what a trump presidency means to monetary policy. a fragmented d.c. engages in another confirmation. putting it is biggest profit ever come apple beats the street with a record quarter. welcome to "bloomberg daybreak." rally get back on track after a four-day skid on the s&p 500? futures are positive. the dollar index the worst since march of last year. looking at political risk also filtering into europe. take a look at the french yield. you have a selloff in the french bond market as you see political risk. sitting on the 100 day moving average. crude from the dollar. gold flat. david: president trump took

primetime television last night to announce his nomination to the supreme court. the judge did not come as a surprise as his name has been widely circulated at the time of the announcement. now the question is one of confirmation. to report on what the nominee is facing, which are you kevin cirilli from washington today. give us the insight. what are you looking forward to in the confirmation? convinceu have to democrats not to filibuster his nomination. , harry reid deployed the nuclear option as it is known in washington and was able to move the nomination by a simple majority. if republicans change the rules, they will not have to convince any democrats to flip their vote. that is where the action is lying today. david: there is not much doubt i

think that unless something comes up he will be confirmed. the news conference yesterday with paul ryan, speaker of the house, and it was hard for him to get off the subject of the immigration order and get back on things like tax reform. kevin: that is a lot of frustration with senior aides of senior members in the republican party in washington. these sources i am talking with our concerned that the rocky rollout of the executive orders over the weekend expended too much political capital and could hurt republicans as they look to publish their legislative agenda -- to accomplish their legislative agenda. it is all good committing to an atmosphere where democrats feel emboldened to do things like a boycott the procedural vote to move it out of a committee for steve mnuchin. later today at the white house in the oval office, president trump will beat with his top legislative affairs team, including people like paul taylor, who has been charged now

with leading his legislative efforts on capitol hill in order to map out a strategy. yesterday, vice president pence meeting with senate republicans and feeling a host of concerns coming from the white house. david: is this simply a matter of the need to get more people on the team, gekko people confirmed? or are they headed in the wrong direction and need a course correction? kevin: i think it is the former. the folks i am speaking with in the capital tell me they just want little tweaks done on things like talking points, messaging strategy, how to effectively communicate and work in tangent with what the administration is doing. they were blindsided by the results on friday night with the executive order. in contrast, what you saw last night with the reveal of neil gorsuch was a more cohesive messaging strategy. we will have to wait and see if that sticks. david: thanks so much.

jonathan: thank you. big question for this market, if global leaders and hedge fund managers turn somewhere on president trump's policies already. 's bobwater associates prince said the following. with me now is troy and the global head of effect strategy at global swings. reconciling, appeasing your banks with the business friendly policies this market wants to see, are you rethinking how difficult that will be? >> not really. from the start, it is clear there has been a good trump when he is focused on regulatory relief and tax reform.on

the other hand, you do some of his populist policies would cause confusion in markets. the markets focused on the good trump, which is the business family and economic friendly aspect, and now they are getting a dose of reality that it will not be all clean and nmice. in our opinion overtime, ultimately, the program policies well trump -- no pun intended. they will overpower some of the protectionism and job loading from corporate america. provostu have the policies but that you have verbal intervention like over the last 24 hours. >> that's right. it is going to be messy trading currencies in this kind of environment. even as the progrowth agenda comes back in a more explicit issues likell have g7 meetings, g-20 meetings. the market will look at these

dates in the diary and see them as potential conflict points. it remains somewhat under the sense of the positions. alix: we saw a huge jump in the last two days, but we are still at historically low levels. when will see the volatility trickle through? troy: we started at an extremely low base. ultimately, we think we will settle more into the 1215-1218 vix range. the key for investors is not to lose their head. focus on the good and the bad and make sure they are engaged. for anythat the path asset you are interested in will be rocky going forward more than it was for the postelection period. jonathan: there has been a huge conviction in the market. we came into this year with

short treasuries come along short treasuries, long dollar trade. if you get another month of that, do you have to rethink then? troy: part of the trouble with conviction trays is they are crowded. the hedge fund industry should have learned to avoid crowded trade. to us, neither one of that has the risk reward profile. a much more volatile path. in terms of shortening the dollar, from our perspective, this could be a repeat of last year. last year, you had months of weakness and trading sideways. we did not however higher until you got a hike and the promise of massive policy change. their arbiter risks in other asset classes.

alix: to pivot off that, you want to concentrate on the issue. david: i want to come back to you, shahab. are we misinterpreting this president already? heated with a he was going to be a shareholders president or ceo as president. he said he was going to be a workers president. what does that mean for fx? if that is the only thing you are solving for to get more jobs, with does that do for the dollar? shahab: depends what you interpret as a policy that actually creates the jobs and what you create as one that appeals to your base. sellu go to the base, you the dollar against the yen when it gets closer to 120 because the authorized japan -- the odds can rise. this is not going to go away.

as time goes on, there will be evan flow -- and ebb and flow. until we see some change in that idea, i don't think you can be all in on the idea it will be a one-way dollar trend. troy and shahab: will both be staying with us. coming up, bill daley served as secretary of commerce under president clinton and as president obama's chief of staff. he will be joining us to say what lies ahead for the new supreme court nominee. separately, bloomberg will have coverage of the first monetary policy meeting of the year starting at 2:00 p.m. eastern time. jonathan: right now over in the house of parliament, prime minister may taking on the .pposition, jeremy corbyn the u.k. government is clear. decisive travel ban is

and wrong.divisive full coverage right here on bloomberg. from new york, this is bloomberg. ♪

david: this is bloomberg. another decision day for the fed. this time, they are not expected to raise rates and taking a break after the hike in december. it will not be holding a news conference either. we turn now to mike mckee, who is in washington waiting for the decision. tell us that we will get. i have said we will not get. mike: what is the fed?

everybody has dropped from their radar screen with what is going on at 1600 pennsylvania avenue. they are meeting today, the first meeting of 2017, the first since the rate increase in december. there is not a negligible chance of a rate move. futures are pricing in at 20%. when you look at the economy, 4% unemployment and inflation ticking up. the fed uses 1.7% according to one. another. you could argue there is reason to raise rates. there is another big reason not to. that is the man at 1600 pennsylvania avenue, donald trump. we do not know what his economic whether they be, have to raise rates faster or possibly cut them depending on how the markets and economy react to his policy. watchful waiting. the fed will come in, do nothing, and not say a lot about the future plans. jonathan: the statement will be

interesting.the conversation out wall street at the moment shifting to what they will do with the balance sheet. voting for this monetary decision, janet yellen, william dudley, and about that that many people do not pay attention to usually. rolling over treasuries, reinvesting treasuries. are we going to see some tweaks around that in the coming meetings? michael: it is possible but not likely at this point. that is one of the last things the fact officially laid out strategies said they will do. they want to getrates higher before they start playing with the balance sheet. when they start, the idea is they start selling off, not reinvesting, letting rolloff the security they old. hold.an--

they want to make sure they can continue the process before breaking down the balance sheet. davidalix: thank you for joining us. shahab, the right high probability for march is now 34%. can the dollar keep rallying without a fahrenheit? -- fed hike? shahab: if 34 goes to zero, the probably can set off a little bit more. that is setting up how likely a hike would be in march. today is important despite the fact that you do not expect any kind of a change. jonathan: we might expect the check to come out and say something about the dollar. global intervention is not coming from the reserve this time. it is coming from the trade advisor to the president and the president himself. how do you factor in the dynamics this year? shahab: since the 1980's, we have not had a political dollar as such. we had a strong dollar policy. this is entirely new for a whole generation of fx traders.

before now, the dollar was always, all we had to think about was what the fed would do. the risk was on the other side of the coin. this is a whole new development. we have to have higher volatility price to. alix: barclays coming out saieh saying they are the new boss in town. you are sitting in the white house, what do you want from the fed? is you have to write the decision for the fed, what would you write? troy: they should be patient now, given a chance for the economic policies moving forward. they can move fast on regulatory relief. it is more difficult to move quickly on tax reform. they should see evidence of inflation firming up. you expect one to three hikes this year. it would be shocking for the trajectory for one or more than three times.

the white house would prefer it to be later in the year as opposed to the first quarter. david: many people in the market --ddered when he offered [laughter] jonathan: my question will be as follows. if we have the election on the horizon, germany, france, etc. this time last year, the federal reserve was a lot more cautious about risks of broad than maybe they will be in the coming months. is there on their agenda, radar? of china's massive evaluation is why they were cautious. the risk has not gone away. it has been mitigated substantially. in terms of europe, it is going one of the two guys, which is a net positive. merkel is consolidating her base. would be surprised if overseas risks influence the fed to the

degree this year that they did last year. 16 the fed had a higher forecast because of the risks at the end of the day. what do you see as providing the potential risk? shahab: the difference this time is the u.s. is doing things it's so potentially -- itself potentially to force itself to grow. it lowers the weighting of overseas risks when you have the wind behind you. at the end of the day, if you are the fed and looking at what risks are out there, you cannot ignore the european risks. there is a new variation. china will always be brewing in the background. these unusual issues we have to deal with, but it is important from the fed's perspective to think about what the u.s. itself may do. it lowers the relative weight over the overseas risk.

troy: the backdrop for the u.s. economy is far stronger in q1 this year than q1 of last year. . you have a much more stable trajectory. david: thanks very much for being with us. bloomberg will have special coverage of the decision at 2:00 p.m. eastern time. coming up, it was a beat for the world's most volatile compan va. the market do not expect it will do this well. the stock is trading higher on the news. we will go after their first quarter results with walter, next. this is bloomberg. ♪

>> one stock on the move this morning is apple. take a look at the nugget of apple here.

this is iphone revenue growth, the white bar. the yellow bar is overall growth year-over-year. both of them finally returning to growth in the last quarter, fueled by the demand for the latest iphone. joining us is walter. rating on apple. troy is still with us. is it a sigh of relief due to look in the second quarter? walter: definitely. if you are in revenue decline, then there's year to drop would be to marginal distractions. returning to growth when there is ia lot of concern about the quarter. to return to growth and have guidance that implies some sort of growth and iphones were not going to be a disaster in the heart order. -- march quarter.

alix: we did not see it in china. >> 50% of our iphone sales in china were switchers and first-time buyers, which is a very high number that we are pleased with. obviously, our total base continues to grow there in the strong double-digit. the challenges are the currency has devalued 6% year-over-year. two, hong kong remains a very difficult market. alix: devalue 6%. sales were down 12%. is there another part of the story? thatr: he went on to say besides hong kong and china, unit sales were up in double-digits. hong kong is certainly a disaster right now, but they were still able to grow the overall number. that is out for you. it is a global business.

-- that is apple for you. it is a global business. the fact the overall they were able to return to growth when china, which has been such an important market, had a 6% headwind on currency and a disaster effectively in hong kong was very positive. jonathan: talk to me about their ability to meet demand in the last quarter and how much of that will bleed through. walter: this goes back to the six and six plus. the shift was greater with the seven model. a great deal that samsung had the issues they did in the fourth quarter with a large screen phone that had to be recalled. you got a lot of pickup of those sales. in the u.s., which also had double-digit unit growth, a lot of that was customers coming from android, which is probably samsung, to apple. if you get those guys in your

ecosystem, the ability to upgrade them in the future is far higher than it would have been had those customers bought samsung phones. david: globally, sales are flat. they increase their sales. can they do that without samsung stumbling the way they did? walter: that is a good question and samsung will have a new product in the march or april time frame. i don't think you should look for more market share gains from here, but if they can hold onto to those customers they got as a result of the same song stumble, the ability to put up low single-digit growth from the upgrade cycles is still a good opportunity for apple. jonathan: you have been out front on balance sheet optimization on apple. how has that evolved under this administration? walter: they are giving back 100% of their free cash flow. $12 billion in dividends. if there is a tax holiday and you are getting hundreds of

back, idollars of cash do know that means a one-time payment to shareholders. maybe they feel more free to buy a large company. they can buy pretty much whoever they want right now regardless of whether there is a tax holiday. there is a question of what will you do with the money? they can buy anything they want right now. jonathan: stocks up this morning in the premarket by almost 4%. special thanks to walter. troy will be sticking with us. bill daley weighs in on president trump's supreme court nominee. from new york, this is bloomberg. ♪

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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. jonathan: from new york city, this is bloomberg. let's get a market check for you quickly. two hours away from the cash open. in new york city, futures are up. up on the dow.

positive five on the s&p 500. a four-day skid on the s&p 500. to 2017.r coming in this morning, the euro of to one $1.08.-- up to pointsies up two basis to 2.47 on a 10 year yield. let's get you an update on what is happening in the headlines outside the business world. emma: james mathis is out on his first trip since being sworn in. the left for south korea and japan. he will try to reassure allies they can count on the u.s. president trump suggested asian notntries were paying attention to u.s. troops in their countries. a bleak picture of afghanistan.

the analysis of the most recent u.s. military data suggest the security situation did not improve in the last three months of the year. to give abilities of afghan security force is questionable and basic corruption threatens the u.s. gains. in the u.k., theresa may's draft law on brexit faces its first draft today. it is almost certain to pass. still, her own conservative party is demanding more power over how to conduct it. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. this is bloomberg. david: thank you so much. last night during prime time, president trump introduced in the nation to his new supreme court nominee. that is federal court of appeals judge neil gorsuch from colorado. this is the outlook greg

anticipated. he joins us now from washington. you anticipated this and wrote about it as one of the two most likely outcomes. tell us what you know about just neil gorsuch -- judge neil gorsuch. greg: he will be a lot like the man he will succeed in justice scalia. conservative groups are very happy. liberal groups and democrats are very worried. david: as you say, he is parallel to the man he is replacing, but there is one important respect particularly to our audience and that is in difference to agencies. yes, this is what is known as indifference. if there is a statute like the

clear act and words that are not clear, the courts have been saying for the past 25 years or so we will defer to the agency in terms of how it reads the statute. said weil gorsuch should look at the words of the statute and decide for ourselves. waseems like justice scalia moving in that direction anyway. justice neil gorsuch probably would be much more limiting of what agencies have the power to do than justice scalia was. david: many thanks to greg reporting from washington. someone who knows the supreme court nominee by his record and personally. joining us on the phone is travis. welcome to the program. travis: good morning. david: you heard that discussion. tell us what we should know about what justice neil gorsuch would be? travis: i think justice neil

in business and finance cases will look a lot like a mainstream conservative, a lot like justice scalia and some of the other members of the court who were on the more conservative side. the doctrine you and greg were talking about, that is a fairly important doctrine and effects business cases. at the heart of how the court , i think itctions interesting dynamic in the first two weeks of the trump administration is that president trump has nominated someone who would be left differential to the -- less differential than the justice he would be replacing. david: you clerked for justice kennedy. sometimes it is important who gets along with her can put a majority together. the reports on neil gorsuch is he is someone who can put

together a majority, perhaps unlike justice scalia. travis: i think it is an interesting point. even if justice neil gorsuch and justice scalia's records overlap, there is an internal politics difference between the two of them. both are known for their exceptional writing. justice neil gorsuch is probably throwing fewer bombs than justice scalia was known to do in some defense that were stinging and directed at his colleagues. it is also the case that judge neil gorsuch clerked for justice kennedy. 's we the first time that a former clerk has sat down -- this would be the first time that a former clerk has sat down on the bench with his former boss. would seeml gorsuch to have an inside track on the ways to sway the median judge, justice kennedy. david: interesting whether justice neil gorsuch can swing that vote.

thank you so much for joining us today by the telephone. travis: they. thanks.il-- david: bill daley service editorial commerce under president clinton, chief of staff under president obama. today, he runs u.s. operations for a swiss bank hedge fund -- a swiss-based hedge fund. welcome back to the program. they give for being here. -- thank you for being here. let's talk about confirmation for a moment. how difficult you anticipate this will be? bill: it will be a difficult confirmation process. not necessarily the end result. my guess is he will be approved. obviously, getting nine democrats to be filibuster proof will be difficult for two reasons. one, you have a very bitter

democratic party, senators at least, because of a fact that the republican leadership will not even consider president obama's nomination for the court over the last year. not even a hearing, and most senators would not meet with him. second of all, this is very much a proxy fight for if there is another supreme court vacancy. that will make the difference on the court. there will be a proxy fight around this nomination. in the end, i think the president and the leadership of the senate will do whatever it takes. if that means blowing of the filibuster rule, they will do it. in the end, he gets confirmed, i think. alix: if it gets contentious, that may hijack more of the legislative agenda and that of mr. trump. bill: there is no doubt a supreme court fight takes up a lot of space in washington.

there is only so many things that can be done. but a supreme court fight is like no other. you can have tax reform, battles around the rates, and lots of other issues and even the immigration battles, but a supreme court what is fundamental to the direction of the country, especially when you have a nominee as young as this judge. it will take a lot of space, a lot of bitterness. not that there is not enough of that right now in washington. in some ways, it puts a monkey wrench in the whole system of the senate during those couple months. i think it will take a number of months. this judge was approved why the senate many years ago. over 40 members of the senate were not there when he was last confirmed. this is not a slamdunk process by any stretch. david: let's turn on that and say as an investor, are you more interested in whether neil gorsuch gets confirmed or not

distracting the congress from some of the stimulus measures? troy: in this case, it is interesting. when you think about his expected tenure on the court, which will be quite some time, what it does is shift the country in the progrowth direction. it sounds like he will defer more to the private sector as opposed to government agencies. within this whole theme of regulatory rollback, this will be an important piece of that going forward. power will change in washington. when it does come having someone on the court that will be less open to overreaching government bureaucracy and regulation is a friend to business and markets. bill: if i could say something though. everyone expects justices to be of a certain mold. most people thought justice roberts was going to be one of the most conservative if not the most conservative member. he was the key vote on upholding obamacare and gay marriage.

the expectation that someone will be a certain way over their 10 year as a justice does not always hold true. david: president eisenhower's of the worst mistake you made was having justice warren. bill: the outraged by the conservatives to justice roberts was pretty strong. alix: when you do have the uncertainty, when you have a contentious debate, when democrats are preventing some secretaries from being approved by congress, does that influence how you invest? when the volatility winds up hijacking any fundamental agenda? troy: break point. the perfect thing would be to roll back regulations. alix: you would love that for the market. troy: would love to get it over 36 months. it will not happen. the more political capital spent on other distractions,

particularly protectionism in things of that nature, will lead to more volatility and confusion for investors. clearly, a supreme court justice is not a waste of political capital. this is a key point that trump ran on. this is a conservative consensus builder that is also willing to work with his colleagues. it is hard to think of who would be a better pick at this point not only for business but for the political controversy we have today. alix: much more coming up. we are joined by someone after his meeting with president trump. bloomberg will have special coverage of the federal reserve's first monetary policy meeting of the year. drumroll please. this is bloomberg. ♪

alix>> this is "bloomberg daybreak." ourng up in the next hour, guest after his meeting with president trump. from new york city, this is bloomberg. this get a check out the markets for you very quickly. four-day schedule the s&p 500, the longest since the election on the s&p 500, the longest since the election. the story of treasuries and so far it 2017. we started the year at 244. we closed in january at 245. 247 is how we train this morning on the u.s. 10 year. -- trade this morning on the

u.s. 10 year. it -- searches in surges in input prices. you wonder when they come across from the factory gate onto the shopping shelves for the consumers this year. alix: tomorrow, how will we look at the inflation. transitory or not? angela merkel spoke out overnight rejecting a charge my navarro.se head peter barrick his views on the u.s. president's communication style. tom: maybe this was abrupt. this president's method of communicating is abrupt because it is kind of a revolution we are all getting used to. alix: still with us is bill

daley and troy. mr. secretary, let me start with you. do you feel like this is something the rest of the role will have to get used to or something temper down by the trump administration? bill: if the past as a predictor of the future, this will not change. this is president trump's style, who he is with the way he ran his business, ran his campaign, and the way he will run the nation. it will be difficult because statements and tweets matter. people around the world listen to these things. it is not as though each day is a new episode on a reality tv show. people follow this stuff. 's talkedtom barrick yesterday about the european union is over was unbelievable. do we want that to happen? i know the president was in favor of brexit. is he really in favor and is his administration sending a message through his high-level friend

and business leader that we want the european union to be over and the consequences of that? you have an election coming up in france where it looks like someone is in a stronger shape to win the election because of troubles with the other candidate. is that what we want to have in europe, a breakdown of the european union, and the consequent as of the world and the u.s.? words matter, actions matter, tweets matter. buckle up and get ready for the most interesting for years. -- four years. jonathan: the communication style, doesn't open up opportunities, or is it a danger? troy: it is a great point. all trump was doing is stating the obvious. right? one of the reasons he was elected, the frustration in washington not doing anything. you may disagree with his style, but he is a man of action.

the french election, it is pretty clear that le pen has a low probability of winning. from that perspective because markets are more fixated on the downside to europe, we think you is set up this year to have its best relative and absolute year for quite some time. jonathan: she wins the first row. round.ng t-- to say the left against the far right candidate, we have seen this play out. troy: you are right, but the starting points were different. we looked at the polls. we are not saying it is a zero probability. assigning amay be 30% or 40% probability, and we think it is more 5% or 10%. bill: what did they say about trump winning? troy: we would go back to the better forecasters like nate silver gave him a 25%

probability. a lot of people who have different political views wanted to keep that a lower probability. we think markets are overestimating the probability, which is creating opportunity in europe. europe in the meanwhile is finally getting his groove back from cyclical growth. jonathan: solid, david. david:. no question. is it going to make it better or worse? rex tillerson, general mattis, what will happen if the president continues to tweet and have meetings and make statements publicly that contradict you? bill: that makes it obviously difficult to be secretary, especially when you take a large ones of treasury or state or the ag, but at some point, you cannot just run everything with an executive order or press conference or statement from the white house. there has to be, and i think you

saw over the weekend with reactions around immigration in the ban for those muslim majority countries, this mass confusion, which has an impact on how the world views us. you cannot just pass these things off as early mistakes. this is the u.s. government. this is the white house speaking. this is the president of the united states, the leader of the free world. a special position. i hope they get their act together. i hope the cap delivers take a stronger -- the cabinet members take a stronger position, but it remains to be seen. president trump, he is the show. leadsves the band - h- he the van and there is no one close to playing along with him. jonathan: special thanks to troy. thank you very much. coming up, it is a day full of federal reserve speech. will give you the look ahead.

that is next. from new york, this is bloomberg. ♪

jonathan: from new york city, it is time now for today's trading diary. get data on the u.s. mortgage applications that came in little earlier. last yearfell 3.2% after rising 4% in the previous week. in about 20 minutes or so from now, initial jobless claims. at 10:00 a.m. eastern, manufacturing. decision.he fomc rate coveragering you live starting at 2:00 p.m. today in new york. here to walk us through it, he screams at me. i am getting excited. i want to discuss with you at the moment the speech by governor brainard in september

when she shot down the hawks. it goes as follows. there is a bias in this market that somehow things that quote is somewhat dated. >> i don't think it is dated. if we look at the last fomc statement, they said the risks to the outlook are roughly balanced. they are shifting to a more neutral risk assessment. however, that is in the context of a rate that will be moving lower and more slowly relative to what traditional policy prescriptions would be. i do not think that quotation is outdated in any sense. that factors into the discussion they are likely having at today's meeting because they are not really considering raising interest rates. they have probably taking a step back and looking at bigger

issues. they want a buffer in place. i don't think a 1% rate, which is still an emergency stance, is high enough to provide a buffer for them to start the unwind. they will pushing closer to a 2% fed funds rate, which means late next year if not the beginning of 2019 when they start pulling the plug so to speak. jonathan: at the bottom of the statement is about reinvestment, principles from mbs, and rolling over treasuries on the balance sheet. how is that going to change? is 1.5%, 2% the goal on rates before you start doing something on the balance sheet? carl: 1.5% to 2% is a range. i don't think that particular paragraph is going to be changed today. they are starting the discussions. i think this will be discussed in greater detail possibly when

chair yellen has her semiannual testimony before congress the week of february 13 or even in the next post meeting press conference at the march fomc meeting. there is no rush to do this. they need to have a discussion but not finalize details anytime soon. 8:15 today. jonathan: i know. at the bottom of the screen. carl: there you go. jonathan: the ceo after his family's earnings and meeting with president trump. futures are up. 49 on the dow. positive five on the s&p 500. this is bloomberg. ♪

jonathan: the fed meets to consider what a trump residency

means. a fragmented d.c. engages in another contentious confirmation fight, supreme court nominee neil gorisuch. apple beats the streak with a record quarter. from new york city, a warm welcome to "bloomberg daybreak." i'm jonathan ferro alongside alix steel and david westin. can the risk rally get back on track? futures say yes. the dollar with its worst month since march of last year. alix: geopolitical risk spreads in france. yields backing up by seven basis points. candidacy it's a potential roadblock. , goes nowhereld after its best month since june.

apple is the stock to watch. second-quarter guidance was not as bad as some of the street was expecting. david: president trump introduces supreme court nominee in primetime television last night, federal appellate judge neil gorsuch. he did not come as a big surprise, but some democrats are already saying they are opposed and saying they may filibuster the nomination. we turn to our political reporter on capitol hill. bring us up to speed on where the voting is. >> progressive senators already signaling last night just moments after president trump announced his pick that they would work to block this nomination, most notably senator elizabeth warren raising significant concerns about his ties to financial rulings. more centrist democrats, moderate democrats,

as well as senator chris kuhn, theyignaling that while might personally be opposed to the nomination, they will allow it to move to a vote. i just spoke with senator chris kuhn. let's take a listen to what he had to say. >> i don't think it is appropriate or fair for us to do exactly the same thing back. i'm alarmed, gravely concerned, and vigorously opposing executive orders, nominees of cabinet appointments for this president, but not everyone of them because not everyone is outrageous 10 unreasonable -- and unreasonable. >> you are seeing more moderate democrats signaling they will not force republicans to have to deploy the so-called nuclear option, a legislative tactic that democrats used in 2013 that would require only a simple majority vote to approve the supreme court nomination. this is big news and suggests

that democrats are ready to play ball with president trump, at least some of them. david: you reported about some republicans.mong is there any dissension among republicans on this nomination? >> not among republicans. this was a pick that was on his list. they expected it. they knew what was coming. so far, republicans holding steady. david: thank you so much. jonathan: david, thank you. it has been remarkable, the fx market last 24 hours. yesterday, the trade advisor to president trump commenting that germany was using a grossly undervalued euro. the president weighed in on the currency intervention in japan, china, and elsewhere. we are joined by bill egan.

he joins us from our boston bureau. , currencies,s almost the only thing that matters. rate differentials feels like a story of the last hundred years. what does it mean for you and the president and those around him removed the last two decades of policy on a currency to talk about it in a different way? bill: yes, it induces an additional element of uncertainty into the markets and the issue you are dealing with is with rates globally at historic lows. the ability to make money in traditional fixed income is that much more compromised. none of it helps fixed income investors to make money. hostilees increasingly for traditional fixed income investors who need rates to fall. jonathan: for someone like you, bill, you saw this massive

monster record short in treasuries. treasuries have been stable against that. how do you reconcile the action we have seen against the positioning at the start of the year? bill: january, you did not see too much action in rate. you came off the lows quite vigorously from when mr. trump got elected to today, coming off like 175-180. that cost significant losses in the fourth quarter. your traditional fixed income 2%-4%.ere down it has been 35 years of falling rates and it is kind of a shock to the system when you get a negative print like that. that is something we might have to become more accustomed to, particularly with the fed reversing course, becoming more dovish, and economic data starting to move reasonably well where you are seeing surveys

start to peak up -- forgot. -- perk up. alix: we had some confusing options last week and we have some big ones coming up next week. have you position yourself when these options come out? bill: it is interesting. trying to day trade options is sometimes an exercise in futility. some of the best described options you have seen our 10-15 basis points ago. you have to take noise like that with a grain of salt and focus on the longer-term fundamentals. bill, take us through the different parts of the curve, short versus long. as there is more and more delay, if not uncertainty, about stimulus coming down the pike, what does it do to the long end of the curve and does the short end continue to rise or does it stay down? bill: you've got the target rate

at 75 basis points right now. i think in today's meeting what you are going to see is less dovish language. i'm not going to call it hawkish, but i will call it less dovish. of thecognition of some fiscal stimulus likely to be coming down the pike. when you look at that, the way i think it is going to go is you are exactly right. there are some pretty big short positions in treasuries right now. you might get a small rally before you get a significant selloff, but that is tough to position for. if you are a strategic investor, am i going to bet on a 10 year to rally 10 basis points? that is kind of tough. it gets expensive after a while to keep flipping trades like that. we like to focus on other areas where the risen margin of safety and where the technicals are more favorable. technicals are favorable when

people don't like a particular part of the market and the fundamentals are stable. that leads us into lower rated credit where we have been solidly positioned for about a year. jonathan: just to bring the dollar story and the fed story together, one of the stabilizing factors in all of that is traditionally how quickly the dollar has moved, but now we have this political intervention , seemingly, we can assume it is going to continue -- does that open the door for the federal reserve to move in a way people did not anticipate? bill: the fed likes to call themselves a political, so i would like to say no, but i can't help thinking there could be some minor influence in the future. i do think a lot of the noise you are seeing, it is at a fever pitch right now, all of the political noise. i think it is going to calm down as we move over the next 2-3 months. that will allow markets to someone normalize in the short run. alix: my favorite note of the moment -- morning came from barclays.

they said there is a new boss for markets. is janet yellen no longer the boss in 2017? bill: she is still head of the federal reserve and wields a pretty big stick, so i would be careful on how i classify that. but i will say that mr. trump has injected himself into these markets to some extent. i think he is trying to bring in accountability and business sense to d.c. we will see how that develops. if he can't hold his promises and get fiscal reform done and get tax reform done and rollback regulations, then there could be a potential issue down the road. alix: good stuff. ceong up, the eli lilly joins us. and we hear from jeff immelt on how he views globalization in an exclusive interview. this is bloomberg. ♪

>> time for other stories making headlines this hour. there is a multibillion dollar transaction in the natural gas business today. one oak will acquire all shares that it does not own -- $9.3 -- of oneoktocks partners. and its longtime adversary have made peace. the two airlines establish a new partnership that covers aircraft maintenance and in-flight catering. the ceo says there are more areas where they can cooperate

with lufthansa at etihad. >> our teams met today. there are a range of opportunities in cargo systems and information technology, how we work with other equity partners. we are very keen to continue that dialogue. emma: for years, lufthansa argued that etihad on the begin major players with the help of illegal government aid. that is your bloomberg business flash. alix: hedge funds -- ray dalio were bullishe after the elections. yesterday, they said that while there is a lot of potential to improve fiscal policies and make beneficial structural reform to enhance the business environment, there is also significant risk that his populist policies could hurt the world economy and worse. .till with us is bill eigen

he has $20 billion in assets under management. the you agree with that assessment from ray dalio? bill: i agree with parts of it. we are just a couple weeks into his presidency. to try to look forward to-three years and come up with an exact picture is difficult. i do like what i have seen in terms of proposals. we will see if enactment of those proposals can be as smooth as i think they can be. to the extent it impacts the global economy, that is an unknown. alix: ray dalio is avoiding concentrated bets and looking toward liquid assets because of that uncertainty. it sounds like you are taking the opposite approach. bill: i do like lower rated quality depth. i like parts of the high-yield market that can benefit most from his proposals, that can be the down in quality trade. if you look at single be minas

triple c type issuance and supply out there, it is relatively cheap compared to history. people just aren't interested in high-yield despite the returns. you have seen minimal inflows into the sectors and assets sit way below where they were in 2014. in contrast, you look at , thoseonal fixed income assets are at all-time highs and people keep piling in. jonathan: way below is not how i would describe the employment numbers that have come in. the previous month revised marginally lower. 2.46%. that is where we come in. if i don't want to play the , if i want to strip out the noise and focus on how solid the data has been, in the united

states and globally, how learning seven improved, had wet play that in fixed income? bill: that is a great point. it is something not many people are talking about. there is so much focus on doom and gloom in politics. if you look at it, everything you are seeing, including that adp print, it is not good for traditional fixed income. it causes rates to move higher. there are inflationary forces at work. should mr. trump get policies enacted, it is a pro risk on type trade that will become available. that is not good for fixed income. traditional fixed income investors have had it easy for 35 years. they are not used to losses. what i'm afraid of is that when they do start to experience them, you will see a big dis -intermediation. high-yield to

converged to risk on type trades. jonathan: yields are up this morning. significant upside to the price coming from the adp number in the markets. david: whether you look at fundamentals or politics, they are both pointing in one direction and that is higher wages. to come back to the politics for take him at his word, isn't donald trump bad for fixed income investors? bill: yes, that's what i've been trying to highlight to people. should his policies get enacted, should some of the noise settle down and we go back to focusing on the economy and its impact, it becomes a bad environment for low-risk assets, particularly longer duration fixed income assets. your average traditional core bond fund has a sensitivity of almost six years. that means rates go up 1% and fromose 6% in principle

one move. if you go back to 2010 levels, you lose a lot more than that. i'm just looking for some normalization, so i want to avoid those interest-rate sensitive areas of the market strategically. tactically, you can trade them. strategically, i want to avoid them. alix: it is all about in the policies. something interesting happened earlier this week with at&t and microsoft coming to a huge offering, raising a lot of money. if you think the repatriation of money is going to work under president trump, they should not need that extra cash. what did you make of that? you have a read on that? part of that is the recognition of how low rates actually are and getting money in what the money is cheap. no one wants to have to term out that or refinance. to me, it tells me that some smart people at these companies are looking at the market saying, let's get this done now. great to have you on

the program, bill. for payroll isr significant upside surprise? the mean estimate was 168,000. yields up across the curve. the reaction from the bond market with 10 year yields up three basis points spilling over to the fx market. the dollar index up about 0.3%. up 0.25% so far on the quarter. coming up on the program, it was a beat for the world's most valuable company. apple lifted by strong holiday sales and a stumble from its big competitor. this is bloomberg. ♪

david: this is bloomberg. apple was in the news yesterday as it announced earnings an

unexpected step up in the sales of the iphone 7, even as sales in china like to behind. it has also been at the center of the controversy over president trump's immigration order. him cook said that apple might be going beyond just protesting about that order. in an interview, cook said he was considering taking legal action challenging the presidential order in court. with us is our bloomberg news colleague, brad stone. in his spare time, he has managed to write a new book that tells the story of the two leading share economy companies, airbnb. congratulations. brad: thank you. david: let's pick up on this apple discussion and the possibility that they might bring a lawsuit. how realistic is that? brad: it is curious, what could they really do? amicus briefs.

expedia in the state of washington filed basically gestures of support on behalf of his lawsuit against the u.s. government. could apple and other companies file a lawsuit against the federal government for hurting their business? we have seen some of those types of actions in the past. he went to dinner with ivanka trump and jared kushner last week. a lot of tech ceo's are trying to find a way out of this. he told the "wall street journal" he wants to find a solution that is conductive and productive. jonathan: what we see at 9:00 a.m. every morning is seeing ceos be pushed to do things by the president. what we have not seen a lot of until very recently is companies start to push back. as a sector, are we going to see them be more confrontational, technology companies, versus what we have seen elsewhere? brad: they go to washington, they talk to the president.

they go home and they hear their employees. these are blue state companies. they do not like the immigration executive orders. over theh companies years have been pushed, somewhat reluctantly, to embrace diversity, the impact of employees from other countries. their businesses are multinational. 64% of apple's revenues come from overseas. a lot of pressure, they are caught in the middle. the executive order is almost an assault on the culture of silicon valley on the entrepreneurial energy it draws from overseas. alix: silicon valley also does want tax reform, so that puts them in a tough spot. and they want a seat at the table. elon musk wants to push his energy agenda in washington. we are seeing the clumsiness of the threading of the needle. david: as your book points out, this is not the first tech

company to go toe to toe with the government. have hadairbnb legislation in their respective areas. what could apple learn? brad: historically, silicon valley has had its head in the sand. they were inwardly focused. government was a nuisance. , is ak, the upstarts story of this new generation that from the very beginning the ceos had to be politicians. the regulatory burdens were local. city to city, fights in the trenches, they had to weave together coalitions of users. over the years, we have seen tim cook and jeff bezos have to be more in that vein. this is a different kind of battle. this is the president of the united states. airbnb was fighting city councils. i think there is something to learn in terms of harnessing employees and customers in coalitions to try to make a difference. david: do you have a sense that jeff bezos is paying attention? brad: jeff bezos is an investor in uber and airbnb.

everyone is a disciple of jeff bezos right now. i would say they all want to be amazon. jonathan: thank you very much. a special thanks to brad stone. coming up, dave >>, the eli lilly -- dave ricks, the eli lilly ceo joins us. on how from jeff immelt he views globalization. that is an exclusive interview next. from new york city, the data drops, a significant upside surprise. next, we are going to see market u.s. manufacturing pmi and little bit later. this is bloomberg. ♪

isathan: from new york, this "bloomberg daybreak." let's get a check of the markets. if blowout number from the adp jobs report.

246,000 is how we come in. 168,000 was the median. longestay skid, the since the election, on the s&p 500. we are set for an open that could bring us some gains. switch up the board. the treasury market. treasury yields up for basis points on the u.s. 10-year. the dollar stronger against free much everything except the pound over in the u.k. that is the action cross-asset. here are your headlines. emma: good morning. president trump's choice of a supreme court begins what is likely to be a tense confirmation fight. the president announced the nomination of neil gorsuch, the federal appeals court judge, less night. >> i consider the united states

senate the greatest delivered a body in the world. body in theive world. it is for congress and the courts not -- and not the courts to write new laws. chuck schumer called him an ideologue and is skeptical he could be a strong, independent justice. u.s. defense secretary james mattis is off on his first trip since being sworn in. he left for south korea and japan to try to reassure allies that they can still count on the u.s. president trump has suggested in the past that asian nations were not paying enough to u.s. troops stationed in their countries. british prime minister theresa face firstt plans challenges today. ,t is almost certain to pass still, even her own conservative party is demanding more power

over how talks are conducted. next week, lawmakers propose more than 100 amendments to the law. global news powered by more than 2600 journalists and analysts. this is bloomberg. jon. jonathan: let's move on to the morning meeting where we deal with wiki banks are -- where we look at key banks are looking at. investors should buy equities and sell bonds -- this is your framework for thinking about the equity market and cross asset, as well. walk me through it. robert: it has been around in the currency market for some time. it divides the dollar strength. into -- strength periods into two components. when the dollar is strong and we are fearful and when the dollar is strong and we are greedy, happenedwhat has

since the november election, we think we are in the latter of those. jonathan: given what has happened with the data, the data is strong and that suggests a stronger dollar, the politics of the last 24 hours, some intervention we would expect from central bankers, not officials in a u.s. administration. how do you put those two things up against each other? robert: there are counterbalances and markets, that is the way they work. i suppose when we look at the balance of all of the things like this happening, in particular three hikes from the fed, we think the dollar is going to be up on a trade rated basis over the year and that is likely to have a very important influence on what strategies work within equity markets in particular. jonathan: something that citigroup and yourself have been out front of. we began the year, a lot of people have talked about this rotation out of fixed income into equities.

you guys defined it as a risk rotation within each individual asset class. is that a new wants or does that give you a net somehow -- in and somehow? robert: that is the greedy end of the dollar smile. it pays to put risk on trades on. the easiest way to do that is to buy equities and cell phones elsewhere. that has been absolutely a great way to look at how markets will perform postelection in the u.s. we think it is going to continue the rest of this year. jonathan: great to have you with us. the date of this morning, just that number everyone is talking about. adp, 246,000. alix: when we have that kind of blowout number, i have to say, what is the catch? is there some kind of payback? general electric chairman and ceo jeff immelt sat down for an

exclusive interview in boston's bloomberg bureau. they talked deeply about globalization and trade. jeff: we believe in trade. we believe in the free flow of goods. inherently, we don't think things like walls are good ideas. maybe the macro answer. at the same time, there is nothing wrong with president trump wanting to add manufacturing jobs in the united states. the president of china wants to add manufacturing jobs, the president of mexico wants to add manufacturing jobs, the chancellor of germany wants to add menu factoring jobs. i think his thrust on how do we help our exporters, i think that is a good thing. >> the relationship with china, is the prospect of any kind of trade dispute with china, does that worry you? jeff: it does.

in the economic context. there is no good case to be made with the two biggest economies on earth being in a trade war. i think that relationship, a bilateral relationship between the u.s. and china, is significantly important. for the whole world. >> you had the joys of brexit and now you have the possibility. are you still confident about the future of europe? you have invested very heavily. jeff: we have never looked at europe is europe. we know the difference between france and germany. inn we were doing altima 2014, we were stopped in paris by a set of decisions that basically violated brussels' rules. we are kind of sitting there as an american company sucking her thumb in paris and we had to fight our way in paris, we had to fight our way out of brussels. it did not feel like the european union at that time. we have learned how to manage paradox as a company. we have learned how to manage

subtlety. , people that see globalization from 30,000 feet at a resort or in a townhouse or think tank don't know a dam thing about the way globalization really works. it is country by country, deal by deal. freeh it was all like trade and all that other stuff, but that is not where we are. it was a wide-ranging interview. great stuff you delved into. did you get the sense he talked to president trump? >> i think he is more due to speak to him at the moment. in the previous inclination, trump sort of worked for him through nbc. i think the main thing that came through for me is that you had jeff immelt, the head of ge, probably the most global company in the world, some would say, and his approach to globalization is to say that it

stopped a bit ago, which -- that is a big thing. ofis saying that big era ever open trade deals, multilateral trade pushing forward, that that is over, that that has gone by and you have to focus on individual countries. he mentioned france, he mentioned other places, as well. he is giving trumpet little bit of leeway in some sense. i cannot believe that everything that trump is doing is not squarely in the face of ge. alix: indeed. ge is in a huge transformational place as it was. they are really moving into oil services. they are transforming. how do they do that when there is this political risk? >> i think it is very difficult. it is bits and pieces crossing border every day. international talent in every area. imagine turning to people and saying you cannot come to this

part of the world. alix: they are making a big bet in africa. >> exactly. versions of capitalism colliding. you have the ge version, one anchored in the old era of globalization, as jeff in melt sees it, which most of us hope has not ended, where we want to cross borders with peaceful, good services. that is up against it now. the weird thing, which he does point out, is that strangely as barriers go up, the people who will really suffer will not so much bge, they will be small, little companies. if you start building malls, you can't connect to the world. it will be the old-fashioned multinationals that might gain from this. there is no doubt which side of the argument he would be on. david: i wonder about that. if you are sitting in jeff immelt's seat.

as a saturated market, they move on to the next market. if you no longer can make that move, if you saturate a market and you can't readily move over to the next market geographically, does it put a limit on overall growth to the company? it must be a challenge. i know it was a challenge at walt disney. when they saturated the u.s. market, they moved to china. >> there is a bit of that. that is certainly true. the reason why these big companies did so well is because they knew how to be in places. you look at the big giants, ge, unilever, they were used to the world in the way that small companies were not. raft ofnk there is a small companies now that just assume that if you pursue a small software company in bangalore, you can get it everywhere quickly. if you put up walls, that is going to be a lot harder.

i think there is an element when you look at companies like ge, who manufacture a lot of things, then you have somebody like donald trump in the real estate world, which is not as knowledgeable about these things perhaps, i think there will be some resistance on the manufacturing front. jonathan: you referenced the post world war order and the stabilities created for a company like ge come he also talked about europe in this interview. what has been apparent to us is that this president, this administration see a fragmented europe as a political, tactical opportunity. that is not going to be the case for ge. john: firstly, i think jeff theyt would point out that had to deal already with something of a fragmented europe much more than they already expected. they also faced a problem with honeywell in europe. on the whole, i think it is very difficult to believe that from the point of view of global commerce, you do want a united

europe, you want friction-less commerce. that is one of the principles of economics. what is happening at the moment is although he is prepared -- he goes out of his way in the interview to say that donald trump is not doing that much different to what other leaders have done -- i think there is a big difference when america, the global guarantor of trade, britain was the guarantor of the 19th century, america is the one .hat keeps the ceilings open america has pushed for free trade. that is now in trouble and that is a big deal. jonathan: it is hard to reconcile promoting those things of the president of the united states when you campaigned against them and you've got to appease your base. how do you appease your base and deliver the kind of policies that this audience wants to see, which is a business-friendly policy? john: i think there is a total friction between the two. people like jeff in melt welcome the idea of regulation.

-- deregulation. the welcome the idea of reforming the tax code and infrastructure spending. there was a simple deal to be had when they bring the money back home and some of that goes into infrastructure. that all makes sense. on the other hand, if you destroy trade, you build walls, you destroy all the basis of talent, which america has always stuck in, that will hurt. the two are in complete conflict of the moment. david: to be a successful ceo, you have to be a diplomat. let is melt -- jeff imm being diplomatic in this interview. over thesetrue fight things. john: things are moving quickly. china is shifting into services. a lot of those jobs are going into other places. it is one of those debates where if you look at the history of trade, what tends to happen is the politicians jump on it 10

years too late. core of the trump u of trade is back in the age of nafta, where you just shifted this. on the basis of jobs have not been displaced by trade, they are being displaced by technology. the donald trump wants to stop disappearing, he has to do something about technology because that is the real driver. he some economists say nine times more effective. you are right, there is a competition for jobs. the will be a u.s.-china spat. but overall, it is a much more complex structure with global competition not matter nearly as much as other things, which nobody is doing anything about. alix: we talked about trump's priorities. there is also a ceo conflict of priorities. no one wants to be tweeted about

or dragged into the white house. did you get a sense of how he views the dueling priority? diplomatically points out that ge exports slightly more than it imports. or considerably more. alix: getting out ahead of it a little bit? john: he is ahead of it at the moment. i think there is a conflict. if you are a ceo at the moment, you have to deal with two things. i would suspect that ceos will follow the following recipe. they will keep -- with a few rare exceptions, like bill gates, who felt comfortable, warren buffett felt comfortable -- the big manufacturing ceos will save their ire for the private meetings. i think they have to explain to somebody who has not been involved in these industries how manufacturing works nowadays and what the consequences are. my guess is that you are right, he will be diplomatic and many other ceo's will be diplomatic because they don't want to get

stuck in a fight with the president. jonathan: we have not talked about leicester city with you. you got to celebrate the fact that they won the league. john: this was a bad result. the handball at the very end. [laughter] john: leicester city is drifting. alix: i literally don't know what you are talking about. [laughter] alix: good to see you. thanks for coming on. coming up, the battle over drug pricing. aftericks will join us his meeting with president trump. this is bloomberg. ♪

alix: this is "bloomberg daybreak." that is the hewlett-packard enterprise green room. coming up in the next hour, ethan harris.

bank of america merrill lynch head of global economics. jonathan: from new york city, this is "bloomberg daybreak." let's get a check of the markets, 41 minutes away from the cash open. futures are higher. four-day losing streak on the dow and we are up. setting the tone is this blowout number from the adp report, coming in at 246,000, after the forecast of 168,000. a big tick higher and the most in seven months. you have to go back to june of last year for a number this solid. if you switch up the board, here is the read across the other asset classes. basis points. just getting confirmation from the treasury that we will get $62 billion in notes and bonds next week.

a low supply coming next week. the fx markets. dollar stronger most across the board, with the exception of sterling, on this fed decision day. david: we are now going to turn to a very busy man, the eli lilly ceo, dave ricks. he started the day yesterday with the announcement of his company's earnings before meeting with president trump and other leaders in the pharmaceutical industry. the president led with getting prices down. president trump: these companies have produced extraordinary results for our country, but the prices have been astronomical. for our country. we've got to do better. in drugs have led to longer, healthier lives, we'll know that, but we have to do better. we are focused on accelerating fda approvals. we are going to get the approval process much faster. david: dave ricks joins us now

from our bureau in washington. welcome back to the program. good to have you. dave: good morning. david: we want to talk to you about what you talked to the president about, but first, we want to hit the earnings. your first earnings in your new job as the ceo. dave: that's right. david: you were up year-over-year, you beat a lot of expectations, you had a lot of sales. your stock was at the most in a single day since december 2015. tell us about what is behind those numbers and then we will talk about the pricing issue. dave: we reported a strong quarter in q4. global revenue was up 7%. costs flat. that creates tremendous leverage to the bottom line. 22% eps growth year-over-year. the revenue is the story. this is really driven by new product introductions in a pharmaceutical business. diabetes, oncology, and psoriasis. that is really our strategy as we came out of a difficult window in the first part of this

decade. get back to growth, driven on the back of our new product introductions. you may recall in december 15, we announced long-term guidance to grow on average by 5% per year between now and the end of the decade. q4 is a good start on that. for the year, strong performance. non-gap.t 3.52% in now we look at a strong 2017 kumal were we have projected -- a strong 2017, were we have .rojected significant growth it is a good time for us as we introduce new products. innovation is coming to patients. there is a lot to talk about outside our walls, but the company is in good shape and i think my predecessor for leaving me a company that has the ability to grow going forward. david: things are going well for eli lilly, you are the new ceo, everything is fine, then we have a new president, who says we

think you may be charging too much for your drugs, the pharmaceutical business overall. let's talk about one drug that is a big seller for you, and insulin product. what could be done from your point of view to accommodate the president, if you think you should? dave: right. the drug is our biggest seller and his insulin for people with diabetes, so really a life-saving medication. we have invested a lot in the supply chain -- over $1 billion over the last several years to expand capacity. we continue to study the medication. as we look at what is happening in the u.s. on pricing, a lot of attention gets focused on list price changes and list price has increased for this drug. that is true. our average rebate and discount to the health care system has also increased. since 2009, the pricing net is flat for us on this drug.

i think the problem we need to spend more time talking about is out-of-pocket cost for consumers and this is what is really changing in the last five years in the u.s. the growth of high deductible health care plans, where the patient, starting january 1, is accountable for some portion of the out-of-pocket until their insurance kicks in. for chronic medications in particular, like a diabetes medication, that is confusing to people. they need to the medication in december, january starts and they have to pay full price, where they had insurance coverage in december and, until they burn through the duct double, they are on the hook. we need new ways to think about how to get patients a discount in that deductible or exempt chronic medications in total. that is what we are advocating for. alix: you were in the room yesterday with president trump, as well as other pharma ceo's. president trump hitting the ground hard on drug pricing.

obviously has an impact. what kind of conflict was there in the room between what you still need and what a trump administration is asking of you? dave: we had a broad ranging discussion. what was encouraging about the discussion is that we were able to touch on all facets of the industry. we makene hand, life-saving products that really change the health care status of americans. people need and want more innovation from our industry and they wanted at an affordable price. on the other hand, we got to talk about what a tremendous industry the pharmaceutical and biopharmaceutical industry is for the u.s. it is an export industry. global competitiveness is really placed -- based in the united states. in our sector is in the united states. what can we do to grow and expand jobs and opportunities for americans? the encouragement i had is that there was balance between the two topics.

notthan: just quickly, i'm interested in the conversation in the room, i'm interested in the conversation you had with your colleagues. do you feel like you've got a new boss? [laughter] dave: he is clearly engaged on the issue. we will work with the white house and leaders on capitol hill, who were also in the room as we look at the repeal and replace, the potential changes, to try to create a better environment for innovation and to grow the sector. jonathan: dave ricks, diplomatic answer, expected nothing less. the eli lilly president and ceo. coming up, is this the beginning of the trend of the trump trade? ethan harris joins us. from new york, this is bloomberg. ♪

jonathan: from new york city, a warm welcome to "bloomberg

daybreak." i'm jonathan ferro alongside david westin and alix steel. one question. are the wheels coming off the trump trade after a four-day skin? a blowout adp jobs report gets us back on track. the changes in the other asset classes like this. yields up 3 basis points on the u.s. 10-year. the dollar bid almost across the board. that is the action cross-assets. let's see some movers. alix: let's look at apple, up by 5% in premarket. sales were up 3.3%. overall revenue finally returning to growth. the second-quarter outlook got analysts' attention. it was not as bad as many analysts had thought. you had chinese sales up by 12%. but that is truly just about hong kong. apple still holding up well over

in asia. watch the stock. heavily weighted in the dow and the s&p. in another tech story, advanced micro devices up by almost 4%. revenue was a bit stronger. also, q1 revenue outlook was also going to be done by 11%. the markets looking through that estimate into the relatively strong quarter. on the downside, johnson controls. i love talking about the industrials that you think should benefit from things like any kind of stimulus tax reform and this stock is down by 0.5% -- excuse me, 5% in premarket. the revenue first-quarter forecast was a bit light coming in at $7 billion versus estimates of about $7.1 billion, and of echoing themes for mother industrial companies. jonathan: thank you. report coming in

at 246,000. the median estimate survey was 168,000. it is a seven-month high. on the screen, what do the adp numbers mean for friday's jobs report? that is the private payrolls report. the white line is the adp report. let's talk to michael mckee. he joins us and he is the author of that chart. great to have you with us. typically, we get the adp report and they say it does not mean anything for friday. this time around? mike: it may mean something. if you look at that chart again, you see how far adp deviated from nonfarm payrolls. adp changed some of its methodology and the fit is much closer. it is not going to be an exact number, but it does suggest that there is definite upward bias to the month of january for the numbers. these are private payroll numbers. you've got to add in to get the

total number of payroll figures, government jobs, but i think you are going to see wall street start to raise estimates going into friday. jonathan: economists like yourself like to tell stories. i imagine one of the stories that will come about is looking at the gdp print from last week. yes, it was a downside surprise, but business was suspended again. is some of that confidence translating into hiring? mike: that may be the case. there is also an end of the year factor that gets incorporated into seasonal adjustments. we could be seeing a little bit of additional confidence, postelection confidence, in the same way markets went up. will it continue to show? the interesting thing about adding this many jobs is that we have been seeing fewer jobs added because companies said they could not find enough workers. that is the point when you start to see wages growing up. if we are attracting people into

the labor force, that is downward pressure into the wages. that is not the goal right now of the fed or the trump administration. jonathan: michael mckee, thank you. in the adpsurprise means a stronger dollar and treasuries on offer. joining us is the head of research kumal one of the research. head of it is a random number and then we go to a commercial break. >> it is a random number. alix: thanks for joining us. [laughter] >> this is a big enough surprise that it does make you think that maybe we get a better payroll number on friday. remember, january is a pretty strange month. layoffss do massive after the holiday season. the data tends to be very volatile around the seasonal adjustment of the data. the bottom line is the economy looks fine. growth is good, labor market is

good. it is another good sign of growth. forecast what kind of the you need to become the biggest bear on the street? >> there must be a relative term, right? alix: whoever thought you would have that title? [laughter] >> that is why it is funny. ishink the stock market appropriately expecting better growth. i think good economy is the right thing to expect. translate intold good stocks. turbulence is what we are thinking. bond markets a lot more pessimistic because the curve has flattened a lot. , it islast four years the least turbulent for your period in the history of the stock market. we have only had an average of 25 days 3% off their highs. alix: it does raise the

question, last year, it was all about turning over every single speaks.t janet yellen now it is about every single tweet coming out of the white house. is that a huge paradigm shift? >> it is. there are really two donald trumps when it comes to the markets and the economy. there is the growth friendly trump, which drove the markets coming out of the election, very heavily focused on lighter regulation and the prospect of fiscal stimulus, but the growth negative trump is on trade and we have not really seen yet, we have not seen his opening gambit , vis-à-vis mexico and china, are there going to be very aggressive actions to try to change the trade rules or not and that is really what the market is a little bit shaky at the moment, because people are starting to think, ok, so the shoe has not dropped on trade. david: the things that bring those two donald trumps together is the focus on the worker.

at what point will we see the adp number translate into wages? trump wast, candidate saying, the jobs are not paying very much money. will we see wage growth? it is the irony is that happening, but it is not being trumpeted very much. trumpeted. that was not intentional. by the way. we have seen average yearly earnings accelerate to close to 3%. on friday, we will probably find out they have continued to grow at 3%. the job market does not turn on a dime. it is knowledge wages immediately accelerate to normal levels. this is a three-year process of improvement and we have already had one year of improvement. this comes before the election. this was kind of the unspoken story going into the election that joe sixpack is already starting to get a better raise. that should continue going forward. alix: hair this all together with this.

i was struck by mohamed el-erian's article in "bloomberg view." you have these two competing priorities for president trump and that we can either see a huge reflation in inflation or we could see stack-flation -- .tag-flation >> is a lot more about sectors than making an index called. i think it is appropriate for people thinking of moving from a world where there was a fed put to a policy put. deregulation and inflation are two outcomes either way and that leads you to want to buy the cyclical stocks, the value stocks like old tech, banks, energy materials, telecoms. jonathan: how nervous does that make you? we have just replaced the by mentality with something else

and we have done it so quickly. first it is the fed put and now it is the trump put. does that make you nervous? >> a little bit. i think it is probably why in 2017 we will spend more of the year well-off our highs. i think that is something we have not seen. every correction in the last four years has been so v-shaped. you should never have sold a single stock in 2016. in 2017, you have to be very tactical. jonathan: in which way? >> i think you have to time the market and i think the sector and value versus growth is going to hurt a lot of people if you don't get it right. we are saying you want to be overweight value and you want to own the cyclical stocks. alix: before we go, can we define what that is? >> computers, the resource ,ector, american-based banks

and phone carriers. crap. jonathan: the biggest bear on the street. right to have you with us. check this out. u.s. january sales coming in up 6.2%, the estimate, -1 .3%. significant upside as far as this company is concerned. david: coming up later, former u.s. attorney general, governor, and senator john ashcroft joins us. this is bloomberg. ♪

alix: we are about halfway through earnings season. earnings surprise coming in at 3%. joining us is ethan harris and tom lee. , we did not see the downgrades into earnings season as much as we normally do. talk to us about the underlying growth supporting top and bottom line. ethan: i think the story that we have not really talked about much because of all the focus on donald trump is that actually we have an economy with some real into theomentum coming new year. the data now is not the trump effect, this was momentum that was already in the numbers. there are two big things supporting growth. one is that the dramatic rise in the dollar a couple years ago that really hammer the manufacturing sector is no longer as big of a headwind and the other is that we no longer have fiscal tightening going on

at the state and local or federal level. we have already had a little bit of a pivot toward better growth and that is being reflected in earnings, particularly when you think about these manufacturing firms that really absorbed a big blow. a 20 percent move in the dollar in a year is a huge hit. alix: tom, on the flip side, we have a lot of optimism and stopped it to potential policy. sometimes, the earnings don't match up. what stands out to me is what happened with big oil over the last few days. movement in much the stock. how do you understand the linking between the fundamentals and the hope? tom: it is a great question. first of all, in 2017, energy and materials are going to account for the majority of the revenue gain. comps. you never want to be devaluation sensitive at the bottom. when you look at rolling returns

, banks hit their five-year and if return in 2012 anybody was trying to be valuation sensitive, they missed four years of huge gains. energy is at the lowest rolling returns in its 90-year history. i think anybody who goes energy should not be thinking about earnings. they should realize that of oil improves, if deregulation takes place, this is going to be a huge sector. jonathan: another piece of the mentality has been the amount of buybacks we have seen. we had now have an administration seeing companies push money elsewhere in the united states. how have you thought about that as a framework for investing? tom: it is going to make the market more turbulent. buybacks were a steady buyer. you count them in right after earnings. now, they've got to figure out border adjustments and taxes. you lose that buyer woman of the incremental buyer is a rotation

for an individual out of bonds into stocks, they are not steady buyers. it is one reason why the first half is down year to date. ford january u.s. vehicle sales were down 0.7%. the estimate was to be down 2.8%. you have consumers with rest. -- with record suv sales. ethan, at the end of the day, whether you are the fed or donald trump, you are looking at what is happening with the consumer. we are supposed to be at peak auto. these are not the numbers we are supposed to be getting. what is going on? ethan: autos are near their peak. withe it as consistent improvement in wages and growth, but we are not going to get boom type numbers we had a few years ago. it is still a positive growth story. the consumer is going to continue to benefit from decent job growth and coming out for the first time, as we talked

about earlier, a little bit of wage growth. it is going to be a good story for the consumer still. david: let's come back to earnings and valuation, which takes us to the price-earnings ratio. what earnings have to come through to justify it? ethan: ok, as an economist, i look at the equity market and i say, is there a risk to the market from a bad economic outcome? every bull rally in stocks ends when the equity market smells a recession coming, when the correctly smelly recession coming. i don't think it recession is at all likely in the next couple years. even if you are concerned about the level of p/e ratios and even if earnings disappoint going forward, fundamentally, as long as the economy is on track, i'm optimistic in a medium-term basis about the equity market. jonathan: the story goes something along the lines of a bull market never dies of natural causes, dies because the fed kills it. well lit be any different this

time around -- will it be different this time around? ethan: i think the fed is always an accomplice in the death, but there are other things, as well. a big commodity shock is frequently one of the factors. also, you have a big overheated sector like housing in the last cycle or tech in the previous cycle. we don't have any of those factors that normally you look for as creating the recession. it would have to come either take time to develop or it would have to be some random factor that we just don't descant predict. alix: your risk question mark how are you doing it -- your risk? how are you doing it? tom: we don't normally think about hedging for our clients. half of our clients have to always be fully invested, so we just want to get them in the right sectors. , ih our hedge fund clients think they manage risk on their own.

i don't think about hedging too often. as i was allocating money -- david: i think it is time to wrap up the section on murders and guns and knives and accomplices. [laughter] alix: dry powder. [laughter] jonathan: i promise you, it was not that bad. it really wasn't. david: ethan harris and tom lee, thank you so much for joining us. .oming up, it was a beat apple seeing revenue climb and earnings per share grow, lifted by strong holiday sales on a stumble from its big competitor. we will go over the first quarter results next and this is bloomberg. ♪

jonathan: from new york city, this is "bloomberg daybreak." i'm jonathan ferro. we want to get a check on markets eight minutes from the cash open. a four the s&p 500 after

-based light, the longest since the election. has the trump trade followed off the rails a little bit? it is back this morning. treasuries on offer, yields up four basis points. ?hy look to the significant upside surprise in the adp report that came out this morning. a couple days away from payrolls friday. 246,000 is the number. 168,000, the estimate. it is an outside, upside surprise. talk about surprises. apple had a pleasant surprise for investors when it announced earnings and revenue better than a year ago and better than forecast. leading the news was an increase in iphone sales. joining us from his offices in new york city is the managing director of the research group at ubs securities. buy rating on apple

stock. welcome back to the program. >> thanks for having me. is thethe topline story iphone sales. is that a matter of samsung stepping in it? >> i don't think it is, actually. the company with some fly -- supply constraints. at the end of the day, i don't think they really will. tim cook made good on his promise that you would see a year-over-year increase in the iphone. there is a significant shift toward the larger plus model, which helped the average selling price. david: at the same time, there seemed to be some struggles in china with sales down 12% and they are losing market share. what is the problem in china? steve: the company lost about 10 points of market share in china last year, which was the only country in the world it lost share. the company would argue it is more cyclical based on where they are in the product cycle. the chinese consumer wants a differentiated phone. s and the 7 probably

isn't. we are looking for the so-called 8 to be sufficient to get upgrades going. there was some good news in the quarter. you did see a reduced decline in mainland china that was flat. the big problem was hong kong because of the strong dollar and the international shopping center that represents. i'm encouraged these are released moving in the right direction. alix: i do have breaking news. president trump will be having lunch with rex tillerson later on today. it could be that rex tillerson is confirmed as secretary of state today, wednesday. there has been a contentious fight over many of trump's nominees. tillerson and trump will be having lunch at the white house. david: obviously, a very important member of the team for the president. alix: absolutely. david: let's go back to apple. talk to us about india. india had a pretty dramatic growth. steve: india saw very strong growth.

the company said that it is 10 years behind china in terms of gdp per capita, although it is probably not that far behind in the sense that apple is trying to lay a foundation. they are going to work on getting retail stores, an . it is only about 2% of iphone shipments. david: at the same time, dramatic growth in services. can they grow that to make what they might lose in terms of iphones?

steve: hopefully, they won't lose much and iphones, but services become material financially. it is growing at about a 20% rate. the company said they hope it will double over the next four years. we hesitate to call apple a services company because it is really tied to the hardware. you don't sell an iphone, you don't get the app store revenue, necessarily. it is margin accretive and representative of the growing base. the company emphasizes it for that reason. some think it may be a place they could make acquisitions. david: are we concerned about how long people are holding on to the iphones? steve: we are, but we have early evidence to suggest that the cycle is not lengthening. in our numbers, we assumed it is lengthening. we think you will have double-digit iphone growth in fiscal 18. david: thank you so much. jonathan: we are just over 47 hours away from the payrolls report coming up this friday. the adp report is an outside surprise, that is what is moving markets. .he s&p 500 up 8 the market opens next. this is bloomberg. ♪

jonathan: from new york city, this is "bloomberg daybreak." we are moments away from the opening bell here in new york. futures just off session highs. staffed at 20,000.

on a four-day losing streak on , the longest slide since the election. the risk rally is very much back on track. yields up four basis point spirit you hear the bell ringing in new york. the dollar up .4%. it blowout, can payrolls report if looking at the adp number? alix: and markets are not pressed for that. you have the dow up i-78 points on the open and the s&p up by eight points. -- you have the dow up by 78 points. this is setting the overall mood of the market. let's check out apple early in .he session, up by about 5% it sold 3.1 million more phones last quarter and returned to overall revenue and iphone growth.

second-quarter outlook is not as bad as many analysts had been expecting due to headwinds. that is trickling through to some suppliers. here is a look at two of them, both stocks up. the supply chain looks relatively strong from pacific crest, so minimal risk of inventory correction due to apple's quarter. the other stock we want to watch his electronic arts, off by about 1%. it had a fourth-quarter earnings below estimates. half of its business is out of the u.s., so there is an fx pressure. the december cells quarter was pretty good, but they did not want to upgrade the full year because they are worried about and certainty in about the dollar, something we have been following. it is the first trading day of february. i want to talk about the last four weeks. function.ur grr

a little cyclical and a little consumer play as best performers. materials up over 4.5%. consumer discretionary up by 4%. energy is down by over 3%. optimism ine and the sector, but the earnings have not delivered when it comes to big internationals. jonathan: more breaking news dropping. gm, u.s. auto sales falling 3.8%. the estimate was down 2.4%. it is a downside surprise, unlike what we saw from ford. we have been to the top-performing sectors. we're joined by david wallace, t. rowe price fund manager and morningstar's manager of the year. blowout numbers across the board. looking at u.s. auto sales and the data. that keeps the

risk rally on track? david: thanks so much. the t. rowe price fund manager is joining us. alix: can you hear us? guest: imf rate i cannot hear you. jonathan: a blowout number on the adp report. does the data keep the risk on track? guest: to be honest, i am not much of a person who is motivated by data points and the macroeconomy. my portfolio is more oriented toward bottom-up investing. i cannot forecast where the market is going other than to say, if you believe in our country long run, you will do well in investing in stocks. jonathan: three dollars to the rally, the trump trade, reflation trade, the data, and then the earnings numbers. are you positive the earnings numbers will keep up the rally in the united states through 2017? guest: well, i will politely

defer to some of your other guests that have stronger opinions on that. on thech more focused individual stocks in our portfolio. alix: can you give us insight on how you -- you said if the u.s. economy is strong, that it's good for stocks, but not unilaterally. energy not do well. utilities falling off slightly. what might we see with the mid caps as we see a change of policy in the u.s. administration? for meit is really hard to forecast exactly what groups are going to do well. my focus has always been, where are the opportunities in individual stocks in the market? sector rotation, i am afraid i do not have tremendous expertise in that. but if you ask about individual stocks in the portfolio or our investment process, i would have a better sense. alix: so give us a sense. guest: we look for companies

underperforming their best potential. we look for companies that typically have been around for years and have a franchise or product or service that resonates with their customers, a company with a dna of success and has typically had some challenge or issue they are wrestling with, which we deem to be a temporary problem. so we are trying to buy things below what we believe they are worth. david: thanks so much, david wallack. coming up, former u.s. attorney general, governor, and u.s. senator, general john ashcroft, joins us to talk about the trump's administration policies and appointments. this is bloomberg. ♪

emma: coming up, a vice chairman joins us. jonathan: from new york city, this is "bloomberg daybreak." eight minutes into the session, and stocks are up 96 on the dow. s&p 500, we rebound from a four-day losing streak, up .4%.

switching out the board, other asset classes look like this. the yield in the 10-year up four basis points. a surprise out of the adp report payrolls friday, a very strong report, a seven-month high. high yields means a stronger dollar. that is your market action. there is news outside of the business world. emma: good morning the confirmation battle over president trump's choice for the supreme court is on. a federal appeals court judge is meeting with senators who will vote on the nomination. republicans hope to entrench a conservative majority on the court. senate democratic leader chuck schumer says he doubts gorsuch can be a strong independent justice. trump's state visit to the u.k. should go ahead, some

say, despite nationwide protest against it. thell found that 49% back visit to the u.k., and 46% say should be canceled. 1.8 million signatures from those against the trip. in france, a republican has become the de facto front runner and presidential elections. his rival would lose in the first round, according to polls. it shows that he would beat marine le pen in a runoff easily. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. david: in these early days of the trump administration, there is a flurry of 70 in the form+++

executive orders, statements, and tweets -- there is a flurry of activity. there was a controversial order stopping immigration from seven countries, at least for the time being. there are government consequences. attorney general john ashcroft talks about this when it comes to justice and national security. general ashcroft was senator, governor, and attorney general from his home state of missouri, and he now heads the ashcroft group. he joins us today from for jenny of each. good to have you here. gen. ashcroft: good morning. it is a delight to be with you. let's start with judge gore such. it looks like he came into the justice department for george w. bush after you left. year wasroft: his 10 2005, 2006, and i ended my time in february of 2005. i know him i reputation and by his credentials.

everyone has an opportunity to know him by record as a judge of the circuit court of appeals. he is a very interesting and person,family qualified great intellect and capacity. david: you have had the opportunity to observe these confirmation meetings from both ends of pennsylvania avenue, both as senator and attorney general. we are hearing that democrats are expressing some reservations, but some say they have an open mind. there is even talk of filibustered what do you expect to come out during this process? gen. ashcroft: i think it would be a national tragedy if a ch'son of neil gorsu capacity and character were to be turned down. i think it is impossible that he will be denied confirmation. the question is basically how do the democrats in the senate want to impose on america, and how much delay do they want? those who say that this tips the

court one way or another, in some ways, that is overestimated, because in replacing, obviously, one of the most renowned jurists in american history, he is closer to being a carbon copy of his replacement, of the person he is replacing, than anyone i can remember. so this is going to pretty much restore or the court was about a year ago. david: general ashcroft, if possible, put aside partisanship. there has been, it seems like, increasing rancor surrounding these nominations for the supreme court. it is an important job, but is all of this back and forth, and it is on both sides, is it doing us any good in getting better supreme court justices? gen. ashcroft: well, i cannot imagine a person of higher capacity or talent being nominated than judge gorsuch. and not endorse the rancor, i do not endorse the

partisanship. but i do not think it is depriving us of the opportunity to get persons of very high capacity. judge scalia was a person respected by jurists who served with him, those who were congruent with his ideas and those who opposed his ideas. they understood his great talent. this nomination has that kind of great talent. i do not think we have been deprived of talent by the rinker and the divisiveness and some of the unfair tactics, but they certainly are a discredit to this country into the american people we do not expect that out of their leadership in the senate. turn to aould like to different subject, the executive order that came out of president trump's office last friday, this having to do with a ban on immigration from seven countries identified with terrorism. you have been over this. aboutd like to talk not the substance but about the process. what is the normal process?

what role does the justice department play? gen. ashcroft: the office of legal counsel is asked to comment on the constitutionality and legality of proposed and anplemented actions taken by administration. cream of the crop. justice skill leader was the leader of it before he went to the supreme court. an attorney general was leader becameolc before he attorney general. so it is the best of the lawyers and justice department who are acknowledged by virtually everyone to be the cream of the crop in terms of legal talent. they assess and comment on whether things are not only sustainable or arguably legal, but whether, in fact, they are

legal. david: what happens if there is a conflict between advice from the olc and the white house? gen. ashcroft: those kinds of conflicts are resolved, either by the adjustments in the program beingthe therened, or sometimes is an effort to overrule people in terms of a program which some people think is a proper and others might think being legal. at that time, you get the opportunity for people to demonstrate their commitment to principle, and there are times when people resign if they feel like they are asked to endorse things that are illegal. circumstance two days ago were the attorney general of the united states did not feel that the order of the president was consistent with her personal preferences, perhaps political preferences, and rather than resign, she simply order the justice department to stand down and to not enforce the order.

that is highly unusual, and obviously the president acted in order to make sure that his order would be carried out. david: you also had a wealth-publicized -- you had a well-publicized instance with jim comey about extending a program over objections. how important is it to have an attorney general, is we're looking for to quite likely senator sessions, how important is it to have one willing to make that decision? gen. ashcroft: i think it is fundamentally important. fundamentally against interest of the white house -- any attorney general who helps the white house avoid doing something that is inappropriate or illegal is serving the president and the white house well. i am confident that jeff sessions has a kind of determination. his association with the department is decades long. he was a u.s. attorney, so he knows from the inner workings of the department how prosecutions

happen on the basis of conclusions and's in the department. he has overseen the department as a member of the u.s. senate for a couple decades now. i have every confidence that he is an individual who will put the rule of law at the center of his philosophy. in other words, not looking at, well, can i favor this group or that group, but how can i do what the law requires me to do in this circumstance? i think he will be honest with the president of the president seeks to do something not consistent with the law. jeff sessions will make it clear that he can save the president and the country heart ache if he gives an honest response and tells him clearly what is and what is not consistent with the law. david: mr. attorney general, thank you for your time today. john ashcroft, former attorney general of the united states. alix: breaking news -- the senate finance committee approving steve mnuchin and tom price through emergency action. no democrats showed up when the

hearing began at 9:30, so senate finance was able to push them through the emergency action, although no democrats were present. coming up, special coverage of the federal reserve is the first monetary policy of them -- meeting of the year, 2:00 p.m. today in new york. it is not what they do, it is what they will say. we will be looking into that. this is bloomberg. ♪

ago, the senate finance committee has approved steve mnunchin and tom price through emergency action. room.s a live shot of the

no democrats showed up for that vote. through emergency measures, the senate finance committee was able to approve steve mnunchin and tom price, and now the vote goes to the entire congress four. jonathan: a lot of breaking news this morning from the united states. outsidert, big surprise, 246,000, looking for 168,000. number and 55, up from 54.3 in december. 22 minutes in, up 90 on the dow. positive about .3% on the s&p 500. the adp report really set the tone. , yields a three basis points on the 10-year. the dollar up on every thing except the pound. europe down about .3%.

at 2:00 p.m. eastern today, the fomc rate decision, the first monetary policy meeting of the year. we will bring that to you live starting at 2:00 p.m. in new york. riccadonnamist carl joins us. the data continues to be solid. adp number, let's see if it is verified. there have been some big misses. there is never a clear direction to the miss, sometimes to the upside, sometimes to the downside. there has been this big rally in small business sentiment, household sentiment, and big business as well, but really in the small business sector. we're looking for when the trump honeymoon and the expectations of stronger activity translate into stronger hiring figures. the adp figures, i thought it might have been in the last payroll report, and we did not get it. looks like maybe it is coming around this time.

jonathan: traditionally, you do not commit to firing and tell you nothing several -- and tell you know that things have rolled over. is it too early to look at this between confidence and hiring? carl: maybe we see it in the payrolls on friday, maybe not. i kind of suspect maybe we do not see it just yet here it we have not seen a lot of pickup in hard economic data. we see it in sentiment surveys, but even from purchasing managers and production surveys that are showing optimism, but we're not seeing it in our data like retail sales and industrial production. anathan: and there is surprise indicator we can bring to you. on the bottom right is the surveys and business cycle indicators, sky high. and towards the left, the data has not improved in a way some have anticipated.

alix: and you can see that in the fed expected -- in the market expectations for a fed rate hike. what do you think we will hear from the fed to help set is up for march? will they help set is up for march? carl: i do not think they will set us up for march. they do not want to sound the until the june meeting to they want the markets to be somewhat on edge, so they need to steer to a slightly different course, they can do so. ahead of the december rate increase, they gave very explicit guidance, saying we have held off for now but we could get a rate hike in the near term. if they readopted that language, similar to q4 of last year, that would be a strong inclination the fed is not happy with the complacency in the markets, basically pricing in the next move at the june meeting. i do not think they will go that

far. i think there will be some offance, but if you print the december meeting statement, the economic assessment, the timing, all very much appropriate for today's meeting. jonathan: are you saying ignore the statement? very i am saying it is similar. jonathan: just putting him on the spot. that does it for "bloomberg daybreak." thank you very much for it we have been across the board. we will he break the four-day skid? looks like we might. from new york, this is bloomberg. ♪

vonnie: it is 10:00 a.m. in new york, 3:00 p.m. in london and 11:00 p.m. in hong kong. i am vonnie quinn. mark: i am mark barton.

welcome to "bloomberg markets." vonnie: we will take you from new york to paris and cover stories from the u.k., germany and washington, d.c. first, the imf manufacturing index is coming out. julie: better than estimated. at 56-55 for january as the estimate. prices paid at 69. 56.5 was the estimate. looks like new orders at 60.4 index atmployment 56.1. overall, manufacturing continuing to show strengthening and falling on the scene of what we have seen around the globe. also, the fifth straight month we have seen an increase in the index. i am just calling up some of the numbers to cp had been