>> this is a disappointing day for us. >> i believe strongly in free trade, but it also has to be fair trade. the tpp is a horrible deal. my plan for the economy can be summed up in three beautiful words, jobs, jobs, jobs. north korea is a big, big problem, and we will deal with that very strongly. >> we will get tax reform done. >> my number one agenda item is taxes. >> how do we get economic growth? >> it is a hugely successful first 100 days. >> welcome to "bloomberg daybreak" on the evoke president trump's 100th the day in office. alix steel is off today. we have a great lineup to share thoughts on the first 100 days of the trump administration, including bob kimmitt and a

roundtable with tom--and trend locked together. daschle and trent lott. jonathan: very quickly, a big print in the eurozone, core inflation a four-year high. , up .6%.gh on the euro treasuries on offer at the margin. of the market action. let's get you up to speed on the top stories. here is emma chandra. emma: president trump warned there could be a major conflict with north korea if diplomacy fails, telling reuters the u.s.

would love to solve the issue peacefully, but said it is very difficult. at the united nations security council today, secretary tillerson will try to showed north korea the world is against it. in france, the presidential election is a week from sunday. at a rally and nice, marine le pen did not mention her plan to pull out of the euro, but said macron lacked french fry use. tell thes are ready to u.k. they are united when it comes to brexit. there will be a summit in brussels to discuss the uk's departure from the block. they will warned the u.k. against trying to create division. after anfell the most unexpected dip in fixed income

trading revenue. at ubs, shares surging after better-than-expected results and wealth management and investment banking. clients added $21 billion of new money, the most in a decade. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: president trump promised to repeal and replace obamacare. yesterday, that repeal and replace came back from the dead. here to explain is kevin cirilli . explain where we are. then: it has new life, but it is dead again. mark meadows said he believed the ultraconservative party, the freedom caucus, has the votes to

get through a vote on health care. then hours later, he backtracked and said publicly to reporters that he does not believe the entire conference has the votes. so we could see a vote on health ase, not today nor tomorrow, president trump had hoped to finish his first 100 days, but next week at the earliest. to get tobe next week the house, which is different than the senate. caucus is oneedom board, but moderate republicans .re weary this will go through a process known as reconciliation, then go to the senate, and that is where things get tricky. david: another one of donald trump's promises was to move forward on tax reform. he had a promise in his contract

with the american voter. we now have the outlines of a plan. how are they doing on that plan and how does it fit with the health care timing? kevin: i spoke with top lobbyists against the border tax. they did notgested have the detail to give them the closure they need. all of that said, the notion ism lawmakers and k street suggesting this is an opening bid in the corporate tax rate of might be raised in order to attract new sources of revenue should the border tax not the in it. the second point regarding ,ealth care timing, right now there are ways to get around that. that will be interesting to watch in the weeks ahead if they can slice and dice them to move forward.

taxes, first the house republicans, and perhaps senate republicans, how long is that process likely to take? will we see some legislative language on what is proposed? kevin cirilli the freedom this does not seem to bug these conservatives as much as health care reform did. david: pretty remarkable. withyesterday, we sat down alan greenspan in washington to talk about the path of the u.s. economy and how the trump presidency could change that path. dramatichether that tax reform outlined could drive fundamental growth higher. if you werebe

willing to make the cuts in social benefits, which would be required to fund the type of program he has put forward. it is also military expansion. a periodoing through in the last decade where the share of gdp going into the than it were the lowest had been. the budget outlook is not only a tax question, but also a military question. .rump has said both it is arithmetic. it is a problem. you get either a tremendous

reduction in some areas of the economy, or you get a very large budget deficit. the figures for march for example, which are difficult to seasonally adjust, are now showing a significant spike in the budget deficit. i think that is the beginning of a move which will take a long time. critical to is growth to have tax cuts, but not increased deficit, is it only entitlements that you get the money? what about tax expenditures? there are all sorts of deductions and loopholes and exceptions we can get out of the tax code, get real reduction in rates, brought in the face as they say, and still not increase the deficit. is that a sensible plan? simpson bowles was put

together to tackle this problem. they did precisely what you're suggesting, lined up all the tax expenditures and the benefits and brought the deficit down to normal. it had bipartisan support, probably could have passed the house and senate easily. not listenhe would to the commission he put together. that was the worst mistake i think he made economically. -- we had used up a lot , so we don'tews

have the capability to do the same thing now. we should be doing something like that. david: that was alan greenspan talking with us in washington. he basically said there has to something that is revenue neutral for economic reasons. he said if you run up a big deficit, you will tighten monetary conditions. the investorsink we spoke to this week are finding it difficult to believe that tax plan will become reality. if you are running the fed, if alan greenspan still ran the fed , i'm not sure he would provide any forecast. david: he is deeply skeptical, but also concerned with deficit spending could do. jonathan: i think that is spot on. kimmittoming up, robert

will be with us live from new york and washington on the eve of president trump's 100th day in office. this is bloomberg. ♪

>> i am emma chandra. moltkee bank names von ceo.

ubs wealth management tries profit. he told bloombergtv what he is concerned about. >> the biggest risk to markets issues,rgence of minor north korea, france, any geopolitical event, many macroeconomic issues, and they are all there. other, there is a chance many issues may crash. >> that is your bloomberg business flash. jonathan: thank you very much. dark place, dropping the most in barclays, dropping the most in six months. with the ceospoke earlier today. >> the corporate and investment

north of 8%,d rot 100 basis points better than last year. in terms of banking fees, mergers and acquisitions, debt capital markets, equity capital markets, we had a great first quarter. it is that best debt capital markets revenue number in the history of the bank. revenue, rates and currency come up we had a strong first quarter last year, and on a quarter to quarter comparison, we did not have the uptick that the u.s. banks did come up but in part that was because we had a strong quarter in the first quarter of 2016. we always want to do better, but we are comfortable with how we came out and the overall profitability of the cib is making good improvements and we feel good about the quarter.

in relation toy how your peers performed? you mentioned your strength last year is one of the exceptions. at deutsche in fib bank, 24% is the average among the top five in the u.s. are you happy with that? >> i am comfortable where barclays is as a competitive matter. investment banks had very down quarters last year in terms of the first quarter and recovered from a weak first-quarter. we had a good quarter in the first quarter of last year. we could have done better on the u.s. rates side, but we will not make any judgment on one quarter's performance. have you witht to us on the program. fantastic interview. the story is this tremendous outperformance in the united states on fixed income, trading

revenue. walk me through the explanation as to why they significantly underperformed year on year? fig revenue down year on year. 11% at deutsche bank. 24% up at the top five in the nine states. says this is about positioning, not about the franchise. he is downplaying the significance and says it is not right to judge this business on one quarter. focused on the overall profitability of the bank, which was up strongly. he wanted to sing the praises of debt underwriting come and he explained this comparison year on year with good comps in 2016, not something his rivals had.

the stock is down 5% or so. a man who has backed investment banking at barclays. he said this is an important transatlantic heart of the business that needs to be there as europeans are pulling back. you would expect them to beginning market share. jonathan: you would. let's talk about the man himself, questions about his future. the first time we have had an opportunity to ask him about it. what did he say? ande said he made a mistake was trying to protect a foldable colleague, this on his actions to unmask a whistleblower. he was reprimanded by the board for doing that. this is now in the hands of the regulators. he is limited into what he can say. he says he has support of the shareholders and the board. hasshareholder lobby

advised to vote against him, so we will see how the regulators come down on this. jonathan: frexit, brexit, he does not seem to be concerned about brexit. >> a different story with regards to brexit, u.s. and european banks talking about thousands of job cuts. he did not want to talk about any job cuts. he wants to talk about hiring in europe. ech is what on fint he wanted to talk about this morning. jonathan: thank you very much for that exclusive interview. the stock down 5%. coming up, we take you back to washington, d.c., the former u.s. deputy treasury secretary. live from new york city and washington on the eve of the president's first 100 days in office, you are watching bloomberg tv. ♪

combination of positives. my two words would be, economic symbolism and foreign policy symbolism, so the president has projected the power of the united states around the world, which is reinforcing to our allies and putting pain into our adversaries. economicates to symbolism, he has done a lot with executive orders. the combination of those two things, we both know the presidency, a good component is the bully pulpit and sending messaging from the presidency, so a message of economic leadership and geopolitical leadership, those two things are positive of about the first 100 days. he emphasized president trump's geopolitical leadership,

and goodness knows president trump has had plenty of opportunities already. joining us now is robert kimmitt, who served as deputy secretary treasury, and ambassador to germany, now senior counsel here in washington. welcome back. mr. ambassador, north korea is very much in the news today because secretary of state tillerson and president trump have been saying various things. white has this -- why has this moved to the top of the agenda? >> the administration has concluded that the situation in north korea presents a danger not only to northeast asia, but global security more broadly. what i like about the fact is they are moving beyond rhetoric to action, and the action is in the right order, diplomatic, economic, but keeping the military option on the table. the secretary of state will be

at the united nations today pushing on the diplomatic side. indications of tougher sanctions against north korea, but the military option is not off the table. .he chinese are key to this they are a permanent member of the security council and crucial on the economic sanctions question. is president trump making progress when it comes to the chinese? the last time sanctions were voted on, the chinese abstained. is that progress? >> the chinese often abstained. they abstain from the use of force resolution in the first gulf war. that is the way of saying we understand the need to move forward. one thing that might surprise your viewers, president trump inveterateas an telephone conversation this with world leaders as president bush, so he has had multiple conversations on the north korean question.

approachinge now the end of 100 days. give us your sense of for all about how this president is doing geopolitically and economically. >> i have been through five first 100 days. they are always bumpy, even for experienced politicians. president trump was elected because he is not a politician and filled his white house with people who had not subvert -- served in the white house before. next look forward to the 100 days and beyond, i think there are lessons learned and there is a developing momentum on the economic and national security side. david: talk about tax policy. we have been promised this plan. there was some criticism saying there was not enough detail. is that a fair criticism?

is this a sensible way to get things done in washington? to move a sensible way us towards action. in 1986, it was done differently then. you have to do it in the style that works for the political moment and the political leader. president trump is different than president reagan. it is not surprising that what we saw was putting out the key elements -- by the way, building on a tax plan that came out during the campaign, but the tax plan to came out, again, is an opening bid and will move the process forward. there has been detailed work done inside the administration. i don't think they wanted to put details out until they had a chance to start with the congress. david: they are starting that process.

has the white house and the treasury department decided what the important things are that they need to get? >> in that one page, you saw the priorities. what is this administration focused on? growth and jobs. economic growth and good jobs, especially manufacturing jobs. focused oneen results, not rhetoric. if you take a look at the part the mostx proposal, important part was harmonizing corporate and small business taxes. 75% of new jobs are created by small and medium-sized enterprises. that will be the engine. david: what does that do to deficits? baker and of jim ronald reagan, you had to go across the aisle. his president, even with own party, it does not make sense to go for it with a deficit-busting proposal. >> it cannot be a

deficit-busting proposal. you have to pay attention to the deficit. there has not been enough attention on what he is doing away with, a lot of tax preferences, even deductions ,or state and local income tax quite unpopular, so they have to find ways to enhance the revenue side. some of it will come to the economic growth and spurred by lower tax rates, but there will also be spending cuts to go with it and regulatory reform. in theis there enough tax expenditures to get it close to revenue neutral? we just talked with alan greenspan yesterday. of simpsonthe days bowles, it was true. today, you cannot get much money out of it. get think you can

considerable money on the tax side. you also have to take a look at spending cuts, discretionary and beyond, and couple regulatory reform that will unleash those businesses better job creators. david: can you get there without touching entitlements? i think entitlements need to be a dressed. i think you can move ahead on tax reform with the promise of then moving towards entitlement reform. you cannot get ultimately to long-term fiscal sustainability that taking on entitlements. david: thank you so much for being here. great to have you. jonathan: great work. let's get you up to speed on the market action. up,res positive, 13 points as well. we are set to advance for a second straight week. switch up the boards,

treasuries, what arranged through april, as low as 2.16, as high as 2.4, yields up a basis point at 2.3%. a slow grind higher in dollar-yen, a weaker japanese yen story at 111.37. the boj downgraded their forecast. out ofnflation print europe, up by .5%. we cross over for breaking news with david westin. david: gm earnings out. the stock is up because earnings per share were $1.70, beating $1.48, revenue also beat estimates. they had a strong quarter and strong truck and crossover sales in the united states, and did well in china. and is the general motors story. we will talk with the cfo of

general motors at 8:10 this morning. now that's good and update on headlines outside the business world. house leaders have put off a vote on repealing and replacing obamacare. kevin mccarthy says when there are enough votes to pass the measure, a vote will be scheduled. republicans had hoped to vote this week, but moderate republicans are still opposed. president trump plans to expand ,ffshore drilling today ordering the interior department to revise a five-year schedule for resuming drilling rights to open more waters to offshore rigs. will order a review of measures designed to prevent a deepwater horizon accident. british consumers have cut back

in response to rising prices in the u.k. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. jonathan: thank you. breaking a 20 year streak of double digit revenue growth shows no sign of slowing. joining us now is david kirkpatrick. great to have you with us. 20 years, walk me through that. through the emergence and society of companies that have this kind of power. this is a fundamentally new thing. the robber barons had big companies. google, amazon, facebook, apple, they are a new kind of entity and society and have figured out how to make their businesses grow. jonathan: maybe not plugging

everything back into the company , that was a while ago. what does the future hold? >> i don't think they are focusing on profits. they have $1.48 in quarterly revenue per share when their stock price is over $900. that is not a lot of profitability. .t proves they have the dial if they choose to turn it up, they could make money, but they are still plowing money into their businesses. their shipping business, where houses are growing all over the world, in a battle for market share in india, doing aggressive things to grow their business in numerous ways. you mentioned delivery , planes. how many have they got now? i wonder whether fedex and ups should be worried. than 10, basically

becoming a competitor to ups and fedex, the biggest client for some years am a so that is a big deal. what is worth noting, both amazon and google are so beautifully managed companies. they have a dominant position and are amazingly powerful, market-dominating companies, but the leadership is excellent. peoplen: a lot of talking about how amazon could change the landscape. what are your thoughts? >> advertising? jonathan: yes. >> you could make a list of businesses that amazon could transform. see amazon as the alteration for the future of advertising, however they have so much attention every time we want to buy anything that they are taking advertising revenue in some ways away from google

because when we shop, we all go to amazon first. that is increasingly a global phenomenon. amazon's sales tools are almost ads in themselves. jonathan: a lot of people talking about trump's 100 days. we thought it would be overwhelmingly negative for tech stocks. 5502asdaq has gone from two 6000, why is big tex still outperforming? are the most important companies in the economy. there is confidence in the economy, therefore these economies are doing well. jonathan: some headlines crossing the bloomberg, qualcomm cutting third-quarter revenue forecasts over a dispute with apple, the stock down 4%. talk to me about that dispute and how significant it is. >> qualcomm has a strong market

position in mobile technology, but when they have a dispute with apple, that is serious because apple is increasingly the most important company globally. they have the dominance in smartphones, and this is very profitable for qualcomm. they have been competing on the technology that apple is trying coreing more technology into its business. this arises from that. jonathan: great to have you. futures stable and positive in the united states, futures up 14 on the s&p 500, decent earnings from the tech sector. switch up the boards, treasuries, what a month, as low as 2.1 six, as high as 2.40. in the fx market, a big cpi print out of europe. .6%.uro stronger, up

a 2017 high for the euro against the dollar. newark city, washington, dc, you're watching bloomberg tv. ♪

this is the hewlett packard enterprise green room. marks --, powered powered marks, oaktree -- howard marks. 80% inital agrees to buy

the watchmaker breitling. atwould value the company $870 million. sony is forecasting its highest annual operating profit since 1998. it continues to dominate in gaming and shows strong growth and phone camera chips come of validating the turnaround strategy putting less emphasis on consumer alert tronics -- consumer electronics. bombardier ofsing of certainly low prices. trade tensions have been growing .etween the u.s. and canada the u.s. impose duties on canadian lumber after president trump complained about

protection for dairy farmers. jonathan: yesterday, i spoke petereader roskam -- roskam on the president's first 100 days. >> the first 100 days have demonstrated good momentum, bringing clarity to american policy.olicy -- foreign now he is working with capitol hill to do things on a legislative basis and my hopes are high. high ono hopes are things like tax reform. let's check in now with one of his colleagues, the feiss ranking member of the house ways and means committee. welcome to the program. good to have you. >> good to be with you. david: how are your hopes doing on the possibility of permanent legislative action on the tax reform package? >> tax reform is an area where

you could see republicans come together. substantively, the concern is we don't have a lot of detail. .ou can see some common ground we want to see a more competitive tax code, a simple tax code. middle-class families need a break. that is done in a way that is a violation of the president's promise to not add to our national debt. that is a drag on our economy and an area where we may have disagreement. it is hard to expect democrats to be there. there is no outreach from the administration. you have to solicit input as well. talk about you

middle-class tax reform, there are things in this, things like a $50,000 -- that is an area where we could find common ground. david: do you agree with the overall goal of growth and is this a way we can get growth for the entire country? right now a tax code that does not encourage investment in the united states of america. if we have a more simple tax code and an opportunity to lower ace rates, it has an opportunity to drive investment in the united states. increase in our debt inhibits growth, so we have to do this and weight that is responsible and makes sense for the american people. unfairly typically and asnk of the freedom caucus

anti-deficit. as a democrat, do you need the package to be revenue neutral or close to it? >> deficit matters, the national debt matters. it is not enough to say those things should matter only when we have a democratic president. david: is it possible to find expenditures,tax loopholes, and perhaps a border tax, to have meaningful tax reform that everyone wants? -- to yourthe area broad question, there is an opportunity there to element eight some elements of the tax code that don't make sense and don't drive a public policy purpose. that provides an opportunity to lower base rates. we have to make sure we are not throwing out the baby with the bathwater.

there are elements that do serve a purpose and drive growth in our economy, and that is where the details matter. we have not seen this details from the administration. david: you have a background in business. how important is it that these be permanent tax changes, what ever they are? we talk about the rules of the congress that might lead to a tempora tax change. temporary tax change. >> it was a shock when i saw how congress approaches tax policy. i came in and we were working on and extenders package, basically where you temporarily extend components of the tax code, mostly retroactively, sake you are saying we will try to incentivize people things to do that they have already done with the hope that congress would get its act together and extend those revisions of the tax code. that is no way to do business.

my experience suggests that business wants an environment of trust and predictability, and congress has done a fine job of missing that up. david: we have a deadline looming, tonight at midnight. up will we get some sort of resolution, a contending resolution, to keep the government open? >> we should. this does feel like groundhog day. we are talking about a bill that was supposed to be passed in september, then the can was kicked to december, and now april, and now it will be kicked one more week. this is no way to do business. of uncertainty, not just for government agencies, but private industry as well. it would be astonishing, particularly when you have the house, senate, and white house and republican hands, if we saw a shutdown. it would be outrageous. david: what will the deal look like?

will there be something in there about the obamacare subsidies? >> i think you have seen the white house back away from their demand. we were making progress over the easter break on the appropriations package that americand want the people want, to support american families, having the backs of our veterans. with the people don't want his funding for a wall they don't want. that is not the infrastructure that people are clamoring for. they want roads, bridges -- that is what we need to see. the american people do not want provisions in the spending goal that would dramatically increase their health care premiums. i hope that is the direction you see. do we have this week? three just need to put it down

on paper, vote on it? or do we need another week to talk about it? >> the broad parameters are there. to see this extension is some indication there has been progress made. there are still issues that need to be ironed out. i serve on the appropriations committee. of thelook back at some appropriations bills that passed out of the committee, there are languageideological that would make it difficult for democrats to support those bills. state of playthe is in terms of trying to negotiate those issues. david: are we going to get a vote on health care next week as promised? >> that remains to be seen. i look at this like the blanket on my bed back home. cold,time my wife gets she pulls the blanket on top of

her, and i get cold. every time i get cold, i pulled the blanket and she gets cold. the tea party and the moderate members are fighting over language. let's look at what the congressional budget office says. this will lead 24 million americans without health care. this means in the near term a substantial increase in premiums. it is not a good dynamic for them when the primary debate that is happening within their conferences whether this will deny coverage to people with pre-existing conditions or dramatically increase premiums for people with pre-existing conditions. that is not what the people want. david: it sounds like we need a bigger blanket. thank you for being here. coming up, general motors on pace for another record annual profit. chuck stevens joins us in the next hour. this is bloomberg. ♪

,onathan: from new york city for our viewers worldwide, you are watching "bloomberg daybreak." just off session highs. range.ies, remarkable , 2.30 on in the middle the 10 year. eurozone inflation, a big upside surprise from the previous month, marginal against the estimate. , 1.2% coreadline inflation the highest in four years. against the up dollar. stock specific, switch out the board. deliveringmanagement decent earnings, the stock goes nowhere.

55%, all about fixed-income trading revenue down when the big five on wall street delivered a 24% jump. the stock trading lower by 5%. it is time for today's trading diary. we get our first reading of first reading of first-quarter gdp at 8:00 p.m. eastern. great to have you with us. not a good number to be sure. there are two explanations. one is this recurring pattern of seasonality, complications we have seen since the great recession. economists call it residual seasonality, but q1 tends to come in weaker than performance over the prior quarters. that is part of the story. that, we had a

disappointing performance from consumers in the first quarter of this year. i brought a chart with me. it shows the contributions to gdp growth over the last four quarters. what we can see looking across the screen is consumers are the only game in town, so this is not well the first of five economic growth. that means when consumers stumble, the broader economy stumbles, even more so than what is usually the case, and that happened in the first quarter. the next quarter, the neath the headline number, was not great either. talk to me about the hit to gdp. >> the second chart, gdp growth or gdp excluding inventories final sales. that means that 3.5 percent

growth in q3 last year was only 3%. wase look ahead to q4, 2.1% a full percentage point lower when we take out inventory fluctuations. that tells us underlying momentum is not all that great. we are really stuck at 2%. we will miss that in the first so this is an economy not really accelerating. as we look ahead to fed policy, the economy is rarely handling , so it begsncreases the question what happens to an economy stuck at 2% if we have three rate increases and unwind the fed balance sheet? why are they hiking? the kos theyiking don't want to be caught

flat-footed when the inflation and wage pressures start to pick up more forcefully. becauseyet to be seen economists more generally have continually downgraded our expectation for full employment for the cycle. thansaid five point 5%, 5%, still no wage pressures, now 4.5% and still no pressures. jonathan: thank you. coming up, 30 minutes dedicated to fixed income. do you believe and attacks -- in the tax cuts? if so, what is the tenure doing a 2.30. this is bloomberg. ♪

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i got it done in the first 100 days. >> my number one agenda item is taxes. >> how do we get economic growth? welcome to "bloomberg daybreak" on this friday. i am david westin in washington, alongside jonathan ferro in new york. alix steel is off. we have a great line of guests today, including, in just about an hour, a rare roundtable with tom daschle. we want to know their thoughts on how president trump can work better with congress. jonathan? jonathan: let's get you to market action ahead of all that. up by 13 points on the dow, positive by a single point on the s&p 500. set to squeeze out a second week of gains for april. point on a basis

u.s.--- on a u.s. 10-year, much stronger, up by .6% on the back of it pretty decent read on headline inflation and encore as well. let's get you some stories elsewhere with emma chandra. to first's get you word news. china has told north korea to conduct no more nuclear tests, according to rex tillerson, who spoke -- who said china also told the u.s. that it would not -- that it would impose sanctions of the north koreans continue testing. president trump told voices that if diplomacy does not work, there could be a major conflict with north korea. the president still plans to end a tax break that some investment managers pay lower tax rates than average workers, according to a white house official. the president's tax plan did not mention carried interests. -- carried interest therein -- carried interest.

he said during the campaign he we close the loophole. sell the mostlays in six months. the british bank reported an unexpected hit in fixed income trading revenue. equities trading revenue fell, too. banks, after the swiss posted better-than-expected resulting wealth management and investment banking. clients added $21 billion in new money, the most in about a decade. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am emmaountries, chandra. this is bloomberg. david? david: maybe the biggest question about the white house outline for tax reform is how we would pay for it. when i asked alan greenspan, he said we had to address some of the deductions and exemptions, including some sacred cows. : tax expenditures are not what they were. have all sorts of things. for one thing, the thing that

has been left off was removing for interest. that is a big deal. it would have been a big issue. why wasn't it done? because it is part of the third , and if you are going to do something bold, you might get some criticism. unless you do something bold, we are running into a real serious problem. david: joining us in washington on set is numbered senior executive editor marty schenker. here is alan greenspan saying we will have serious problems if we do not address some of these problems. is that politically possible? they: in this proposal, did not eliminate the exemption for state and local taxes.

and there is no mention at all about entitlements anywhere, which is really the third rail of u.s. politics. he is right that if we do not address some of these fundamental issues in copper hints of tax reform, we are headed for trouble. david: will this force the issue, with a lot of americans looking at some of these , as they get their hearts set on tax reform -- if -- are told they will marty: everyone wants the good stuff and no one wants the bad stuff. that is the political reality. at the 1986 tax reform, it took 18 months and was a bipartisan effort. you do not have 18 months and you do not have bipartisanship on this issue. it is hard to see how this is going to play out. 1986 reform increased

taxes on corporations and did creek -- and decreased it for private citizen. this president is saying they will cut everybody's taxes across the board. marty: there is no one who is going to lose, is what they are saying. unfortunately, if you want a revenue-neutral proposal, some people have to lose. david: it is the start of a long process in washington. thanks so much to marty schenker. jonathan: i want to get you up to speed. exxon mobil, first quarter, a decent beat against the streak of $.95 -- the headline number, first quarter eps $.95. first quarter capex comes in below the estimate of $4.81 billion. let's go back to the text story. our guess joins us. -- our guest joins us.

>> i think the markets are handicapping the tax plan in many ways. it is not that they do not believe there is a tax plan or there might be some sort of tax former legislation coming. it is a question of how big and will it be watered down. when i look at the numbers, it is hard for me to make things at up and make this budget neutral or add only a little bit to the deficit that would be socially acceptable. i do not know if that is going to happen. are probably not talking about a 15% corporate tax rate. we are talking about 20%, maybe 25%. when i look at these headline numbers, it is an opening folly. i think he will be negotiated up a little bit. beenhan: the range has ounces around. have we seen below for 2017? jim: i would like to say yes. certainly if things go poorly

with fiscal reform in the u.s. and people lose confidence, we could go back down to 2%. but that is not my base case. my base case is that we move 2.50, 2.60, possibly 2.75% by the end of the year. that is predicated on some kind of stimulus that makes people think that 2018 is going to be really strong. yields go up in late 17, that will be on the hope that 2018 is much stronger. jonathan: getting through 2.60 is proving tough. what is the information the market needs to trade on to get us to 260 -- 22.60 comfortable? jim: we are going to get first-quarter growth and data coming out soon that will probably not be too strong. we need to leave we are sustainably growing above 2%, not slightly below 2%, which is

where we have been, but that we can's -- but that we can sustain in 2018.ove 2% jonathan: in the markets this morning, futures up positive but only marginally. dow. on the you are watching bloomberg. ♪

david: this is bloomberg. i'm david westin. general motors reported earnings earlier this morning and boasted therst quarter the on both -- the first quarter beat on both the top and bottom's lines. chuck stevens, good to have you here. you beat the estimates.

overall, vehicle states for everybody are soft, not down. how are you bucking the trend? chuck: fundamentally, when you look at the results on the quarter in north america, where we earn $3.4 billion on 11% margins, there are fundamental drivers. respectively build inventory strategically as we think about the downtime we will have in the third quarter. we have strong price performance and strong cost performance. the price performance is a testament to the strength of our product lineup, recent launches, the continued strength of trucks. we are optimistic as we go through the rest of the year because we have a number of new the crossover space. from a cost standpoint, we have been talking about intense focus on driving cost efficiency, and it is showing up in the results in the first quarter. this was a great start. as expected, to what we think

will be a strong year for the company and for north america. david: on the price-performance, particularly when there is a challenge to vehicle sales overall, our you resisting incentives and givebacks? chuck: we have been and we will remain discipline from an incentive perspective on the supply and demand standpoint. spendingrter incentive is an example of transaction price, in the united states being elevated. that was specific to crossovers and the cell-down of our enterver portfolio as we into the launch cadence of our new products. other than that, out pricing has been strong and stable. we are optimistic given the strength of our launch case that we will continue to drive come improve pricing, and improve transaction prices. buildupt is a planned

because it will be a production cut back. what point will we see the inventories drawing down again? chuck: as we have talked about, starting in january, very strategically we were building inventory in the first half of the year. we would expect to end the second quarter somewhere at the 90-day supply level, then have ---- then have 10 weeks of by the end of the year, we would expect to be somewhere in the same range on a day supply basis as we were at the end of 2016, which is roughly 70 days. we are focused on passenger car inventory and ensuring we have the right appropriate level of trucks and crossovers as we go through the year. we are very much on plan thus far, but it is something we have to watch closely. david: you mentioned the product mix and how that is benefiting and should be in north america. there is a new pickup coming from general motors.

when are we going to see that? chuck: we have not announced the timing yet. i would suggest we are going to take down timing in the third order to transition the plants for the next generation truck. it is not far down the road, but i will not make a specific announcement. that said, r three-truck strategy between light-duty, duty -- we and mid have a great product and will continue to take advantage as we go through this year and leading into the next generation truck. david: finally, since we talked to you last, you made the announcement of selling opel. what would that look like for gm? back to when we announced the signing of the transaction. we indicated we would see immediate improvement in our

overall profitability and our profit margin. most importantly, we would see improvement in our free cash flow movement. as we indicated when we made that on an annual basis, we would pick up $300 million to $400 million in profit. as i said before, $1 billion in cash. that is the way i would think about it on an annualized vases once we close the transaction with psa. it will be a big benefit for the company, for our shareholders. it will allow us to the risk the business and return more capital to our shareholders and focus our time and attention on growth opportunities globally, which will have long-term significant benefits. -- i said finally last time but i did not mean it. as you look at the trump administration and the outline for the tax plan, how much hope do you have that it will help your business if we got the fundamental tax reform they are talking about?

chuck: we are obviously in favor of tax reform on a number of dimensions. forer one, a lower tax rate consumers means they have more disposable income, which will help grow the economy. a lower tax rate for businesses like general ministers -- like general motors means we will up -- we will be able to invest in the business and drive growth. there are details that still need to be worked through, and relative to specifics around the tax reform proposal and the proposal we saw a early week was very high level, but at a company level overall we favor it because it is good for the consumer and the economy and for general motors. chuck stevens, thank you so much for spending time with us. coming up, we will continue our coverage of president trump toss first 100 -- of president trump toss -- of president trump's first 100 days in office.

live from washington, d.c., this is bloomberg. ♪

emma: this is "bloomberg daybreak." deutsche bank has named the citigroup treasurer as its cfo. he will start in july. he will play -- he will replace marcus schenck. first-quarter profit that rose 80%, beating estimates. wealth management has been ubs' main business since the ceo scale back the investment bank in 2012. he told bloomberg tv what he is concerned about. >> the biggest risk to market still is unfortunately the for what we call now

minor issues. you mentioned north korea, france, any geopolitical event. you talk about many macroeconomic issues and they are all there. other, is there a chance many of those issues may crash? emma: barclays has come the latest european bank to report disappointing first-quarter trading results. there was a surprise drop in fixed income trading revenue. shares of barclays fell the most in six months. still, profit beat estimates. that is your bloomberg business flash. jonathan: joining us from london to discuss more about european banks is bloomberg's u.k. finance editor, michael moore. our guest earlier came up with a reason as to why the fix was down where it averaged 24% otherwise. he said there was a year on year based comparison. is there anything in that?

michael: they did have a strong quarter a year ago. that did heighten the effect. certainly aside from that, they were down and their market share compared to the competitors was the lowest it has been in a couple of years. that certainly was not all of the story. jonathan: the positioning of the bank, the franchise is positioned as a transatlantic investment bank. weakerle rate is a lot than it was this time last year, so they have not got that excuse either. what is happening in the states? michael: on the trading business, on the call, they andd some poor positioning u.s. interest rate trading. they talked about client flow as pretty good. the franchise looked pretty good in terms of paying on the client , so it was not that. it was more about a bad trade or two that brought things down in

the interest rate business. overhan: barclays down by five percentage points. michael moore, thank you. jim caron is still with us from morgan stanley investment morganent or it -- stanley investment management. inflation creeping and higher -- what is the story? jim: in some of the growth concern areas, it was pretty decent as well. i think it is an interesting thing right now with inflation rates in europe. what we are looking at is a affecting energy prices. effectively when we see the higher inflation prints coming through, what kind of confidence do we have the next month and the month after that and the month after that? the view in the markets is that we will see less of it going forward. mario draghi is trying to be more cautious in terms of trying to communicate higher rates or even moving away from some of the qe purchases they have been

doing. this probably is not a 2017 event. it is probably more a 2018 event here it getting through june into july, let's see where we stand and if we continue to see robust growth. if we do and the inflation is there and it is organic, we will have a different story. investor,typically an eigh theis that you w investments to where you think you are in the cycle. credit spreads are super tight so thinking it through, the economy is going to improve and the ecb will step back. where are the spreads going to go? jim: we look at the interest rate sensitivity of the asset. credit spreads are tight. has mores that credit interest rate sensitivity than it actually does have some can some creditoes have

component to it. if the growth is good, if the forecasters are correct, yields are going to up -- yields are going to go up. we do think it could be vulnerable in a rising rate environment. if that happens, that is something -- yield as soonigh as the economy picks up? high yield, but if you are looking at maybe some of the financials, maybe not so much because higher rates will help financials. if you are looking at your interest drills -- if you are looking at industrials or traditional rates, there will be a higher rate to bund yields. jonathan: so the ecb will struggle to take a step back. once they communicate that it is a taper and we are heading to zero, what is going to happen? we all know what happened in the u.s. when there was a taper tantrum.

i think the ecb delays on purpose to be super cautious about this because of exactly the factors you are mentioning, that there is a significant amount of sensitivity in the interest rate market. believe this still is a removal of accommodation? jim: absolutely. u.s., i do note use the words "tightening policy." you have a dollar index that is weaker, equities are stronger. interest rates are low and credit spreads are tight. everyone of those factors point to easier financial conditions. the fact that the fed is heightening interest rates does not mean they are tightening conditions. i do not think we get to a tightening of policy until the nominal fed funds rates get to above 3%. and stocks can win in this environment, particularly in the u.s. jonathan: that explanation about

why -- at explanation jim: i think the fed needs to be slow and cautious. jonathan: jim caron, i think they are doing exactly that, slow and cautious. coming up, it is u.s. gdp, just four minutes away. and an interview with this man right here, who is joining us to talk about the world of credit. from new york city, four minutes away from that report in the states. one hour and four minutes away from the cash open. from new york city, you are watching bloomberg. ♪

jonathan: from new york city, for our viewers worldwide, you are watching "bloomberg daybreak." futures up 20 on the dow,

positive, almost two points on the s&p 500. treasuries, the range this month, remarkable -- as low as 2.60, as high as 2.40. we are up by a single basis point on treasuries. comes acrossdata the bloomberg terminal. gdp annualized comes in with a significant downside. 1% was the immediate estimate. the employment index comes in at 0.8% or it the survey, the immediate estimate, with 0.6. the headline number comes in different than anticipated. the estimate was for one full percentage point. bandholz, andharm jim caron is still with us. as far as the headline number is

concerned, a significant downside to price? harm: that depends. now 20.2. i think the feel that we get is a flat number -- the gdp is now to 0.2. if we look back over the last five years, first quarter gdp -- averaged .9%, and was there is something wrong with the first quarter gdp. just a quote stanley fischer on this, he said there is something going on with the data that we do not quite understand. i think that is true. i think there are seasonality factors at play. inventories and consumption were certainly down. bright spots could come from the business investment side, residential investing, and even exports.

i do not think the balance was enough. going into the second quarter, the headwinds of consumption and also inventories is supposed to reverse. you are still supposed to have business investing in gas and oil and drilling. of put that with a backdrop decent global growth, you could get a second quarter gdp of 3.8%. that is what morgan stanley's forecasting. expect thisd you attraction as well? jim said the good thing about inventories is that they are usually correcting themselves in the next quarter. we have a pretty strong rebound for the second quarter. jonathan: the ability to get three percentage points gdp annualized -- what is the potential of that happening? period, you long

need to increase the population in the labor force productivity. we are not turning the increase in the labor force around to the positive. on theivity means more -- productivity needs more on the inflation side. jonathan: consumer spending has been propping up the economy for with the worst performers going all the way back to 2009. what is the story? the warmhear that winter was holding back utilities demand, but we also had headlines in consumer prices. we have seen similar things in the income side. mentioned, disposable income is the main driver. on a nominal basis, it on asable income grows nominal base. why do we do this every quarter? the push black -- the pushback will be auto sales are down.

feel that we have played this game every year in the first quarter. as far as the read is concerned, we are getting the first quarter mixed up? harm: we do not quite know. there have been a couple of reviews, they are trying to get rid of residuals. maybe it is just a coincidence that it is the first quarter. there is a one in four chance that it will hit the first quarter. it could be a coincidence. the problem with the argument is that if it is a seasonal issue, you would think it is the same every year. that is not true. sometimes it is consumer spending, investment, and with different mixes. seasonableruly a that it was truly -- if it was

truly a seasonal problem, we would see it always. jonathan: the hard data right down here, the big question as to how those two things are going to reconcile that spread. will it come from the top down or the bottom-up? hard data -- is the business investment going to carry on in a way that optimism is down to surveys? harm: not to the extent that the top data is indicating. we had the weakness in the oil and energy industry for some time because of rises. there is pent-up demand in the system. there is a lot of uncertainty even ahead of the election. we have not seen too much action by the trump administration. there may be some relief by which the administration is running the country, which direction we are going. there may be some pickup in demand on the side. -- on the capex side. jonathan: david westin, the

numbers speak for themselves. david: as you know, president trump and his team are really focused on exactly this number. they want to get rove up 3% or better -- they want to get growth up 3% or better. some in the administration would disagree with what harm said. we should be focused on deregulation. that mulvaney -- mick mulvaney had that to say. the: we believe with research that is done by outside parties, we get twice the boost to gdp growth out of regulatory reform than we do on the best tax policies we could come up with. that is how overregulated our economy has been. there are a lot of things that we already have done on the regulatory front to send the signal to business that we are

open for business again and that the layer upon layer of regulation and overregulation, that era has come to a close. you will see that impact gdp. he is harm bandholz, if right and deregulation is a more efficient way of getting growth than tax reform -- when might we see that the regulatory issue show up in these numbers? harm: i hope he is right. i do not think he is right. it is an easy way for the administration to explain and improve their own record saying we did the most important stuff in the economy to reduce regulation, whereas all the hard issues, we do not see much progress there. earlier, what we really want to see is to step up the quality of education for the labor force. we have this huge labor gap. i have my doubts that we see the

"that's the big increasing that the country would need. david: as a practical matter, most people say if you improve education today, it would be a or 30 years before you see it show up in productivity. what can we do to have faster growth in the growth rate? if we see the regulatory environment get easier -- and i think trump is trying to do that. you get the regulatory side right, the fiscal and the tax side right, then you will see fiscal that then you will see business investment say what is good about this business investment. if you invest back into your businesses, then all of a sudden you will affect productivity. the problem with gdp in the last several quarters and years is that we have not had business investment here it business investment is one of the biggest drags. you invest in business, you get productivity and a turn in potential growth.

now you will see numbers in gdp at 2.5% and even possibly 3%. this is the big bet that we are taking. this is what the administration is trying to lay out through tax reform and regulatory reform. they are trying to get business investment, and that leads to higher and sustainable growth. harm: the point is that we have to be patient. all of these things have been neglected, and whether tax reform and education reform is effective, we will not see anything next year. effectshese long-term takes time. , with theyesterday opposite story in the united states, the ecb and president upghi focused on talking growth and talking down inflation. the percentage came in better than it was expected.

core pca came in better as well. thedoes the fed factor in better picture with the growth picture? i think what we are seeing in the eci, that is what we would have expected. corroborates with what janet yellen has said, that the fed has shifted the focus from providing as much support if they can to just maintaining and defending the gains that we have seen. they are getting more confident that we are at or close to full employment, and the inflation and labor cost measures corroborate that. jonathan: harm bandholz of unicredit, and jim caron of morgan stanley, thank you very much. quarter,irst

annualized one percentage point, gdp. let's get you to top stories with emma chandra. emma: in washington, president trump plans to extend offshore drilling. he ordered the interior department to order a five-year schedule for drilling rights. the president also will order a review of rules designed to prevent a repeat of the deepwater horizon disaster in the gulf of mexico. house leaders had agreed to a vote on repealing and replacing obamacare. majority leader kevin mccarthy says that when there are enough votes to pass the measure, a vote will be scheduled. a number of moderate republicans are opposed. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am emmaountries, chandra. this is bloomberg. jonathan: coming up on the

program, talking global credit from new york. you are watching bloomberg. ♪

emma: this is "bloomberg daybreak." this is the hewlett-packard enterprise greenroom, and coming up, a roundtable with tom daschle in trent lott. and trentm daschle lott. i am pleased to say that erik schatzker joins us now for an exclusive interview. erik: i am delighted to welcome .ack howard marks good morning.

this is what has been on my mind lately. if years or -- a few years ago, leon black of apollo famously declared that it was time to sell "everything not nailed down." is now one of those times? howard: you know, a lot of stuff has appreciated a lot since that statement was made. direction,atement of at any point in time, it is unlikely that you can get great prices for the things you want -- and buy buy that the things you want to buy. usually at any point in time it is better for one or the other. it was better then for selling and buying. it is still better for selling and buying. that for selling than buying. point, you can tilt in either direction, but now and then it tilts to the

extreme. that is what i am trying to discern. are we close to or at the extreme? in other words, is there still room for assets in credit markets to appreciate further? if so, how? howard: since the crisis, i have been asked, what inning are we in? erik: i try not to ask you that question. howard: thank you. i would today that we are roughly in the seventh or eighth inning. but there is a problem because we do not know how long the game is going to go. ace ball, we know how long the game is -- in baseball, we know there are nine innings so we have an idea. but it could be nine or 12 or 15. chart ofwe look at a credit spreads, some people might say we are already in extra innings. it is: i do not think

that bad. if you look at high bonds, the yield spread is -- erik: this shows it to be about 355 basis point. howard: that is in the low part of the normal range. historically, if the low part of the normal range -- at the low part of the normal range, you did better than treasuries, etc. also, the question with spreads is whether they are adequate to push in for the default losses that would occur, and i believe in almost every year, a spread of 350 has been adequate to do that. in 2007, roughly march, the spread got to 240. that was red light territory. today it is yellow light territory. erik: you have been doing this credit investing thing for almost 50 years.

today, give us a historical comparison. today if it does not feel like 2007 -- and i get the sense it does not -- what does it feel like? what would you like an this -- perioduld you lieken this to? the buyouts were sectoral. this is a systemwide thing of whatit is a function has been going on in the credit markets generally. but it is not nearly as profound as 2007. in 2007, the crucial ingredient was the vast amount of subprime mortgages, and there is no analog to that in quantum today. so i do not think it is as bad. it is a time for caution, and

our manager for the last 5.5 -- for theeen moved last 5.5 years has been move forward. with caution means more cautious than usual. erik: work in a credit investor -- where can a credit investor move today? howard: within each market you have to buy the better credits in the hope that we can get them at a decent yield. but you cannot. yes, it is very tough. which do you, soap -- -- so which do you -- if you cannot get both, which do you emphasize? better credits are good yield? it is more important to emphasize the better credit. erik: so you emphasize return. howard: i wrote a memo 15 years

ago that it is what it is. the market is what it is. you can invest in it, you can say i will not invest in it. the one thing you cannot say is i want a different environment. we are stuck with this one. it is a low return world, and how an investor functions in a low return world is challenging. erik: here is what i am left wondering, particularly after listening to oaktree's earnings yesterday. your colleagues read -- your colleagues used the word "harvest." if now is the time for oaktree to harvest, who is on the other side of those trades? who would be dumb enough to take market risk in credit right now? howard: you talk about market risk. we sold an asset this week. the buyer was a strategic. they do not care about the market price of that in three

years. erik: that is -- howard: strategic buyers have been very good buyers of late. that is one example. some people have lower cost of capital that. -- have lower costs of capital man others. -- have lower cost of capital than others. i was talking with some of yesterday who was approached by a foreign pension fund who has a 4% cost of capital. for them, some of these investments are more attractive. back to the baseball analogy -- much as i know you do not like it -- if we are in the eighth inning and there is still a full inning left for this game to play out in regulation, what is going to drive the market? higherctors underpin prices for credit assets right now?

howard: primarily the quest for return. the point is -- erik: in other words, there is no fundamental argument for higher credit valuations. howard: i think that is right. or higher valuations of assets in general. most asset classes are in high valuation territory. erik: to me that sounds like 2007. -- to me that sounds a bit like 2007, though. howard: as long as you say "a bit." you have to say rich, fair, and cheap. we are in fair territory. i do not think we are in bubble territory. it is not black and white. we do not draw a line down the middle and say everything here and here we sell, and everything here we buy. there is a middle ground which is fair, and we happen to be

largely above it. bek: where would we have to to feel as though we were in that warning sign territory? howard: if the high-yield bond 3.40, was 2.40 or wherever we are today, that would be one example. i think we are not in a bubble because one of the characteristics of a bubble is having people say, no matter what price you pay, you will make money. we saw that in a tight bubble, the 50/50 bubble years ago. erik: and you are not saying that. they are saying you are finding difficult things to buy, however. thatd: exactly, because implies an awareness. erik: i was surprised that no one on the earnings call yesterday asked about the implications of donald trump's

tax proposal. what are those implications for oaktree? if the corporate tax rate is reduced to 15%, does it mean anything for oaktree? what changes? a you no longer consider conversion to a c corp., for example? the lower the rate on corporations, the more likely that one would consider a -- two cn to see core corp. i would say a low corporate -- not that i am foretelling anything. you would's -- he would think about a c corp. when the rate on c corp. is low. know, if the whole program were to go through, which i do

not think anybody thinks is going to happen, corporate credit worthiness would get much stronger. that would be great for oaktree. in terms of the value of the things we own. but of course, stronger credit awareness makes it less likely that we would get to buy bargains. everything has pluses and minuses. look, itt would be -- gives something to everybody. to some people it gives a lot, so it is generally a good program for those who pay taxes. are: true, but not if you managing the budget. howard: which is not economic reality. erik: politics as opposed to economics. howard, thank you very much for coming back to bloomberg television. always great to see you. john, -- jon, that is howard marks. jonathan: let's get you up to

speed on the markets. , gdp for theomy third quarter, the slowest -- for the first quarter, the slowest pace in three years. if we switch out the board, here is market action elsewhere. treasuries up three basis points. the euro is stronger by around .3%. u.s. gdp comes in with a downside surprise. inflation comes in with an upside surprise. from new york city and washington, d.c., you are watching bloomberg tv. ♪

jonathan: the u.s. economy grows at its slowest pace in three

years. growth looks ambitious or geopolitical tensions rise ahead of president trump's 100 days in office. tech beats. google beats wall street estimates, and amazon completes a 20-year streak of double-digit revenue growth. yes, really. counting down to the opening bell, this is "bloomberg: daybreak." out today, but david westin is in d.c. david: tom daschle and trent lott will have a roundtable together. jonathan, back to the market. jonathan: futures up 23 on the .ow

stocks head for a week of gains. what a month it has been for treasuries. yields up three basis points. eurozone -- it is a big eurozone cpi read. it takes the euro higher as well. ofth of a dollar -- north 1.09. let's get you to some movers now prepares abigail. abigail: lots of earnings movers this morning. shares are higher premarket as gm beat on the top and bottom 15%.earnings by gm is being driven by a boost in truck and suv sales. the internet giants beat top and bottom line estimates per for amazon, the strength is coming commerce unit. investors dohat

not seem to be that concerned by the youtube ad issue. turning to some tech losers -- shares of qualcomm are down after apple says it is cutting off its licensing payment. our team was just told it is a little bit worse than expected and qualcomm has cut the forecast. beat, but it is interesting the shares are lower. a bloomberg intelligence analysts say it is a matter that expectations going in were a little bit too high. david: you have to manage those expectations. thank you so much. for anybody who might not have gotten the memo, tomorrow marks donald trump's 100 day in august -- in office. i asked alan greenspan on his views on donald trump's first 100 days. mr. greenspan: it is a mixed bag.

where the president has direct authority, he has been very valuable. i think that the lifting of regulation and the expectation more of the future will move the stock market. that has created real value. in other words, as i said before, the stock market is not it is leading indicator, a creator of gdp. david: with me now is kevin cirilli. mixed bag. achievementse real in deregulation and some of the lifting of the animal spirits. how does the white house grade itself at this point? kevin: it points to the notion of how several folks within the administration as well as outside of field, that it has been hit and miss. where they feel their strongest

positions have been is when they are meeting with ceos. this is where the politics starts to matter. next week will begin the markup of that piece of legislation to this is a much more conservative legislation that is set for an offramp of financial institutions. you hold more capital, you get rid of their risky business that we are more likely to provide. an offramp to walk back some of the regulations. when you move to the senate, that is where this gets interesting. that is much more of a moderate legislative body. the senate banking committee chairman, the companion to the house financial services committee, they are taking a much slower approach on dodd-frank deregulation. they are not even touching it until they touch -- david: all of this takes us to

an important point that alan donaldan made, that trump has done well when he has had to do it himself. tougher when he has to work with others. he has yet to show us and perhaps himself that he can work with congress. kevin: i was speaking with some senior sources yesterday with republican leadership in the house. they described a situation where yourevious administrations, would have the legislative affairs director negotiating with staffers of the white house at all staff levels. that is not the way this works, this administration. they are working principles negotiating with principles. that is a good thing in some places, but it also prevents challenges -- it also presents challenges. ,hen president trump is talking he is not talking to the tuesday group.

it is different than managing a business. david: who would've thought that would happen within the republican party? they have the majority. kevin cirilli, thank you. york, thehere in new chief market strategist at a be joins me. u.s. economy is at its slowest pace in three years. >> if you look at the atlanta fed numbers, they have been bring out first quarter estimates. i do not consider that to be much of a surprise. the disconnect between the soft indicators or so-called expectations or sentiment and the hard data is among the widest it has been in the first quarter. are they going to converge and in what way? economy ishe u.s. doing this in a shallow way, rolling over a little bit and then we collide with enthusiasm and optimism in d.c. where is it going? >> i think it is going to go

higher. right after the election, the fear was fiscal policy combined with an already strengthening economy is going to overheat. there is a worry that the implementation of fiscal policy is going to get delayed. it is going to be much smaller and much more uncertain. all of a sudden you see sentiment starting to decline. jonathan: when i see a rate of 15%, -- when i say a rate of 15%, is that not going to happen? i think it is highly unlikely. i do not think you can get to 15% permanent tax cuts. jonathan: the earnings have been terrific. tech earnings beat, beat. record growth for amazon. the optimal -- the optimism is in the hope in the price? the expectations for the year are about 10%.

the elements are a little bit worrisome. beat onas the companies sales and earnings, the stock went up generally. when they beat on earnings but not on sales, most of the time the stock went down. you are getting into an environment where the surprise has to be in terms of growth. it is no longer enough just to get earnings higher. you need to generate procyclical growth in terms of sales. do notn: the markets deal with fairytales, but it feels like goldilocks, to me, growth is going, but the fed is going nowhere fast. the market is just going to keep grinding higher? m: the big growth will be in second half. you are starting to see labor costs creeping up, so the cost structure is continuing to increase. you will need to see aggregate demand rise, pricing power,

capital spending because that is what the market is discounting for the end of the year. for the next few months, i think it is fine. jonathan: if you need pricing power, you need consumer price tolerance. number was not terrific, not good at all. going forward in the quarters the years to come, do you see consumer price tolerance developing? vadim: the only way it can happen temporarily is if you have protectionist policies, in which you have no choice. the way the growth in pricing has to come from is in corporations. you need to see small business confidence give way to a greater capital spending. if that happens, you could see pricing power in the industrial space. next,an: coming up former senate majority leaders trent lott and tom daschle. that is live from new york city and washington, d.c., on the eve of president trump's first 100

days in office. you're watching bloomberg. ♪

david: former chief of staff joshua bolten on how he related donald trump's performance so far. difficult, what a lot of promise, especially for economic policy, and especially for job creation in the united states. they have done a lot of extraordinary things in the first 100 days to create an environment in which businesses think that we can now invest, create jobs, in a much better

fashion than we would have expected six months ago. david: joining me in washington in our studio are two very special men, former senate majority leaders trent lott and tom daschle, together again as well as writing a book together. agree with what joshua said, that they have created an environment. , have they created a foundation to move forward? senator lott: joshua was very positive in his remarks. he has been around for a long time. there have been a lot of distractions. a lot of the things that they have tried to do with regulations and the ray latorre agenda, including bills passed or congress, i think is very helpful. a lot of discussion about the tax bill. and a lot of excitement about that. i think there are positive signs economically, but i think but they have got to begin to move some legislation with congress

as part of the packaging. i worked over the years with several different presidents, and everyone comes and brings their home state people with them. they think they will pretty much run the town. they find out quickly that there is a coequal branch of government which can be pretty to herd. to heard -- things thatsitive can happen, but they have to fill up the post and the administration more, and they will have to move legislation. david: you make an interesting point. the things that they had most competence with his unilateral actions. proved that hee can work well with others, and particularly congress. david: -- sen. lott: republicans feel this way with the supreme court selection, with the process

being unsettled in a way to me because i hated them to pull the trigger to require 51 votes and not have a filibuster. that was a significant thing. the senate handled it pretty well. david: senator daschle, what is your if? how are they doing? sen. daschle: i think joshua is right in terms of the executive actions he has taken. he has been aggressive. residents, when make -- presidents, when they cannot get their way capitol hill, they do so unilaterally. president obama was criticized, but i am not surprised that president trump will do that as well. there is a law's physics that will always be there in washington. the only permanent legislation is bipartisan legislation. we saw that with the aca. now the republicans are making

the same mistake the democrats did in not bringing about the kind of bipartisan consensus on health care that is really possible. there is a pathway to bipartisanship. that is true on taxes, on infrastructure, on trade. there are a lot of issues that we could resolve, but instead of just doing it unilaterally, they have got to reach out and create the bipartisan consensus to make it permanent. david: the last time we saw fundamental tax reform in 1986, bill bradley crossed the aisle. and dan rostenkowski. even though it was bipartisan and a good achievement, it was difficult. it took two years to get that done. in 1986. was difficult is it even possible now? some of what we saw in the election was the american people say we are not sure washington can work at all. there is a lot of

skepticism with good reason. it has been 30 years since major tax reform. we have amended the tax reform bill of 1986 over 10,000 times. so we have a mishmash that really has to be addressed. it is going to take time and it is going to take both parties. sen. lott: i do think that infrastructure, on broad-based tax reform, both of those could be bipartisan. democrats and republicans do think we need to do something about our roads, our bridges, our airports, our water, our sewer. we have bad water in jackson, mississippi, not just flint, michigan. that is a place where they could get some bipartisan efforts. same thing on the tax bill. i would hope people in key positions would sit down and talk to chuck schumer and say, what is it that you would like to see here? or what are you not want to see? i want to talk about the

executive orders. over the years, executive orders have increased with every president, partly because congress will not act. i think that leads to sort of an imperial presidency, which i do not like. the answer is for congress to act. then at least it is permanent. david: apart from the inherent partisanship and maybe some redistricting issues, we do not have as much money to work with as we did 30 years ago. we have a substantial deficit. how do you pay things for infrastructure that there may be bipartisan support our -- that there might be bipartisan support on? sen. lott: you have to do some things to encourage growth, which brings in more revenue. republicans say maybe it does not even need to be revenue neutral. ,f you do it in the right way with broad-based tax reform, you can get a lot of growth. you have to do things that show courage. like highways and bridges.

how about a little gas tax? we did that for reagan. in the 1980's, we raised the gasoline tax, solidified the highway trust fund for a number of years. nobody lost because of that vote here in you have to come up for some innovative ways to pay for what you're getting. david: what about tax expenditures? what about exceptions, deductions? the simpson bowles commission, president obama did a lot with it -- did not do very much with it. sen. daschle: it may be one of the proposals they had in there, but it may be the last time a real consensus was reached with republicans and democrats. trent is exactly right. there have to be revenue options on the table, entitlement options on the table. we have over $1 trillion in tax

expenditures today, loopholes of various kinds, all with their own constituencies, that have to be addressed it it takes courage and real commitment to get the job done. it has been done before and can be done again. david: i think the one thing that there is absolute bipartisan agreement on is we do not want to touch entitlements because they will get voted out of office. it was never mentioned in the presidential campaign. sen. lott: and that is a big mistake. you cannot deal with the long-term stability of these programs, making sure that they will be solid in 10 or 20 years. there are some things that you can do. we did a bipartisan fix on social security, again, in the 1980's. we want to make sure that the elderly and the sick are taken care of, and our poor. there are some changes that can and should and have to be made. one thing i like about paul

ryan, he things we will have to deal with entitlements. these appropriations bills -- they make up like 28% of the government spending that congress actually controls. the rest of it is entitlements. we are going to have to deal with that. david: and growing, as a percentage. you both are master craftsman when it comes to legislation. senator daschle, on the red team here, put aside the democrats for a second. president trump has problems within his own party. he has the freedom caucus on one hand, the tuesday group on the other. how could you bring together these people, to support meaningful legislation? sen. daschle: the tail is wagging the dog here. if he really wants to pay attention to the freedom caucus exclusively, that is his choice, but he is doing it at the expense of coming to the middle and finding common ground on a

whole array of issues. he has to decide if he wants to make history and accomplish a lot. the only pathway to that accomplishment, especially if you want it to be permanent, is to come back to the center and deal with the vast majority of people in the middle who really want to get things done. that is why they are here. sen. lott: the solution to these problems is action. aere is no need to be doing continuing resolution for another week, to fund a 2017 budget. why didn't they act this week? health care, as difficult as that is -- but if they actually will work hard to find the sweet spot and find some bipartisan possibility -- but at some point you have to make them vote. senate and house members, a lot of them, will hide, will

disseminate, will do whatever as long as they have two until you say, ladies and gentlemen, we are fixing to vote, so get ready. i would rather go down fighting and losing than to do nothing. sen. daschle: the other thing we have not done enough of so far is using the committee process. the committee process has a purpose. they are negotiating from the top down, and that never works. that falls apart. nobody feels invested. you have people not even on the appropriate committees that are cutting deals around the committees now. that is a guarantee for dysfunction. that is what is going on with the negotiations right now. there was an old system that seemed to work pretty well. house, do whatever you want to do. the senate will fix some of the rough edges. then there is a thing that we used to have called a conference. you go together and look at the differences and you come up with

a bill that has broader support. when was the last time they had a legislative conference? beltway,tside the there are businesses out there, ceo's, markets saying how do we make investments, decisions? if they do it as well as can be done -- i will start with you, senator daschle -- what can we expect to get done by the end of the year? we follow theif track we are on now, very little. i hate to say that, but if we follow the track, very little. if we follow the track that trent and i are talking about, there is the possibility of health care, tax. they will have to change the way they are operating to make them happen. i will say this for republicans. if they do not have some health care reform and a tax bill this year, they are going to be in a heap of trouble.

they had to it done this year. hopefully they will do it right in a way that will be positive, but there has to be action in that area. hopefully there will be action sooner than later on infrastructure. david: when you say textbook, can it be a light version? sen. lott: where they are headed now, it will not be a broad-based tax reform. it will be a tax cut. i believe that is better than nothing, but i do not see that it can be as they as they would like for it to be. they talk about the corporate tax rate at 15%. that would be delightful. i do not see how they get there with the money they have without boring a hole in the deficit. david: can they at least get repatriation done? sen. daschle: repatriation is too much of a carrot. they will needed to get other things done, so it will not stand alone. thanks very much, senator lott and senator daschle. it is a dream of mine to get the

two of you together to talk about this. jonathan, back to you in new york. jonathan: great stuff, david. four minutes and 10 seconds away from the casualty. coming up, futures are firmer. we are up 24 on the dow. we switch up the boards quickly -- the read of the economy. it is the slowest quarterly growth in about three years for the first quarter. 2.31 on the 10-year. $1.09 as inflation comes in higher than expected from the eurozone. you are watching bloomberg. ♪

jonathan: you are watching "bloomberg daybreak." the market opens in 21 seconds. futures are firmer. the dow up by two on the s&p

five -- the and dow -- the dow up by two. if we switch up the boards quickly, the other asset classes -- treasuries, a big range through april, and in today's session, we are up two basis points to 2.32. the employment cost index a little bit higher. 99 on the dxy. it looks like we are seeing another tight trading range right here. the dow, s&p 500, and the nasdaq are all higher. putting in another record high, the range for the dow and the s&p 500 an extension of what we saw wednesday and thursday. but monday and tuesday, a huge rally. they are on their pace for the ly performances on the

year. -- in three years. we are looking at the alphabet and amazon, both shares higher on very strong march quarters. they both beat top and bottom line estimates. amazon helped by the cloud unit. alpha that investors are not concerned by the youtube ad issues. general motors shares are higher by 1.5%. their best performance on the month of april, leading top and bottom estimates. the truck and suv sales were very strong. finally rounding it out, exxon mobil put up a mixed quarter. estimates bynings 15%, the results have been helped by oil. investors are cheering that with the stock higher than 1% on the open. jonathan: joining us on the phone from los angeles is michael. thatuse and outperforming

he has an outperform rating on the stock. the headline is about revenue growth, a story about earnings? michael: i think that is right. -- wee growth is kind of know amazon is gaining shares on its brick-and-mortar competitors. the real surprise was that they crushed on the earnings line, and the driver of that is gross margin. they greet -- they beat our estimates. forre certainly high earnings. it is all about the mix, and it is really demonstrating that fulfillment by amazon is generating a ton of high margin. they only book the feed if they charge third-party resellers, and that business is about half of their phone business, so on the trailing 12 month basis, that is a $24 billion gross profit contributor. that is a big number, and it does not look like it will slow

anytime soon. outthan: you have a target 50. holds, zero cells -- zero sells. there is a lot of optimism already. what makes you think we can go a little bit further? michael: there is no question that amazon can go from its current 1% share of total global retail to something like 4% or 5%. i do not know if that is going to happen in a year, but it will happen probably within five years. you are going to see the top line continue to grow, and that is why we are so confident. to think of them as a 5% share of all retail, that is not crazy at all. web services are only at about a 3% share currently. atould see that growing about 5% or 6%. i could see cloud services

doubling in the next five or six years. this company is just in the right place and executing flawlessly. jonathan: michael, we talk about their ability and their potential to crush traditional retail. talk about how worried ups and fedex may be as well. it makes me laugh when i see the press releases from amazon about all the jobs they are creating. they are destroying jobs and other sectors. retail, for sure they are destroying jobs. retail -- ups and fedex are fine right now because last mile delivery is so important to the consumer experience for amazon. but if amazon is ever successful in rolling out grocery and doing a good job with amazon fresh and they buy a fleet of amazon fresh trucks that are refrigerated to deliver in every neighborhood, it is easy to stuff those trucks

with televisions and toilet paper and things that are not perishable. that will cut into ups and fedex's livelihood. that is probably in four or five years. jonathan: we spend a lot of time talking about the strategy of this company. let's talk about the like a trade between five big tech companies. the big five are responsible for 45% of this ain't. -- of this gain. overall, a big momentum trade behind five big players. michael: i can speak personally that i do not know what to do with my portfolio with the markets at all-time highs, so i tend to go to what i consider to bigafe, and those five players are really safe investments, good companies, high-quality companies that are growing. your easy to blindly park funds there while you wait for the market to correct. jonathan: i am not sure anyone

has ever called amazon a safety stock. we appreciate your time, michael pachter. vadim.with us now is and joining us on set is a market strategist. year, it is kind of like e.m.. back in november we would have said no. why? it is right back to fundamentals. the fundamentals behind tech have been strong. the earnings growth has been there. that is why the group is the best performing group in the s&p and the nasdaq is outperforming the s&p as well. jonathan: if you concentrate on the gdp figures, you would have missed quite the quarter in some of the tech stocks. talking to me and trying to ask you whether you should really look at gdp for stock prices --

yes, we had disappointed, yes it is up 1%. does it matter? of recessions, there has never been a correlation between gd growth -- between gdp growth and stock performance. all about surprise. the issue is that the current quarter of earnings surprised to the upside. revisions across the world, the growth,looking view of is positive. should -- nick, should you bother building a bullish-bearish case, nevermind that the headline is the slowest growth in the united states for three years? isyou should note that q1 very little in terms of predictive power of what gdp is going to do for the rest of the year. that was not the case in 2012 and 2013.

but for some reason, q1 math has fallen apart for the last three years. jonathan: it is going to get tougher to deliver upside on prices to earnings. it is not happening. you are having 9% earnings growth for q1 versus q1 last year. it is not going to be a case where analysts want to cut their numbers just yet, but it will be a matter of how the economy shapes up in q2 and q3 to keep those earnings growth numbers alive. jonathan: what does it say about sentiment when an analyst says amazon is some kind of a safety and you are waiting for a pullback? it has driven the stock up over 20% in just this last year alone. m: the opportunities for growth are not obvious you are in a market where the valuation

spreads have narrowed. most of the investors anticipate a recovery. characterizing where the recovery comes from is not clear. stories liketh amazon like out for that, as for persistence through stronger growth for the rest of the year. jonathan: is that wire's -- is that why we are seeing these emerging trades move through? amazon's market capital has gone up. the overall market is higher, but it is fastening to see how the market ways disruption versus the status quo. rates forconviction 2017 -- what are they seeing now? vadim: the hair rates in europe. the bond is higher, treasuries are flat. nick: still good to trade for

the end of the year. jonathan: thank you for sticking with us for the last 40 years. nick, thank you very much as well. let's get you up to speed very quickly. s&p, cash open, marginal moved to the downside. we are down .1% on the dow. pretty much unchanged on the s&p 500. treasuries on offer, yield tie up by two basis points. a remarkably softer dollar in the mix as well. from new york and washington, d.c., you are watching bloomberg. ♪

emma: this is "bloomberg daybreak." this is the hewlett packer enterprise green book --

green room. this is bloomberg. david: this is bloomberg. late yesterday we sat down with alan greenspan here in washington to talk about the path of the u.s. economy and how the trump presidency could change that path. i started out by asking whether the dramatic tax reform could drive fundamental growth higher. greenspan: it could be if you were willing to make the cuts in social benefits, which would be required to fund the type of program he has put forward. remember, it is not only a tax military is also a expenditure thing. d laste going from a perio decade where the share of gdp going into our military was at

the lowest level since 1940. the presencentain we are trying to maintain militarily unless we come back a significant amount. only aget outlook is not tax question, it is also a military question. both, and his arithmetic is a problem. he will get either a tremendous -- or you will get a large budget deficit. it is now showing significant up spike in the budget deficit. i think that is the beginning of a move which will take quite a period of time.

david: is it only from entitlements that you could get the money you what about essentially tax expenditures because there are special interest things that we could get real reduction in rates from the basis and still not increase the deficit. is that a sensible plan? mr. greenspan: remember simpson bowles? david: i do. bowlesenspan: simpson was something president obama put together to attack just this particular problem. effort toipartisan line up the tax expenditures and the benefits and brought the deficit down to normal.

-- heught -- obama said had to listen to his commission, the commission he put together. that was the worst mistake i think he made economically, and we are coming forward to now because what we have done is we have used up a lot of the goodies that was available to simpson bowles so that we do not have the capability of doing the same thing now. we should be doing something like that. that was alan greenspan speaking with us and washington, d.c. jonathan, what is going on in the markets in new york echo jonathan: we are 16 minutes into the session. the dow up by 11 points per the s&p 500 goes nowhere. the nasdaq, at another all-time high. earnings from amazon and alpha that taking all to that milestone.

from new york, you're watching bloomberg. ♪

>> you asked me how i would characterize it. his success depends on how you measure it. you go on a diet, first five or six days, not much success. but if you stick to it over three to six months, you will see it happen. it is sheer insanity to say that you can move something around as you just america in the hundred days. langone thinks that president trump has done a good job in his first 100 days, but you cannot move roll around in 100 days. togressman, welcome back

capitol hill. thank you for being with us. give us your perspective on how the president has done in his first 100 days. is he making progress in working with the other side of the aisle, your side of the isle? >> think you have to look at the president's own verbiage. he said this would be a great 100 days. the first thing we are going to do is get rid of obamacare, have tax reform like you have never seen before. i think he set up the table for his own failure in the first 100 days, and you saw a recent language where he pooh-poohed the whole notion of the first 100 days. so in many respects, his own verbiage set up this failure for him. think it has been lackluster and a fairly disastrous 100 days for the president. david: he has accomplished some

of the 100 things some -- some of the things he said he would do in the first 100 days through executive order. is it a matter of being able to do a lot more when you can act unilaterally and when you need to bring along congress? i would bring attention to a number of executive orders that the courts have stepped in and have stayed or ruled unconstitutional. he says he will take them to the supreme court. i guess we will see how it all flushes out in the -- how it all flushes out in the end. but in terms of legislative accompaniment, the big things he spoke about like -- of legislative accomplishment, the big things he spoke about like thereform, i think president may have thought about attending those civics classes

when he was in high school to understand the process. the coequal branch in the government is the legislature. they cannot demand that a bill be brought to the floor. david: take for example the instance of health care. insaw speaker ryan yesterday a news conference say he is reasonably confident that he has the votes to at least get that passed the house. are the republicans going to put it through? i think it is difficult for the republicans to get that bill through. the rush to try to get it done by today or tomorrow is holistic late manufactured -- is holistic ally manufactured to get it through in the first 100 days. now it will not happen and it is said that it will go through next week. many of the moderates, every day more and more moderates on the

republican side are coming out in opposition to it, all in an effort to get the freedom caucus back on the same page as the white house and the republican leadership. they are hemorrhaging moderates at this point. david: in the meantime, we have this continuing resolution set up. it looks like we will have a short-term extension by one week. are we looking forward to a series of these one week extensions? i think that we are looking at a one-week extension. intould possibly lead another extension. i doubt that will happen. my understanding is that the negotiators in the republicans and democrats in the house and senate have been trying to work this through, keep it as clean as possible, and in that sense there is a bipartisan spirit that democrats can join republicans for the final

product. david: when it comes to the outline for tax reform, surely there are some things that you as a democrat can support. there are some things democrats can get behind, aren't there? rep. crowley: i think the -- a proposal does not an accomplishment make -- it is what theounter to house and senate was offering, which would require no democrat support, using the bat as the means to pay for it. i think there are a number of things that the president in his proposal has outlined that attract democrats. but bringing down the corporate to 15% and bringing down -- that possibly is a mechanism for very wealthy people to use llc's and partnerships to hide their rate asgetting a 15%

opposed to a 35% rate. that can very well serve the purposes of the wealthy in this country. -- ats point there are no this point there are more questions than answers. the one thing for sure, he is keeping congress busy. so you have a lot on your platter. thank you very much, tom rissman joe crowley. jonathan? jonathan: david, thank you very much. that nearly wraps up the 100 days, david. for me, the biggest surprise over the last 100 days is how could be.s google is up over 15. if i told you that this year the best-performing currency would be the mexican peso, would you have believed me? and the relationship with china looks pretty fine. so the expectations right down here, if you look through the market, it really has not been

that bad. it does strike me, being down here for two or three days, it must seem strange, the markets, with what is going on inside the beltway. it is very opaque. in the meantime, the president is issuing a series of presidential appointments to fema and to treasury and things like that. david westin, great work down in d.c. jonathan ferro in new york city. thank you very much. 26 minutes into the session, let's get you up to speed. the dow on the downside, the s&p 500 flat. from new york and d.c., you are watching bloomberg. ♪

mark: welcome to bloomberg markets.

vonnie: we will take you from new york to london this hour and cover stories out of south korea and also seattle. first, breaking economic data. abigail: for the university of michigan sentiment index, the final and third reading is slightly lower than the survey. it's important to note that the initial ratings of 98 or higher than expectations. strategists said they defied expectations. butttle bit of a miss basically on target. not a lot happening on our averages. ehe dow and the s&p 500 ar fractionally lower. the nasdaq is on pace for a record close.