supporting the program for backing iran's islamic revolutionary guard. president trump and national security advisor michael flynn said this week that iran was on notice for the launch. iran said it does not the permission to defend itself. the attack outside the louvre in paris was raising concerns about the city's bid to host the 2024 olympics. it is part of a wave of violence that has left more than 200 people dead over the past two years. olympic officials held a ceremony near the eiffel tower to mark the final submission to host. french republican presidential candidate françois fillon says he will not quit the race despite a widening investigation into allegations that his family of used public funds. the former prime minister posted video on twitter saying he understood the anger of the french people but his campaign will stay on track. the latest polls show him in

third place, meaning he will miss out on the second-round runoff. 23 elections are on april and may 7. president donald trump welcomed about a dozen corporate leaders to the white house today with 2 notable no-shows. and disney ceo. kalanick said his joining the council was misinterpreted as an endorsement of the president. business leaders offered suggestions for changes to the travel ban and immigration policy. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am emma chandra. this is bloomberg. bloombergive from world headquarters in new york, i am scarlet fu.

joe: i'm joe weisenthal. we are 30 minutes from the close of trading in the u.s. scarlet: u.s. stocks climbing on the signs of strength in the economy and relaxation on bank relations. joe: the question is, "what'd you miss?" scarlet: banks are driving the s&p 500 higher as trump takes executive action to scale back the dodd-frank law. onwill hear from ken bentsen the orders and the latest on the fiduciary rule. in an exclusive interview with bloomberg, the san francisco fed president says a march hike could be a possibility. his comments are coming up. now let's look at where the major averages stand as we head towards the close. abigail doolittle is standing by. aigail: we are looking at very nice rally for u.s. stocks heading into the close. dow, s&p 500, and nasdaq all nicely higher. the dow is back above 20,000, an

important psychological milestone, on pace for the best day since the beginning of december. we have the s&p 500 and the nasdaq turning ever so slightly positive on the week. we are ending the week on a positive note after some aeration action earlier. as scarlet was -- after some bearish action earlier. as scarlet was mentioning, it is all about the banks. xlf, financial etf, on pace for the best day since november. big rally day here. jpmorgan, morgan stanley, goldman sachs all trading hybrid it has to do with president trump signing 2 executive orders, want to repeal dodd-frank. the second having to do with a delay of the fiduciary rule, something intended to protect investors and their retirement accounts. the reason work and sally m goldman sachs could be up more -- morgan stanley and goldman sachs could be up more, they could benefit from the potential delay.

will it last, the? 5782, this is the xlf over the last five years. we see a very nice uptrend. in blue, the 200-day moving average. for the most part it is rising good right now the xlf is 50% above the moving average, the most since 2013. we can see that this etf has had a pattern of consolidating back down to the moving average and when it has been above it, we could see the financial sector get back some of the gains in the weeks ahead. finally, one market that stands out to us, the dollar. the bloomberg dollar index is on pace for the sixth weekly decline in a row, the longest-such stretch since 2010. really big move for currency. this could reflect the fact that president trump has said he favors a weaker dollar. today it seems to be much about president trump with the

financial markets, joe and scarlet. joe: thanks, abigail. let's get more on those same financials. trump taking aim at financial regulations today, move applauded by a lobbying group that represents security firms, banks, and asset managers. here to talk more about the implications is the ceo, ken bentsen, with us from washington. thank you for joining us. about rolling back aspects of dodd-frank and an executive order today and what can he do it unilaterally and what will need legislation to accomplish? ken: let me start by saying that what i think the president proposed today, or what he did, directing the department of treasury to work with the financial stability oversight council, to work with the total regulatory framework we have in the united states. the financial services industry is among the most regulated

sectors in the economy and it is also the envy of the world. the industry for many years has been calling for a cumulative review of all the regulations, particularly the new regulations put in place postcrisis. if you look at where the industry is today in terms of what the balance sheet look like, where leverage has come down, the level and quality of capital that has come up, there has never been a better time to take a look and see where the rules may conflict with one another and made the impeding capital formation. this is something that our trading partners and other jurisdictions most recently in europe have begun to step back and take a look and say where it is our financial stability rules may impede our capital formation and economic growth goals. this is what the president did and we think it is entirely appropriate. scarlet: i tend to consider and we can spare. we spoke with the national economic council director gary g cohn about the dodd-frank regulation and listen to what he said. never thing dodd-frank

really dealt with, it never dealt with too big to fail. we need to deal with two big fln no government bailouts. that is an area where dodd-frank said they would deal with and they never actually dealt with it. scarlet: i think it was during the campaign that president trump said the banks are too big to fail and he wants to break them up. do you take the president seriously when he says we should bring back last eagle -- glass-steagall? ken: you got to understand, what does that mean? i spent time on this when i was in congress. it is a complicated measure to undertake. there are very strong safeguards in place today in terms of how you treat insured banking entities versus the securities brokerage, and when you can and cannot do between those. anytime you go into that and say we want to change the structure of those rules and look at how the entities operate on the global marketplace, it takes a lot of work. i think what we do know is since the financial crisis, the

quality and level of capital has increased dramatically. leverage has come down and institutions are much more secure and safe for and sounder today. we have to start with predicate where areack and say these rules working, where are they not working? to your earlier point, we think there are a lot of areas where regulators can step in and recalibrate rules. there may be cases where congress needs to step in and take a look at legislation they adopted in earlier days. that is something congresses do all the time. joe: one of the specific regulations that president trump took a mac today, the department of labor rolled that would require financial advisors to serve as fiduciaries to their clients. he is calling on the dol to delay the room. how does a delay or eventually a repeal of that rule help consumers in the end? ken: first of all, again, this is a tightly regulated area could frankly, it is a misnomer

on the part of the department of labor to act as if there wasn't a regulatory framework in place. the members we represent, 80% registeredgistrants, as either fiduciary under the investment advisers act or as a broker under the securities act. and they are held to very high standards. our concern with this rule was it was adding yet another standard, another rule on top of what congress had already intended for the securities and exchange commission to do. and we believe created more confusion and definitely resulting in a negative impact on the marketplace for investors , because it was already showing signs of raising costs and reducing choice for investors. we are pleased that the administration recognized that, that they are saying, let's take the time out here and step back and see what the real impact of this rule is going to be for investors, and that if we need to, let's start over again. we applaud that. joe: can you walk through that

last part again? you saw already evidence of reduced choice and higher costs for the proponents of the rule argued that the rule would encourage financial advisors to reduce costs and put clients into the work-cost investment options. -- lower-cost investment options could explain the mechanics of how the rule would work. ken: we have seen action by various firms who say they are preparing to be in compliance with this rule and the industry is working very hard in an effort. but firms have already taken steps to either say we will no longer provide commission based ira's, which most ira's are in commission brokerage accounts, and instead will choose a higher fee-based account even if those accounts don't trade very often. investors choose what they want based upon the service that they want to pay for. if you are in a buy and hold account, commission brokerage account is going to be cheaper. if the rule is going to force

service thatgher costs more, that will cost the investor more even if they are not using all the services. that is one of the problems with this rule. we have also seen where firms, again, to reduce legal liability that this rule would bring upon them, reducing choices that they would provide to their clients in the commission brokerage accounts. as i said to him we have already seen -- this is in the public domain, where the costs are going out. morningstar has put out a report on this. and choices coming down. we think this could be done better. the industry has been in favor of the best interest standard and the sec is the best agency to do it. scarlet: final question, does the rollback of these regulations, does it come too late? many firms have spent the last six or seven years adjusting their strategies to comply with the changes at our finally there. how likely is the sudden reverse

of course because of an executive order, reconsideration? ken: first of all, i don't think the second of warner says a rollback. i think the executive order says let's look at all the rules and where they fit with our goal of promoting economic growth and job creation in the united states. what that lays out is if we find that the rules are impeding that, where are the changes to be made so we can better find a growing economy in the united states? likewise, with respect to the department of labor, we never thought that the department of labor should be acting here. this is where the sec said in the dodd frank act -- this is where the sec should be acting. all of our members operate through the investment advisory business under the fiduciary standard. there is a better way to do this . the department is not the way to do it. scarlet: ken bentsen, thank you. coming up, is the federal reserve comfortable with three rate increases this year even

slow wage growth and the latest jobs report? san francisco fed president john williams. this is bloomberg. ♪

joe: "what'd you miss?" consensus view on wall street after the jobs report makes the march rate-on effective. the median forecast is that june is the earliest the fed would move. economic policy correspondent michael mckee sat down for an exclusive interview with federal reserve bank of san francisco president john lyons, and he asked if he agreed with the view. -- john williams, and he asked if he agreed with the view. scarlet: we will bring you that conversation in a moment. the dollar has kind of been

sagging and it will caps off the sixth straight week of losses for the dollar. over the longer term committed has been the case and the postelection rally has petered out a bit. joe: if you're coming to the bloomberg, i'm looking at the work function. i don't think we brought it up in a while, because everything is about the administration. you can see in his left column here. 48.6%, until only in june does a jump above 50%. now let's go to the williams tape to discuss his perspective on what the jobs report means for the pace of fed hiking. -- williams: mine own view my own views that the report is consistent with what we've seen the past year. michael: the other argument, received wisdom, is that you cannot wait to march because he you do not know about the fiscal policies from washington. mr. williams: i disagree with that, too. there is uncertainty about what fiscal policies will be this

year and next year but i look at where we are today and the economy. essentially full employment. inflation is moving back to 2%. given where we are today and the progress we are making, we in theto make this year economy, we can make decisions based on that without actually knowing what happens in terms of fiscal and other policies later in the year. michael: the current median forecast is for three rate increases this year, something you have called a reasonable expectation. if you don't move in march, do you start to run out of time? is there an advantage to going sooner rather than later? mr. williams: again, given where we are in the economy and the momentum we are seeing, there are arguments for and against moving earlier rather than later. i would not want to be too timid or delay too long this path of rate increases. i think the economy justifies a gradual pulling back on monetary accommodation. let's take our foot gradually

off the gas. i think the economy's proving it can grow at a steady rate, reaching our inflation goal without as much monetary stimulus as we have been giving . in her december news conference, janet yellen warned that the economy does not need a whole lot of fiscal stainless now. are you worried we will get too much? mr. williams: in terms of our goal of full employment and inflation, there is a lot of things that affect that, and we will be watching and analyzing those come in terms of the economic outlook. my views the fiscal policy in general really should be focused primarily at this juncture on long-term issues like productivity growth, in terms of infrastructure, other things that can really affect the longer-term outlook of the economy. but whatever happens in terms of the economy in the u.s., fiscal policy development around the world, we are going to be focused on achieving our goals, moving monetary policy to do that. michael: there is a school on wall street and elsewhere that says you should not raise rates

because the economy still needs additional stimulus, and they look at the history of the phillips curve model that the fed uses and say that you kept zero for seven years and got no inflation. that basically, the phillips curve doesn't work. mr. williams: well, the phillips curve has died many times and risen at other times. my view of this is if we push the economy too hard for too long, inflation pressures will build up. we are seeing those pressures build up in some parts of the economy. i think we are in a good place there. we know that from history that if the economy runs for two hot for too long, you will see inflation pick up. we don't want that to happen. we know in the past that high inflation is damaging so we want to avoid that. michael: lately several of your colleagues have suggested that the balance sheet might come into play later this year. that has global wall street on

the edge of its metaphorical chair. is it likely? mr. williams: really it depends on how the economy is doing and how we assess the economic outlook. the f one c in the past explaining that we plan to put off the normalization of the balance sheet until normalization of the fed funds rate is well underway and we are not there yet, but if the economy continues to perform as it has been doing, and we have something like 3 rate increases, obviously we will be moving closer to a point where we have serious discussions around how or investments in portfolio and how to best do that. that is not happening right now but over time it will be part of the mix of the normalization of policy. michael: would you say you get the three rate increases out of the way before you return to the balance sheet? mr. williams: this is something my colleagues and i will be discussing over future meetings and come to an agreement about that and i hope provide some clarity about what we really mean by "well underway."

the contextdone in of an economy that is doing well, essentially achieving our goals, and where monetary policy and terms of the fed funds rate is already moved up a number of times. before we began, the administration announced plans to start rolling back dodd-frank. as a bank supervisor, has regulation caused any drop in lending or profitability? hasn't heard the economy? , they'reams: well always unintended and intended consequences of any type of reform, and are definitely areas where some of the regular missions may have spilled down to smaller community banks, other banks come in ways that people should be thinking about them is that the best regulation? my focus, though, is i don't want to see a replay of the last decade, where we had enormous buildup of risk and leverage in the financial system ultimately leading to the near collapse of our financial system and causing millions and millions of people to lose their jobs and very slow

recovery. we need to have a very strong financial system. we need to have strong regulations and supervision of that financial system. that is really what i'm focused on. joe: that was federal reserve bank of san francisco president john williams hit you just heard his view on today's jobs report. we are going to show you 2 charts you don't want to miss on wage growth. this is bloomberg. ♪

joe: i am joe weisenthal and we will take a deep dive into the labor market. here with us is the bloomberg intelligence senior u.s. economist. we got the jobs report today, mediocre, disappointing wage number you brought a couple charts. this one shows a few different ways of looking at wages. what do we see here? yelena: today's report showed that wage pressures remained moderate. both the yellow line and white

line show they are moderate. this is the index and the average hourly earnings index. but the blue line in the chart shows the wage tracker and that indicator actually tracks the folks with earnings of $150,000. the chart shows that at the lower end, wage pressures are higher, basically picking up. scarlet: of course, if you look at one sector in particular, that is backed up as well. let's look in to finance industry on a day when the president pledged to roll back regulations or at least reconsider them. this is the financial industry. talk about the white line, a much steeper decline here. yelena: absolutely. this decline in average hourly earnings in the financial industry was the biggest decline in the 10 year history. that tells us that big checks in

the financial industry are long gone. the white line shows all employees in the financial industry. the yellow line shows only production and nonsupervisory workers in the same industry, which is running roughly steady -- which is growing study. so that tells us that basically come even if the lower end, a more broad-based pickup in wage pressures is probably going to take a bit longer. joe: so all of the bankers popping champagne corks about how everything is back -- scarlet: think again. yelena shulyatyeva, thank you for joining us. coming up, the market closes. take a look at the major indexes. dow above 20,000. s&p 500 is gaining 3/4 of 1%. from new york, this is bloomberg. ♪

♪ scarlet: we are moments away from the closing bell. "what'd you miss?"

the trump administration prepares to roll back regulation. there are arguments for raising rates as early as march. i am scarlet fu. joe: i am joe weisenthal. "what'd you miss?" in live ontuning twitter, we want to welcome you. we begin with market minutes. an update for u.s. stocks, all about the financials. ,he jobs report was encouraging better than expected jobs growth even as the unemployment rate moves higher. joe: the economy continues to chug along, markets like that today. scarlet: let's focus on the for thels, a big day financial sector, up 2%.

morgan stanley the best performer, the highest level since august 2008. goldman sachs seeing the best day since november 9. , macy's,orporate story some discussions at the early canada may look to buy macy's. this is something activists investors have been urging the company to consider. nasdaq closing at a record high, pretty remarkable, government bonds, an interesting day, two-year yields and 10 year yields closing unchanged, a surprise, because there was a significant drop thanks to that jobs report that seem to reduce pressure on an urgent hike. here is a look at the two-year

intraday yield, bottoming out around noon, but comments from john williams about how their is an argument for a march rate hike. scarlet: that two-year yield intraday chart looks like the dollar index. what does that mean for the week? sixthllar is down for a straight week. it has gained as much as 6.5% after the election, then losing 2.8%.ill up the on's for a march rate increased did decline after the jobs report, then mixed that up a little bit. the ruble stronger after the bank left at central rate unchanged. they want to reduce the risk of inflation, especially after the

government announced a plan to i foreign currency to shield the russian currency from a swing and oil prices. oil finally, commodities, ticking higher, gaining on news of the new iran sanctions. there was a pop. natural gas down 4% today, gold comfortably above $1220. scarlet: those are today's market minutes. let's take a deep dive into the bloomberg. our new president likes to use trade as a way to keep score on whether a country is winning or losing. is australia's trade balance, which has seen a huge upswing. after posting trade deficits for 31 months, in the far right

corner of the chart, australia's trade balance moved above zero because of rising production and prices. that grew to a record trade surplus. in 2015, that long line at the there, a record deficit so a huge move in a short amount of time. the global reflation trade has shifted. this is the manifestation of that. joe: i'm looking at a chart, the data came out a couple of days ago, one of the craziest charts of the week, the percentage of the entire world's population that checks facebook every day. higher, 16.8% of everyone on earth, and this is based on facebook's daily average users divided by the total population of the world.

2009, it wask to 1.6%. scarlet: i don't know whether to be impressed or scared. joe: both. scarlet: i clearly don't know how to spell. joe: i hope everyone knew what i meant. scarlet: president trump speaking on facebook live this evening. fromjoining us now managing director and head of o.s. rate strategy at bm capital markets. you said trump might be on a shaky political footing, but today's orders on deregulation were on the gop agenda, so thank you for joining. there is a lot people are excited about, how do you see his political capital? can he get it done? is the biggest question,

has he set the right priorities getting some of his campaign promises out of the way early, then going for where they overlap, traditional gop vice overlap with what trump wants to do. of uncertainty, and that is reflected in the treasury space, and there is a fair amount of optimism. isrlet: the executive order to look and reconsider everything, not promising anything. that means president trump's deputies will be managing a, steven mnuchin and, regulators, perhaps the fed. how much outside input should they seek as he tries to shore up his political support for these regulations? >> if he's going to get some of these major initiatives through congress, he will need to build

consensus and the type of support to get the votes through. the first few pieces of legislation will probably meet little resistance, that it he does not start with the type of positive momentum, he will run into opposition. trump has only been the president for two weeks now. it seems like a busy two weeks, but only executive orders, nothing legislative. to do that, congress will have to do the heavy lifting. there is only so much he can do on executive orders. relationship, the between trump and the democrats have already collapsed, so how hard will it be to get through congress regardless of what he has prioritized? how heavy is that lift going to be? >> in the beginning smooth, but roughly half of congress is up

for election in two years. the campaign will start at end of this year, beginning of next. back toill need to go constituents and voters with some type of platform as to how they responded to trump. looking fors easiest victories, so what is the easiest victory he can score? >> tax reform. scarlet: they said they won't start that until after health care. >> exactly. i don't think health care and immigration-type reforms are going to be easy. there is an argument that he gets the hard aspects out of the way, then easier sailing in the overlap. that does not resonate with me because i don't think this congress is going to behave that way. one has been talking about the fiscal stimulus, spending. tax reform could have a fiscal stimulus, but there was this

enthusiasm about $1 trillion in bridges, factories, so where do you see that on the calendar? >> that will probably be a second order issue. i wish it was first. the market wants it to be a today issue. it will take a while to get that online. the real gdp impact will probably be a 2018 issue. know trump has promised to bring jobs back to the u.s., calling ceos to washington to make that point to them. the economic argument for prioritizing manufacturing jobs over other jobs? is there one? a great question. there is a lot of strong political arguments why that would make sense. it is undoing globalization in a meaningful way, and that is what the market is trying to back into. what does that mean for

reflation, the dollar, u.s. growth as a whole? remember that bringing manufacturing back to the u.s. is also bringing automation back, so it's less a job creation story than a repatriating manufacturing. joe: what is your take away from today's job report? mediocre wage number, increase in labor force participation, suggesting slack out there, market pushing back expectations of the fed rate hike calendar? >> it reduces urgency for the fed to move in the first half of this year, although fed comments suggest they want to keep that march meeting in play. scarlet: in terms of what your looking for next week, because the trump agenda has been full for the first two weeks. what could move markets in the next two weeks? joe: what is your call on the 10 year? >> next week, a lot of questions

about what will come out of the fed. we do have a series of treasury options and will try to gauge demand. we think the treasury market is going to sell off a little bit tree now and the end of the second quarter, probably take a run at 2.7010 year yields, but we will see a summer rally and retest a technical opening gap of two point 15-2.116 in the second half. bmrlet: managing director at o capital markets. coming up, an interview with gary: and rolling back parts of dodd-frank. this is bloomberg. ♪

>> president trump and two executive actions, one to order a review of dodd-frank rules and acted after the 2008 financial crisis. the second halted a fiduciary one that requires advisers retirement accounts to work in the best interests of their clients. iran will impose restrictions on in. individuals and entities retaliation for the sanctions imposed by the u.s. today. iran released a statement on its foreign ministry website saying to ron will respond in kind to the latest treasury sanctions and plans to release a list of u.s. companies it says supports regional terrorist groups. the french president says there is no doubt an attack outside of one of the world's most famous museums was terrorism. the soldier outside opened fire on an attacker armed with a

machete. the attacker was wounded and arrested. he is described as a 29 your egyptian citizen. u.k., two judges have thrown out a brexit lawsuit that attempted to force a parliamentary vote on whether britain should stay in the european union single market for goods and services, a boost for theresa may's plans to two start rigs and negotiations by the end of march. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. scarlet: thank you so much. "what'd you miss?" added 227,000 jobs in january, up from 180,000 estimated. the unemployment rate edged higher to 4.8 percent from 4.7%. hourly earnings were .2% shy of estimates. it is that wage growth data that

concerns the white house. gary cohn spoke with david westin earlier. >> we are concerned about the wage deflation, wage growth, and we think it is an area we need to attack in the united states. we have been trying create inflation for eight years, and wage inflation is one of the major inflation categories. we are concerned about better paying jobs going overseas. we have been talking about that quite a bit in the white house. we have had many ceo groups in, and when we talk to those groups, manufacturing, or the ceo group today, undoubtedly the first issue that comes up as a hindrance for them doing business in the united states and craving more higher-paying jobs is regulation. it comes up before taxes, taxes comes up as a second issue, infrastructure a third issue, so

we will spend a lot of time with our executive orders in financial services today, spending time to help industry of alleviate some of the burdensome regulation that forces jobs offshore. we want to bring the high-paying jobs back to america. >> could you give us the priorities in their order? what is the first concrete step we will see? deregulation? our topis one of parties. we have a couple of priorities that go hand in glove with each other, some legislative priorities, but the number one priority we have his job growth, number two priority is job growth, and number three is job growth, so what ever we need to do to grow jobs in this country, we will do, and what we have been told consistently is we need to deregulate and cut down the regulatory process to grow jobs in this country, so yes,

that is our number one white house priority. >> let's turn to the announcement of the review of dodd-frank, can you get where you need to go without going through congress? of whatn do quite a bit we need to do. we will work with congress. i met this morning with committee members to talk about what we can do at the house. the house wants to be active and helpful with us as well and what we do in financial service regulation. we will engage the house, the senate. they are equally committed to reforming the regulatory process as well. we can do quite a bit without them, but the more help we get from congress, the better we will be in making the job creation vehicle more effective. we are talking about regulation in every industry group, automobile manufacturers were talking about what they have to do with the epa and other regulators, manufacturers were talking about different regulatory groups, so we will

need from the house and the senate, and we will give them help from the white house as well. >> there is a wide panoply of regulations, but let's stick with financial regulations. you know dodd-frank as well as anybody in the country given your experience at goldman sachs. as you look at dodd-frank, what are the specific areas that need to be changed? at the big issue. the overarching issue that we want to fix is we want to get the banks working again. we want banks to be back in the lending business. has we think dodd-frank done is that it has stopped banks from lending to small and medium-sized businesses, entrepreneurs. job creators in this country are entrepreneurs and small to medium-sized businesses. banks have been forced to hold

capital and not allowed to lend money. we need to get them back into the lending business. that's our number one priority, getting capital flowing back into small and medium-sized businesses. thates that suggest changing and repealing the volcker rule is not that important to you because it is hard to draw the direct line between the vocal role and getting lending to smaller businesses. >> every place a bank needs to retain capital prohibits them from lending, so we will attack all aspects of dodd-frank, volcker role, we also care about deep, transparent markets. the united states has a and wetive advantage, want to preserve that competitive advantage, so we will look at the poker rule, but we want to free up capital and regulatory costs through it

banks have been burdened by enormous regulatory costs. scarlet: that was gary cohn speaking with david westin. joe: with so much information being noise, what is the best indicator to filter out the noise and determine where the market is going? we will talk to a bloomberg strategist who has the answer. this is bloomberg. ♪

joe: "what'd you miss?" the most important stock market signal heading south? --'s bring in a strategy strategist. u the holyng to bring in

grail of indicators about where the market is going. what is this chart? , markett context signals and cycles are driven by fundamental signals. every day we are inundated by facts, figures, news, most of that is noise. for there playing bigger picture, you won an indicator you can anchor on that will get you an accurate forecast. this is my favor one i have used for years, which is the real earnings yield of the s&p 500. may be a little remedial demonstration here. scarlet: please. >> i like to think of stocks on the stock market in the same way i think of lawns, how much am i

paying for the yield i am getting. or a bond, it is a coupon plus capital appreciation. for stock, it is the earnings of index for the individual stock. as you evaluate bond yields relative to inflation, you should evaluate equities earnings. so thehe real aspect, inverse of the pe minus the headline cpi. scarlet: we are seeing that line heading south, creeping down since the start of 2015, middle of 2015. joe: what is nice is you can see in the bottomed hard 2000's, went to negative, also 2008, so you can see -- >> it is saying that when you are paying too much for earnings when inflation is high, there is

not a lot of value there. joe: we have another chart that shows the distribution of , sorns from extreme points what we looking at here? an empirical demonstration is more effective than my words. tot i have done, go back 1954 when the s&p 500 started, and i pocketed the real earnings yield in various buckets. what we can see clearly is that there is a strong correlation between the levels of real earnings yield and the monthly average return of the s&p 500, so 6% plus, almost 2%, in some cases above 2% since 1954 to 1980. i started the modern financial

air with 1980 when interest rates were high, got cut, and a great bull market started. joe: which bucket are we in? to 3%. i have always used 1.5% as the cutoff point. there is no magic reason why that works, it is just empirically that it has worked well, so above 1.5% real earnings yield, you can expect pretty good returns. below, it does not pay you a lot for the risk you are taking. scarlet: thank you very much. coming up next, what bill gross -- why bill gross called the jobs report schizophrenic. those are his words. this is bloomberg. ♪

>> time now for first word news. haleymbassador nikki plans to take a close look at united nations peacekeeping operations. according to two security council diplomats, it comes as part of a goal to reduce contributions to the organization. ambassador haley is focusing on 16 united nations missions which have been criticized for sexual violations, corruption, and inefficiency. this was the week president trump nominated judge neil gorsuch for a seat on the u.s. supreme court. that is still going before the senate judiciary committee in a matter of weeks.

we will continue to follow that story. europe wills, work with the u.s. even if they don't find common ground on a host of issues, according to the irish prime minister speaking today and malta. he said the u.k. and ireland will continue to build a hard border between north ireland and the republic of ireland. trump today signing two executive actions, one to order a review of dodd-frank rules and acted after the 2008 financial crisis, the second halted a fiduciary ruled that requires advisers on retirement accounts to work in the best interest of their clients. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. scarlet: thank you so much, mark.

u.s. stocks rising, the trump administration taking executive action to roll back financial regulations put in place after the financial crisis. the dow jones industrial average up 9%. a starals with performer, morgan stanley at the highest level since august 2008, and the nasdaq at a record high as well. joe: "what'd you miss?" one of the most popular charts on twitter had to do with volatility. now have a special guest to talk about why this chart got so much attention. the first of 84 people to retweet this chart. i would like to introduced an option strategist, thank you for taking the time. like to talk would about my logic in creating it and then have you tear it apart. there was a lot of feedback,

positive and negative. year,thinking is over one the s&p 500 versus the vix. 2000, a big99, black space, and in 2006-2007, a bigger space, and now the biggest in history. convergence, a a bear market after 2000, the financial market crash, so my setting upare we sittin for a big event. tear it apart. there is an inverse negative andelation between vix equity indices. when we have shocks or spikes in volatility, equities tend to come in. that said, over the long course

of time, vix implied volatility is a statistical calculation since 1990, reverting around the 20 level. the s&p 500 is a measure of market value, not statistically tethered, so yes, over the long course of time, these will do verge. that said, u.s. equity some volatility is very asymmetric. is all time low since 1990 9.31, back in 1993. there is not a lot of downside, but plenty of upside. the question is the timing of that. we know there will be shocks, or haps not in the two distant equity lifting volatility sharply. equities will correct off of that. the question is timing. stuff, and the point i was trying to make with

this chart, so relative to the super low equity volatility. at bondn looking indexes, volatility for currencies, and it is much higher. you have a great chart. it takes into account risk across multiple asset classes. can you take us through this chart? >> this is a broad measure, global financial stress index, measuring volatility and market risks across geographies and asset classes. this,int to take from beginning in late 2014, we shifted into a high volatility regime across asset classes. we are very much at the bottom end of that range, however, we are still structurally elevated. it means there is volatility across asset classes, equities broadly, and certainly u.s. equities are a bit of an outlier

in terms of how low its level is. >> we have geopolitical events, you werefed, i know talking about a 4-5-month gap between volatility around the fed meeting in march could be another spike in the near term? >> that is where our bullseye is now. 2015, look at august since then, we have had a shock every 4.5 months or so. the last one was right around the election in november. before that, brexit in the summer. if you project forward 4.5 that's march, our baseline case, so yes, volatility can remain low and stable. that is when we expect an is perfectlynd it natural. it does not mean a bear market. the great analogy is the late 1990's, elevated volatility, shocks, and u.s. equities

continue to do pretty well for several years into the end of that cycle. of views,tuff, lots fair, objective analysis across the board. thank you. scarlet: thank you. we got the first jobs report of the year. added 227,000my jobs last month, beating estimates. at the same time, wage growth disappointed. bill gross joined tom keene today to talk about what he called an "schizophrenic report." growth strong, but wages revised down by .2%. i suppose that is good for corporate profits, but ultimately we know it is consumers and consumption that drives the economy, and if they don't earn enough money or money is only growing at 2.5%, then

that is a slow growth economy. markets might interpret it one way or the other. not the, futures up, 20,000 level, but i'd like what bill said about it being schizophrenic. if we get a reflation, is it a reflation that gives us a boost, or can we hope that the real economy will boost with the trump stimulus? that is the hope, that real gdp, which is now around 2%, and for the quarter with the atlanta fed above 3%, but the hope is we are in a 3% to 4% real gdp economy, the promise from the trump administration. that is the hope and terms of fiscal policy, stimulation, deregulation. i remain skeptical, of the camp that productivity is the key to

real gdp growth we know labor force growth is less than 1%, so it is all productivity. thentment has not there, and to the extent it remains anemic, productivity will remain anemic. i think we are stuck in a 2% real gdp world no matter what the fiscal stimulation and deregulation. >> we have to remind ourselves that mr. gross for decades has had an international perspective where dollar dynamics, a key oneersation this will was guest who was adamant that mr. trump will lead us towards dollar strength. you show up every day just assuming dollar strength? >> no. the dollar has had a good rally, and certainly against emerging

countries like the mexican peso, significant one, so i don't see continuing dollar strength unless the fed stays ahead of the ecb or the boj, and at the moment, that is not the case. both of the central banks are still stock on quantitative easing, significant proportions, and that has led to the dollar rally and lead to stronger growth in the united states, but i think there is some catch up coming from japan and europe land, growth rates as close to 2% as well, so dollar growth and dollar appreciation is certainly not assumed. i don't think we have a situation in which the strong dollar threatens the global economy and we have to take significant measures, i don't see that. and, you are looking at live pictures of president trump are arriving at west palm beach airport in florida on his way to

his estate. he will be speaking on facebook live in the next hour, so we will bring that to you when that happens. looks like he's going to beginning in an suv there, so we will be following that and his appearance on facebook live when that happens. tweets. those could come at any time. scarlet: coming up -- joe: house democrats are unifying their political agenda. this is bloomberg. ♪

joe: "what'd you miss?" the democratic party showing rare signs of solidarity, standing up against the republican agenda. that is what our next guest wrote in her latest note. democratic unity turn into an effective strategy of of structuralism? thank you for joining us. democrats talking about possible areas where they could work together, but you are thinking that will fall apart, and perhaps put trump's agenda in peril. what you see happening? >> certainly for the near term. found theirs have backbone and our hearing from constituents all over the

country, galvanized by the protests they are seeing across the country, even in airports now, and you saw a united front fundamentallyrats boycotting hearings earlier this week, and i think while we are on this discussion of cap nominees and supreme court justices, you will see hard and fast backbone from the democratic party for at least a couple of months now. we might see bipartisanship on issues like taxes and tax reform. we are of the opinion that we will see a tax-driven stimulus out of the senate. there will be a lot of back-and-forth with democrats and republicans spying publicly over things like cabinet positions. scarlet: we seem to be experiencing --

you are back. continue. into then as we get spring and early summer, we might see some areas of bipartisanship, particularly on the tax front, and i think investors are looking for that now. you will see extreme legislation out of the house, very rigid in its republican mantra, 15%, 20% corporate tax rate, but once republicans realize they need the vote of democrats, bipartisanship will be required, so all of this is pop and circumstance now, but june-july, we might see bipartisanship that people are looking for right now. scarlet: are they using the republican playbook when it comes to being obstructionist? therefore the republic's know how to get around that because they did it them selfs? tactic they used to stall

on the steven mnuchin and and tom price nominations was some thing republicans pulled out originally in 2013. the republicans clearly knew what was coming and orrin hatch changed the rules and suspended the rules process in the senate finance committee to moves withrd -- move forward that nomination regardless of whether the democrats wanted to play ball or boycott, so republicans have the upper hand when it comes to strategy because they wrote the book. democrats are attempting to use the same strategies, and the republicans it appears are one step ahead of them. scarlet: do you think democrats are growing a bit of a backbone here? take a listen to what the governor of virginia said when we asked about the prospects of working with the trump administration or in opposition to them. >> i want to work with the president could i also serve as the chairman of the national governors association. we want to work with the president on infrastructure, as

it relates to health care. for a vast majority of governors are you cannot just repeal of obama care because many people will be locked out. it is a serious issue for us. scarlet: that's two important issues on which the democrats want to work with republicans on, health care and infrastructure, yet for him for structure to take off, you need health care first, which looks like a political nightmare. >> it looks like a huge nightmare, and that is where a lot of delays will come from. the republicans are not prepared to offer constituents a replacement bill, which is why the dialogue is moving into things like we will repair the affordable care act. today, there are things

constituents like about the aca, and democrats need to be asked to work with them and find solutions because i don't think republicans are in a position to limb asut root from they promise. joe: there are a number of things investors are excited about, tax cuts, $1 trillion fiscal stimulus, perhaps a regulatory rollback of dodd-frank. what do you think is most imperiled by the political climate right now in d.c.? i think investors are expecting a 20% corporate tax rate, and i can't get you the votes for that. i believe you have to have democratic support for legislation in the senate if you're going to see corporate rate cuts, which is a big thing investors are looking for right now, and ultimately our thesis

is that if you will negotiate with democrats, you can't get 8-12 votes with a 50% corporate tax and will have to increase your threshold there, so something in the range of 20%, 25% is more appropriate. scarlet: thank you for joining us today. 51,ng up next, super bowl not just fans are excited. york, this is bloomberg. ♪

scarlet: "what'd you miss?" is on the way.ay according to the national chicken council, americans will eat 1.3 billion chicken wings

this sunday, 30 million more than last year. will be purchased through restaurants, 25% through grocery stores. joe: perhaps you will consume those wings by mulling over your daily fantasy football picks. than 57 million people participate in fantasy sports this season. asks draft king ceo who will win the super bowl. >> it is an interesting question, because fantasy points offer incentives to defense, so if you look at it, atlanta actually has fantasy points, but if you factor in the defense, it makes new england have the edge, but it will be a great game with lots of scoring and it could go either way, so exciting to watch. >> what about commercials from

draft king's? there was a lot spent this time .ast year is that being cut back a little bit this year? >> we did not do as much advertising this year. do a super bowl commercial. it is the ending of the season, and would like to advertise at the beginning of the season to get people to play for the whole season, but last year we did a tremendous amount of advertising , and this season, we did some, but not nearly as much. are youhat reason curtailing that? >> last time, we got some blowback that we went overboard and people were getting sick of the commercials. take because we were acquiring new customers. we felt it would make sense to not go so happy this season.

>> now you are looking for new customers in new regions. you have a license for malta, looking for europe, access to germany, and you are in the u.k. , how quickly can you move into europe? a we were pleased to grant controlled skills gaming license. if you are a member of the eu and license that company, that company can operate under that license anywhere as long as that placed is not have their own set of regulation, so a number of countries in europe don't regulate the skilled gaming ourgory explicitly, so maltese license allows us to enter any countries, germany being the largest market in europe, and that will be the first one after malta. >> can you give us a date? the quarter. of we will have an announcement soon on the exact date, but

definitely by the end of q1. >> i want to talk about the and how your fantasy sport is regulated. colleges, you are not able to run it, deemed illegal on college campuses, but it must be a huge area to make inroads. how are you dealing with that? when we started to see laws passed in the united states to explicitly regulate fantasy sports as a skill game, a big part of those laws was they did not want us to run games or contests for college sports, and that was something we supported. we thought that made sense. it was not a huge part of our business and it was more important to make sure we had a good regulatory framework for the professional sporting contests we offer, and that is where we focused. ♪

scarlet:

>> you're watching "bloomberg technology." trump signed to executive actions today, one to order a review of dodd-frank. the second to stop a judiciary

role requiring advisers on retirement accounts to work on the best interests of their clients. more thanas revoked 100,000 visas since the ban on travel in the u.s. for people from seven middle eastern nations. that is according to a government lawyer who spoke at a hearing in virginia. the u.s. has imposed new sanctions on iran. 12 companies are among those penalized for supporting the missile program. meanwhile, iran is retaliating with sanctions of its own. they say they will respond in kind to the treasury sanctions and have a list of u.s. companies they say support regional terrorist groups.