post, he discussed sanctions with the russian ambassador. they think it could've been a possibly illegal signal to the russians. now they say they cannot be certain the topic did not come appeared and the senate debating the nomination of stephen mnuchin as treasury secretary. the vote is scheduled for monday. and they will quickly take a look at the secretary of veterans affairs. thetheresa may looking at -- raising the risk that negotiation will be worth than expected. according to diplomats, theresa may is looking at elevating the chance of great britain leaving in 2019, without a trade agreement. and in france, a new poll indicates there could be a shift between the first and second rounds of the upcoming presidential election. a significant majority of voters on the french left are likely to

abstain in the second round, if their choices between the right candidate and the far right candidate. la pen is an independent and twoe, -- la pen other independent candidates are the top ones in the polls. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ scarlet: live from bloomberg world headquarters. i'm scarlet fu. joe: i'm joe weisenthal. we are 30 minutes from the close of trading. scarlet: and finishing the week higher for those business friendly policies. joe: the question is, "what'd you miss?" scarlet: in finance, the regulatory point man will be

stepping down, amplifying the present ability to reshape the oversight of wall street credit and president trump's pledge to honor the one china policy may have averted confrontation with beijing, but did it roy in that ruin his reputation. joining usr inslee to discuss the order to halt the travel ban. ♪ joe: now we will take a look at with them -- were the major averages stand. abigail doolittle is standing by. abigail: solid game going into the close. nasdaq, s&p 500 and solidly higher for the second day in a row. and nasdaq of up, four days in a row. and the same story we had yesterday, more record highs for the major averages in the u.s., a bullish street.

do not be surprised if by the end of the close we see higher levels for the major averages. this is a great chart put together by one of her colleagues cameron price, who has taken a look at what -- half hours of the trading day have brought the best returns. we see that those of the most at the beginning of the day and then right here in the last half hour of trading. do not be surprised if gains are even bigger as we take a look at the next half-hour. and as for another story standing out, we have -- hop into the bloomberg. and this is about the bloomberg dollar index, the bloomberg dollar index is poised for its first weekly gain in seven weeks and we see the weekly gains and losses over the last year or so weeks,ere was six down to donaldeacting

trump wanting a weaker dollar. but today we are looking at a gain. however, we have a chart sent to us by a bloomberg customer, he has built upon a previous chart that we built and made a very strong. 5816 -- chartd 5816, and the point he is making his this momentum indicator showing the two major averages, but typically when they cross in the past some of the blue lines shown on the bottom, that has led to a significant decline in each of the cases of these pink line. 15% declines. not so long ago, a smaller decline, so perhaps those together may suggest that there could be weakness ahead for the dollar, perhaps as president trump continues to job phone, wanting a weaker dollar for perhaps the benefit of companies. joe: thank you. love those turks -- charts.

currency might come of this weekend in mar-a-lago where president trump and prime minister shinzo abe will be staying. they held a news conference this afternoon. there is uncertainty between the two countries on trade and donald trump abruptly pulled out of the trans pacific partnership. abe says japan and the u.s. have agreed on a new framework for dialogue. >> in asia-pacific, we see dramatic growth. but to expand free trade and investment, this will be a big chance for both japan and the united states. of course, it must be done in a fair manner. joe: what the latest is our bloomberg correspondent at the with house and let start kevin. what is your big take away from today?

kevin: this is a president that i spoke with the chinese president before meeting today with prime minister abe from japan. he is trying to walk the tightrope of being tough on china, particularly on currency manipulation, but also trying to build foreign ties. he has said he has been able to draw u.s. companies from going overseas, to stay in the u.s. gm, andioned ford, intel. he is also previewing the tax policy initiative that will be underway in the next week. and the second big headline we are carefully monitoring is immigration and the executive order. last night, the ruling from the ninth district court, the white house prepared to take it all the way to this pain court, upreme court, despite this overturning. scarlet: you are usually based in asia, but the president of

china obviously watching the news conference today very carefully and paying attention to what kind of agreement the two leaders make. what is at stake? >> it is been -- has been a fascinating toy for hours in terms of relationships with the u.s. not just the news conference and the phone call last night from the white house. in particular,, i was start by the lie about the one china policy were the agreed at the request of beijing, that would be quite a confession to china in terms of things stirring up in the bigger picture remains, the trade deficit is substantial and we have not heard anything specific from the white house in terms of where they are going with those sanctions toward china. and we expect that after the debate and that still has a long way to go. joe: from japan's perspective, how big of a setback was it that donald trump hold the u.s. out of the transpacific partnership? >> that phone call last night

right before he had the press conference, i would think that japan today would be happy. they wanted to come and make sure they cemented in alliance with the u.s. on security and trade. i thought that the press conference was warm. they faced the controversial issues, talk about economic framework and the prime minister made a date at china without naming them on unfair trading practices. scarlet: speaking of controversial issues, the issue of immigration came up during the news conference. let's take a listen to what the president said. president trump: we will be doing something rapidly happen to do with additional security for the country, seeing that next week. and we will continue to go through the court process and ultimately i have no doubt that we will win the particular case. scarlet: kevin, do we know anything about whether president trump discussed immigration with prime minister shinzo abe? japan iscause

favorably restrictive on immigration as well. kevin: it did not come up, but mitch mcconnell was at the white house today before the press conference with the prime minister and president, and it did come up at that meeting. on capitol hill, a lot of republicans are very frustrated with the administration for how they are handled the rollout of this particular issue. they are nervous it could cause the president key capital as he tries to get through the legislative agenda on tax reform to repealing the affordable health care act and the deregulatory policies on dodd-frank. i spoke with one senior trump official who told me that behind the scenes they are carefully prepping judge gorsuch who will face confirmation hearings, they are prepping him to answer questions about not only from democrats on the overturning of the ruling, but also from republicans. --ald trump tumbling down

doubling down today and is saying he will announce new executive orders to act in the next couple of weeks, days even. scarlet: there has been a flurry of activity the first couple of weeks. theedna, when you look at prime minister and donald trump, they are forging a personal relationship and they have a lot in common. when you see that a - -would you say that abe is a populist? >> i think he is acting out of necessity. and donald trump talking about japan having to pay for the u.s. troops and ending tpp, there is an element of that to abe, but i would not compare him to the same style as donald trump. they want to get the relationship going, because they need to cemented. scarlet: ok. thank you, kevin and enda, our chief asian correspondent. later, we will speak with a ee aboutvernor jay insl

the decision of the ninth circuit federal appeals court, washington one of the states that sued over the ban. joe: breaking news, the former aig ceo has settled a lawsuit from eric schneiderman. the has agreed to pay $9 million to settle the fraud lawsuits and has admitted to initiating to fraudulent deals. the lawsuit came about last year. actually dates back to over a decade ago, claims that greenberg had engaged in fraudulent details to come feel that to cancel information -- to conceal information from shareholders. he admits to the fraudulent deals and will pay $9 million. scarlet: we will monitor those headlines. minute, speaking with the portfolio manager of prudential total returns about what we might hear from janet yellen when she gives testimony next

week. that is coming up. this is bloomberg. ♪

scarlet: d'angelo, the official that spearheaded the aggressive push to make things safer plans to step down in early april. his departure will tease regulatory pressure on banks. and next week, janet yellen getting ready to testify in the u.s. economy and monetary policy before the banking committee. we will get a glimpse of their thinking before the next meeting in march. and now we will bring in robert tipp from prudential, joining us now. is daniel tarullo stepping down a game changer?

robert tipp i think the main thing is the underlying fundamentals. robert: it could be less hawkish at the fed, although prior to donald trump selection -- elect ion, there was something seen about the low interest-rate environment that the fed was creating, there was something unwholesome about that. but when you think about it, he has a lot of people to a point and i guess they would be dovish. joe: you anticipate in my question, because prior to the election you would think that republicans were critical of the fed's dovish policies, but who wants to appoint somebody to the fed that is going to work cross purposes, especially when you are trying to get gdp near 4% year after year. robert: you have a background in real estate and what the high interest rates. the best interest of the economy in the long run is good economic

growth and stable inflation. but really the thing that people do not expect of higher inflation and going through: clue might -- going to employment my those are not really panning out. the pendulum has swung from a year or so ago where people were bearish on the economy about the ecb, they thought it would be easy forever. that has changed, those yields have risen. the fed has hiked again and people expect the stimulus. i think they are a little ahead. things have gone too far. joe: i have a chart of wage inflation, different measures to the wage inflation, this going back a couple of years. if we go even further, you can see the generally trending upward would've gone down a little bit lately, what is the story for wage inflation? are they going up in your view? robert: very slowly. if you bring up the hourly earnings, which goes back even

further, you would see that this level of wage growth is incredibly low, when you look back around 2-3 decades. even the series here, the eci, the year-over-year rate has been increased by just, the quarterly figures coming out in the second quarter of last year. there are signs with the last payroll report that we had of wage growth decelerating. and it is not entirely surprising, the dollar is up 30% on a trade weighted basis in recent years and if you are going to be competitive, you cannot have your weight of inflation, the wages going up, it is not going to work. one of the leading example has been japan. unemployment there has gone incredibly low and yet there is no wage inflation, no real underlying core inflation. and it is a competitive world. scarlet: do you think folks at the said and those -- fed and to

those making fiscal policy are looking at japan as what not to do? our policymakers thinking that way -- are holidaymakers thinking that went? -- way? >> they are trying to take a long-term approach with the budget deficit. it is 7%. it was as big as 10%. and this is difficult to do with the underlying dynamics. in the u.s., it is unclear what we will get on the fiscal side. butidea of stimuli growth, at this in time there is motivation to rationalize the tax system and reform it. and strict -- in terms of the budget deficit. i think that it is a big challenge, but i think what people are expecting in terms of growth is probably overdone. and first of all, the timing of it. scarlet: so no 4%?

robert: we're thinking if you percent that would be a base case over the next year and we will not really see this for several months. joe: the 10 year yields went up after the election and reached 2.6, now pulling back, around 2.4 right now. where are they heading? robert: we are in the 100 30's, last year around 265, you have to remember we are in a world with 32 basis points on the 10 year, so we are massively elevated relative to the levels. and so i think that you are going to see the range that we are in go down as it becomes clear that the stimulus, the tax but itt may be positive is not going to revolutionize u.s. growth. and it is important for the yield levels, not just for the

u.s., but looking at global growth conditions. i think you will see that edge out over time and bond returns will be positive, not just for treasury, but for nongovernment corporate structured products and so on. fromet: ok, robert prudential. he will stick with us. we will talk about whether the reflation trade has been overplayed. this is bloomberg. ♪

♪ fu.let: i'm scarlet we are back with robert tipp. we want to take a dive into the bloomberg, you can use the function at the bottom of the screen. we look at the negative correlation between the yen and japanese stocks. the blue line is dollar-yen. you can see it strengthening here and here, because the dollar is coming down. and we see the correlation with

japanese stocks. the white line shows foreign investment into japanese stocks, trailing by 12 months. there is a life -- a lag. you would think more foreign investors would put money into those stocks, but when the yen weakens, they pull money out of the japanese stocks. i am not sure why? nevertheless, robert, when you look at the dollar-yen rate and think about how they are conducting policy, they are charting the 10 year yield and the curve, how do those equities factor into their thinking? robert: talking about the relationship and the analogy in the bond market and how it relates to stocks and whether they are shooting for. when the dollar goes up, that makes japanese exports more competitive. and it coincides with the rising equity market, they go hand in hand. and the other thing is a lot of investors, although they may

send money to japan, they could have a foreign currency hedge on that. they invest in the stock, but it has no currency impact. if they have $100 investments and the stock market doubles, they have to go sell a bunch, twice in the amount. that tends to push down the yen as the stock market goes up and they have to hedge additional amounts. that drives the relationship for those two factors. the bank of japan is involved in the stock market and their objective is to boost growth and inflation, they think it will help the economy overall. but if you rewind 16 months ago, they crushed the japanese curve to a flat configuration in order to stimulate growth. that was very taxing for the financial sector and for investors who had nothing to buy, so they have taken a second look at the yield curve and made

the bond market unsafe to buy paid a 30 year bond has that -- unsafe to buy paid a 30 year bond -- buy. so they year bond -- want to make a safe environment for bond and they feel like this is a maximum stimulus point. on the equity side, if they aggressively buy stocks in order to create a well affect, or reduce the cost of investing, they basically make stocks a dangerous investment. scarlet: got it. robert: so they have done some of that produced confidence, but there are good reasons why they are keeping it to a limited amount. joe: i want to go back to the u.s. situation, looking at the breakeven rates. this goes back one year and you can see how much they rallied since the election. now they have rolled over a little bit. so my question is, going into the next fed decision as they

think about how many times it will hike this year, what will be the impact of these market-based measures if inflation continues to slide? robert: it is a complicated issue. they are looking at this and the underlying drivers, and if you look inside the cpi, you have volatile food and energy components, but even if you take those out, you are around 2% right now. but really, what is driving the entire increase in inflation is housing and medical costs. and those are rising significantly higher, everything else in the economy is growing at about 1%. so the medical is not really something that the fed is going to run and real estate as well, do they want to run the entire policy for one sector of the economy? probably not. scarlet: ok. robert tipp, thank you for

joining us. the market close is next. the major indexes with four minutes to go, record highs again. the dow is up 100. the s&p gaining 3/10 of 1%. ♪

♪ scarlet: we are moments away from the closing bell.

u.s. stopped expanding all-time highs. the president comments on cutting taxes. ♪ scarlet: i'm scarlet fu. joe: i'm joe weisenthal. if you are trading in on twitter to mount -- tuning in on twitter, we want to welcome you. scarlet: we begin with the market minutes, record highs again for the dow, s&p 500 and nasdaq, the second day in a row grid and this comes after -- row. camehis comes in after -- in a bit lighter than anticipated. joe: two straight days, getting more detailed and hints about the upcoming tax plan, could have helped the rally today. scarlet: everybody trading on the optimism. take a look at the major groups, this is the great rate returns and you have materials and industrials, those leading the

advance. and none rising by 1% or more. consumer staples, a little change. it was a broad-based advance over all caps on want to focus on consumer discretionary, this is a record high. the biggest mover is news corp. 7.25%. up and activision blizzard at an all-time high, and upsetting the call of duty franchise, and electronic arts also at a record as well. so much for people not playing the video games. and the baking index, this is one worth paying attention to, because of the news from the afternoon, the big leg up at midday when dan tarullo announced he was stepping down. he was pushing for increased regulation. joe: and let's take a look at the government bonds, the yields

in the u.s. are back up, but modestly. and two-year and 10 year a little bit higher, but not a lot of action today. and the great deals with a big -- yields with a big rally fed and concerned about over the bailout. more optimism today. and dropping below 9%, perhaps the imf and creditors agreeing to how they will approach the bailouts. no done deal, but maybe perhaps a path. and everybody watching france, we will talk about that later. those yields of higher on the day, 1.06% on the 10 year as concerns over marine le pen continue to mount. scarlet: currencies, the dollar indian the six week -- dollare ending it six week losing streak. go while way back to 2016 to see that. we continue to talk about the strong dollar. dollar-yen.

it did strengthened during the news conference. and it came right back on donald trump saying that he was complaining about currency devaluation on the part of trading partners. and the canadian dollar, gaining on better than estimated jobs data and it was expected to fall, but it rose on strength in financial and business services and the leg down indicating a falling u.s. dollar and a stronger canadian dollar. joe: finally a look at commodities. big gains for the industrial metals, iron ore and copper are dataer 4.5% and a strong out of china overnight could have helped copper. copper getting a list -- lift out of this strike going on in the copper mines. not much gold, flat and selling off a little bit. silver up just over 1%.

scarlet: you would think that it would have fallen you will more. joe: oil, we forgot to put it on the board, it was having a good day. opec sticking to those cuts. scarlet: so far it has. those are the market minutes. joe: "what'd you miss?" who spearheaded the push to make banks safer after the financial crisis, plans to step down in april. they may welcome the arrival of you ever donald trump was in charge -- puts in charge. for more on this, the deutsche bank chief economic columnist, great to have you back. what is the significance of this news, are you surprised and what is the fallout? >> markets are already on edge because we are waiting for who will be the new members and we are waiting to find out if janet yellen will be replaced, so this is adding to the suspension that we basically now have a fairly

big group of people that need to come in and the question is how will the act, what will their intentions the? -- be? thatbasically suggests this will be important, both for the policy and also from a regulatory perspective. scarlet: everyone is concerned that the president is focusing on immigration first, that is where he is taking action and he has promised to appeal to the supreme court, so does that distract away from tax reform and infrastructure spending, the issues that will push risky prices higher? >> it is clear that for the last several weeks, the markets have been waiting for some positive news on what the details will be on corporate taxes, on infrastructure, and also in particular the issue about the composition of -- it is probably coming, the question is how long is the

honeymoon and how long will we wait for the details? we expect it will come and be good news overhaul. forlet: are the projections gdp in line with waiting for the details, or are they too optimistic right now? >> you can see that the expectations have not changed much. there is some caution among economists and also the fed, the projections they had in december are close to what they had for november, so with that said, the stock have spoken clearly that there are expectations of something positive coming and we need to give it more time before we know the details. but we do expect it will provide a boost to the gdp over the coming quarters. joe: talk about inflation, where is it going? >> the favored measure for the fed is 1.7 and the target is 2. isyou ask the question,

1.72 -- now may have the forecast for january and february, and we look at it going slowly higher. the question is for the fed and the markets, are we getting to an inflection point where this goes to 2%? especially the orange line. it is not quite yet. at least up to this point, we are getting dangerously close to the magic number of 2%. and if the fed ignores those numbers going up, while the long-range also ignore that, or will we wake up the bond out of the hibernation? it does not look like it right now, but the economy is already close to full employment and we are close to 2%, so in that context it is important to think about the fed reaction. scarlet: are you bothered between the disparity on the stock data and hard data? if you look at the small business optimism, it was a big

feelings but that is data, not hard data. how is this resolved with such a big gap? >> it is consumer confidence from michigan, it was down a little bit today, but generally speaking the sentiment from consumers and corporate has gone up since the election. and the issue is the hard data has not gone up to the same degree and small models are trying to predict the database on the sentiment data and it has not shown the large increase, so we are waiting for a stronger data. and the employment report we got last friday was generally good, but it is true that we want to see soon some of the sentiment indicators that are basically showing that the animal spirits have been unleashed. joe: let's go back to the question about what is being priced in policy wise. that seems to be fairly crucial. what do you see as the additional fiscal and paul's

that we are going to get that fiscal impulse -- that we are going to get next year? partyat we have one mostly for the government and it makes more spending possible. >> those around the world to expect fiscal expansion, they expect gdp to go up, the question is the timing. look at the fed expectations and how many hikes we will have this year, this is more looking like we will get a boost in 2018, so therefore it makes sense that the fed could expect three hikes this year and the market is more conscious of two hikes, but it is uncertain. that, we will have much more clarity on what gdp growth will be, but also the inflation profile and of the level of interest rates, what they should be. joe: ok. stick with us, we will be talking about the risks and of -- out of europe, next.

scarlet: can you can watch bloomberg television anytime from the bloomberg terminal, but the times and days you want to watch. joe: and you can see all of the charts we are looking at. scarlet: on the right-hand column. different charts we have brought up. you can always click on them and they will open in your launchpad as well. what was the last one? joe: wage charts. scarlet: this is bloomberg. ♪

♪ >> it is time for first word news. the president has issued his

verdict on the appeals court that refused to reinstate his travel ban. in each week, he called it a disgraceful decision, a three-judge panel of the court of appeals unanimously concluded that the government failed to make its case that a freeze on the ban should be lifted. it also rejected the argument that the courts cannot review a presidential decision on immigration. during a joint went -- white house press conference with the prime minister of japan, donald trump said the administration is planning to unveil additional measures. >> we will do something very rapidly, having a they do with additional security -- having to do with additional security. we will see that next week. and we will continue to go through the court process and i have no doubt that we will in that particular case. mark: the president added, we are going to keep our country safe and we are going to do whatever is necessary to keep the country safe.

and, as tom price of georgia has been sworn in as the health and human services secretary, setting the stage for the conservatives to play a leading role in dismantling president obama's health care law. vice president mike pence administered the oath hours after tom price won by a narrow vote. the democrats criticize tom price, calling him and i along with a questionable history on trading health care stocks and that he would take away health care insurance millions of americans. michigan will provide flint residents with water filters for three years according to a report that says filters and replacement cartridges will be given out as officials work toward replacing the pipes in the city. the state will also offer access the bottled water. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg.

thank you. "what'd you miss?" europe experiencing financial cash --election needs. sten, you wrote that the netherlands is the next test for populism. we do not see those spreads going out the way that french ones are. >> one thing for them to pay attention to is that europe is going to elections in march for the neverland in april and may for france and in september for germany. although the elections have polls pointing toward not a dramatic turbulence in terms of a regime changes over all, but it is obviously important given the track record of both brexit and the u.s., to keep an eye on what kind of risks are around these events. joe: living show is -- the big

show is france, two rounds of elections. i have a chart, you should send this around, it is fun. the white line is the french and german spread and the teal is the betting odds of marine le pen winning. people will watch the relationship over the next couple of months. the market, according to -- she has a 31% chance. is it that high order people nervous about the repeat of donald trump and brexit, nobody wants to get it wrong and they are overestimating her chances? >> it is coming out on the forecast of what will happen with the political situation, it is typical, but the bottom line is the chart shows the spread is widening and we need to think about why is it widening between germany and everybody else? probably telling you there is anxiety in different forms of the investment community, that there could be risks that we could have. be that obviously would

quite a difficult situation for europe over all, but generally speaking i think this widening is reflecting the anxiety about the political situation and the scenarios to the downside that could play out. joe: we all see the polls. this is not like brexit where it was maybe five or six or 10, losing in the final round. is there an element of, we do not want to be burned a third time on being wrong again, causing people to feel uncomfortable forecasting something, that the numbers say this is not close. >> this could be insurance that they are taking out against the scenario. a 25% chance of something can believeut you that even 25% or 20% or 30% to require insurance you take out options and basically in different ways taking bets on whether the scenario plays out,

you have to protect yourself. and this is something that is extremely important for the european economy and european political landscape as we go toward -- into 2017. scarlet: how does the ecb position itself? the next meeting will be march 19. there will be a vote before then, but they have decisions to make and pressure from germany to taper off the easing. >> it is in a difficult spot, they just promised that they will do qu until the end of the year, and they will end at in march, now they say december. so they are basically saying, let's let the political situations play out and then we will come in for the fourth quarter and assess where the economy is and whether something is needed, but it is a difficult debate in europe whether they should do something or not do something very and where they are at the moment.

scarlet: they took themselves out of the debate until the end of the year? >> i think that is a fair description. joe: the other thing people got wrong about brexit and donald trump, they probably got wrong with the annealing market aftermath would have been, there was not as much volatility in any market after those votes, except very briefly. the pound is weaker. will it be different in france because this is a eurozone country and marine le pen -- moving the french and that into -- >> it has been widening. the outcome is getting a lot warmer and colder if you will and another way of saying it is that volatility is higher and it should be higher as a result of the uncertainty of where we are, so all measures on the bloomberg, basically all countries in the world are showing an uptrend. it tells you that you should probably see more volatility and therefore the main mystery in

that context is the vix and equity policies. it continues to be very low despite the political uncertainty, so there is disagreement between equity market saying everything is ok and the bond market saying, we still have significant uncertainty. and therefore it is a bit of a mystery in many of my meetings, why is it that the equity markets continue to be so optimistic. joe: ok, the deutsche bank chief economicist. coming up, tracking sentiment beyond the standard surveys that using. this is bloomberg. ♪

♪ joe: "what'd you miss?"

the preliminary sentiment index for february fell a bit as the immediate postelection enthusiasm wore off. this is only one way of measuring the mood of the nation. our next guest has done research on text analysis to measure that sentiment. dan wilson is a senior economist at the federal reserve bank of san francisco and joins us from san francisco. thank you for joining us. talk to us, what is the work you are doing in measuring sentiment? what are the new techniques? dan: first, let me say the work i have been doing is joint work with a colleague of mine at the san francisco fed, adam schiff and the company doing the text analysis for us. basically what we have been doing is exploratory analysis, trying to see to what extent we can extract sentiment from news articles, and then construct an

index that we can use to track the economy over time in much the same way as things like that consumer sentiment index from the university of michigan or the confidence index from the confidence board. scarlet: how well do the techniques you employee match up to existing data on sentiment, the soft data that we talk about with the surveys? that we new sentiment are trying to measure is a somewhat different concepts from the consumer indexes and the existing standard sentiment measures. those are based on surveys of households. ours is trying to use our exploits the advances in machine learning techniques to be able to use computers to essentially read texts, like news articles, and measure the sentiment in news. it is a different methodology

than the standard sentiment measures out there. joe: the holy grail of anything like this is actually to be able to get useful signal information before other people have it, whether it is to anticipate market moves or be ahead of the curve on hard data that moves the market, so are the -- are you finding these techniques you are working on give people information ahead of the curve? forecastingconomic is a really hard job. there are not any statistical models out there that are really good at predicting the economy respectively, the financial markets, way in advance. what we are trying to do is basically take the existing forecasting models based on hard data and cs tracking -- see if checking the news is sentiment can help track the current economy and help forecast the economy in the future.

i would say it is like making a bad forecast somewhat better. we find that our sentiment index does at least as well as consumer sentiments, in terms of tracking the economy is helping with forecast. and all of them together produce the best forecast. scarlet: how well do these sentiment measures hold up in the era of donald trump, where the reporters and media are trying to wrap their head around the new president and how he communicates with the public and how to interpret his various comments? dan: what we have done is more of a historical analysis. we have gone back to using news articles all the way back in 1980, from all the major newspapers. and we are exploring the technology, whether we can extract from those. going forward there is a lot of interest in these techniques for looking at social media posts texts thatypes of

are out there in the economy. so i think news articles will always be relevant, but there is more and more text out there to be analyzed that could potentially be useful for tracking the economy. scarlet: dan wilson, research advisor at the federal reserve bank of san francisco. thank you. advances -- new advances. joe: this is such a rich area people want to study. this tracker measuring sentiment on a given company and a social media, looking at twitter, you can break down the percentage of people who are optimistic or pessimistic. the positive ones are the grain bars. there is such a big area of everybody wind the data edge. scarlet: cutting edge stuff. -- cominglking about up, talking with governor jay inslee.

thatate one of two states challenged the travel ban. this is bloomberg.

>> i'm mark crumpton, it's time for first word news. president trump will unveil his proposed tax plan within weeks. according to a white house official, chief economic advisor gary cone is in charge of that plan. he's the -- he formerly worked for goldman sachs. disagreements with james mattis in their first meeting today and she said e.u. lawmakers are aware the u.s. government expects germany an

europe to take on more responsibility. french anti-terrorism officials have arrested four people, including a 16-year-old girl and say they prevented what they call an imminent attack. they raided a home in southern france where they uncovered a makeshift lab with explosives an bomb making ingredients. authority says the teen had pledged loyalty to islamic state in a recent video. official says one of the suspects was believed to have been planning a suicide attack. in tehran, thousands jammed the streets to mark the 38th anniversary of the islamic revolution. president hasani called president trurp's administration a problem. global news 24 hours a day, powered by more than 2,600 journalists and analysts in over 120 count ruries -- countries. i'm mark crumpton.

joe? joe: let's get a recap of today's market action. new highs all around, lots of gains, two days in a row. perhaps some optimism as expectations of a trump tax plan are still -- are expected to come in a few weeks no real details yet but the idea this is something the white house wants to push soon, perhaps investor optimism. >> we want to move to politics which is driving so many of these gains. washington state is declaring victory over the decision by a federal appeals court that refused to reinstate president trump's travel ban. jay inslee quoted, tissue tweeted, quote, thank you to the washington tornle attorney general for making the case that no person, even the president is above the law. here to talk about that decision an what's next is gnchor inslee. thank you for joining us. >> thank you. scarlet: i want to get your best sense of how quickly things have moved and will continue to move.

the immigration ban was put in place two weeks ago and the court ruled on it. presumably this goes to the supreme court. what's your best sense of how long it will take to get resolution? >> i don't have any inside knowledge of timing on that. we don't know exactly what's going to happen. i actually think the president would be well-advised to read this decision and go back to and revise his approach to this, rather than go through what i believe is highly likely an unsuccessful appeal to the supreme court. so if that does not happen, we will continue our course that we started immediately when the executive order happened. i'm proud our state was the first to stand up and defend not only the constitution but our businesses which have suffered because of this ill-conceived and very chaotic plan which prevented us from selling our products around the world. we have microsoft, amazon,

expedia, it's imperative that people move so we can sell our product. this has been impeded because we move sod quickly and thanks to these four judges, two of whom are bush appointees, by the waying because of these four judges, we have restored the ability to sell products. we have researchers in global health who got to seattle yesterday because of this stay that was issued. we have a researcher doing h.i.v. research. thank goodness here we have checks and balances the way the founders intended it. frankly, the judicial system moved with lightning speed to write this law to allow what they considered to be a winner which is our keas. joe: do you believe there's a way the administration will be able to come back and preserve the spirit of the executive order's intent but do it in a narrower way so that it will pass legal muster? >> well, the spirit, i believe,

the evidence is pretty clear is to bar to the extent they can do it muslims from entering the united states. the president said that specifically. i, donnell j. trump derek claire muslim ban, etc., etc. they went to rudy giuliani and said how can we make this happen? they designed this sort of insidious way. and then unfortunately, made a huge error. they were blatant about what they did. they gave prior toy non-muslims, told muslims to get to the back of the bus an not admit them. then the outright ban of all the refugees from syria was just not constitutionally supportable. and the courts were very clear that there was an absolute failure by the president to show a national security threat. the courts noted there had had not been one single fatality by terrorism in 15 years even though we've had 700,000 refugees coming in, they could not make that showing.

so we don't know what they're really after. if there are things that can improve the vetting process, if there is additional documentary evidence we can obtain if there's additional interviews to be had, by all means we should consider ways to do that. but i think the evidence has been our multiyear vetting process has been successful over the last 15 years. we rescued a guy who couldn't come in to see his wife as a tizen , he arrived at seatac three days ago. he was a refugee for two years. this is an extremely comprehensive process. does it eliminate all risk? heavens know. people can hurt us whether they come from france or japan or china, they can hurt us from anyone -- anywhere. but this was an ill conceived, ill managed, chaotic effort. i wish the president would sort of abandon the concerns and go back and try to rethink this

policy. ic we'd all be well served. >> we know the president is not above retribution he threatened to withhold federal funding from the university of california at berkeley after the cool canceled a breitbart editor from speaking on campus. do you worry that washington, the state, could face some kind of blowback? >> look, i learned something a ng time ago on the iraqi broken bottle-strewn back lot that you've got to stand up to bullies, you cannot allow bullying bhayor or intimidation to cow you into giving up your rights. if we start down that road, really bad things can happen in this country. i do hope that what washington did here, which did take a little courage because we were the first one to do it, will inspire other countries or other states and i just believe seeing what we have seen from this president in the first two weeks

in office, we are all going to be called upon to stand up for basic democracy and our base exrights in every county and every city and every state and every dimension. if we don't, we're going to lose our rights. so no, i am not afraid about that. i feel good about this victory. joe: governor inslee from an economic standpoint in your state, obviously home to a lot of big employer, including tech employers like microsoft, amazon, how concerned are you about the economic ramifications both from this familiar e.o. and possible future -- further crackdowns on immigration. what effect will that have on your state specifically? >> we are very concerned and so are the c.e.o.'s and employees of these great companies. we are a hub of innovation. we sell the best software, jets, you name it. and we are very concerned and that's why almost 100 major,

particularly high tech companies round the country testified by affidavit or declaration against this executive order by the president. they made very clear that their operations were significantly threatened. yesterday, i was at a -- with a dwroup of c.e.o.'s in the biotech industry in our state. company that's doing this whiz bang cancer therapy now has a researcher that can't go to a conference outside of the country and come back for information they need. this is a significant -- throwing sand in the gears of commerce. it is a major concern. it is recognized by business leaders across the country. scarlet: i wonder what have executives told you, executives of amazon, motorcycle soft, starbucks, boeing, all the big multinationals that call your state home, what have they been

telling you since the victory in your lawsuit? >> they've been saying thank you. i've heard it from many, many quartest in the business community. they recognize that when you are such an export-oriented economy like we are in the state of washington, to shut the doors which essentially you do when your sales people can't be afraid of getting back in an leave the country, by the way, clients come here, can't come from these seven countries now and we need something like $35 -- we did $35 million of tax revenue associated in sales for these companies. we have 21,000 people in my state today, most of whom are employed in these companies, who are doing business in these seven states, have family members in these seven states, who are getting health care, their relatives, want to go visit their relatives and can't do so. this is not a min muss issue. -- a minimus issue as far as it

affects the daily working life in our state, not to mention the personal suffering. look at the profound suffering these people have, not being able to leave or realize their dreams. they are living in the most war-torn places, the most, perhaps the most painful place on earth is syria today. 've seen the pictures of the horror that is happening there. i don't think america should turn its back on the compassionate and empathetic history we've always had in this country and we should not allow fear to drive us away from our national core. we've seen that when the japanese were interned, i live on bainbridge island, washington, the first place japanese were interned in world war ii. we learned the lesson of what fear can do and don't want to let that happen again. scarlet: washington governor jay inslee. joe: and we want to talk about

hank greenberg settling that fraud lawsuit. he had a $9 million fine he said the case against him was, quote, disgraceful. this is bloomberg. ♪

scarlet: president trump seemingly made a u-turn when he reafirmed the one china stance. he said he would respect the policy that's been in place since the 1970's. ining us now is brad setzer, senior editor, great to see you again. the president backing down from the taiwan issue. does this reduce the prospect of a trade war with china in any way? >> not really. i think the one china policy was in some sense too important to both china and taiwan to be an effective tool of trade leverage

and i don't think reaffirming the one china policy going back to the, essentially the status quo on the one china policy, in any way impedes the united states from initiating tougher trade action against china. scarlet: so what did he gain? what kind of leverage, if anything, that we recognize taiwan officially? >> i don't think he gained any leverage. i think what he discovered is that one china matters so much to china that they're not willing to negotiate over it. and i think you'd find the same thing with taiwan. taiwan is not willing to be a pawn to achieve trade gains for the united states. it's very hard to use the one china policy as a tool of commercial leverage. i think that's a reality the president learned. >> speaking of china, we got tom fresh data out last night, including trade day that that surprised a lot of people. what do you make of what we've seen? >> i was one of those who was

really surprised by the data. the first point to make is that january and february are always difficult months when you're following china. lunar new year distortions, the seasonal adjustment is quite big and we have added -- the added difficulty of price changes. if you remember that january of last year, commodity prices were very low. oil was in the 30's. this is the increasing prices, commodity prices export and import prices, is having a profound impact on the data. that said, imports surprised significantly on the upside. exports also sur -- after a weak q4, also surprised on the upside. scarlet: do we have reason to be doubtful or suspicious of p.p.i., that the wholesale level is over? >> i think this is consistent with the notion that the police station is in the rearview mirror -- that the notion that inflation is in the rearview mirror.

this is consistent with the notion that the chinese economy is strengthened. they're up at least 5% year over year. china's economy, i think, across a broad range of variables, is showing signs of normal, let's say, growth. joe: let's talk for a second to the u.s. lots of interest what a president trump tax plan is going to look like. no one knows but there's a theory that one possibility could be a border adjustment tax. what would that look like if that were to happen? and one of the big questions is, what would that mean for the dollar? >> i think we could probably spend 30 minutes adjusting border adjustment. so i mean, a border adjustment in the most straightforward sense is -- it acts as a tax at the border on imports, acts as a rebate on the domestic wage cost of exports. the key questions are, how would

other countries respond? would they view this ss an unpermissible export subsidy under the w.t.o. rules and retaliate? and how would the currency markets respond? if the currency markets moved in such a way they could offset the border adjustment. that's what many oto have o they have proponents, not necessarily president trump, expect will happen. personally, i doubt you'll have a perfect adjustment. i expect you'd get something less than full adjustment, which has a range of implications. scarlet: do you think there needs to be some kind of tax to to reduce the number of imports that companies and consumers bring in? source more of it from home? is the spirit of a tax necessary? >> what i think we need is a stronger set of policies that encourage stronger demand growth outside the united states, that make our key trading partners less reliant on monetary policy,

on loose monetary policy. that would facilitate an adjustment in the exchange rate, bring the dollar back down, because the dollar is in my view too strong for the tradeable sector of our economy, and ultimately the key to adjustment in my view, given that the risk of a retaliation, given the risk that the border adjustment would be offset by further dollar appreciation is not the tax at the border or the tarry, it's technically not a tariff, it works in some ways like one. the key is a weaker dollar, frankly. >> could this be a moment where china undergoes further reforms that it's been talking about forever in terms of more domestic demand so it's not as reliant for demand on the u.s. and other parts of the world? >> that would be the best scenario if other countries, china, korea, japan, germany, the netherlands, realized that they couldn't rely as heavily as

they have on export oriented their economies a little more toward internal demand. joe: thank you very much. brad setzer, senior fellow for geoeconomics. up next a look at why president trump's america first agenda is driving a resurgence of nationalism in mexico. this is bloomberg. ♪

joe: mexico's nationalism is spreading in response to donald trump's criticisms toward the country's border -- criticisms, border wall and promises of an american first -- america first mantra. more are saying good-bye to american brands and more to those made in mexico. let's bring in a reporter based

in mexico. tell us about the changing mood. there's more nationalism, it's spilling over. how is it affecting the political story there? >> we are seeing a backlash of nationalism to what's happening in the u.s. and on the government side, they're organizing a, you you know, mexico first sort of reaction, where companies are, you know, focusing on buying in mexico, people are being told to buy in mexico. you can see in social media, all across social media, the mexican flag is being waved. it's on your what's app screen and everywhere. on the fringes it's a little more intense. because you have people boycotting -- there are some local governments saying we won't buy certain -- from certain companies. star bucks is, you know -- starbucks is, you know, one of the products. american products. scarlet: is there also a sense

of bewilderment, some confusion over the fact that there haven't been as many mexicans crossing the border illegally as there have been in generations past and donald trump is fighting against yesterday's issue today. >> yes, i think there's a surprise in mexico because there's been so much integration for so many year work nafta, with families between mexico and the u.s. just grown and grown. people were caught by surprise, that's for sure. joe: there's a presidential contender that is sort of seen as the one tapping into this rising nationalism. who is he, what's his story? manuel low pez. he's been around for a while, a two-time presidential candidate but lost in 2006 and 2012. he's back and doing well in the polls. he feeds into the nationalism, he's been talking about, you know, problems with the relationship between the u.s.

and mexico for decades. >> so he's a mexico first kind of candidate, make mexico great again is he similar to donald trump then? >> we call him the anti-trump. he talks about, he's more on the left, first of all he talks about ending a subordination relationship between mexico and the u.s. but there are similarities in terms of trade. he has had issues with nafta in the past he said he wouldn't let certain tariffs be dropped, you know, for corn producers. so he's more the answer to trump's kind of brusk attitude. -- brusque attitude. joe: from an economic perspective, what's his vision for mexico's economy? >> he talks about strengthening the internal economy, focusing on that. in that sense, it's kind of similar to what others have been talking about as we see the larger political apparatus hue a

little bit more toward that protectionist rhetoric. joe: thank you very much. and coming up, what you need to know for next week. this is bloomberg.

scarlet: a busy week. what's coming up next week? president trump hosts canadian prime minister justin trudeau on monday and hosts netanyahu on wednesday. joe: and janet yellen appearing before congress on tuesday and wednesday. scarlet: and the senate votes on confirmation of steve mnuchin, and will hold hearings for andrew poster another nominee. joe: and vice president mike pence in germany for a munich security conference, expected to meat with angela merkel. sc

>> you are watching "bloomberg technology." president trump welcomed shinzo abe to the white house as the allies look to shore up an alliance and repair economic

ties. they held talks in the oval office followed by a joint news conference. abe will spend the weekend with the president at his palm beach resort. nominationte on the of steven mnuchin as treasury secretary is scheduled for monday. senate leaders have agreed to thekly take up and vote on nomination of david shocking, a holdover from the obama administration to serve as secretary of veterans affairs. georgia has been sworn in as health and human services secretary. setting the stage for him to play a leading role in dismantling obamacare. vice president mike pence administered the o's to price hours after he won the senate confirmation. estors gathered outside washington dc school where betsy devos. been promoting charter schools and voucher programs which critics say would hurt public schools. global