the big tex reveal is imminent. into want charted territory, the nasdaq hits for the first time ever. credit suisse will cap investors for $4 million, becoming the third major european banks to sell shares this year. from new york with an easy question, who wants a tax cut and difficult one? nobody wants to pay for it. in the market, let's get you up to speed. futures largely flat in the united states. s&p 500 futures negative a single point. treasuries at the margin, yields low. the euro a little bit softer after a few days of gains. we are down by one third 1%. alix: let's get your morning brief. another big day for earnings. for seven companies reporting at 730 -- seven: 30. look at the treasury option. 5-year note, 34 billion. two-year notes have the best recovery since last may. 1:30, that is when we are going

to see what mnuchin and the economic director hold a briefing at the white house. look at twitter earnings. ,t looks like a pretty big be coming in at 11 percent. monthly active users also coming in slightly better than estimates, coming in at 328 million, beating the estimates better than the fourth quarter. also, revenue dropped the estimates as well. looks like a good quarter for twitter. you've that revenue, earnings up, monthly active users up as well. we will cover that throughout the next three hours. david: you can get money for it and this might be a case where they figure out how to do that. and maybe video because they really have the video. let's see. today president trump is going to release his plan for what he has called the "big tax reform and reduction." we've gotten hints about where he is headed. we are joined by our chief

washington correspondent kevin cirilli. >> what we know so far is he is going to call for a 15% corporate tax rate -- tax break. we don't know the specific details but i spoke with some sources who are familiar with the meeting last night between treasury secretary steve mnuchin as well as top republican leadership and what they are anticipating is that they will also call for a timeline in which congress will also be forced to address tax reform. that is an interesting development because there is a lot of uncertainty now amongst the business community as well as other tax watchers in washington and the beltway, wondering just when exactly lawmakers are going to be expected to take on any type of tax reform. hints we also have some about repatriation. a big issue is trying to get all that cash back on shore. >> regarding repatriation, this is an adaptation from

representative bill shuster who was a conservative from pennsylvania on the house transportation committee. he has called for a repatriated fund as a means to offset some of the costs that would incur as a result of tax reform. also, to allocate those to transportation. using those repatriated funds and using that reduced rate would enable lawmakers to pay for some of this. that is something very attractive for the likes of people like steve bannon. david: when we have seen so far is consistent with what candidate trump said on the stump. do we have any sense the white house is really serious about this or is this actually a former real estate developer negotiating? he has said in the past that he is going to put forward something you don't expect to get. pointt is a really good but what today is designed to do is to jump start the conversation on tax reform. eventually, say this is

something we want to address in the first two years of congress. i do think that this is designed, coming just before the to assumea marker this is a big priority for this administration on tax reform. it is also something house speaker paul ryan has push for for years. and he is someone committed to tax reform. but he has clashed with members of the base. david: we will check back in later. we are starting. alix: joining us for more is dole --mand, and bob bob doll. i'm going to look at one barometer, the dxy. since the election, you have seen a pricing out of trump's legislative agenda. what needs to be priced in? >> what you need to see is the contours of the fiscal program, essentially making most

investors think the cuts are going to be permanent and large-scale and not going to be deficit neutral. unless you see those qualities come through in the package i'm not sure that the ex-wives going to rise that much -- the dxy is going to rise much. with what is going on in washington, that could easily liberate 25 basis points over the next 25 months and that requires a higher dxy. but the fiscal package is going to be large and permanent. >> in the equity market, are you going to see the optimism and deliver on those key points to have the same momentum? >> that is right. i don't know one investor that believes the corporate taxes are going to 15%. it is trump's completing what he started in the campaign. it is a starting point. we will have lower than 35 and higher than 15. i will take 25. and the market wants to see something get done. the repatriation is important as

well. jon: based on standard negotiation tactics, their market sensitive policy issues. when they have to gravitate towards 25, as the market participant, how are you factoring that in? if i believe 15 and we end up 205i will be disappointed. >> i don't know anybody that believes 15. it is a starting point. it is more about, when does it happen? how significant is it? is this tax reform or just a cut? jon: do you share the same view? >> i think you get some indication that the initial plans are not as ambitious as we were meant to believe. i feel at the numbers that have been floated around corporate repatriation is another example of that. in nominal terms it is only enough really to fund higher corporate tax cuts or household tax cuts.

struggling for financing mechanisms for the original plans. david: take us through some of the specifics. 10%, bring the cash home, make it happen. jon: how much money is going to come home? what is the impact likely to be on the effects rate? >> most of us have done standards analysis run this. they look at the example of 2004-2005 in the u.s. that mayy to say several hundred billion dollars would come back and half a trillion dollars to come back but there is a distinction you need to make between the impact of that on the broad market and the corporate markets. wholely a function of what activities they want to pursue or share buybacks. because we think most of this is in dollars we don't think of it as a currency impact at all because obviously these are fungible resources.

david: so we are told it is going to be big and permanent. let me tell you from washington's point of view the chances are very slim because it is not does it neutral. you've got past 60 votes in the senate. what if you get modest and permanent? >> it is that is and where we are. david: what about big and temperate? >> we do that too. alix: we will take anything. >> for the long-term, great, for 10 years we can live with that too. david: do you agree with that? i thought you were saying in order to get the reflation trade back in you've got to have it be big and permanent. >> looking at the duration of the reflation trade, you're not going to have one for the next three months or six months and one that is worth 50 basis points higher in yields and higher on currencies and commodities that are very sensitive like gold.

that is something that can come out of even a modest fiscal package. if we are talking about a reflation trade that could last for a year or two years that could give you 100 points higher on rates, or a cyclical low on gold, you need an aggressive package out of d.c. alix: where is the biggest mispriced than? >> the bigger plan would be better than the smaller plan but we will take any plan to repeat. this is the secondary story. the reflation trade is all about earnings. earnings are off the charts. we are spending this much time on politics and this much time -- where it should be exactly the other way around. alix: but what is the risk if we are already closing the outpost cap and you have the 100 basis point rise? david: that is a risk with the entire trump agenda. >> how much more gross are we going to get? i don't know. more nominal growth would be just fine with an inflation rate

starting as low as it is and units starting as low as they are, they would be great for revenue growth. alix: both of you are sticking with us and talking about killer earnings. let's look at what stocks are doing. jumping in premarket. here are the key stats you want to pay attention to. monthly active users, up 6% year on year. daily active users up 14% year on year. you also had 45 million unique streamingwards its video service. a key metric to watch is that with a 31% on the quarter growth. we will talk about that later on. jon: they are good for reflation trade. i'm joking. looking at the markets, we will be looking at the world of politics. jeremy corbyn in the house of commons in london, westminster for the final prime ministers question time before the snap election on june 8. we will monitor that for you.

from new york, coming up on this program, just curry, goldman sachs global head of commodities research. you are watching bloomberg. ♪

alix: in news of the morning, credit suisse announcing plans to raise more than 4 billion euros in a rights offering this morning, abandoning plans to hold partial ipo with business. we spoke with the ceo about his cautious outlook. >> i am cautious because it is a tale of two cities. growth, she is very pleasing for us. but for april, it was not too great because of the uncertainty

of the french election. you still got it monday. and the market friday. there may be -- but we are cautious. in q4 and q1, the difference was an honest. up 9%. up 54%, ecm rose we have the volatility, low spreads. -- we have low volatility, low spreads. so those conditions were very favorable. it may continue or may not continue. you will probably notice we are always cautious. alix: i know that very well. talk to me about cost cuts. where will he lose jobs? doing this to make the

bank more efficient. unfortunately, that requires job cuts but we are really focused on the non-comp expenses. and how we are cutting the non-staff costs. we went down 15% year on year. we are well on track to 18.4 billion by the end of 2018. we took it to bureau savings. >> we were just on track. zurich,e news now from francine lacqua. more than analysts have been expecting, what credit suisse's success depends on. clear that the ceo who i catch up with regularly reminded me that the 4 billion was not on top of estimates because investors thought it was going to be between 2 million and 4 billion. the 4 billion is what he said initially a year and a half ago.

at the time he said about 9 billion. he initially said 6 billion and he said now it was an option to raise capital directly. at least they were more on his side and six months ago. he decided to go for the safest option of directly going to the markets, which he thinks is less than the ipo swiss bank unit could have been. alix: it really raises the point of how much growth can you get out of that capital rate as well. jon: and where the european lenders are in the state of things. three major european lenders so far this year. i know everyone wants to get into the european limits and the long, but you compare the same to the european banks right now on wall street, how many of them talk about raising capital? david: it is diluting the value of shares. every share was getting less valuable. jon: joining us now to discuss some credit suisse is our jim

bowery of bloomberg intelligence. i want to begin with you a little bit. talk about the ceo. we sit down with him every quarter. he is cautiously optimistic, but what does this say about the execution currently? >> look at the first quarter and they are hitting on all the things you want them to. they are on track to meet their target of below 18 and a half billion. capital, capital came in slightly higher than expected at 11.7%. and in addition to raise capital , basically it removed some uncertainty surrounding the potential ipo of swiss universal bank. then in terms of new assets, they came in very strong at 12 billion francs in the quarter. that was significantly above assessments. so if you are looking forward, you want credit suisse to show

off trends in wealth management. those assets were very impressive in that regard. they didn't come up the offensive margins in asia which was a key growth area. jon: in deutsche bank april 27, barclays at 8:28. what is the trading leading up to? >> i think the global markets reported will be in the first quarter last year, a weak comparison. but certainly, credit revenues are more than double here at credit suisse. that bodes well for both them and deutsche bank. the key for deutsche bank will ofwhether we see any signs lasting franchise damage. can they regain market shares that they lost to u.s. peers last year? but overall, the trends are broadly positive. doll, deutsche bank.

4 billion from credit suisse. is this it? >> i'm not sure they are finished. in nine and 10, the u.s. banks had to raise capital. they didn't want to. nobody had a gun to the european banks so they need to as well. now they are doing it. i don't think we are quite finished. the balance sheet could use a little more help. jon: for people who want to get longer equities that doesn't sound like a long equity story to me. >> i think you still have to be aware of the fundamentals they are approving which is enabling the banks to raise the capital. it might be better off to say they didn't have to, but look. if interest rates go higher and economic growth is a little better and we get a little less regulation, that is great news for the banks to raise more capital or not. david: is it also good news that they are competing against themselves and the market rather than the u.s. government? >> absolutely. you hit the nail on the head.

let's get this behind us. will come at that before the market tomorrow. more coverage here on bloomberg. peschel thanks to bloomberg intelligence and to bob doll. david: on friday, we have alan greenspan, the former federal reserve chairman. the first hundred days of the trump presidency. live from new york and washington, this is bloomberg. ♪

>> this is bloomberg daybreak. i am emma chandra with your business flash. chairs of twitter are surging in premarket trading. the company reported its first klein since it went public in 2013. but the amount is still higher than expected. the number of monthly average users rose to percent from a year ago, beating estimates.

healthier snacks are helping pepsico meeting groups despite sluggish demand. ruffles chips beat estimates. attractis trying to customers were turning away from soft drinks and tom cruise -- and junk foods. jon: thank you very much. tomorrow the european central bank will announce its latest policy decision where analysts are predicting the recent recovery will not be enough to warrant scaling back the bond buying program this year. still with us, john normand of jpmorgan. i want to break down the ecb's march 9 statement into two parts. a lot of it will be focusing tomorrow. one is an economic assessment. what is stopping the economic assessment? the eurozone growth outlook risk have become less pronounced but have tilted to the downside and relate predominately to goebel -- global factors. if that changed tomorrow?

>> it should have changed a year ago because the coming has been performing above trend for two years so why have they prescribed that? i think they will. jon: so that takes me to the other quote by comes of the top of the statement. the former -- the forward guidance on rates. based on monetary analysis, we keep rates unchanged. but we continue to expect them to remain at present or lower levels for an extended period of time for our next asset purchases. if you change the economic assessment do you need to remove the word "lower." >> that statement is not terribly credible because the ecb already adjusted the asset purchase program in december. they could move rates even lower on asset purchases, so there is a bit of airbrushing on that statement.

jon: so to dissect this even more, if you are going to change the lower lined, the idea that rates don't move until qe ends, how long do we have to wait? >> i think this is correct in the sense that it doesn't have much economic rationale or financial rationale in different policy rates when the balance is expanding. i just don't think they have to take another step on that path at this meeting. they probably want to wait for politics in france to be settled more definitively than they were on sunday. and in terms of the core inflation numbers. i think changing that statement could probably wait another meeting or two. david: they gave so much forward guidance on the qe, they said we will go down to the lower level and keep this through the end of the year, that kind of locks them in. >> they can't change it if you believe that central bankers should be kept to their word with respect to these statements but as we have seen, when the economic environment changes or

when politics don't really support that original program, that is valuable. david: but wouldn't the markets really react? the whole purpose of foreign guidance is some certainty in the marketplace. >> they will, and i think that there is still a valuation problem there. i think the economy could withstand 50 basis points higher in 10 year yields. jon: three target on the euro? >> 112. jon: john normand, thank you very much. more on the press conference that starts tomorrow at 7:45 eastern. ♪ ways wins.

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after does the straight days of gains. coming into wednesday at the beginning of march on yesterday's close. this,ing treasuries like a marginal bid, yields low by six basis points, 6.32 on the 10 year. four straight days of euro strength, we are a little bit softer, down by one third of 1%, just below $1.09. boeing numbers, first quarter revenue comes at $21 billion. the estimate $21.2 billion so pretty much right in line on revenue. coming in at two dollars and one cent, the estimate, $1.91. alix: i should say the backlog also created a $480 billion, that is a total of net orders. it also raised its earnings guidance. you have a major industrial coming in better than estimated. it is forecast for the whole year, up by $.10 on a tax and.

jon: let's get an update on outside the business world with emma chandra. >> in china the military has launched the first domestic we built aircraft carrier. the character is at the heart of the country's effort to build a so-called blue water navy, capable of projecting power welded on -- well beyond the coast of china. they have another ship for ukraine. prosecutors have arrested 10 --ple related to the 2016 the 2015 attacks on charlie hebdo. 17 people were killed in those attacks. trumphington president plans to reveal the broad strokes of a tax overhaul plan today. according to white house officials familiar with the plan, one of the proposals called for a 10% tax on the more than $2.6 trillion in earnings u.s. companies have stockpiled overseas. one-time proceeds from the repatriations act could offset the deep cuts the president wants in other business taxes. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more

than 120 countries. i am emma chandra. this is bloomberg. david: those plans by president trump to redo the u.s. economy are affecting all sorts of assets and investments including initial bonds. here to explain what is in store is ben barber, head of musical -- municipal asset management. i want to put up a chart that shows what happened since the election. this is the largest municipal bond etf the first quarter ended you go to the left that is the election. you can see the price and the top chart goes way down and it comes back up roughly overtime. you can see the fund flow is way negative. what are the stories on minutes of the bonds and how they reacted to the election of president trump? >> postelection rates rose quite a bit and nav's felt quite a bit. shareholders reacted in a negative way and we saw a redemption out of the uni asset

class in general postelection. a couple months after, blows really start to stabilize and they come back in a positive way over the past month. relativest the overall valuation to communities, relative to fixed income. it is compelling to anyone paying any sort of taxes. people are cognizant of the fact that the asset classes are high-quality in the sectors involved in 10,000 different issues in the market. i think there is a degree of comfort in terms of where the relative valuations are with muni's growth. >> how much of this is indications that they don't quite believe the tax cuts will be as big or as long as we thought they might be? >> as it relates to potential tax reform and personal income

tax levels and corporate income tax levels, our view at goldman sachs asset management is that we would need a very significant reduction in tax rates to really move the needle from a demand perspective. where we areat is starting from a relative valuation perspective. when you look 15 years and longer, maturities, yields are very close to the yields of treasuries. most people will point to the i dividedyield of mun by yield to treasury. those levels are right around 100%, 15 years and longer. you are starting at a relative valuation that is very compelling. i understand that these bonds can be a very good investment. david: but on the margin, incrementally, you do go from the 46% marginal tax rate to a 33% marginal tax rate, doesn't that shift your balance? >> it would shift very slightly. i think to have a significant

demand reduction i think you would need to go down to tax rates somewhere in the mid teens. one of the proposals by the thee has been reducing income tax on interest income down to 16.5%. that is something we have our eye on. at the personal income tax level, we think a reduction in command communities would be very slight. jon: i want to be clear, some people have built a narrative that the flows that have gone in over the last couple of months are a verdict on the trump trade. not a good one. is that the story? or is there some thing else? >> i don't think so. i think it has been a send -- a general stability in race and municipals and a realization by the investing world that the asset classes are selling at very high qualities with

different sectors and institutions. jon: the other big story is infrastructure. we have talked a lot about tax reform of the last couple of months. we barely hear the conversation anymore. when is a great question, we think about infrastructure, what has been bent around was the $1 trillion over 10 years and if you think about that and put it in context of unicycle markets, primary market supply, we will generally have a primary supply of about $400 billion give or take. a lot of it could be termed infrastructure already. when we look at the $1 trillion over 10 years and if that comes to fruition we would welcome it for additional supply. we really would like the additional supply in the bond market. but in reality it wouldn't be a net new number. it would probably be a portion of the existing $400 billion or so of primary market supply. david: how much of the $1

trillion would come from municipal bonds? there is a combination of private and public funding so how much of it would come from these bonds? 100% fore for -- not sure. there is some additional federal role that could be talked about for some of this infrastructure financing so there is no doubt it wouldn't all come in the municipal market and any portion that goes away from the municipal market would be a positive. from a supply and demand perspective. alix: where is the best value right now? david: we really like the lower credit quality spectrum in a civil right now. jon: we think -- >> we think spreads are attractive. we are following rates that are too high based on credit in that market. alix: but where are we in the credit cycle? what is your belief on a credit cycle?

i'm talkingty is about the difference between investments and grade municipals. it has been volatile over the last couple of years. thate last two years spread differential has not moved as much as some people think. we still have implied default rates that are quite a bit higher than what is close to reality. jon: as we count down to this tax announcement, what are you looking for specifically? --we are looking for exactly obviously details on the corporate tax reform, any sort of detail that might come out on personal income tax would be very interesting in the bond market. jon: the announcements will come out. >> i think we take everything very seriously. we are skeptics by nature. so the details will be very important. alix: what is the negative? >> the negative for municipal

taxs would be a massive reform, something that does away with the tax exemption of municipals which we don't see as anything near a possibility that that is always the biggest worry. the is one of the reasons curves are generally steeper than the yield curves. we always have that long dated worry of potentially massive tax reform that would diminish the value of tax exempt and as well. david: you folks are pretty sophisticated so you have already taken a look at it. something that president has talked about as a candidate. it seems to be in his proposals. that brings corporate together with personal. a lot of the higher net worth individuals are, and affect that goes to 15% that could be in the midteens range. >> we will look at that closely but i think that a midteens income tax, if it comes to that through it, it will be something that you would need to

recalibrate relative to other things. >> i believe so. >> you would have to relook at werereaking's and there probably be a small adjustment. alix: thanks so much. coming up, shares of twitter up 10% in premarket. looking at better daily and monthly user growth. the second quarter coming in a bit light. we will digest the numbers. it is the nation's second largest public pension fund. chris ailman counters cio joins us. this is bloomberg. ♪

>> this is bloomberg daybreak. this is the hewlett-packard enterprise greenroom. in the next hour, jeff curry of goldman sachs commodities

research. this is bloomberg. now to your bloomberg business flash. credit suisse plans to raise $4 billion in a rights offering. the bank plans to hold a partial ipo with shares of credit suisse bounded -- rebounding from a record low in july. soared atter profits charters. transaction banking revenue is at the most in three years. and this old more than half the year ago. they are trying to some of the bank. an explosion of emerging-market lending led to a loss in 2015. for the first time, apd has lost one of its customers in the first quarter of 191 thousand the virus drop the service. that expects competitive pressure in the mobile phone

industry. at&t maintained its profit outlook for the year. alix: twitter shares, the story of the morning, surging in early trading as the company beat analyst estimates with 328 million monthly active users. ,oining us for the breakdown bloomberg intelligence senior analyst for internet and consumer electronics. ghose,york, anindya explaining that his most recent book, how businesses can harness the power of a data-driven mobile economy. i want to break this into two conversations. user growth and revenue. let's start with you. how good were the daily and monthly active user numbers? >> on stabilization, they were sort of shown inconsistent this quarter. what is interesting is the revenue expectations are pretty low. they were expected to be down 14%.

but if you look at the u.s. growth it was down 17%. stabilization in user growth. you see accelerated growth in daily active users but in terms of understanding whether the advertising landscape is changing for them, especially in the u.s., we still need to do deeper. alix: and this is sort of a divergence between the good and the bad in some ways. you get those active users rising but at revenue, down 11%. overall revenue is still down 8% year on year. put those into perspective. >> on twitter they could have done a lot more. they have two cases of this. one is live streaming. online streaming, they might do well but it is also true they have done a lot better. influences,ny key

dealing with instagram. influences, -- ling with >> the numbers are in fact moving and spending more time. one of the issues with these metrics is it doesn't fully capture you how much time people are spending. it might be just you login once and you are an active user. or are you active based on 30 minutes at a time or an hour or so on? so you have to dig deeper like the analyst before said.

david: it is clear that the key is streaming and video. do they have the right product and just can't monetize it or do they have the wrong product? >> if you look at the product, with respect to live video there is not a lot. is in its video earnings. if you look at what is happening with youtube and measurement concerns, those issues have gone away from the industry as a whole especially with respect to video. that is something to watch out for in terms of how it could impact our ability to make that video drive. jon: in the minds of many people the problems lie with management. what is your view on that? isright now, the main goal management. there have been prevention issues.

if they are able -- the cost management's have been done so far, they are able to know hold the talent they have while steadily growing user growth and more importantly making sure the advertisers in the u.s. remain there platform, you know is some hope year. -- hope here. jon: but if you look at second quarter estimates it is below estimates. so what is the biggest risk over the next three months versus a medium longer-term outlook? >> i was actually expecting like the analysts would have the first ever year-to-year revenue decline. that happened. >> on a revenue basis overall, down 8% year on year. international was up 2%. >> basically, my thinking was>> this is going to trigger conversation about a sale and acquisition.

we talked about google and microsoft and walt disney and someone. now that the numbers are looking healthier, not terrific but healthier, it is going to trigger competition. jon: i can't think of a single company how much is talked about relative to shareholders. this must be one of the worst ones out there. >> the expectations were so huge and they have come down so much. the expectations -- it was going to be on the facebook or something. but it is too late. >> it is too late to become a facebook, but we have seen this before. gopro went through the same process before. but moving back to social networks, twitter has a unique value proposition. there is value in 140 characters that makes people communicate. it is limited by demographic size because there is only a

certain kind of demographic. it is not another instrument or snapchat were what's at -- what's app. the user base is going to be around for a while now. jon: there is a newsfeed in the president's twitter account and they can't monetize it. that is a massive problem. if they can't monetize that, then something is going seriously wrong. isn't it? >> that is the thing with twitter. they had a lot of organic eyeballs increasing in the second half of last year. you know, with all of the news going around, i think at the back of that, you see 17% dropped in the u.s. ad revenues. obviously it is clear that they are not able to monetize this organic eyeball in terms of

product. but again, you have to really understand what is the strategy to retain those appetites? so far that is not really clear. alix: we appreciate the conversation. good to see you. thank you much. we continue at 9:30 a.m. ratingeenfield, with a on twitter, will be joining us. if you have a bloomberg account checkout tv . like on our charts and graphics and interact with us directly. questionlick on the and we will do so in the interviews. this is bloomberg. ♪

jon: from new york city to our viewers worldwide this is bloomberg daybreak. let's the market action. futures with a market move to the downside. software by 10 points on the

dow. 1/10 of 1%, on the s&p 500. through 230 at the close yesterday, for the first time about two weeks, we stay there. yields on the 10 year, at basis point 2.23 three. on the asset markets in euro, just a little bit softer in today's session. we down by one third 1%. let's get over to alex. havingirst, chipotle is a boost over 1%. first quarter coming in at 18% higher. shares have not closed above 500 since march of 2016. watch those stocks today. the highlight remembers that chipotle recently announced the first price raised since the tainted food outbreak. ther jaffray adding to division. u.s. steel, a huge miss on earnings, a loss of $.83. the prophet heading to its worst

day since november of 2008. the irony here is that you had steel prices actually up 55% in the first quarter with the company really unable to take advantage of that. they had operating challenges, flat roll plants and they couldn't take advantage of the better conditions. steel front and center with president trump and potential tariffs. people buying gucci, check out, up by 9%. growth in 20 years. sales up 48%. overall sales rising 29% of the company. eastbound, 33%. i'm expecting birthday presents from both of you. they are having the best day since 2015. jon: -- transparency here on bloomberg. alix: if there is an important point to make, they got hit as

well because of china and increased spending. david: and anytime we step back, it might be bad news is good news because it lets them going the pile thatmb was her by thumping. that was the case for donald trump. alix: you have to say, if you couldn't make a good profit with 55% commodity prices increased there is something to be looked at. jon: you think she is getting gucci shoes? coming up on this program, jeffrey currie, globe and tax -- goldman sachs commodities. the nation's second largest pension fund has a couple of problems. chris for aleman will be joining us from new york. you're watching bloomberg. ♪

♪ alexa president wants companies

to bring their cash home. trump wants a 10% levy on offshore earnings. the nasdaq hit 6000 points for the first time ever, and will the results justify optimism? third major european bank to sell shares this year. for new york city, good morning hurray you are watching bloomberg daybreak. i'm jonathan ferro. this wednesday morning, the picture looks something like this. down on the s&p this morning. the euro down a third. a huge day for earnings. , auctioning call billion the u.s. treasury secretary steve mnuchin and gary: briefing at the white house.

we will hopefully get the numbers. where weday's the day see the outlines of president trump's tax plan. here to take us through what we think we know and what we do not know, kevin. >> we know he will call for a 50% corporate tax rate and he will call for the 10% rate regarding repatriation. this instinct according to sources on capitol hill, tells me they're hoping will kick start test or heading into the first year or two regarding tax reform. it is something speaker ryan has wanted for quite some time. nothing major will start on this of an actuals timeline. this is to jumpstart conversation. david: i expect a lot of the two.nce mainly heard or

how long will it take? kevin: it would still be easier. this from your interview with mulvaney last week, it would be easier for lawmakers to tape on reform before they get to tax reform. they have a long list of items to get through. if there is anything we learned from president trump passes first one hundred days is that it has been more difficult than they had previously thought. shutdown, i was with someone who is a trump supporter last night, and he said he does not think it would hurt us as much. >> folks i'm speaking with on capitol hill are adjusting that there will not be a long-term we can have many types of extension for a health

we navigate this. president trump will not call for the wall in the budget, -- david: thank you. we will check back in with you throughout the day as we find out more about the tax plan. now we are joined by the senior policy analyst at compass point. was -- also with us is oliver renick. >> happy texted to you. i do not think we should expect a lot from today. the way i described it to clients is we will have an outline that talks about all of the potential game but none of the pain that has to come with it. is this is like president trump telling people

you can have as much dessert as you like but if congress and speaker ryan will have to say no, you cannot have quite so too late.n top of it, we will talk about rate cutting that known on the hill actually thinks we could get to it these we will not talk about the stickiest part of the equation, which is i get paid for this. >> it is not a rosy picture. an extreme position, does that make it a longer time? collects some white house folks, their story is this is the opening statement and what would be a long and tortured negotiation process between the white house and congressional republicans and maybe even some democrats, though that is fairly unlikely at this point.

there is a sense that the white house just wants to take the wheel because they believe the failure of health care the first time around was due in large part to congressional mismanagement. crossing their fingers, hoping they hear nothing on the following, border adjustment. is that dead? we have heard pretty much nothing on it for quite a bit now. is it dead as far as you are concerned? adjustment isder on life support. i still think the house will at least examine the concept. the white house will not come out with any ways to pay for these things. therell have leadership and by that i mean that headlines are possible. of the story, in d.c., having a plan is better than not.

the house blueprint is the only plan as a stance at the moment. the market should be ready for the headlines to persist but border adjustment is absolutely on life support. alix: we saw companies that have high tax rates, versus the s&p, that rolled over a little bit. what still needs to be priced in where in the markets? oliver: that is a good point. i can answer your question in terms of where the companies are, relative to the s&p 500, if the line moves down, it means the s&p 500 is catching up right in november. basically at the numbers we were pre-election coming up a little bit but ultimately that was a big part of it. the border tax will be huge not just for retailers where they have rally, but it could an adverse impact on , theytructure companies

said corporate adjustment tax increase revenue. the chilean dollars a got a phone excited after the election. very specific language for sure. jonathan: i am try to gauge where expectations are. 15%, it will not happen. we just need something. is that the case for a lot of people? it feels like the way ,arkets have generally reacted as trump's policy has started to come out, any kind of sign they will move in the direction of that language will be put forward positively. trying to figure out what exact rate they want, 15 has been the number floating around. they will see something conducive to lowering the tax rate on those companies, we looked at it as banks and insurers benefiting from the tax

cut and that will be good news i think. a question, poignant correctly that working on the , they'rejustment tax are going to give that up easily? is a big event and it will be interesting, but the sugar high from the headlines will subside and then we will have a nagging headache coming that we doalization not have any clarity on procedure, which is also very important given the joint committee on taxation yesterday that really underscored reconciliation without it being budget neutral would be very difficult if not impossible. let's talk about that.

if you wind up having a tax reform not what we expected, not 15%, how much is president trump wanting on the dollar? how much does he want you to be spending? numerous estimates actually come out to come within close enough to pay for some of these tax cuts. the reality is i do not think we .ave come anywhere near 15% be prepared for 25-28% with the potential for the deal to go into 2018, but it will likely be retroactive this point. alix: they were assuming a tax rate of 31%. this is 38%. point. is an interesting

sayingave been companies this would happen to our bottom .ine if we do tax rate x or y the strong focus on numbers has also trickled into estimates -- cally having the trump trade basically stalling out in the past month. there is definitely a turning point in terms of what will be driving the markets. financial reform as well as tax reform as well as tax reform has definitely been what is on everyone's mind since the election. votehan: the house care and now this, if it does not happen, markets will selloff. >> you underpromise and over deliver.

>> thank you very much. you will be sticking with us. jeff will be joining us to talk about commodities. later, an important conversation with the second-largest public , cio from new york. this is bloomberg. ♪

>> shares of twitter are surging in premarket trading. third decline since it went public in 2015. the number of monthly average users rose from a year ago.

trying to -- trying to undercut on price, competition from so-called sustainable projects. helping mexico maintain grace despite demand. --st-quarter earnings did defeat estimates. -- that is your bloomberg .usiness flash alix: moderates are still opposed. where'sth us from d.c., the health care bill right now?

>> more moderate members of a republican house caucus to move forward on health care deal. it is important to take a step back and underscore what the driver of this is. intent on moving the ball forward and getting common headlines before we hit the 100 day threshold. alix: fair but if they are still an agreement, they are still an agreement. >> i once again caution i will not believe it until we actually see it. it looks like we have a shift decideallowing states to more regarding the insurance

waivers,ns, federal and they would still be mandated to cover pre-existing conditions but they would allow -- be allowed to charge more for it. these steps to the right will secure the freedom caucus. right, it step to the becomes incrementally more difficult to pass out of the senate. we willoking likelier get a health care bill out of the house in the near term probably not this week but i expect this month. the conversation starts again all over in the senate where we have completely different dynamics in play. simply's taking it over to the state and if you lose health care coverage, it is not our fall but it is the state's fault. think there are reasons tax reform and a health care reform

needs to be done before tax reform from a budgetary and baseline standpoint. there are reasons why most of the folks on the hill want to get this passed us and as they can and move tax reform p are the health-care debate is about taking something away from people. aboutform debate is giving people more money back. inherently, politicians would rather focus on the latter. >> what do they bake in for savings? see him much money we can save from obamacare. how do we know how much we will save? .> it is a great question the staffers i talked to are in to what thest as guideposts are. they are out in the woods and , a handbook, a way to get back to normalcy. viewpointo get some

on the way things are going. i do not think staffers have a concept of what the baseline will look like and i do not think the house really cares right now because there is intense pressure to just get something, anything, through the house as soon as possible so the president can pound the table about it on saturday. alix: the rhetoric in the market is if we did not get health care reform, tax reform is a table. record highs for the s&p and the nasdaq is over 6000. does any of this matter when it comes to investing, when it comes to the underlying growth and earnings of companies? >> at the moment, no. there will be a moment in time when the market breaks and we have the separation of wall street and washington. what is intriguing to me is secretary mnuchin who runs the treasury second -- treasury department says repeatedly there market to be a

administration. i think that is important and it underscores my belief that with every negative headline we will have, we will have an administration on the other end pounding the table and saying don't worry, we will pass something. it all tells me it will be volatile for the end of the year. >> thank you very much for being with us today. we will have josh, president and friday, -- live in new york and washington, this is a work. ♪

jonathan: credit suisse has announced a plan to raise $4 billion. a partial ipo. francine lacqua spoke to the ceo

about capital raises. we are quite pleased. it is something we got right. a bit of a shock for some people. race one, and the many times, refusal and 17, a we have the ipo as an option to do that. it was something entirely under our control. proven the value of the concepts. we feel now we have accomplished for five quarters, we race $7 billion last year. we believe we have been so the proposition

and two, raising taxes as we discussed many times. a broad range of outcomes. oroving that in the december january, we can now look at capital planning. had nove always .ownsides the core strategy. >> would it have been more complicated? >> if you need capital, you need

capital. huge improvements. prepared to be ipo's. we did not lose anything by preparing for it, and now trade twice, we keep flow.f a cash for $4 billion, joining us now for more on credit suisse, the bloomberg gadfly column. i love the headline. give thanks for macron. >> this is a good window. i am not sure if marine le pen would come in and the first round and would be seeing this reaction on the markets.

it therefore helps push along plans like this. it is a market friendly solution from the bank. a pretty lucrative unit and the shares are up to date. >> as you point out, in the middle of market expectations, talking about the impact, where it will be from here. >> if this works, theoretically, -- deutsche bank is looking a lot stronger as well. skeptics will say this only gets them so far and does not really give them much room if there is or kind of unexpected shock

disruption. deliver.ressure to cash payday -- paybacks to investors. road. or two down the it has been two very tough year's your straight. losses are on track, the execution, and just about .eliable tracks record that is to change. jonathan: coming up, insight in commodity. global head of commodities research. you are watching bloomberg. ♪

jonathan: you are watching bloomberg daybreak. i'm jonathan ferro. nowhere.ost down by almost 10 points, not even 1/10 of 1%.

after a couple of days of gains, if you switch of the board of 230 yesterday for the first time in two weeks, we are unchanged today on the 10 year. the euro a little softer on the four-day winning streak. zero .28%. the top. you >> president trump says -- in the supreme court. ordereliminary court blocking the edict that give save hardest one documented immigrants. circuital by the ninth court of appeals will restore the president's travel ban. the military in china has launched its first ethically built bluewater navy, capable of going well beyond china.

in the u.k., prime minister theresa may faced off during the prime minister passes question time for the last time before. >> every vote for him is a vote proppedalition of chaos up by limerick -- liberal democrats. is a vote for me strong and stable leadership in the national interest, building a stronger and more secure you just for the country. meanwhile, he says she and conservatives only look after richer people. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: we're are waiting for 1:30, the announcement between mnuchin and cohen.

what is the impact on various asset classes? and now, commodities. when you getffect the number? to think about where the probabilities are and the reform coming through and what it looks like. tax cuts are just a lot easier than tax reform. the administration said they wanted a stronger dollar, which means the border adjustment test becomes a lower probability. that has a big impact on oil. what we have seen the administration do is more targeted commodity by commodity like the lumber issue in canada yesterday. and on that, steve mnuchin is joining the hill for a one-on-one conversation and we want to listen in for a second. >> there are many aspects we like and things we are concerned about. we do not think it works in its willnt form and we

continue to have discussions with them about revisions. where we are and it has been productive discussions. >> just between us -- >> mliv tv -- >> will you say whether this will be legislative tax or not? >> our objective is we are coming out with principles today and we will work closely with the house and the senate. we are meeting multiple times with them to reach an agreement that will turn into a bill for the president to sign. to have aive is combined plan coming out incorporating the principles we all agree on. >> it has been reported the trump plan lowers the rate. i will not push you on those

specifics but how do you pay for that? >> i am not going to go through the 15% highly now in the press for the last couple of days. i will confirm the business tax will be 15%. that is what the president said in the campaign. he says it is critical to drive growth. people talk about this and what we think is important is small business. committed small business will have the benefit of the business rate. the loophole paying 15%. this will be for small businesses that drive the economy and they will have the benefit of this. >> are you sticking with the except for the wealthy? >> we will get into that for the

details when we release the plan later today. simplifyinge is taxes. most think they'll be able to do that -- do their taxes -- numberpleased with the of returns coming in electronically or we think it is terrific. the average american should have simple taxes. for the large part of people, they won't be paying taxes. there will be personal exemptions for people who cannot afford it won't be paying taxes. >> initially saying you wanted to get the bill to the president's's desk by the weekend. you are looking for the house to past by the august recess to show movement before lawmakers get out of town? >> the commitment that came out of the group last night is we want to move this as fast as we

can. we are committed to working, getting everyone in the room, and getting this past. that is what you will see that we are working hard to get it done quickly. in terms of economic growth, the president and i and others fundamentally think we can get sustained economic growth. it is very achievable and tax reform is critical to it and regulatory reform is crippled to it. we have worked hard on the president's's executive orders and we are focused on creating economic growth. >> in that growth would pay for the plan. passing thisfor bill, tax reform has not been done since 1986, a bipartisan bill. >> it is about time. >> are you viewing that as the model or are there things in the or do you think

mostly republicans will have to unite to carry this across the finish line? >> we don't start out with what the model's spirit we start out with what we think should be passed. i am hopeful democrats will work with us on this. these are tax cuts that are good for the american people. i hope they will not stand in a way of creating tax cuts for small business and making business competitive and symbol find personal taxes. bipartisanful it is and there are multiple ways of doing this and the president is determined that we will have tax reform he called me at 7:30 in the morning and we went over plans for the day. >> how involved has he been? >> very. involved in the economic policies for over the last year. he has been very involved and we spent a long time yesterday with him in the oval office going through the final details of the plan. that was steve mnuchin

joining the hill for a one-on-one conversation. got.is what we have confirming a tax rate of 15% is what they will put out there, and they are trying to move as fast as possible. a 3% growth rate. you see tax accountants all of the world saying no. quite sweet had not had it officially before. interesting,ng is yes, pass -- they apply for small businesses but we will not give loopholes to people. it is one of the criticisms of the plan that candidate trump put out on the campaign trail that they are really taking to heart. alix: you were just getting into what tax reform meant for energy. classic goes to the point i was trying to make, tax cuts are far easier to do than tax reform. of 15%,d a confirmation which underscores that they feel confident in tax cuts but the

loopholes become a lot more difficult. he goes to the point of the other question, which is how do they fund this, which has a big pat -- impact on energy, the border adjustment tax. , the othernt was issue, that so far, it is short on details. the administration has reiterated this view that it does not want to see a stronger dollar and the border adjustment tax would create a stronger dollar. a higher probability of a reform, as opposed to a sweeping border adjustment tax. we look at the probability is relatively low. this brings us to our outlook on the market expectations are low. if they just achieve something particularly after the health

care bill where they did not achieve much, if they could push through confidence in the market and show details on this, we would see gold selling off on this. pesoook at say the mexican being a measure of trump trade, it is giving everything back. we were up close to 1300, 1263 right now here in a lot of that was the french election. gold, ift is 1200 on you see more confidence in the administration. alix: you mentioned the border tax adjustment and you said you were iffy on that. what does it do for actual oil prices, but the correlation between dollar and oil is pretty much flat. it used to be deeply negative and now it is nowhere. why has it changed? >> if you go back to when the correlation began, it started in

2003. what happened in 2003? emerging markets started to build access. opec companies got rocked with 32. of extra revenue went into the savings and it put downward pressure on the u.s. dollar as well as on interest rates and credit spreads. that is a lot of capital that made it into the market unexpectedly. in 2004, they thought would mean back to 22 and 23 and it got rocked with 40 per barrel. now $20 per barrel savings. until 2014, at which point it reversed. a plan for 97 and they get rocked with something around 70. they plan for 85, revert back to 100 and cap rocked with something around 50. what is changing right now is they are planning for 51 and getting something close to 51. it reduces the amount of excess savings in excess borrowing hitting global financial markets

due to oil prices and as a result, we are seeing correlations not only with the oil dollar, but all across assets and commodity, and all of these correlations. that is one of the key reasons we advocate that the strategic case for only commodity as a diversified asset is going back on that. not only is it based upon demand, there is a strategic reason why you want to own a commodity portfolio. >> where does the longer term stability and price come from? is that shale? >> absolutely. this is the first time, and if we look, i like to survey our clients about where they see long-term oil prices, it is the first time in 15 years there is a consensus in long-term oil prices. >> we have a chart to prove it. you can show what you mean and what we saw in the previous years. >> no one will argue that shale

is not the dominant technology. the only debate we have right now is how much does it cost to get shale out of the ground? you can see in the picture here, 2017 is the distribution of all analysts out there in terms of their three year ahead forecast. you can see distribution is the tightest it has been since you have been surveying analysts. and 2007.08 that is 180 at the top here the distribution now is roughly 45 at the bottom and somewhere around 80 at the top here a substantial shift in the distribution of forecasted oil prices. there is a lot of confidence in what the technology is. back in 2008, we did not know if it was in brazil, and shale was barely known at the time, so the technology uncertainty is what created the fivefold increase in prices. it is now just basically the cost of producing sale -- shale.

does this mean we do not have concerns going forward? out to we think the returns for oil will be great but it will come through carrying and not through price forecast. if you had told me in 2001 oil prices would go to 147 per barrel, i would have thought, best returns ever. they were actually lousy. you look back and the best returns ever from owning oil were in the mid-1990's, when you have a time similar to now, where we would never talk about long-term oil prices. where did the returns come from? a positive carry. demand on aing that one year horizon, supplied these markets on a 10 year horizon. we are anchoring long-term oil prices. surveyagree the strong

data we have seen recently is going to materialize in strong demand for commodities, that means the front end of the curve goes in the backend. that is what can ultimately generate returns. the price appreciation has to come through the front end. -- go back to 1996,

modearket is in status quo

>> coming up, we're joined from 7 a.m. over the short-term, oil dominated by the opec meeting in just a few weeks. prices a little softer in the last few weeks, saying there is a general consensus that the supply should be prolonged. they will talk to rush at some point and see if they can get a deal. do we get an extension of the deal? >> the probability is relatively high. technicals are weak and markets are wearing thin on patients.

to gauge --ying engage the market, there is a probability of that happening. if you look at the scorecard, you will get there and you will see it. even in the u.s. where we have a strong survey data, better hard data. economists think consensus is 1%. in terms of looking at global demand indicators, china had data last week and we don't see the weakness in demand and concern being there. the other thing is opec and russia. the third issue is u.s. shale response. 180expectation is take out barrels per day. that is still not in the markets.

we are only in april right now. >> do we run a risk that they look at global inventories and say we have got to extend the cut? around that. >> when you get to the point that they have the rollover, where do they rollover, they did this in 1998 and 1999, so the -- all of a sudden, you start to see big draws and they start chasing the markets higher. historywe will see repeat itself here. you are seeing it. you have all of the stories, the wti contract, it will be the last place in the world you see it. the point about patients is also where are you looking.

i will not deny the market is wearing thin. china got some help on the numbers from credit. what happens if that turns around in china? >> i would argue a lot of the credit growth at this point is much more organic. if you go back a year ago, absolutely there are policymakers pushing the credit into the system. policymakers are trying to slow down china right now. if we go back a year ago, they injected credit and changed the way they did it. the second thing is they cut supply. supply, they did it by reducing the hours of work and this created a rise in old economy prices. steel, iron or, and so forth.

these prices went up and it pushed the ppi. dide was a second round we not understand until let's say around july, which was that it reduced the number of nonperforming loans a lot of those were in steel and other old economy industries. nonperforming loans decreased and the balance sheet capacity on bank, they started lending more such that this virtuous cycle -- cycle that was created by january and february of this year led to enormous credit numbers. one less argument people will make is yes, the credit is up but prices of iron or steel and aluminum so far much higher. it is a good point to make. raw steelt look at demand, it is up and not declining. expansion is out running by a long shot the gdp growth. that cannot sustain forever. >> one point we like to make across all of the economies around the world, is the best

way out of a debt overhang is through growth. we see that around the world. if we get growth up, you start to a road that overhang. the trade-off between they do not want to shut that down, is solid happen in europe in 2011 and 2012. they are very conscious of the trade-off that in growth, you need it there. >> i will ask a dumb question as we wrap up. if we do not get a deal, what is the downside and what is the upside risk. look at the market and ask how long is it, we put it around six or seven out of a scale of one to 10. it is on the medium side of long. depending on how negative they would be, 3-5 dollars per barrel. in terms of the upside, we would , let'sur base case is 59

call it a 55 and 60 trading range. a substantial upside giving -- given we are trading at roughly 4950 right now. in terms of financial upside, that is not where the focus will be. our focus is on the term structure. we do get the upside but it will create in these forward curves, that is where -- alix: great to have you. to see you, head of commodities research at goldman sachs. jonathan: steve mnuchin speaking ahead of the reveal of the tax plan. he confirms it will be 15%. joining us around the table is michael mckee. 15% is one headline. the other, president trump approved the nomination of the vice chairman as well. >> we expected the fed nominee

for some time. probably not a major surprise that it is finally happening. fedquestion will be how the if itagainst any tax plan creates inflation expectations. for thequestion administration is how they will pay for the tax reform. cannot besays it done. cannot get through congress unless it is paid for. we have heard from steve mnuchin and others, the president seems to be saying we will run a big deficit. hoping they will be able to create enough growth, which has never happened in the past. 15%, that is what they want it to be. how much of today passes announcements will be an initial starting point? >> that is all it is. the interesting thing is the idea of pass-throughs, the small businesses he was talking about but also trump's business.

hedge funds and law firms and all kinds of people whose income basically comes from the revenue of the company and it will be interesting to see how they keep hedge funds out of this. david: increasing portions of prisons -- of business income's overall. a large portion of income. >> and the question is how do they separate that out from a guy who runs the dry cleaner or the nail salon or something like that. coming up next, the cio from new york city with full coverage ahead of the big tax. you are watching bloomberg. ♪

♪ jonathan: the treasury secretary promises the biggest tax cut in

u.s. history. this this rates will be 16%. the nasdaq hits 6000 points for the first time ever. will quarterly results justify the optimism? the thirdlion become major european banks is sell shares so far in 2017 alone. from new york city, good morning. a warm welcome to bloomberg daybreak. task cuts are imminent. the plan coming very shortly. full coverage here on bloomberg. full coverage of that and the market open 30 minutes away. positive not even a single point p are we just hit on the s&p 500. very quickly, treasury unchanged. 233 is your yield on the u.s. 10 year and the dollar-yen creeping higher once again. a weaker japanese yen story continues in that currency pair. now, get you some movers

here is alix steel. alix: all about twitter earnings. the average move is about 11% when you have a surprise on twitter. this is not particularly out of the ordinary. the company beat on the top and the bottom line. estimates coming a little bit below what analysts had expected. a monthly active users up 6% daily, up about 14%, really helping to offset the one big never -- negative headline. in other news, check out .hipotle up sales of 18% last quarter, also able to announce its first price .aise the company has not been able to surpass that since march of 2016. deals. include other

and a bunch,venue over half, is sold through retailers. was steve big news mnuchin giving us a preview of the trump tax plan coming up later today. here part of what he had to say in an interview down in washington. >> the biggest tax cut and the largest tax reform in the history of our country, we are committed to seeing this through. >> joining us is michael mckee and from washington d.c. c is bloomberg's chief washington correspondent. it will be big. give us specifics. >> he confirmed the 15% corporate tax rate that donald campaigned on will be the proposal they put forward. -- small business hedge funds, law firms and people like that, people who get the revenue -- who get their pay

from revenue business like donald trump, would be 15% as well. offered no, he specifics and the big question he did not answer, and he was asked how he would pay for this, paul ryan dropping strong hints that if it is not revenue neutral, it will pass. a big problem for the president. steve mnuchin has suggested they could get to revenue neutrality through growth. that is never happened. >> exactly. and steve mnuchin went back and said we are convinced we could get to 3% or greater growth. we hear from the white house that it is all about growth and not about deficits and we hear from the hill that it is all about deficits and not about growth. how do you reconcile those two? >> an interesting question. the laffer curve, you will remember. the late 1970's and 1980's, he supposedly sketched it on a

napkin. he does not remember that. that is the amount of tax revenue you collect for a given tax rate. his argument was by cutting taxes back, moving from right to left, you could get more tax revenue. the problem is we do not know what the optimal tax rate is. we do not know where we are on that, so you cannot say for sure that you can achieve that. >> the other problem is this is the rake in theory. >> that theory is not wrong. what happened to deficits under ronald reagan? >> they went way up. what happened after george w. bush cut taxes, you can see when we had the government surplus, a big tax cut from the bush administration and they go down and government spending continues to rise and you have a wider deficit. jonathan: the reason we don't talk about it, it was out of

textbooks by the time i got there. a lot of people did not think it worked. >> the theory is correct, you just do not know where it is or how to model it. in the general sense, it is cannote but no, you generate enough revenues by cutting taxes to pay for taxes and it even laffer admits it. you can get part of it back. the former chief in the bush administration, said you could of tax revenue% you have lost. >> what is left to be known about this plan now? it strikes me that steve mnuchin runs out and he starts giving specifics. what else will we learn this afternoon? details pull up more about what will be included trumptoday when president

announces his tax plan. he will cut the corporate tax rate to 15%. he will also call for a repro repatriation tax, and the no border adjustment tax at least in its current form, and that is the caveat, because while they have said no, and we heard this from state secretary mnuchin, in which they said the border adjustment tax in its current form does not work, but what exactly the form is that that takes remains to be seen. a lot of folks here are keeping their eye on that one. >> what will we hear from speaker ryan? be toill their response the plan? >> later tonight and this evening, the entire house freedom caucus will have a health about not only care but also tax policy and it comes following last night when top members met on capitol hill according to sources to talk

more specifically about health care. they will broaden out the coalition later today. sources i speak with signal it is the senate if you take a step live from the house for a second, that votes in the senate, the border tax votes are not there amongst republican caucus. all of this might be putting the cart before the horse a little bit because it will take several months to say the least. >> thanks so much. we will come back to you. >> democrat hawks. joining us now on set is the cio of the second-largest u.s. pension funds. great to have you with us. 10% repatriation of foreign earnings. no border adjustment tax. what will beree, the most important for the u.s. economy? all talk right now. the most important thing will be action.

later this year, the market is going to react to this news. it did yesterday. but that is short-term and i think long-term. i will not get really excited about this one announcement. there is such division in washington that it is tough to see, what do we ultimately end up with? the most important thing is corporate followed by personal income taxes and capital gains. , which isis all talk cheap. let's see the action. we have been optimistic but even so a lot of wall street people are down in washington dc, it will not operate like new york. it is still washington and it is somewhat dysfunctional. alix: ok. but to your point, you are $200 billion asset under -- under management. but when you look at the markets, rank of america said it well. the rate markets say tax reform

is dead. at the markets near record highs seem to be saying the opposite of how do you structure a portfolio to accompany something that theoretically does not make sense? >> and you see that division frequently between equity and debt, equity tending to be more optimistic, and that frankly tends to look at the downside. we agree on the debt side right now. they always want to be the winners, but i think we are last optimistic. more cautious in december when everyone started rallying and getting more excited, we cap guyng this is a real estate p are lot of talk. let's see the action. we will take the long game. we are taking profits and rebalancing into global. we will not bet that rates will drop. we think the rates will slowly climb as they reduce the balance sheet. all of this is very exciting for

us. we are at all-time highs in our in our portfolio. we are not willing to hang in there all the way for the long-term. >> a lot of portfolio managers say growth is so great for earnings. is your decision to pare back equity exposure in the u.s., our fundamentals not holding up or is it a relative value you play for european assets for example? >> relative value play. we take a lot of the earnings and i wish we could stop watching so much. the washington people are nice. paying more attention in corporate earnings. .hat is really the foundation earnings will remain strong, the 55% in the u.s. equity market he -- equity market. not a lot but buying in and we

think asia and the pan are making changes. others.e >> speaking of growth, steve sustainable growth. if they could achieve that, what would they do with earnings? exit would be right on. is sweetlation rate music to most of the corporate ceo's. to get to thatat level. what they arelly talking about in washington. >> the tax code is such a powerful lever. tweaking that a little, it is time to go back to the 1980's. the laffer curve worked in 19 84

and 1982. again, it is a lot of talk right now. let's see later this year and this summer, i will come back and talk about what did we actually end up with? what did we end up with? jonathan: we will dig into the strategy a little bit more. to fixeds dedicated income. this friday, every friday. do not miss that. from new york city as we count you down to the big tex reveal, you are watching bloomberg. ♪

>> still with us is the second-largest u.s. pensions fund. you are a big investor. let's talk about your business and how you run your business and what is changing. you talk about for example hedge funds. not so enthusiastic. >> it is diversification. it is focused on the cost. ,e have an awesome equity trade giant fixed income trade and looking for ways to bring in private assets and syndicated with other pension plans. plants meet with ontario to talk about ways to joint venture and work together. >> when you talk about fees, it draws us in the past recession

session. how much of your funds at this is passive? >> we are heavily tilted toward passive. 70% passive and -- the management has struggled over the last year. when you net the fees, they have underperformed. retailers are waking up to that in the market. i think asked -- active management is at the risk to operate. they are in the struggle right now. >> we hear across the country both public and private, a lot of pension plans would have a tough time meeting. was a net outflow of 97 billion or something like that last year. are you struggling to meet those obligations to the pensioners? not at all.

63% funded but think about your mortgage. you will pay that over 30 years. if you measure where your mortgage is 10 years in, you have a big unfunded liability. a 30 year rise in pension plans. we will be fully funded and that is our plan. of liquidity, we have got it made. plenty of liquidity. illiquid investments. we have a negative cash flow. we pay out more pensioners then we get in. assuming inyou touch in terms of that time? as a low number. you have got to look back. the 1980's, the 1990's, and 7% was way too low. i think you will see when we teens, we will find equity returns is around

8%, averaging more already. >> why getting into the 80's and a 90's? >> i am looking out 30 years. i go back 160 years to the 1840's and i look at the equity market. that is our forecast. with the innovation that happens in america, structure and governance of america, we will see equity returns over the next 20 years. 1950's,80's of a 90's, the best decade ever, i'm giving you a history lesson. theou see something like 1960's, the 1970's, 1940's, a higher return on equity, all we need to make that 7%. what do you say to the crowd of low rates and low ?eturns, a structural shift >> i say you guys have been telling me that for the last decade and i have averaged over it percent in the last 10 years.

low rates are historically and we are very low in fixed income and we have only got .bout 15% in the fixed income we are finding ways to diversify in equity. >> there are really major structural factors, demographics , and 70's. productivity seems to have leveled off and they do not see where they have come from. >> productivity is challenged. that is because we are seeing the innovation. innovation in terms of improvement and technology. is other thing i will say the baby boom is retiring. the millennial generation is bigger and they will have a way through the economy. jonathan: something else that is , 200 billion makes it

difficult? >> there is a positive and negative. there is a challenge. we cannot be nimble. allocate money to one area and money, bute too much the fact we have got size and the ability to talk to people directly, we use our strengths to our advantage and minimize our weaknesses. jonathan: i can see how to negotiate fees lower, but i struggle to see how to generate more returns. , -- your basic assumptions doing is more beta and less active management. we will not try to time the market or find a particular manager coming up. we will own broad swaths of the market.

as challenging as it is for me, my friend runs in japan, one .4 trillion, you are a rounding error to him. alix: oh the problems with 200 trillion. up in the premarket after earnings, a technology analyst has a buy rating on the stock. he will dig into earnings with us. this is bloomberg. ♪

alix: chris, yesterday, casters voted against wells fargo. how active are you and corporate governance right now? twice a very active and we have had a lot of discussions of wells fargo before the meeting talking to them about changes and their internal control and the meeting yesterday i think should be a huge wake-up call to the board.

anybody that was below 60% or at .t should take steps we saw that in manhattan back -- manhattan bank a couple of years ago. everyone got approved and after they reflected on their vote, to step down. >> some reforms on capitol hill might step act. how do you feel about those? crazy.ides us quays -- it drives me knots. the hill wants to take a bulldozer what -- when they should be making subtle changes. you do not come in and destroy your garden. dodd-frank is not perfect. it is huge. it only needs a few small corrections and they are talking about destroying shareholder rights that even the fcc agreed within the last five to 10 years. basic stuff in terms of shareholder activism, fair proxy voting, continuing to regulate private equity, things we think have to stay in the bill. if you will increase

your allocation to funds, how do we put the pressure abroad in the same way? >> i get to sit down with ceo's is and say we will on your stock longer. we are the ultimate long-term thinking. >> as long as the company realizes where they are, are they going to respond to you? they know it will end up in the stocks of the company because they have to be. to get not get a chance into discussions of active and passive. i have to win them over that we will not vote with their feet. we appreciate that we think long-term. not somebody coming in talking about the next 90 days of corporate earnings. be thinking about this over the next five to 10 years. not enough management does.

david: what is the one thing that really tries you nuts? back some of the rule 40 four, changing up the proxy voting capabilities so a board that has a contested proxy fight -- investors do not even know what to vote. it makes voting harder. >> coming up on bloomberg daybreak at the opening bell, we are counting it down to three minutes and 40 seconds. futures going nowhere. you are watching bloomberg. ♪

from new york city, i am jonathan ferro. moments away from the open. 22 seconds away from the cache open. futures are positive. we are up like eight points.

futures, we go nowhere. the headline, treasury secretary says we are about get the biggest tax cut in u.s. history. switch of the board. as we countdown to debate tax plan reveal. the yield on the u.s. 10 year -- a stronger dollar story emerging. a weaker japanese yen, capturing the reversal of sentiment over the back of the french election. so there are the scores across assets. another record intraday by nasdaq, up by two points. the s&p 500 slipping into the negative territory but still a stone's throw away from its own high. much softer follow-through. we had a whopping 448 point gain over the last two days for the dow. theas the first move since 1% of moved since the election. so some calm and quiet into the official announcement of the tax

plan. earnings are key to what we are seeing. pepsi go by 2%. andeat on earnings reaffirms the full-year forecast but the level was below consensus. the cfo warned of margin compression in the first half of the year. boeing, a little good and a little rocky. beat estimates. the fewest jet delivery since 2014. and united tech, a profit of 18% with a boost from european elevator sales. that it offset weakness in china. boom is the last time you heard that? china? sales versus but the big story of the day is twitter. up 40% year on to your. active user growth growing by 6% year on year. 8% off the open. but revenue is down.

jonathan: let's get stuck into the numbers. rich greenfield is one of only five analysts on the stock is a buy rating. also with us is dani burger. begin with you. talk to me about the most important data point within the earnings this morning? : when internet company start to fall, they tend to disappear. and i think you have seen that trend historically, when you look at the usage and engagement. going back to the days of myspace and aol and yahoo!. you can see it is very hard to reverse course from a user standpoint. twitter is bucking the trend. it is why we think your viewers need to own the stock. ,his is a great recovery story they are making the product better. more people are using twitter and they are spending or time on it.

is 40%duct changes, this of the users testing this out and 60% coming back the next day. so the product changes are actually making a difference. and the news and information, news ratings on tv, talk radio or newspapers, everywhere you interest in news is surging and the best way we see to play that is twitter. jonathan: that is if you have faith in the twitter management. do you have faith in that? we haven't liked this stock since the date went public. we didn't think people should own this stock and we were concerned about the ability to execute. i think they have a plan. i think the plan is starting to work. it will take time for the revenue and profit to filter through, but i think you can see the early signs. the fact that usage is growing in the u.s. -- above the 40%

daily growth. thefact that you -- above 14% daily growth. thinking about where advertising can get to as you move into 2018. so it is definitely early and it will take time for the management team to prove themselves. it as you pointed out, people hate twitter. investors hate this stock. investors have given up. there is a big opportunity for twitter to change the narrative or what it has been to where it is going. how are they going to do that? revenue, the first quarterly decline since going public. that isn't the headline anybody wants to write. likes the stock over the summer that everyone hated called viacom. the pitch with that nobody ever wanted to be on viacom. ratings were a disaster. that as thewas content gets better and more

usage goes up, advertisers follow. and that is the same as what you are seeing at twitter. advertisers follow eyeballs. as users grow, advertisers will come back. it is just a matter of time. you need to have six months of patients. it doesn't happen overnight. but the early signs, the outperformance in q1, in the first half, clearly better than people thought in total, it bodes very well. you have to have patience. as you look out, it could be a big winner. differencesig between those companies. one is the degree to which viacom is dependent on advertising compared to twitter. viacom has's instruction sales. and five come doesn't have competitors that are lapping them on the race track. they don't have google or facebook. so even while users are growing on twitter, they are falling further and further behind the dominant forces in advertising. what does that tell you?

in mobilee is a surge advertising. a shift away from life tv. live tv ratings on broadcast tv were down 13%, season to date. so you had a massive shift of eyeballs. they are starting to go to mobile. so whether it is the surgeon is or stock inbook snapchat. the secular trends towards advertising are encouraging. twitter is not facebook. look at the size of the company. a $9 billion enterprise company. they are benefiting from the same underlying trends. so i don't think this is an either-or. i think the sector is growing meaningfully and twitter will start getting part of their share as opposed to when they were getting wiped off the map, which isn't true. jonathan: i wonder what the

value proposition is. company's lapping them around the racetrack -- instagram came out with the monthly active users, 700 million. what can they do about that kind of competition? how can they go to add agencies and say, you want us and you don't want them. rich: i don't think it is an either or. they are a 70 plus billion .ollars being spent on tv eyeballs and attention to television are collapsing. you look across other forms of media and the attention -- the most important screen in consumers lives is the mobile screen. there are not that many ways to play that. they have to show that the roi is a good value and the fact that the usage is growing definitely bodes well for telling a better advertising story. twitter, it is worth pointing out to your viewers, twitter will hold its first ever

presentation on monday. they are literally starting to reposition the story for advertisers based on the new user growth that they have had over the last year. they couldn't tell the story of the year ago. they had weak user trends. and that is the change in the narrative that will start to translate into dollars and they will benefit from the same secular trends that it's a gram and snapchat are. alix: that has a big part to do with the streaming. that theysation is don't have the deep pockets that mobile websites and content websites have. they don't have as deep of the pocket as facebook. so they won't be able to compete on that level. what you say to that? rich: the content you have seen on twitter has actually been high quality. they have done a good job of dating high-quality. bloomberg is on in the afternoon and -- is on in the morning.

you have seen a wide array of high quality, premium content. ofre is an overall shift video content over to mobile screens. and they probably will not be able to compete with the current size and scale for the nfl programming, given the cost. but the good news is, the shift towards video is something they have done really well. facebook went to a consumer content is nowty going to a higher demand quality content. i think facebook recognize that what they were doing works well with advertisers. jonathan: live every morning. alix: a little plug. thank you very much. jonathan: rich greenfield. we do want to bring in dani burger.

points on the nasdaq. we went through that yesterday. a lot of you will talk about the tech earnings and whether they can justify the optimism in the prices. a restart and to see this come through on the earning side? one thing that is noticeable on tech, one thing you have to keep in mind is that when you think about what is keeping investors up at night, you think about policy from the white house, where that will go. you think about rate changes. the sector impervious to that is tech. we are in a strange environment, when you think of safety stock, you think of someone who sells diapers or a utility stock but it is more and more becoming tech he cut they are not sensitive like the banks are. and we have seen a lot of fluctuation there. alix: and also the issue is that 40% of the nasdaq is being driven by about five stocks. is that a good or bad in? dani: it is a great.

one chart i brought with me -- when you look at short interest etf tracking with the s&p 500 in the blue line, we did talk about this before. short interest has plummeted. that individual shares, it hasn't fallen as much, the white line. so the gap between individual shares being short and the entire market has grown which means that if you are going to etf, youst the s&p 500 are essentially betting against tech stocks. the three biggest companies in terms of gains this year. amazon, facebook, they have attributed a third of gains. so you are entering a weird time where there is pessimism on individual stock levels but you can't let that translate to shorting the entire market. david: there may be less downside risk from the trump administration but is there more upside risk in the form of repatriation?

is a lot of these companies are the companies that have a lot of cash offshore. happens,repatriation there are two outcomes. one would be the buybacks which markets historically like which could be a benefit that there was something interesting out from the imf report last week that said repatriation actually might make companies take more risk. they have more money and they onht be spending more capital expenditures. so that could be a negative for them. and these are global companies so we do have geopolitical risks. it is the domestic stocks that people will gather towards. rather than those that have their reaches into a variety of countries through the world. have record of 16 highs. facebook, adobe and google. jonathan: this is what it looks like this morning. stocks are pushing a little bit higher looking at the dow, i not

even three points. percent.en .1 the s&p 500 is pretty much going nowhere. city, this is bloomberg. ♪

>> this is "bloomberg daybreak." i'm here in the hp green room. coming up on friday, alan greenspan. this is bloomberg. ♪ david: i am david westin. steven mnuchin told us this morning that we can expect sustained growth of 3% or better. >> the president and i and

others in the administration fundamentally think we can get to 3% sustained economic growth. that is very achievable. david: economists are estimating a soft reading will be here the first quarter gdp numbers. joining us now is joachim fels. let's go backwards to the first quarter. what are we expecting them to get the read on friday? the first quarter was week so we are expecting a 1%-1.25% read. that there were a lot of runoffs. seasonal quirks and tax rebates -- rebates paid out later than usual. 3% plus it will get to but we think it will only be temporary. --would just be the cash up it will just be the catch up from the weak first quarter. what will be looking at? joachim: i think this is a

2%-2.25% growth year. be aboved actually trend growth. the cusp trend growth is weak. growth inu to slow the labor force. we have bad demographics. and we also have week productivity which is the legacy of massive underinvestment in the economy. rectifying that and getting trends and getting potential growth up, anything that the treasury secretary is talking about, it will be a tough order. you were in their shoes and that was your goal, what could you do? aachim: what you could do is really good tax reform. i'm not talking about massive tax cuts. lowers taxorm that

rates and abolishes a lot of the loopholes. the tax reform that brings a lot of the money that brought back. so i think that is probably the government could do. deregulation also make sense. ithave to be aware that takes measures -- it takes a long time to affect growth and there isn't that much that the government can do. in the end, a large part of this is determined by demographics. and again, provide productivity. there is very little about government and how we know how to provide productivity. thathan: is there anything would make you rethink the forecast for growth next year? joachim: if they really want to do a tax cut, not only tax

reform but a tax cut that raises the deficit, i think this could lead to stronger growth. the fed would probably react by hiking interest rates. and the dollar would probably appreciate. so i think it would be difficult to get stronger growth for longer. and even with the announcement cut, we heardtax steve mnuchin saved was the biggest tax reform in u.s. still doesl of this have to go through congress. and it is different -- it is difficult to see something that theot revenue neutral in current circumstances. so we make any big announcement today and they will talk the talk, they are talking a good , but they have to walk the walk. and there is a question on whether they are able to push through the reform they are talking about. jonathan: typically you go into

a process like this and you under promise and you overdeliver. you sit around with the portfolio managers at pimco, do you sense that this could be one of overpromising and under delivering? is pretty much what we have seen so far in the first 100 days of the ministry should. the administration has actually done a lot of things. and i would argue that is maybe a good thing. isetimes no policy action better than a lot of policy action. done atrump could have lot of bad things on the trade front. he could have started a trade front -- started a trade war. he could have slapped tariffs on mexico. also, on taxes, we could have seen more action on the tax front already but we are in this stage of the cycle where we don't need a fiscal boost. again, this will push up the

dollar. it will lead to aggressive rate hikes. provide under reaching. better.imes this is alix: what is the play? you now have breakevens for the two-year hovering over 1.6%. what you have a lot of live takedowns being really good in the treasury market. what do you do? i think you see some deflation of the reflation trade. if i look at this stage, and in terms ofed inflation, i think that is too low. tipsthink being overweight make sense because i think inflation will turn out to be higher than what is priced into the markets right now. also, you could argue that with --ed yields to climbing from , we bond yields declining

are looking for some increase in yields. we have a new neutral environment where he yields will stay low. at this stage, i think the markets have overdone the deflation of the reflation trade. so i think reflation is still the name of the game in the bond market and in tips. by the fact that the dollar has weakened and the trump administration is not interested in a strong dollar. at this stage, it makes sense to beoverweight and then to underweight in treasuries. alix: they do so much, joachim much,- thank you so joachim fels. check out tv on your terminal. this is bloomberg. ♪

big tax: all ahead, the plan reveal. i am jonathan ferro. let's get you up to speed on the market action. will two days of gains become three? 500 is up one or two points. on the nasdaq, we grind out another all-time high. another record high this week on the stock front. alix: talking about twitter. a big move today off earnings of 12% as the daily and monthly active users increasing reversing the revenue. the is the bad, but it is monthly active users that are willing investors. we see record highs in some of the big tech names like amazon and facebook and google. amazon is helping to lead the nasdaq to a record, the second-biggest point boost to the s&p today. amazon out with earnings on thursday after the closing bell. they got a downgrade yesterday from raymond james.

nonetheless, the euphoria that we keep seeing is pushing companies higher and this is without any of the details and confirmation of a tax plan of 15%. jonathan: do we have anything left for later? david: steven said it all this morning. alix: the point being, nothing is concrete. in retail outlows there are very happy. 26 minutes into the session. let's wrap up the market. and "bloomberg daybreak." we were dead flat in futures but we are marginally higher in the cash open. this is bloomberg. ♪

vonnie: it is 10:00 a.m. in new york and 3:00 p.m. in hong kong. mark: welcome to "bloomberg markets." ♪

vonnie: we take you from new york to london in the next hour and cover stories out of washington and zurich. here are the top stories we are following. mnuchin says the upcoming tax reform will be the biggest tax cuts in history. the statement is bold. what are the chances of it passing congress? mark: stocks are rising. credit suisse among the gains as they look to boost capital in fx, the euro and the pound both falling against the dollar. vonnie: the nasdaq hitting an all-time high. tech leadstocks and us high above the 6000 mark.