon its nuclear weapons program. it is not clear whether the envoy will meet with north korean leader kim jong in. -- kim jong-un. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries.. i'm mark crumpton. this is bloomberg. shery: thank you. gary cohn of the white house economic council says ceo's are most excited about the tax overhaul. how is corporate america reacting and how much is passage priced into the markets are ready? we are joined by shawn golhar at
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barclays capital. what are you cheering from your clients? shawn: a lot of them start off optimistic. as the year has gone on with the aca, the failure to repeal, they have reassessed the situation. in the last global macro survey over one third of the clients think there is a chance of getting tax reform done. david: it will affect people in different ways. are there particular elements people are focusing on? shawn: state and local deduction, mortgage interest, property taxes, but also the interested up the ability of debt is something of interest for the high-yield clients. our team put out a note where they talked through this. the application being this larger number of that's the difference of using the house signing on the senate side could lead to additional default. david: appreciation, amortization.
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it is wondering if congress on purpose did this. help generate more revenue to help her get the corporate rate. this is a $1.5 trillion, 10-year tax cut. if that enormous number. if they get a corporate got a 20 points, they had to find a lot of different ways to keep it in budget resolution numbers. shery: it depends on the timeline. given the alabama senate seat could be up for grabs, does that affect the tax deadline? shawn: i'm glad you asked that. we just put out a note on this issue. the december 12 election is really important because if the republicans lose the alabama senate seat and the majority goes from a 51 to 49, it takes the ability to pass tax reform are difficult. we think december 12 is an important deadline for them. the senate is aiming to detect reform -- tax cuts after thanks giving. -- thanksgiving. david: when the tax cuts will
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hit what affects will have. one thing we hear is individual tax cuts really hit the economy faster than corporate ones. if we are going for corporate investment, that takes time. shawn: you are seeing the delay on the corporate tax cut on the senate side they one year. jcthe individual side, the came out with a distributional analysis and they showed after 10 years you will see tax increases for those with incomes less than $75,000 a year. which is slowly getting out to the news flow. shery: the fact they need to keep the long-term deficit at bay, deal expect the custody temporary or permanent? shawn: these would be temporary tax cuts. some provisions might be permanent. whatever's of congress were asked about this issue on incomes less than $75,000, they said in 10 years we will extend the tax cut which should get a lot of deficit hawks, if they
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still exist, get them worried. david: there is all sorts of things of the air. if they had to pull back and a limited the individual mandate, that's a lot of money they have to make up some other way. if they take the approach on state and local taxes, they have to make it up's mother went. what might happen? shawn: we were talking about a corporate 25%. if you take it from 35% to 25 points, you don't have to make of so much revenue elsewhere. daca will be very challenging. -- the aca will be very challenging. the republican senators voted against it. now you look at this tax cut legislation. there are a handful that inflates. polewardon johnson, worried about how the passage large-scale tax cuts. is the 25% tax rate for corporate still in the cards given president trump called for 20% red line? shawn: there are people with a
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lot of different red lines. this is a long negotiation. tax cuts have to be a bit of a back-and-forth. they have to find some way to do this. it will be interesting to see how the senate will keep this within the bird rule and make it compliant and attendant and year, $1.5 trillion number. david: when? shawn: we are slightly above the even odd to get the tax-cut done. sometime from now to the end of q1. the alabama election changes the calculation with the december 12 election. that makes the senate really want to get this done. even if the senate does pass the tax cut, you have to go to a conference committee to iron out all the differences on property taxes, interested ability of debt, the corporate rate. they will have to vote on this again. shery: one segment of the market affected by this --
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shawn: we have seen a lot of change in that side. obviously the state and local deduction has been something of interest. we have taken quite a bit on this on published a handful of notes on the issue. we are waiting to see what the fed will put out there because you are seeing some important differences, especially on the state and local and property tax issue warehouse members of said that's an important distinction they are unwilling to remove completely. shery: always great to have you with us. shawn golhar, had a public policy research at barclays capital. david: robert mueller is accused a former truck campaign chairman of money laundering. whatever the reason, we have trouble making the numbers add up on some extravagant home renovations that mr. manafort reportedly made. live from new york, this is bloomberg. ♪
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♪ shery: welcome back. this is bloomberg markets: balance of power. david: what robert mueller charged paul manafort in a criminal indictment the charges including laundering millions of dollars to support "a lavish lifestyle." patrick harker's real estate for bloomberg. you took a look at the numbers supposedly spent on his various houses and found some interesting or perplexing things. what did you find? patrick: the indictment said million to ad $5.4 home improvement company in the hamptons, long island. the building permits in new york city don't show $5.4 billion
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worth. david: what did they show? patrick: $5.1 million. shery: that's a big difference. patrick: there may be some on a spec the costs here there. shery: are there any possible explanations you can think of? patrick: i think that's a good one. but every cost needs to show up on a building permit. jobs change and paperwork -- shery: what were the red flags? patrick: aside from the $4 million? i think he would be upset if your contractor came back and said it was going to be for million dollars more than he originally thought. -- $4 million. numbersd to end of row -- row numbers. the famous from the bank in cyprus. payd: most of this when we home-improvement bills we don't
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go to the bank of cyprus. patrick: you would think if you are a contractor and getting the dollar amounts from cyprus, assuming it was legitimate, you might say that is funny. certainly your banquet say what is going on with this -- your bank would say what is going on with this? shery: i read your article. some of his friends were saying he was a big spender. i don't think we would do that. is there a nice for nation? -- an explanation? patrick: partially. it's a nice house and a nice part of the hamptons with tennis courts and a pool and a pitching green. shery: look at that house. patrick: he spent $35,000 on a pergola. david: this is a criminal indictment that could lead to a criminal trial if he does not settle beforehand. will he have to give some excellent nation to the jury?
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most will find $4.5 million a large number to miss. patrick: that's a good question. we heard from a contractor in south florida who did some work on a home that the metaphors -- manaforts wown in florida. you heard from an investigator but it was on the up and up. shery: real estate is a good way to launder money, isn't it? david: something i didn't know before i read this article. patrick: real estate transactions can be ok, if you're buying a property through an llc. and for the reason costs can someun and you can hide and pay some or for a job, that might be one way to clean money. and it adds value to the home. the money you spend on improvements become legitimized. patrick clark, thank you for
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joining us today. shery:, cap the negotiations are in their fifth round. mexico is willing to compromise on a review of the free trade agreement. we can tell the with the country want to return next. a quick check of major averages. we are seeing marcus declining across the board. thafter the best gains in two months. the s&p 500 heading for another loss. the dollar has been reacting to development in washington. we have the special counsel mueller's ongoing probe into russian election tampering as well as tax reform. this is bloomberg. ♪ is this a phone?
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see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to ♪ shery: this is bloomberg markets: balance of power. david: let's start with the headlines on first word news. here is mark crumpton. civil rights leader in former presidential candidate jesse
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jackson has announced he has parkinson's disease. in a statement, jackson said he will make lifestyle changes in hopes of slowing the disease's progression. his father also suffered from parkinson's. in sweden, european union leaders signed a nonbinding set of recommendations calling for better access to the job market, their working conditions, and social protections. the social summit was the first such meeting in 20 years. >> it is time for us to put people first because the european union is nothing more, nothing less than our people. addressing issues such as inequality, unemployment, unfair practices is not only morally right, it is the smart thing to do. mark: on the sidelines of the summit, leaders discussed brexit. the lawyer for former catalan leader says the court hearings
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for his client and secessionist allies on it they should be extradited to spain has been pushed back until december 4. the remains in custody in belgium as he awaits the decision. iraqi officials say their forces backed by the u.s.-led coalition have liberated the last iraqi town held by islamic state. defense ministry officials said forces have taken control of the town and the western province of anwar. last year air strikes began against the militants, allow the ullitary to retake mos this last july. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. shery: thank you. mexico is showing a willingness to compromise with the u.s. on an after review. the country's economic minister agreed it could happen every five years, but there must not be any cause that would lead to
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automatic termination of the deal. here to break of the latest is sarah mcgregor, team leader for u.s. economic policy in washington. great to have you with us. get thehink we could negotiations wrapped up by march? sarah: that is the goal. the countries have scheduled talks to the end of march. last session they decided to extend the talks by the december deadline in a march. we heard from over ross this week saying there is a short time on these talks. he thinks there'll will be some sort of deal they can eventually get to donald trump, but he is not sure if it is a deal that will be in his favor and that trump will accept it. be has threatened to walk away from this deal repeatedly. that is sort of hanging over the talks this week in mexico city. david: why did they not send robert wise heiser data these
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talks? -- down to these talks? sarah: one informed assumption is that the u.s. priority is tax reform. a lot of the legislators that they will depend on to get this tax reform through -- it is quite a tight and controversial topic in itself -- are from nafta states. they depend on nafta and might not want to see it be blown up or influx. -- or in flux. we look at what the impacts there could be if there was a withdrawal. one study by peterson came out shows it could lead to well over 100,000 job losses for the u.s. in the next one to three years. a lot of those are in red states that voted for trump. shery: how much progress could we see in this round of negotiations? sarah: for got a copy of the
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agenda. the issues getting the most attention are rules of origin, which are hugely controversial. the u.s. wants more american-made content and products that qualify for the benefits of nafta, and also financial services. it interesting because the u.s. has a trade surplus and financial services. we will have to see where they can make some ground there. we don't expect major waves. these talks, we have heard there will be talks again in december and perhaps ministers will be involved in those directly. i think if there is any route for things by not explode, it could be this one. david: seems like a low bar. thanks to sarah mcgregor. get more insight into the future of trade relations with mexico from a former senior adviser in the nafta negotiations, antonio ortiz-mena. senior vice president at
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stonebridge. he joins us via skype. thanks to being with us. could mexico have done more to ensure the continuity of nafta? mexico, thehink u.s. and canada could have done more. i think nafta was left on autopilot and everyone assumed everything was ok, until politically it was not ok. i think there is a lot of soul-searching to be done, the right now the issue is how to get a win-win agreement. so far things are looking a bit gray, not because i'm in norway. david: the way the president looks right now is largely as a trade deficit. i will put up a chart and tell you what it shows. the trade deficit with canada and with mexico over the last so many years basically shows the trade deficit in blue goes up
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and mexico goes down with canada. why did that happen? is there anything to be done with this renegotiation to correct the situation? antonio: i think focusing on the bilateral trade deficit as a way to assess an agreement is wrong, but it has become a political reality. there must be a way to deal with that. my suggestion would be to show how the u.s. is reliant on canada and mexico for experts. mexico, axports to lot of energy trade. your colleagues was mentioning trade services. there seems to be a sense that there have something you cannot kick around or torchlight goods, it does not count. let's focus on trade in services, not only trading goods. shery: where the u.s. has a surplus with mexico and canada. there are many areas of negotiation right now.
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28 in total. when you follow nafta negotiations, where do you see the most progress and what you think countries are lagging? antonio: i think there will be a in labor andss environmental provisions. i think there is a good chance to get agreements on corruption, which frankly is a big issue in mexico. and on gender perspectives there is already an agreement on small and medium enterprises. tradenges, you need disputes to be resolved according to law and not according to power or whim. if you don't have a strong resolution it doesn't matter what type of agreements you reach. that will be a very difficult topic. from my view absolutely essential. david: let me understand that. there is a mechanism right now in nafta. the united states 70 are not happy with it -- is saying they
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are not happy with it. antonio: i'm saying they can improve. think it's a bit technical. there is one dispute mechanism to deal with off of fair trade practices. bolstered, not done away with. i don't see how doing away with that mechanism would be in the interest of the u.s. -- mexico. wa could oppose anti-dumping duties. the fight it is important for mexico and canada, i would say that is important for the u.s. and the u.s. has insisted on enforcing its agreement on making sure its partners abide by their international commitments. one way to do that is through a strong insolvent that is on. -- mechanism. i don't see how this would be in
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favor of u.s. interests. shery: do you expect all of these issues to be resolved by march of next year? antonio: to be frank i don't know, but i would say the challenges in terms of political decisions, not technical issues. the teams from the three countries are top-notch. it would have to do with the political masters, now with the technical staff in seeing how these issues can be resolved. david: many thanks to antonio ortiz-mena, senior vice president and former head of economic affairs at the embassy of mexico in the united states. shery: special counsel robert mueller is investigating and subpoenaed the trump campaign manager documents as part of its probe of russian interference in last year's election campaign. we will tell you what this means for the investigation next. this is bloomberg. ♪
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♪ david: this is bloomberg markets: balance of power." shery: our stock of the hour is foot locker. the company rising the most today since at least 1980. at one point the stock was up over 30%. we are announcing a 26% gain. emma is here with the latest. the investors must have really liked this. revenue,y beat on eps, con sales fell by less but less than was inspected. that expected. -- less than expected.
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. it was down 55% year-to-date until today. now it is up by over 20%, by one point more than 30%. some of the things they talked about was they are starting to see the fruits of changes in foot locker. to have been cutting jobs, to make expenses. they had been trying to better organize the inventory and our help fund our premium pricing models for manufacturers, especially as we go into the holiday season. what we see is the makers like nike and under armour will benefit from the news today as well. david: some much-needed good news for foot locker. we are well into the earnings season for retail. give us a scorecard. we have been talking about before the earnings season with the idea of retail apocalypse. everyone was closing stores, radically having to alter their business because of e-commerce. a lot of them are still saddled
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with debt. we have seen a lot of good news stories. gap andp today -- abercrombie & fitch are up-to-date. if you look at the bloomberg terminal, i have s&p retail index. it is having a great day today. up about 6%. and a number of others are doing extremely well today. there is of course something we should continue to talk about, amazon. i will change the chart. 7326. what you can see is the retail index has been doing a better than s&p turquoise line. amazon is the yellow one.
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the white line, that is walmart. if there is one giant that will survive the retail apocalypse is probably them. they had a great earnings report this week. we saw their e-commerce sales have risen by 50% in the third quarter. they had some of the best groups since the recession. if anyone is taking the fight amazon, it is walmart. david: making a substantial investment in e-commerce. emma: that is really paying off. shery: think you so much for that. david: we learned robert mueller subpoenaed over a dozen former trump campaign officials last asking them to turnover doctorates related to its investigation into possible links with russia. here with the details is steven dennis reporting from washington. this is not a big surprise, is -- is it?n mark steven: is not that surprising
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they want all these trump officials to be disclosing any communications involving anything involving russia. the fact this came out in october does suggest that mueller is continuing to dig deeper. this investigation may not end as quickly as the white house once. they want this thing over and done with before next year's midterms, before -- they don't want to dragging on month after month after month. there continues to be more and more news that keeps breaking that suggests it could be hard to finish all these investigations by december 31, early next year. shery: president trump now saying he will pay his own legal bills. what impacts could this have on the probe? steven: i think the president,
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instead of relying on his campaign contributors, which is an awkward situation, to pay his own legal bills. it is interesting. plus, they are trying to set up away from help pay for some of his staffers' legal bills. of hownds up a situation do you make sure that doesn't pollute the investigation that he is helping to pay their legal bills. they are trying to do that as well. tend investigations, you to want a high-powered washington attorney and that you get a sense of very quickly. it is something they are cognizant of and having to deal with. and potentially now for a good while to come. mueller already has one person pleading guilty in a couple more indicted. people are definitely going to be wanting good lawyers. david: we have a senate judiciary committee looking into things. it seems to be unhappy or questioning jared kushner saying
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you have not given us everything. by the way, we know there are documents that exist because we got them from other people and you do not give us your copy. what is that about? steven: there was a very aggressive letter from chuck grassley and diane feinstein yesterday. they are not happy they found these emails that had gone through jared kushner's email and he supposedly for them and them and-- forwarded saw them in the did not turn over. they want to have a nice relation of that. they also want to either interview him or get transcripts of his interviews with the other committees. they could end up subpoenaing him and calling him for the committee as well. the subject matter of one of those emails being a rush of backdoor outreach and dinner. i think it also has a lot of the tongues wagging in washington of
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what was that all about, and why did he talk about it earlier if he had anything to do with any mail like that? david: many thanks to steven dennis, bloomberg's senate reporter. shery: the dawn of a new era at the federal reserve. the new policies officials are pushing for as jay powell takes the reins. this is bloomberg. ♪
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♪ david: this is "bloomberg markets: balance of power." shery: a potentially radical rebound of u.s. monetary policy could be on the way. some reserve officials are suggesting policymakers reconsider their 2% inflation target. it is a good time amidst economic changes in leadership.
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joining us is michael mckee. is is a preparation for the next downturn? mike: that's one of the things people talking about making changes the policy are using as a reason. you have a change in leadership coming. it is a time and maybe the new chairman, jay powell could bring in a new idea. that is what happened with ben bernanke when he suggested setting the 2% inflation target. this'll be harder. one, the matter what he might propose jay powell is not an economist. he is more likely to come in with a developed economic theory. two, there is nobody on the board right now. he has no allies in what he wants to do, except perhaps the bank presidents and a couple of them are proposing some changes. the major one they had talked about is raising the 2% target. perhaps to as much as 4%. the argument being if the
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markets think inflation will go higher, it will get pushed higher. david: are the markets that dumb/ ? they had been saying 2% forever. oh no, let's say 4% and we will believe you. steven: that is difficult to believe that they will put data in the fed's ability to get about 2%. we have a chart that shows inflation over a long time has been coming down, down, down, and it flattens out and stays below 2% for years despite the fed's best efforts. it is not clear that is really going to have a lot of the fact. -- of theffect. if they need to raise rates to cut them, you have to keep policy lower than it otherwise would be which does not get you high enough to get additional cut room. shery: back in 2012, .2% inflation target was set there
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was a clear logic? steven: in the early part of this century we got about 2%. in the 3% range. the idea was it was symmetrical. you are telling the markets inflation got too low, the fed would act to cut rates to raise it. theytion got too high, would raise rates and bring down inflation so the markets knew what the fed was trying to achieve. david: is in the basic problem is most economists would not have predicted inflation would be where was today given the situation with employment? steven: they don't know why inflation a state so stubbornly low. there are a lot of theories about why the fed may have gotten its forecast wrong, but nobody has a good reason yet. they will be slow to make any changes because they can what is going on.
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if all of a sudden we are at 3's,and we get down to theth that brings the argument back. there is something called inflation targeting when you let the inflation rate right above your target for a while. you make up some of the ground lost on inflation. the problem is how to get back down again once it has gone up? shery: it is interesting to see this debate. in japan a lot of people say we should get a target because they did not have a clear target. they finally did and it was followed what the fed was doing. what are other central banks doing? steven: 2% is generally -- mike: 2% is widely used these days. it started with new zealand. they have it and now it has spread to essentially japan and other countries as well. the problem is nobody counted on inflation globally being so low for so long. it creates stability, but it has
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not raised inflation rates. david: and it poses a problem? mike: and a puzzle. david: michael mckee, 90 so much for being here. -- thank you so much for being here. shery: get the latest on global politics in your inbox everyday. coming up, former chairman and president of the export import bank will discuss the latest round of nafta negotiations at 2:00 p.m. eastern. david: you can catch all of our interviews on bloomberg at tv . watch that right here. live from new york, this is bloomberg. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. scarlet: it is 2:00 p.m. in new york and 7:00 p.m. in london. julia: welcome to "bloomberg markets."
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scarlet: we are live in new york over the next hour. carmaking and finance topping a lengthy agenda for nafta negotiators. we will go to mexico city in just moments. elon musk unveils his new big rig. will the roaster helped or hurt its relationship with investors? raisingerhaul plan -- serious concerns. we will get to all of that shortly. u.s. markets close in two hours time. let's get a check on where stocks are trading now. abigail: a small pullback for the major averages after yesterday's rally. we have stocks moderating them of the dow down .4%, s&p 500 less so and the nasdaq flipping between small gains and losses.


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