theresa may reaches a deal after negotiating through the night, opening talks for transition and trade. u.s. point toward equities. , u.s.g a clean read payroll numbers will tell us how my jobs were added. we won't be talking about the hurricanes. how low can unemployment go? welcome to bloomberg daybreak. welcome back, lisa. it's jobs day. alix steel is off. lisa: let's take a look at the majors. you can see green across the screen. everything is up with the stoxx 600 mean a basis point. let's get caught up on once going on across assets.

crude is rebounding a little bit after a couple of days of a selloff. the euro is weakening against the dollar because the u.s. dollar has been strengthening so much over the past few days. that yield curve spread is actually widening for a change. it's up a little bit. i have been watching this. the greek has come down. it has gone down about 4.5%. david: that is remarkable. it is jobs day. we are going to get those u.s. jobs numbers for november. spacex will be launching a falcon 9 rocket to deliver cargo to the international space station. when bitcoin day it comes to wall street. futures contracts on the cryptocurrencies, the banks are figuring out how they're going to respond to all of this.

it's time to our first take. we discussed the top three stories of the morning. up first is the deal on brexit. theresa may got the go-ahead it. the second story, the rise in the u.s. stock market pointing to more gains through the end of the year. , u.s.g news coming out jobs numbers for november. joining us now are the chief the per --.d you usually focus on europe. gina: i think any news on brexit suggests we may ultimately have some conclusion to this. it's going to be greeted kindly by stocks. if you look at european equities, the ftse on the stoxx

600, these of struggled quite a bit this year relative to expectations. if you look at the charts, they both doubled. they really struggled to maintain any momentum in europe. i think brexit is part of that. we need to have this clear before europe can start to leverage what is incredible economic data. david: it's not clear how clear it is very -- is. gina: there does seem to be this hard tops, it's really say this is the end. we do get some relief in the short-term. does this clear the way for future gains? it's tough to make that case. bill there was a divorce established. the u.k. would pay that to the european union. it seemed like theresa may gave a lot of ground.

it's unclear what she did not give ground on. now we are going to get into the actual trade negotiations. what is the most important negotiation to be watching? >> it's a service sector economy at this point. we can focus on some high profile manufacturers, that is missing the picture. it depends on the continental europe given their important relationship in that regard. they are pushing for something looks like the candidate trade agreement. we will see if that comes through. this is really going to leave the u.k. at a significant disadvantage if they don't get a good trade deal. final exit deal is stinky enough, there is going to be a lot of pushback from the populace. it was 48-52.

there could be political ramifications. -- givee could view theresa may her do. she got it done. aboutecifically spoke bringing certainty to business. >> millions of jobs depend on the future trading relationship we will determine. i am optimistic about the discussions ahead. reaching this agreement now insurers businesses will make investment decisions based on an implementation that welcomes certainty. david: how much certainty is this bringing? there is a lot of speculation at this will open the doors for a two-year transition. is that enough? gina: i think it extends the uncertainty. what stocks hate the most is uncertainty. they would like to know one direction or the other.

i think this is what is happening in the european exchanges. see are beats him the economic data and the good earnings numbers coming out of this economy, yet the stock prices are not responding that shares in the united states are. this uncertainty will continue to weigh on their shares. even as important as the exchange rate. any major development on the , you watch the reaction in the pound, the dollar pound exchange rate to see how to interpret that news. as we look at today's market, not a big reaction. david: we have a story about the dow moving up through the end of the year. this basically shows with going on with the dow jones overall

and industrials. that is the blue line. below had been lagging behind. now it is caught up. david: the transportation indexes been a good leading indicator. lead transports 10 to economic growth in general. that they are bouncing back is rapidly as they are is a good indication of future gains for the industrial complex area a lot of this a stronger than expected. fedex, which has soared over the last week as we see evidence that consumers are really shopping. we priced in an expectation of this not team a good holiday season. it's clear that stocks are off to the races. there is a lot of rotation going on underneath the headlines. some of these are domestically oriented companies, generally in the transports index perceived as having a better impact from

future tax policy change. that is being priced in. for the most part, stocks are doing well across the board and we are getting confirming indicators. lisa: the predictive power of this particular index, how far out in the future isn't a good indication? gina: i don't think we can give at that sort of exact number area lisa: is it good for the next six months? gina: it's a confirmation the broader markets are going higher. the transports in general tend to lead the industrials. sometimes it's by three months, sometimes it's i a day. both indices are making new highs. they are confirming one another. lisa: today, the big question is what will the jobs report look like. this is an important jobs report, it's the first clean report that will not have necessarily the effective

hurricanes. what are you expecting? jim: i don't think there is a lot of nuance. we say the hurricanes of past. trend,ld revert back to 170,000 per month. the trend in the economy in the labor market is mildly accelerated. you can add a little froth on that trend. 195 which you get to we are anticipating. what will be more interesting next year, if you are creating jobs faster than 100,000 per month, there will be a downward bias in the unemployment rate. handle, thatthree is a significant development. that will tell you that the wage pressers are going to materialize. the fed hasn't right-sided monetary policy.

if you have frothy financial markets and low unemployment, the fed still has its foot heavily on the accelerator. we think it's below 4%. david: will that be enough? jim: we have been in the range of 2.9% for the last two years. this is a little bit of a payback trauma hurricane effects of a prior months. we are back in the range. lisa: thank you so much. ahead to, we will look the jobs report with the most accurate payroll forecaster on the street area -- street. from new york, this is bloomberg. ♪

about: the combination will be the largest independent exploration company. the ceo of world bank sees little chance of reaching the settlement with the u.s. this year. the bank is in a very strong capital position. it's the last obstacle keeping rvs from its dividend. the company did not want to have to wait that long it. now they will extend their deadline for completing the $85 billion deal. we are getting for the

payroll numbers out in just over an hour. we will see the addition of 195,000 jobs. steve had a more modest estimate. >> you've got an economy that is growing around 2.5%, on average generating about 170,000 jobs. volatility upof and down in the monthly numbers. at the end of the day, 175,000 has been the right estimate. david: we welcome jim o'sullivan. it's a great day to have him here. he is consistently ranked the best forecaster for payrolls. he is the most accurate forecaster in america. that's pretty remarkable. don't blow it today. 195 is the consensus. you heard steve say 175.

to 15.ve got i think we are due for catchup. withast two months, even october, averaged 140. i think we will probably do some catch up. claims suggest we are accelerating. lisa: to the point you are making it, i want to take a look at the chart. these are the estimates. you think it's going to come in at 215,000. we want to look at another indicator. this is the differential between the soft economic data, consumer confidence, versus the hard data such as payroll. soft data has come in much stronger than the hard data. the big question, is the hard

data catching up to your point? it sounds like yes. jim: even the hard numbers of the bit. when you look at employment numbers, those numbers of been strong throughout. have truth it gdp numbers not been a strong is the survey numbers. the survey numbers have been off the chart. es,n you look at the index they are consistent with 5% gdp growth. theis not that strong, numbers of picked up a little bit from a 2% trend to 2.5%. lisa: why is the soft data coming in so much stronger? jim: the hard numbers are due to pick up here and my own theory is survey numbers have been distorted a little bit by increased partisanship in how

people answer questions. by main point of evidence on this, and i just tweeted this yesterday using the bloomberg comfort index, it breaks down between people who identify as republicans and independents and democrats. if you pull up that tweet, how much the increase in confidence has been among people who identify as republican and confidence among democrats has declined. we don't have that partisan detail in other surveys. you can see the red line is republicans. the confidence numbers are up overall. all of these sorts of numbers are up significantly in the past year. to the extent they are experiencing a 5% trend.

i don't believe that. even the hard numbers have picked up. david: they are going in the operant -- opposite direction. because you are the most accurate forecaster, what do you expect in terms of wage growth? jim: i think the trend is up. falling,oyment keep i've got it down to 3.6% the end of next year. about today? jim: i don't think the trend is that rapid. and the wages go up over time. i think the trend is up over time. we are not counting on big numbers today. the consensus if you look closely is split between .2% and .3%. lisa: next year, what will be the big timeframe when you will

see bigger gains in the jobs picture? jim: i don't know if you will see much bigger. we've been averaging about 175 a month. this is at a time when the labor force growth is less than 1% per year. it slows dramatically to less and 100,000 per month unemployment will be falling. lisa: we will see if he keeps his streak going. thank you so much for joining us. the national economic council director joins us for the white house reaction to the jobs numbers. brexit breakthrough overnight. more details on the deal struck between the u.k. and the european union. live from new york, this is bloomberg. ♪

emma: the u.k. and european aion have reached negotiation. theresa may conceded on all the main issues. this is how the market is reacting. you can see the pound is up after rallying. lisa: this is due to dollar strength. you also see the euro is gaining against the pound. it isn't sticking much. you can see the 10 year yield is up a touch. companies seem to be doing alright worried leaders are starting to weigh in on the deal. cranny earlier this morning. >> it's very good news. this is good news to come before

christmas. now we start having real conversations about how we can trade. i think this is really good news for all businesses. manus: they talk about a two-year transition. europe,iness to do in is two years enough? ross: businesses like ours have to move forward as though we are not going to get any form of deal that would be good for banking. we have to look at the worst scenario so we can build a bank that works for our customers. if we get a longer transition and rules established, that is good news for us. manus: can i ask you about the institutions out there? on transition use and financial services in the first three months of the year, could that make you pause for

thought? ross: we have to get in the position of certain operations so we can look after customers. this does help. wecan slow down activity if think the transition is going to be a two-year transition. we can find out what the rules are. services, theal canadians don't have a service. is this mission for you in terms of regulatory alignment? this is a new word. take me through your vision of alignment. ross: we are running along the same rules as europe, being part of the community. it's what is the difference going to be? there will be a lot of difference so that we can be much more flexible in europe.

tradingone of our major partners, the closest we can get perspective.stomer lisa: joining us from london is dave. it seems like the questions are now emerging, that businesses hast asked themselves what their role will be in london. what is the mood like in london given the right through? dave: there is a sense of relief, you heard that. businesses will get a transition agreement. we are moving on to trade. there will be a fair amount of trepidation. we don't have any idea what the relationship is going to be. there is a huge amount of time. a little bit over a year until brexit day. candidate style bill, which

took many years to negotiate, excludes financial services. that is a long way away from the relationship misses may has been asking for. there is a huge amount of details to be unveiled. lisa: thank you so much. chairman, the step on talks to us about job creation and building the skilled workforce. this is one of the main questions for ceos today outside whether they are going to employ people. from new york, this is bloomberg. ♪

lisa: this is bloomberg daybreak. alix steel is off today. let's get you caught up with where markets are trading. s&p is up 15 basis points.

dow jones is up about the same. 1.12%. is up that is a bigger game there. looking at the broader market, that curve is widening. don't get too excited. you have the iron or futures, we ase seen a steady decline they are going to flood the market with more supply. this is causing problems. gold is just a touch, rebounding from a significant selloff as people expect given that interest rates are going up in the u.s., you will get less of a demand for gold. that's where we are at with markets. let's get an update on headlines. emma: it's a breakthrough on brexit. theresa may and the european union have reached a deal in divorce negotiations. the next key is what businesses

are interested in, trade and a post-brexit future. they are keeping a border between ireland and northern ireland wildfires now stretch for a couple hundred miles from san diego to north of los angeles. miles.gest fire is 180 it is 5% contained. conditions are dry and breezy. another member of congress is resigning. trent franks of arizona says he will quit at the end of next month and he said the ethics committee is investigating him. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. david: congress has averted a government shutdown for now.

the republican party continues its full-court rest of bring the president that tax bill before the end of the year. there are some big shakeups in congress, including senator al franken, who said he would resign after nine years. trent franks as we just heard is also resigning. by the latest, we are joined kevin cirilli. you said yesterday they would do this. are they buying themselves more trouble? kevin: they kicked the can down the road two weeks. i spoke with lawmakers yesterday. they suggested they do not think at all the continuing resolution that is now set to expire on december 22 of earning the , thisment shutdown timetable will not have any impact on passing tax reform by

the end of the year. republican leadership is managed to put it on two different tracks. that i think is the big takeaway. it's not going to impact tax reform. lisa: we talk a lot about legislation, we should be talking more about who the votes will be on some of these plans. we see some turmoil with al franken resigning. now the latest francs saying he is going to resign. what is going on? what is the next shoe to drop? kevin: this is a moment of reckoning. it spans lyrical institutions and media and across the country. last week when i interviewed elizabeth warren, she talked about how this needs to be discussed in a political lens and through main street america. washington, the

politics in the policy are starting to catch up with the conversation across the country. there is a line in the tax bill that would make it no longer for people to write is a tax write off their settlements for non-disclosures. think about that for a minute. you could have as a tax write off, your nda settlement area that's how this is going to impact policy. david: to think that uncle sam was paying for part of the settlement through a tax break. congress has immunized itself from a lot of the rules of the workplace that have applied to the rest of america. to say weinally going are playing by the same rules? here, alot of people

new generation of staffers on both sides who are holding people accountable. i think what you are noticing now is increasing pressure to make this not a partisan issue, but it issue of cultural change. david: thank you so much for all of your great reporting. the president has said the reason he wants to overhaul the tax law is to create good paying jobs. has supported the president. he is on the front line of job creation. snap-on makes high-end tools for the transportation industry. thank you for being here. let's talk about job creation. are you hiring? : we hire periodically. we hire year-by-year.

our businesses robust. we have a great brandon legions of loyal customers. there is nothing specific about this that has us hiring more. theeneral, i just came from national association of manufacturers. what's going on with washington? we don't know what is going on. we do know that in general there is a direction that is positive for business. asked their 14,000 members what they think about business outlook read 89% were positive. i think that's going to be the same based on what i hear from them. they are feeling some positivity. to theif you go back obama years, they were creating jobs pretty fast.

one of the things about this -- gina: -- nick: manufacturing is the biggest job creator. part of the reason is because of the burden we have placed on american operations associated with tech. there is a difficulty in finding skilled workers. lisa: i want to talk about this. the big problem is working the workers to have the skills and there are workers out there for the right price. how much hired to wages need to go? nick: i'm not so sure about that. if we paid the same as say a tv anchor, maybe we could get them. david: that prices gone down. this,the serious point is

the welders in the factory, the mechanics in the garage have settled for the consolation prize. we have change the american dream to believe you have to be a tv anchor or an attorney. there is data behind this. manufacturing is essential for america. only 30% what their kids to work in that industry. lisa: if they were paid more, they would want their kids to go into it. nick: derek anderson wrote an article for the atlantic. he said we work not only for pay, but also for self-esteem. pride andve lost the dignity of work is a big point. david: i thought we were friends.

i want to pull up the chart here that indicates something interesting. what they are most concerned, the blue line is taxes. the white line is the concern over the quality of labor. that has gone up substantially. that white line right there has gone up here in why are they concerned more today than four years ago? nick: i think they are more focused on it. they've been hiring for a while. even small business has been hiring. the national association of manufacturers said there are jobs unfilled. be 2.5w years that will million. the technical schools about matching their curriculum to what is in needed. it's not money. it's about matching the skills to the curriculum. lisa: i am going to harp on money. we are in new york. that's what makes the world

work. we are watching for the jobs report. the big question is wages, why we have not seen wage increases. you are saying it's not about that. nick: wages at snap-on have gone up every year since the recession. lisa: how much? nick: 3% let's say. well above inflation. we don't commit to that. i won't say it's up 3% next year. ceo,eople, if you are a you are the steward of the optimization of capital and the energy of the people who work for you. they contribute that energy to your organization. you bring them along. part of what you see about the downward pressure is the reduction of manufacturing jobs. finally, you just said

you are the steward of the capital. break, whya big tax don't jew over that to your shareholders? youru know that to shareholders? nick: you can get other returns from dividends and other things. we have never produced it. if you think about that, we pay attention to dividends. for snap-on and thousands of small businesses, we are investing in the workforce. lisa: and not bitcoin. david: that's another subject. it's great to have you. bitcoin frenzy continues. traders are preparing for the futures trading on sunday. thanks are raising some red flags. we will discuss that.

andcan go over to radio tune into tom keene. conversations the at 9:00. live from new york, this is bloomberg. ♪

emma: coming up, alan krueger princeton university and the former chairman of the white house council of economic

advisers. this is bloomberg. david: it's time now for wall street beat. we talk about the stories wall street will be talking about red are big three are the student loan. he saying it's time to get out of the business. blackrock is planting a flag on companies that need to start reporting on climate risks. number three, bitcoin. it will debut on futures. kelly.ome jason navigate area now he wants to get out of the business. great he is one of the characters of wall street. saying --

lisa: i can read a quote, but i won't read the whole thing. customer primary bleeps all over you, why not give your owners back their money? david: there is a lot of of government oversight about how they have been given out, if there is fraud. it's a pain. jason: there is a lot of pain ian suffered. activism,this age of having a big investor saying just shut it down, it doesn't look like they are going to do that. we talk about how he will probably ride it out and see what happens. it's an interesting one to watch. lisa: leon cooperman is always interesting to watch. blackrock came out saying they

are going to throw their left around. they are going to ask companies to report their environmental footprint. about after a lot of talk climate in the investment world, we start to see them investors come in. i spent some time with the pension fund manager who was talking about has team are telling their companies and their managers this has to be a metric. they are finding ways to measure this. we talked about the tree huggers yesterday. lineis a bottom discussion. people are starting to be able to measure it. the blackrock so the world can hold people to the fire. david: this is blackrock's stake that have real problems with co2 emissions. they are saying you are an exposed company.

you'd better start disclosing this so we can figure it out. lisa: how is blackrock going to take action it? to $6assets have surged trillion. shiftingu deal with around your parameters and making decisions in your investors are going into broad indexes that have already been sent out? jason: that's one of the questions. how they will throw their weight around, it does require a shift not only in thinking, but in action as you say. david: sunday is a big day. bitcoin will start taking futures contracts. i can't believe how high it's gotten. we were talking about 10,000 being high number. the banks are struggling with what they are going to do. jason: this is an interesting

story. this really breaks down why wall street is so worried about this. starting with they don't know which desk it's going to run off. there is a debate if if it's a currency or a commodity. that's where we are, even as the starts trading on sunday night. lisa: you can have the debate on whether it's a commodity or a currency or a fraud, is it a market? i want to point to a chart that shows the gap tween what you can get on coin base. it's been widening out. it could be thousands of dollars different, where you can get that going on coin base versus other indexes. this is not an arbitrage double market. it's very lucrative for wall street.

jason: it's exactly. david: in south korea, it's trading at 23% premium over the regular price. will the derivatives trading clean this up? jason: that's what people are proposing will happen. it will put some rules and guardrails around this. the other is it may halt this huge rise because people are able to short it. david: my favorite fact of the morning, the number one app is going base. -- coin base. executiven kelly, r editor for bloomberg tv, thank you for joining us. silicon valley is hiring, sort of. look what they are doing to spice up their holiday parties. if you have a bloomberg terminal

, check out tv . you can check on the charts and graphics and interact with us directly. just go to tv on your terminal. ♪

lisa: silicon valley is hiring perhaps. it depends on who you are. there is a story in business week that is fascinating, talking about how firms are are $200in models who an hour to schmooze and be

attractive. david: you saw the story last night. i think i am embarrassed for my gender. here, they are criticizing not having men in leadership. they are doing this because there aren't any women working there. they have to have women in. lisa: is this the role of women in the work lace? it's amazing. there been so many inroads made on wall street and washington. david: we hope. lisa: does this underscore that people are still struggling with this? silicon valley has come under such fire, more so than wall street. david: so many sexual harassment things, and they are still doing this? men have not figured out how to deal with women in the workplace

in this day and age. lisa: it reminds me of wall street 20 years ago. the appearance has changed. there have been a lot of compliance officers brought in to make the changes. it seems like silicon valley has yet to catch up. piece, thesen this models are coached on which employs specifically to chat up, to make them feel comfortable. lisa: what europe is this? david: i'm shocked. lisa: this reminds me of 2006 wall street parties. this is what was talked about. i wonder how much this is simply a young industry growing up here and. david: will the show up in the jobs numbers as casual seasonal labor? we should be looking at this. cracked the economic

model. that's a good question. david: it was your idea. i think you were probably right in the end. lisa: i do think it's a bigger issue. david: sadly. we have a lot of work left to do. coming up, we are going to have alan krueger here. professor andton renowned economics. we always enjoy having alan krueger here. live from new york, this is bloomberg. ♪

. david: brexit breakthrough.

british prime minister may and junker reach a deal after negotiating through the night, opening the door for transition and for trade. stocks on the rise. signs point towards new highs for u.s. equities as transportation stocks move higher along with the market overall. and getting a clean read. u.s. payroll numbers will tell us how many jobs were added last month, the first time it happened since the summer and that's when we were talking all about hurricanes. how low can unemployment go? welcome to "bloomberg daybreak" on this friday, december 8. it's jobs day. david west alongside lisa. alyx is off today. lisa: an exciting day and the day we'll actually get a real read on the jobs picture because this will not be a -- david: a weather report. lisa: i want to get you caught up where the market is positioned ahead of this report. in the green across the board, both sides of the atlantic, dow jones up 11 basis points, s&p 17 basis points, stocks,

europe, 600, up much more and the dax up even more, more than 1%, off from the earlier highs. i want to get you caught up across the assets. crude rebounding at 1.6%, the euro weakening against the dollar, 0-year yields unchanged. i have to keep looking at that greek 10-year yield. i'm shocked. that was 8% at its peak and now is down to less than 4.50%. huge rally in greek debt. almost 30% of a rally. david: a couple years ago it was all the news, whether they'd stay in the euro zone. down to 4.5%. time for the morning brief. it's jobs day and in about a half an hour at 8:30 a.m. eastern time we'll get the u.s. jobs report for the month of november. then at 1:20 this afternoon, space x will launch a falcon 9 rocket to deliver cargo to the international space station part of a contract with nasa. sunday is the day when bitcoin

omes to wall street as the cboe will review crypto contracts. that's all coming up. the big news today is the jobs numbers. a little under half an hour away, to set the stage with us and explain what they mean after they come out, we welcome back to the program bloomberg alan kruger, professor of economics and on the council of economic advisors. tom keene says you're the greatest labor economist alive, as least when you're around he says that. alan: there are a lot of people to dispute that with good justification. david: what are you expecting? alan: i think we'll see a solid report. all other indicators have been solid, unemployment, insurance job claims, the biggest predictor, declined last month. we'll see bounceback in the labor force participation which

dropped .4% in october so i think that will probably recover a little bit. david: let's talk about solid. you resist picking a number. give us a trend. isa: give us a number. david: we had jim sullivan on and is the best at predicting the market report. here's what he said. he thought things would pick up a wit. no sound. well, that's what he said. alan: he could be right. david: 175 is the norm. are you expecting above that? alan: i think we'll get at bit because of extra work because of the hurricane, damage caused by the hurricane. so i could easily see this report being above 200,000 on the top line. you have to bear in mind these numbers are very noisy and get revised, typical revisions are plus or minus 50,000 jobs. whatever the number is, we can be confident it's not exactly

the right number. lisa: so a cleaner data perhaps but not clean data. i want to talk about some of the policies that have been coming out, whether it's the tax overhaul being debated or what we're learning overnight. the infrastructure bill we can expect in the first quarter next year, how much will the tax plan, as it has been laid out, understandably, in conflicting form on the senate and house sides, how much does that change the jobs picture in your view? alan: a small amount. over the 10-year period, not very much. maybe next year it will add a little bit to growth. but i think you need to be aware, the tax proposals work against infrastructure investment. cutting the state and local tax deduction will make it harder to invest in infrastructure. getting rid of the private activity bonds will make it much more difficult for investment and infrastructure. so i think there are many features to this bill, and i think we have to bear in mind some of them are going to work

in the opposite direction of what the administration has listed as its priorities. david: yesterday we heard they have a infrastructure bill ready to go. what if they enact it in the first quarter? allan: infrastructure is spent slowly and spent by local and state governments. secondly i wish him luck passing the infrastructure bill and they spent mixed signatures on the high priority. paul ryan said to cut medicaid and medicare. that first of all would slow economic growth next year but also i think pushes the infrastructure investment down the road. lisa: i love the very diplomatic burns people put out there. we wish them luck. i want to talk about a column by harvard professor in bloomberg view yesterday where he was talking about deregulation and how people say deregulating wall street banks will add considerably to the economy. he disputed that and said not so much. do you agree with him?

alan: it's hard to say it slowed economic growth in the u.s. the u.s. has done better than other countries that moved more slowly on the regulatory front. on top of that, if you look at the long sweep of history, financial crisis are horrible for economies. most importantly raising capital standards for banks helped make our financial system safer which should help with growth in the long run. lisa: i want to push back on that. if you take more risk you can extend more loans and what we've seen with wall street banks they've not been lending so much to consumers and pushed a lot of the lending to frankly shadow banking systems and lenders by hedge funds and private equity firms. how does it make the system safer? alan: shadow banking is a concern and smaller than 2007 and think that's why it's important dodd frank completed a systemic risk oversight

committee which looks for emerging risks and has the ability to require stronger standards on new developments emerging shadow banking sectors that can potentially threaten the whole u.s. economy. david: you mentioned medicare and medicaid. one of the things the senate does was eliminate the individual mandate and the projection is it would cause fewer people to participate in the health insurance policy. what will that do to employment specifically? alan: it's econ 101 this is a mistake. we have now universal health insurance. we have a prohibition of discriminating against people with pre-existing conditions which americans like. we need a requirement that people purchase or obtain health insurance or they'll wait until they get sick and really need health care to buy health insurance. so the estimates that eliminating the mandate will

reduce 13 million people from getting health insurance i think is a real threat to our entire health insurance system. the congressional budget office estimated it will increase premiums because it's going to affect risk pools and potentially lead to the unraveling the whole system. lisa: we were talking about this dissidents in the economic data, consumer confidence and things like that with respect to the hard data, not really keeping speed. i'm wondering why do you think that is? does the hard data have yet to catch up with the positive consumer sentiment or is something else at play here? alan: we've seen a bit of the pickup in terms of the g.d.p. growth and suspect it's temporary but we'll see. the soft data is weighed a lot by people's partisan views. lisa: same thing we heard last segment. i think it's interesting. alan: if you break down the data who has become more confident in the economy, mainly people who support the republican party and since the government in washington has changed, that's affected the way in which they view the economy.

david: what we haven't talked about, alan, before going to the next segment, is what's going on with wages and inflation? what will we see in these numbers today. david: last month we saw a dip in wage growth. i suspect we'll see a little bit of a recovery and some of that may have been due to the composition of the jobs. with the low employment rate i expect wage growth to pick up. we haven't seen as much as of a pickup as one might expect because labor is so weak because labor unions have been reduced under 10% of the work force because companies have no poaching agreements, noncompetition agreements and all of that has reduced workers bargaining power. david: alan krueger, princeton university. and we'll be joined by a fund manager and have a reaction to the numbers at 8:30. coming up we'll take a deeper look at one particular aspect of the jobs numbers, the

participation rate. why it's not moving higher and what role will america's opiod epidemic may it be playing. live in new york, this is bloomberg. ♪

emma: this is bloomberg day break with your bloomberg business flash. the u.s. government anti-trust lawsuit to stop at&t from buying warner goes to trial march 19. the companies didn't want to wait that long and will have to extend their soft imposed april 22 deadline for completing the $85 billion deal. the basf agreed to merge the

oil and gas unit with a energy company controlled by the russian billionaire friedman and will become one of europe's largest exploration and production companies. bassf will control 2/3 of it. the royal bank of scotland doesn't see a settlement over a mortgage bond episode this month. >> a very optimistic human being. there's a chance but a diminishing chance given where we're sitting in the year. this is something we do want to resolve and made it quite clear we'd like to resolve it. it's the last major, major thing standing between us and being a much more normal bank and being able to get back in position to talking to our regulator about paying a dividend which would signal this bank has gone to a major over the last 10 years and is back to a more norm position.

emma: when they stop paying dividends the bank will go small. david: one of the puzzles about u.s. job numbers is why low unemployment isn't pulling more people into the work force from the sidelines and why they're not returning it. this is the rate to 1950 for prime age males and how it's come down. there are bumps up and down but it's come down overall. it's a complicated decree and princeton's alan krueger has joined us before. and michael mckey is the correspondent. you're really a student, what's ausing this? michael: there are a number of factors. partly is a shift in demand for workers with different skills and had an adverse effect on men. the problem has now run into the opiod crisis and what i've found in my work is nearly half of the men who are out of the labor force are taking medical pain education on any given

day. alan: 2/3 of that group are taking prescription medication. we have opiod crisis in this country with over 30,000 people a year dying from overdoses and think it's making it more difficult for men out of the labor force to get back in the labor force, to pass drug tests and is causing some people to leave the labor force because they've become addicted to pain medication and lose their job or lose motivation. david: you have a student of your work becoming very influential, jay powell referred to you explicitly to his confirmation testimony in the senate. listen to what he had to say. jay: in terms of participation by prime aged males and specifically alan krueger's research, what we can do is push harder on maximum employment. i think we're doing that. we're looking at an economy going under 4% unemployment. the tools dealing with the opiod crisis and the long-term

60-year decline in participation by prime age males, those are twools congress has to weigh. david: how big of a problem is this for the fed as they're trying to figure out how to manage monetary rates. alan: a the lo of the participation decline has been a retiring of the baby boomers basis. michael: and if it stabilizes which it has the last couple months, they won't be worried about it. if it continues, then that's a problem. jonathan: is this people getting older and around the edges and you have the open oid crisis but is not a main driver. is that an accurate way of putting it? michael: that's right and the question for the fed and with a was alluded to is how much hidden slack is there, how much potential is there to raise employment. if a lot of the people out of the labor force to come back that means monetary policy

could work in a more accommodative fashion. lisa: what could the fed do? alan: this is all about the potential growth force of the puns. as the labor force shrinks you have a lower growth rate. the fed can't do anything about that. the federal government on a fiscal side perhaps can. michael: but they have a problem as well and may get at part of what alan is talking about. i brought a chart showing people in the labor force and the people who don't want to work and you see the number of people who don't want to work and are not in the labor force is rising. the people who want a job is falling. the whole idea of a stimulus package that will increase the labor force runs counter to what people say they with an. david: they may not include the opiod people. i want to pick up the chart again that looks at the participation rate. this prime aged men since 1950 and controls the question of

demographics. this is the kind of thing that's a real problem. alan: absolutely and it's been a problem for a while. i think what michael said is right, the fed's tools are limited and don't want to make a mistake or misjudge the situation and think that the unemployment rate is actually misleading and that there's a lot more slack than the unemployment rate indicates. to address the problem we need to use not only fiscal tools but not only use our health system to try to reduce the opiod crisis but think about immigration policy as lisa mentioned to me during the break. that has been a source of our growth in labor force and the u.s. has become a less hospitable place for immigration and the senate immigration bill i think would have helped, the bipartisan bill rubio and schumer supported but the house didn't pick it up. lisa: i want to talk about what you were saying, mike, there could be a fiscal or legislative response to this. alan, what could they do considering the things you mentioned are all so heady but to get this congress to agree on any of it seems like a pipe dream. what are the concrete measures

that are incremental enough they could actually get past but would have enough of an effect on what we're seeing? alan: one of the reasons i've focused on the opiod crisis is my calculations 20% to 25% of labor participation is the proliferation of opiod medication. that's something i think there are levers where congress and our medical system can address the problem and at least slow it down and stop it from getting worse. lisa: like what? alan: like better treatment, like better surveillance when doctors prescribe. opiod medication. using alternatives to opiods, using alternative pain therapy. david: the fed can't do much about this, how is the fed reacting to the rising -- approaching of full employment as a practical matter? we've had people say they're going down to 3.6% unemployment next year. and that will have to lead to wage hikes at some point.

michael: that's their belief. they believe the curve will hold but there's a question when you get the pay increases. anecdotally we're starting to see it but statistically only slight movements but if we get in the threes there's nobody in the fed who doesn't think that won't push up wages and become an inflation problem. lisa: we had snap on chairman's chief investment officer and he said we're not getting enough qualified employees to hire. he said, it's not about giving them higher pay, it's about a culture of appreciating industrial work. do you agree? michael: no. alan: higher pay will change the culture but that's the way the economy works. employers have gotten accustomed to having a lax labor market and having so much slack they have their pick ithout having to frankly adequately compensate workers and that environment will change with the unemployment

rate so low. david: i would put a question to you and touches on your other report and that's the gig economy. the labor force participation numbers are being disported by the fact people aren't taking traditional jobs. alan: if people work in the gig economy they should be counted as part of the labor force because they're working. there's question about whether our labor force statistics are keeping up with the evolution in the job market. and i think with the unemployment rate falling so low, some of the gig companies like uber and lift will have difficulty getting workers going forward. lisa: thank you for joining us. alan krueger of princeton, stick with us. we're moments away from the november u.s. jobs report. we'll break it down when it comes out from new york. this is bloomberg. ♪

lisa: we are 10 minutes away from the u.s. november jobs report. here to take us through what to expect from the data is brad bestall, and alan krueger of princeton university is still with us. let's get to it and get a sense. brad, what are you expecting, numbers? brad: our u.s. economists are expecting 230 on the headline number and 0.3 on average hourly earnings. so relatively solid. we're looking to our first clean report since the hurricanes so this will be a nice picture for where the

employment outlook is currently. we're expecting something strong and i think the market itself is also leaning to the strong side as well on expectations so the risk of course is we get something disappointing but expecting 20 and 0.3 and i'll be more focused on the average hourly earning of things myself. lisa: i'm sure everyone is with you, brad. real quick, i want to nail you down. you think this will be a clean report? some people are saying well, in the data comes in lower than expected people will chalk it up to noise. you think this is clean. before we get it, this is clean? brad: it should be. definitely the cleanest we've seen in a couple months. yeah, we expect this one to be relatively clean and i would imagine if we miss to the downside folks will look at the past couple months and say some of it was bleeding into december but we don't expect that. david: tell me what the dollar will do in response if it does to what you expect and i'll put

up a bar chart on my terminal that shows what the dow has done this year. it's been up and down, overall sort of soft but really on the way of a strong week right now. brad: on the way for a strong week right now. we've been in a tug of war. it's been a nice fall rally followed by a correction here the past couple weeks. we started the rally this week. the tug of war is coming from the fact you have a tax bill on the horizon and a fed in construct coming hawkish with dudley and goodfriend joining and people are wrestling with that equation. you have the dollar repatriation story that's out there and then you have this expansion of the budget deficit which will be a very dollar negative potentially down the road. that's a dollar head wind. you also have dollar funding, not really express yet but demand, picking up in the marketplace. that's a dollar positive as well and a bit of a tug of war

on the dollar index. this week so far, a pretty good week. lisa: i want to pick up on something brad said which he is focusing on hourly wages and seems to be a theme and nobody cares about the headline number but are we getting inflation? do you agree? alan: they're both important this month. by should see pickup in wages given the dip we saw last month. 230, 250 which is in the plausible range. that will get teafpks of the fed. i think they'll think that this is going to be leading to a labor shortage pretty soon if we have a resumption of job growth over 200,000. it had decelerated and was below 200,000 up until a couple onths ago. david: what we looking at when it drops? alan: inclined to look at the

dollar yen but today euro-dollar is also quite important because the funding demand on the dollar side is actually impacting more the e.u. versus u.s. basis so the euro has been in play in that regard and interest rate differential between euro zone and the u.s. is wadening. keep an eye on euro-dollar and dollar yen but typically dollar yen is the most correlated. david: would you play it out far enough if these are strong numbers employment might make it more inclined for the fed to exacerbate that differential with europe? brad: i agree with those things and think if we get a strong employment number clearly december is a done deal but there's a lot of uncertainty in regards to 2018 with range of forecast from two hikes to four hikes and it will put -- that's where everyone will focus. so if we get a strong unemployment picture in december influences that forecast for next year which is again a dollar positive to the extent it's hawkish or people adjust higher on that basis.

lisa: thank so you much, brad bechtel and alan krueger, you'll stick with us. him let's look at the markets. we're looking at the dollar. it has been strengthening and continues to strengthen. 10-year yields rising a touch and pretty much flat and s&p futures up about a quarter of a percentage point. i want to point out right now futures traders are pricing in a 98.3% chance of a rate hike at the december 13 meeting of the federal reserve open market committee. you have to imagine if everybody is saying go, go, go, the fed will do just that. i want to say right now the market is pricing in almost a 37% chance the rate will be between 1.75% and 2% come the end of next year with a 20% chance it will be between 2% and 2.25%. really high odds the fed will hike dramatically and will be

interesting to see if this report gives them that ed r edification. david: seems like it takes es a strong number to change the fed's mind. right now we have five seconds to go to get the numbers from washington. we turn to chris condon with the report. chris: good morning. 228,000 new jobs in november. 221,000 of those in the private sector. not much moving, however, unfortunately o on wages. more of the inflation mystery for the fed to deal with. revisions. they're just about a wash in october. 17,000 taken away in september and 20,000 added. that brings the total new jobs report to around 230,000. all this happened as the unemployment rate stayed steady at 1.1% and the participation rate remains steady at 62.7%.

148,000 new people in the labor force. that's a bounceback from last month when more than 700,000 people exited. that's good news. the q-6 unemployment measure is a wider measure of unemployment, including things like people working part-time for economic reasons. that tick is slightly up from 7.9 to 8%. back to wages. average hourly earnings were 2.5% year on year. it's been compared to the expectations of 2.7% month on month and 0.2% compared to a 0.3%. david: great report, chris condon from washington. is this a solid report? you were asking for a solid report. alan: certainly solid. the top line number was spot on to what brad was expecting. wages are week but 2.5% is edging up, at least it's moving in the right direction.

the labor force staying steady. i think that will be of some concern for those who think there is so much hidden slack, the fact that labor force participation didn't recover, basically been flat all year long, suggests that a lot of the people left the labor force for a long period of time. lisa: to brad's point, it's all about wages, if you look at my bloomberg, you see two-year yields fell pretty sharply once we got the report, even though you had a headline number that was far above what estimates were, you saw wages were a disappointment and that's what this is responding to. so definitely interesting to note, it's all about wages right now. david: indeed. did you see the six number that fell off the cliff, the volatility went down rather substantially. alan: the world looks a lot more stable. you look at the rest of the world, things look more stable than they had and certainly we mentioned greece earlier when we were worried about greece leaving the euro zone.

david: once again we want to recap what's happened. the number of jobs added in the month of november was 228,000 compared to 195,000 which had been protected. the wages went up 2.5% instead of 2.7%. we'll head over to our colleagues with tom keene and jonathan ferro. tom: joining us on bloomberg television worldwide, bringing you william gross, a modest interest in the bond market and of course in the nation's economy and the jobs report as well. bill gross, let me begin this report by partitioning good job numbers way above what potential g.d.p. would suggest, big 200,000 numbers but wage growth isn't there. do you have a why, why we're not seeing better wage growth in america? bill: i think there are some hidden labor out there. the participation rate is down significantly from what it was four, five, six years ago. that's part of the answer.

the other part has to do with continued globalization, technology which displaces labor and keeps the price of labor down relative to other factors and a number of structural forces i think that keep wages down and probably will keep wages down and doesn't fit with the fed's model which is cyclical based and has no anticipation of structural factors and is the real question to me and i suppose my answer is structural as opposed to cyclical numbers. tom: between the enand flow of market folks and the struck churl, longer, deeper issues, let's go to your criticism of this fed. can you take fed policy in the disportions in the bill gross world of fixed income. can you bring them over to labor dynamics. did those decisions and the oddities of fixed income, do they expect job growth?

bill: i think they do. i'm not so sure the fed factors it in and perhaps they're making the right decisions for the wrong reasons in my opinion. i do think that they're raising interest rates gradually and think it's a good decision to stop quantitative easing and minorly reduce the balance sheet though it doesn't make much of a difference. so i think the gradual increase of rates to perhaps as high as 2% nominally is another 50 or 75 to go. it's probably the right ecision. the benchmark for the fed as aside from wage is really the funds rate and if inflation stays under 2%, the fed will stay under 2%. jonathan: two 10's at 37 basis points, is there any data around the united states that is going to change the

direction of whether this yield curve is going? bill: i think so with the quantitative easing and other countries and is a few months off for the e.c.b. and we don't know to the extent they're going to cut it back. i don't think the b.o.j. will ever cut back their quantitative easing and have to keep going. to the extend they've lowers their 10-year levels to artificial levels earn, then u.s. treasuries are artificially low on the 10-year side and shows as a flat yield curve. the importance in consideration is where short rates are when curbs have flattened in the past three or four or five recessions, the yield curve indicates, it's been a fed that's tightened significantly nd tightened perhaps too much. to browse the great recession.

2% at the moment is the goal and where they'll stop in terms of when we get inflation and wage growth. jonathan: that's probably what they will do but how are you ositioning on the yield curve? bill: rates don't change much about 240, 225 and a 10 year being a significant benchmark and hasn't been broken and doesn't look like it will be broken today but will be broken if wages increase at a faster ace than 2.4% if we get 2.8 or 3.0 and closer to three, then certainly the 10-year goes up but we don't see that today. tom: the questioning of jerome powell has been one of not

three deviation shock or four statistic deviation shock. when you look at the mix of fixed income, the distortions, negative zero and two-year zero in italy where swiss yields are, an example of the bill gross world, do you need to tell chairman powell that the real risk here is instabilities and outright jump conditions as we try to get into quantitative tightening? bill: that's the minskie omposition and i'm a devote of minsky but it's different these days, the bank regulation despite going the other way has tightened things up and we're in a better shape. there are negatives to this low interest rate world. i've talked about it several years and affects sabers, not just institutions in terms of pension funds and insurance companies but small sabers and ultimately the savings liability which is enormous going forward for small sabres.

and talking about education and retirement to the extent interest rates stay low they can't meet their objectives and things tart to happen and happen gradually and slowly and think they're currently happening slowly but the fed doesn't recognize it. at some point they have to renormalize and the question becomes what's the rate that renormalizes? i think it's closer to two than here we are now. tom: what's critical and it goes to a minsky moment, there's in the unraveling there is a repression and a tax act which clearly is a donor class act, will that extend or prolong our financial repression? bill: i think there are elements that it probably will but of course it depends on the central bank's reaction to it. to the extent taxes and the brunt of it is it basically a

lower corporate tax rate and a deficit of $1 trillion plus dollars over the next 5-10 years and ultimately that leads to higher inflation and nominal g.d.p. growth to the extent the fed follows it up, i suppose sabres are benefited but still doesn't benefit from the standpoint of real interest rates because it's real interest rates that add to their kitty, so to speak in terms of retirement and savings. i think financial repression has been with us and was with us for 40 years since world war ii until the volcker era and will continue for another 5-15 years. sabres are the ones paying the price. david: that was bloomberg surveillance tom keene speaking with bill gross. coming up, more with job reaction from alan krueger, princeton, university. later on we'll go live to the white house with gary cone, the economic council director for

his reaction from the numbers. live from washington and new york, this is bloomberg.

emma: this is bloomberg daybreak. i'm here? hewlett-packard greenroom. coming up, gary cone, the economic council director on the job report. this is bloomberg. trey: it was a fairly strong jobs report david: it was a fairly strong jobs report. the jobless rate held steady at 4.1% and earnings rose 2.4%, a businesses of a disappointment. here to break down what today's data means is alan krueger of princeton university. you said it's a solid report. but what do you see in the

sectors and what stands out for you, alan? alan: it was widespread job growth so even under the surface it was a pretty solid report. manufacturing stand out at 31,000 jobs last month. manufacturing also rose and durable manufacturing as it has been throughout the whole recovery was strong and durable manufacturing added 27,000 jobs. that suggests the stronger dollar is not affecting manufacturing and as the dollar strengthens i think it will affect manufacturing. lisa: the dollar has been weakening dramatically with a little strengthening but go on. what other sectors are you focusing on? alan: could be why manufacturing is doing so well because it's the most sensitive sector to the value of the dollar. temporary help was strong. temporary help has been consistently solid and the reason that's important is temporary health is a harbinger of future job growth and is a predictor of what's coming in the month. david: we're starting to get in

the christmas season so you'll have more temps. alan: these are seasonably adjusted numbers and temps are hired for the holiday season and massachusetts the adjustment compared to past years. what typically happen is when companies aren't sure whether they'll need somebody, they'll reach out to a temp help firm so that's a sign next month will be strong as well. lisa: i'm struggling because if you look under the surface and see only strength with respect to this report, everywhere except for wages. does it intensify the mystery, underpinning the lack of inflation and wage growth we've been getting? alan: 2.5% wage growth is nothing first of all. janet yellen said the market is healthy when the wage growth is 3% to 4%. lisa: at 4.1% unemployment it's not healthy yet? alan: if you look at the full picture it's not healthy yet. real wage growth has been strong if you subtract the

consumer price inflation from the wage growth, we're actually seeing the strongest real wage growth we've seen since the late 1990's. david: a viewer has written in, i won't read it all but basically, matter of fact isn't all the models, answering the questions, don't work anymore because those models were developed when there was a shortage and no shortage of anything but the shortage of models that can answer the lack of realingsship between models and inflation. i think it's going to digital which has taken away a lot of the shortages. is it fair maybe the hot ells are wrong and the phillips curve is out of date. alan: the models change and important for economists not to abandon the models too quickly or stick with the model too long. that's still an art when it comes to economics. the models do change over time, changes in not only because of globalization and digitalization but labor market practices.

i was mentioning before labor is weak below 7% of the private work force. 20% of workers have signed noncompete agreements. so it's hard for them to move to higher paying jobs. and there's no poaching agreement which are is mind-boggling that companies like burger king prevents their franchisees from hiring workers away from other burker kings and puts a stop on wage growth. lisa: you're saying models change with the phillips curve and that's the theory as the unemployment rate goes down, inflation will eventually pick up at a commensurate speed in the opposite direction. we're not seeing that. and a lot of people are saying the phillips curve is dead. what do you think? alan: rumors of the death of the phillips curve are premature. tom: to quote twain. alan: there are different ways of estimating the phillips curve. the way it's typically estimated is how does wage

growth compare this year to past years or how does it pair to recent inflation and how i prefer to estimate the model. if you look compared to previous year's price inflation, we are seeing real wages pick up. i wouldn't yet dismiss the phillips comfortable. i would put less weight on it about a than if you asks me a year ago but it's modeled with worth wile predictiveness and you'll tell me it's wrong maybe. might there be a relationship in the relatively subdued nature of the wage increase and the opiod crisis in the sense some of these men who are perhaps despondent taking painkillers are in fact depressed because there aren't good jobs or well paying jobs and have to work at a starbucks or burger king and people with some pride in a bigone era would have raised a family on the income. alan: that's correct in far too many cases. the arrows point in both directions. i think people who have been

dispiritied by the way they've been treated in the economy the past 25, 30 years may have turned to pain medication as a way of escaping their daily struggles. it's hard to determine cause and effect and regardless we have a problem we need to confront. lisa: we talked briefly about deregulation because i want to bring it up again. it's an interesting point and people say we're already seeing a boost to u.s. growth because the trump administration has been deregulating sectors at least on a agency by agency basis, a cast unseen wrote about that and to quote from what he wrote, it's reasonable to speculate that in 2017 white house skepticism about national regulation has contributed to a highly congenial economic atmosphere and increase in spontaneous optimism and is hardly the principal driver of the stock market boom and probably not a major contributor but it certainly hasn't hurt.

how much, if we have loosening up, and i'm not only talking financial but the corporate sectors, how much growth could you unleash by pulling back on the regulations? alan: my personal view is very little. i think there are some sectors where regulation is certainly a constraint, petroleum chemicals, if you look at the economy as a whole, i don't think it's played a major role and i think we have to look at the benefits of the regulation, the fact we have cleaner air, e fact that we have less pollution and if you look at the performance of the u.s. economy in to 17, 2016 or 2015, we're seeing a continuation of the previous recovery. job growth actually has slowed down. we haven't had major changes in economic policy yet and as a result we're seeing a continue situation of the economy the way it was growing previously. lisa: alan krueger of princeton.

now we have the jobs data we're looking forward to a big week for central banks and we have several taking center stage. if you have a bloomberg terminal, check out tvgo. watch us online and click on our charts and draffics and interact with us. go to tvgo on your terminal.

lisa: central bankers take center stage next week and we'll hear from fed chair janet

yellen and mark carney and mario draghi and i have to think the biggest meeting of the week will be the e.c.b. in my opinion. david: i agree with that. lisa: the fed is almost guaranteed to hike rates. david: 98 what? lisa: 98.3% being priced in for the fed futures. it's all but preset and there are questions what they say about the balance sheet unlined and what they say for forecasts next year. really it's the e.c.b. because inflation and growth are picking up and yet still have a negative deposit rate and still buying bond. david: the question is when will they give us an indication what they do after. they said how long will they keep buying and what level and what happens after that. mario draghi said we'll keep going on quite a while but wheads quite a while. lisa: other analysts say the e.c.b. could lift the deposit rate by late next year and would be a dramatic move. david: it would be dramatic and given what draghi said they'll have to stop buying bonds

because you said there will be a time between stop buying the bonds and raising the deposit rate. lisa: to give context why we care and are focused on the central banks, i want to point to the immense growth we've seen in central bank assets since 2008. it's just shocking to me. you can see just the trillions and trillions of dollars of assets that they have amassed and the e.c.b. has 5.3 trillion of assets on the balance sheet exceeding the fed's assets. the bank of japan also exceeding. just an amazing growth. this is the whale in the market, what they decide will determine where the market goes. david: the united states is coming down. the e.c.b. is picking up the slack. a lot of people think this is what the stock market is doing, not so much deregulation. lisa: i don't think the point you made is appreciated enough. we're getting just as much stimulus but coming from the e.c.b. rather than the fed.

david: if you're looking total around the world, they're still buying a lot of bonds. and it's still affecting, for example, the long end of the yield curve in the united states. lisa: absolutely. david: that's great. thanks, lisa. coming up, keith parker, head of u.s. equity strategies, lizann and gary khn and will pair with jonathan ferro on bloomberg markets. the opening is next. it's been great having you and has been a lot of fun. we got through jobs day together. lisa: did you a great job. david: boomer markets coming up next. this is bloomberg. ♪ . . retail.

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coming up, payrolls friday. 228,000 jobs in -- found in november. futures grind higher. the dollar erases some of this week's solid games. congress kicking the can down the road pay the house and senate approved an extension to keep the government open. from new york city as we count you down to the opening bell, let's whip through some of the price action. futures this morning firmer, a by one third of 1% on the s&p 500. in the fx market, a story of dollar strength. the euro dollar flat to negative by about 1/10 of 1% at 1.1765. treasuries up just a little bit. yields higher on a single basis point. the catalyst for that muted price action -- the payrolls report peter the economy adding

about 220,000 jobs. the estimate was 195,000. on appointment holding steady -- unemployment holding steady. here is what bill gross had to say. bill: i think there is hit in labor out there. the pacific -- press division -- of the participation rate is down from where it was for five years ago. the other part has to do with globalization, technology, which displaces labor and keeps the price of labor down. jonathan: joining us, keith parker, ubs u.s. equity strategy , charlesz ann sonders schwab chief investment strategist. keith: this is a continuation of what we have been seeing in august, where the data is solid, supporting a rally outside of

taxes. this is another example of positive real growth, where inflation remains tepid. jonathan: a lot of people will say where is the wage growth? do you look at this in a different way? liz ann: i do. average hourly earnings is the growth wey for wage look at. the problem is it is a simple average. to understando do the problems with that, at times, is i am sure anyone with a bloomberg can do this. look at the three-month long-term look at average hourly earnings. wages were going straight up almost the entire time during the great recession. what was happening was the vast majority of people losing their jobs during that era of 7000 and 9000 payroll jobs lost at the month -- in a month was at the lower edge of the wage growth average. i think the opposite has been in place, where we have retiring

on the upper end of the wages spectrum. a strong job growth for the younger cohort right now. that brings a bunch of lower wages into the mix. that is why i think median measures of wage growth, like the atlanta fed does with its wage tracker, may be picking up more accurately the underlying strength. that is about a full percentage point higher. go to dannywant to blanchflower. professor, always great to catch up with you. has been slack -- do you still see that story in the labor market today? danny: i do. and i do not really agree with the comments just made. above, if are well you like, the level of full employment. there is lots more slack in the labor market than indicated by the unemployment rates. what people have not actually talked about is, once again, the employment to population rate

went down, with three percentage points lower than where we were in 2008. that is why there is no wage growth. full employment is a long way away. there is lots of slack in the economy. people outside the labor force would come in if there were decent jobs. there is lots of unemployment. the mistake is to think we are anywhere near to full employment. i fully expect not to see substantial wage growth. i want to give you the opportunity to respond. liz ann: again, depends on how you measure it. tracker by the atlanta fed, it is more in the 3.2% growth. i think the labor market is fairly tight. i think most indications point to that. if you look at the number of job openings per the number of people looking, it is about a one-to-one ratio. i think this has given freedom to the fed said watch tight

monetary policy. areh: i think things getting tighter, but there are signs of some slack, where pretty solid payroll numbers at this current level of unemployment -- i would expect some bigger boost to inflation. from my respect it as a strategist and at the equity market, the key for margins is productivity. as we have seen wages why -- rise, productivity as lagged. jonathan: i want to catch up with bloomberg's chris condon. you are on top of the payrolls report when it dropped it i want to discuss the types of jobs being added, the detail in the north of $200,000 that we seem to be -- in the north of the 200,000 that we seem to be printing every month. categorye biggest rod -- private business services -- account for 159,000. see 31,000 in manufacturing,

30,000 health care. construction, 24,000. quite positive. retail, almost 19,000. a little funny number -- non-store retail saw a drop. broadly speaking, the job additions were pretty well distribution. jonathan: d.c. a problem of jobs being added to this economy? danny: the some issue -- sum issue of quality of jobs -- underemployment is a big issue. another thing is during the recession, people enter the job pyramid further down than they normally would. we live in an economy that moves to for employment, there is the opportunity to raise up that pyramid. thatobs created are not great, but we have lots of room. it is not about fiddling with

the data. it is not because the atlanta fed measures it some other way. it is that the economy is still not close to full employment. years, i willight hurt wage growth will rise, because i have not measured it correctly. we are starting to create jobs, but we are not creating enough decent jobs. that is why all of these people outside the labor force are not coming back. that is the expert nation. it is not about measuring things or fiddling with the data. that is just wrong. jonathan: what is the next move for the fed then? i think the expectation is that they will continue to raise. i think the evidence is they theably should not, but fiscal stimulus looks to be coming through. that is what the market is responding to. if that does not come through, we will wait and see. if it really does come through, the fed is in a position where it can start to raise rates, which it would like to do. it looks like a done deal at the moment, but i do not see lots of este hikes -- rate ris

coming down the road. jonathan: is the payrolls report becoming less important for equity markets as you the -- you see things? liz ann: it is one of the representations for one of the fed's two mandates. but when you listen to them talk about their dashboard of jobs indicators, it spans well beyond payroll data. they are looking at everything are.n the yolks that i think it is part and parcel. i also think we are at a stage where they are looking at some of the later cycle tendencies that we are seeing. actually, they are probably going to raise rates consistent with their forecast, which is probably three hikes next year. the market is still below that. one of the ships is that the market may be forced to move up versus the fed having to move down its expectations. jonathan: if you get a market

reconciling to where the fed is, what does that mean for your estimate? keith: we think higher rates are priced in already. , 2.75 percent. if you assume the fed gets there, we think equity valuations are about fair. what is not priced is how are -- higher growth occasions. we are one year into an earnings cycle. we think stocks and markets can move higher. we think payroll is important for the consumer. new jobs. better consumption growth. keeps the economy growing. blanchflower,y always appreciate your time. thank you. rick rieder coming up shortly, ckrock's goal of fixed income cio. later, gary cohn will join us on bloomberg tv. futures with a decent little bit come up by one third of 1% on

the s&p 500. dow futures up by about 60 points. this is bloomberg tv. ♪

♪ jonathan: live from new york city, counting you down to the opening bell. futures positive i about one third of 1%. the payrolls report dropping almost 45 minutes ago. 228,000 is the print. unemployment in line with estimates. hourly earnings, 2.5%. the estimate, 2.7%. in the markets, futures positive

. the dow up by eight about one third of 1%. the equity picture is positive. the story in the bond market may be less so. curve hasing of the left strategists with little choice but to contemplate the possibility of an inverted yield curve. joining us with his forecast is rick rieder, blackrock's global fixed income cio. great to catch up with you. sincee grounded higher earlier this week. what do you see in the evolution of the curve and the shape of it at the moment? rick: pretty incredible. there is this commentary of what is it telling you, what does it mean for the economy? is this a pernicious sign for the economy? it is actually not there is a demand for income, with the ecb and the bank of japan being slow.

there have been buyers in the very back end of the curve, particularly buying out of international buyers that has pulled the curve down. my sense is, at the turn of the year, you do not see a dramatic impact. jonathan: the consensus is it is a one direction train. very flat or at least look inbred it. do you share that view? rick: i do not. we think we will be in low interest rates for a long time. can we move up to 275? we think we can go there. the dynamic around the average hourly earnings gives us a bit of a sense that inflation is not accelerating. inflation is actually picking up. you are seeing real dynamics around when you take the compositional effects out of a number like average hourly earnings, looking at better indicators. you are looking at ms. three --mid-3's wage growth. jonathan: over the last year, we

were down about 70 basis points. next year, how are you advising clients to be positioned on the treasury curve? rick: we talk a lot on your show about the curve being flat. did you go a few more basis points -- for sure. forever, if we are going to be in a rising rate environment, which we are, the ecb will buy less security, starting in a couple of weeks. we think the dynamic that will be important is make sure you are protecting your yield, your return. you can buy assets on the two-year to five-year part of the curve. you are seeing that demand for sure duration. yield on theny front end of the curve. if you want to protect how your returns diversified globally and make sure you're not taking too much interest rate risk. jonathan: as we get this evolution as it becomes more attractive for people to park

themselves there, do you see it damaging risk appetite elsewhere? the appetite created from really low treasury yields along the credit risk spectrum into high-yield -- does it involve the other way and reverse? rick: next year, volatility will be higher. which is not a strong statement. think about what has been happening. quantitative easing creates volatility. year, the organic economy will be more important. we think you will have a much more interesting market with real dispersion. jonathan: is that they goldilocks regime of stable growth and positive returns and risk assets, that will change? rick: the volatility will change. rates will move up. i do not think they go that much higher. i still think equities -- we talk a lot about the demand for income, for yield, for return is tremendous. but you will see more volatility.

news flow gives you more volatility. you will see more uncertainty, because now central bank's not creating that option. jonathan: i want to bring the ds versuson bun treasuries. anyou go from 220, is there oxygen left up here? bunds versus treasuries? rick: yes. think about what is about to happen. the ecb will start slowing down their purchase program significantly. and by the way, growth in europe is very good. we think the dynamic about ecb slowing puts us in a lot of yield, particularly at the front end of the curve. the amount of yield you're getting up a front end without getting interest rate risk. unless you have a specific european mandate, why would you own the front and -- end? jonathan: is 2018 the year of the bund finally starts rising?

rick: absolutely. more do you go up. could you move another 40 to 50 basis points? for sure. jonathan: rick rieder a blackrock will be sticking with us. strategistsl street see the debt rate falling in 2018. we will get you up dated on that. 12 minutes away from the opening bell. this is bloomberg. ♪ account -- the countdown to the open. ♪

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about nine minutes away from the opening bell. futures positive. we are up about one third of 1%. time for your morning calls. a look at the big movers on the backside of analysts admonitions. first up, drugmaker pair ago from a buy to a hold. point upgrading lending point to neutral, pushing shares to the lowest since the company's ipo. finally, morgan stanley predicting significantly lower u.s. credit returns next year. analysts saying late cycle and fundamental risks being rationalized as purely idiosyncratic problems. we view them as faultlines. still with me is keith parker of liz ann sonders of charles schwab, and rick rieder of blac krock.

rick: the point about our credit spreads if they are too tight. reallyink some of those tight trading sectors will be -- do i think some of those trading sectors will be really tight? i do. i think we have an extraordinary point in time where cash flow is still quite good. i do not think there is necessarily a fault line issue. jonathan: i think we has a credit spreads are too tight for the last five years. they get tighter and tighter again. is there any plate that's reason to believe that change is next year? liz ann: the relationship to the equity market, my area, is important. you tend to go in cycles, where correlation is, at times, extremely high. i am not sure that persists in 2018. jonathan: there is this idea that the shakeup we had about a month ago, 80 you credit factors about the collapsing merger of a

specific telecom company that we got from there, is that your view of what happened the last three months? rick: telecom and health care created this idiosyncratic pressure. it is larger because of technology. energy was an idiosyncratic moment. there is more idiosyncratic that is coming. you have to be careful. you can put most of that in high energy. so you have dynamics that will play out into next year. you have to be very careful about the names you own and the sectors you own. jonathan: de-identify any sectors, part from energy, where these companies are being ran for the debt holders are not the equity holders? rick: that is a chick you wonder the utility sector is one that will be extremely sensitive. i do not think there is any

company -- i do not think there is any company that is run, necessarily, for the debt holders. but the financials have to be incredible, given how they are geared. i do not know that there is any today -- you still have to drive equity has prior -- higher. jonathan: when you think about year, doe factors next you thinking -- are you thinking more and more about illiquidity? keith: 100%. we have lived in a world where liquidity in the system has been fused by extraordinary numbers. that is coming out, and it will be more -- the organic economy is great in liquidity. when you get one of these events, markets go down quickly. careful.to be really volatility will be a bit higher. as a questions that are not that cheap -- if they give you liquidity, they are worth a lot. jonathan: what does being

defensive look like right now? rick: how much interest rate you have is important. there is asymmetric risk. we have talked about some of the credit spreads. parts of the financing markets. that are price markets asymmetrical to the downside. in terms of the equity market, you can buy upside complicity in equities that is really attractive without taking as much as upside risk. so diversification, how you manage a portfolio. glowing -- going global that diversify the interest rate you have. people have come around this table and say it is time to get defensive next year in credit. but how few i have met in equity saying the same thing. why is that? keith: we are still at that point where asymmetry is pointed to the upside. we are one year into an earnings cycle. valuations are not high in aggregate.

i would agree. where -- what is cheap in the equity market is convexity. we do see opportunities, after 10 years of qe, dispersion amongst was -- returns have been near all-time lows. we are seeing that pickup. jonathan: keith parker alongside liz ann sonders and rick rieder. this course is as follows. the payrolls report -- an upside surprise on the headline number. wage growth slightly disappointing. futures go up 16 on the dow. up one third of 1% on the s&p 500. in the bond market, treasury yields grinding higher by a single basis point. ♪ is this a phone?

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week, down by about two tons of 1% over the last four or five days on the s&p 500. no real drama. weaker losses. as you hear the opening bell, here is the story in the bond market. have been higher throughout the last hour or so. then we erased some of that move. at 93.87.r strength up 1/10 of 1%. the bloomberg dollar index on course for one of its best week of gains so far this year. are 57.58 come up by about 1.6%. still with us, keith parker and rick rieder as well as liz ann sonders. how much pushback did you get on the call? keith: quite a bit. we had a 900. we also put out an upside case of 2300 if tax a form and a few more things come into fruition. i got a lot of emails back that

said i will take the under. close at as we set to maybe all-time highs once again on the s&p 500, i imagine we will do that at some point over the next couple of weeks. you find yourself sitting down with clients and facing the same question you have faced over the last couple of years? when does it end? liz ann: yes. but there is less skepticism. there is a bit more optimism. not to the point where i feel it is waving a flag of excess optimism or euphoria, but just in the last couple of months, noticed a shift from what had been nonstop questions -- not to much when is it going to end, but why is it even doing this? what is the black swan you are missing? was matchingoral the institutional investment, i would be worried. looking fore you

the amount every tell action getting into this market? liz ann: you're still seeing more action outside of the u.s., which may be good outside of the flows, but lesser in domestic equities. cumulative flows are still relatively negative. 1%athan: up by about 2/10 of on the dow pay let's take you over to julie hyman. julie: watching up and down movers, not necessarily moving along with the broader market move. we want to start with something -- we wanted to start with something different, but we start with at&t and time warner. not much is after the judge pushed back the deadline for a trial on at&t's purchase of time warner until march 19. this creates a longer overhang for the deal. start date.ter this is the department of justice antitrust lawsuit we are talking about. this could potentially cost at&t , since there is a cut off of

april 22. we will keep an eye on that developing situation. we are also watching a square this morning. shares of for the fourth straight session, gaining another 2.5% today. we have had a lot of analyst commentary are bound -- around square. payment processors are going to benefit from a changing retail landscape. the consumer migration towards things like e-commerce and online payments. of course also, there is square's link to bitcoin. it seems anything tied to iscoin, even secondarily, gaining at this point. you can now be -- you can now app.itcoin via square's with itsesson out numbers, slashing its forecast. the ceo of the company saying fear-based motivated by an

we saw during the prior administration has now been replaced by the search for bargains. and there is too much promotion in the gun business. zonehan: a bitcoin-free this hour. julie: good luck. joining us is chuck grom. me of the silent winners for so far has been walmart, up by some 40% in a way when people thought the only win and retail was going to be in e-commerce, and it would be amazon. your thoughts on where we go from here. generally speaking, the consumer seems particularly healthy over the last couple of months. obviously, that is that an important time of year with black friday weekend just concluding. you're really seeing strength not only at walmart on the low end, but we have seen strong reports from dollar general.

yesterday, dollar tree. the lower income customer seem strong. we continue to like walmart. we like what they are doing online. we continue to see a grinding north of $100 crossing into 2018. you. one question for the retailers have to bring costs aggressively, including real estate. any sense of how that transpires from here and what they do with entrenched real estate? let's just focus on the department stores in particular. i think that is where your question is coming from. i think you have seen a number of companies closed doors over the last couple of years. the retailers in general have really been operating in a know, compronment -- no- environment. they are getting used to run their businesses in a very tough environment. in the hypothetical, if we start to see a resurgence in sales in

some of these department stores, the leverage and the model is significant. i am not sure we will see that yet, but early signs for some of these department stores are favorable. keith parker from ubs. the retail market got a pretty big boost from shifts in perception around tax reform. have you see things now? what is priced in? and what has overshot? chuck: great question. that is the number one question we are getting right now. 30%srt has moved from down to close to up to 1% right now. how much is tax reform, how much is the consumer being stronger in the month of november? is from colderat weather, the election distraction from last year -- it is hard to know. look out to 2018 and say where do we feel the most credible with our numbers?

read we feel like those models are sustainable? ofill give you a couple names to home depot, walmart, dollar general, dollar tree. those are survivors. there's an interesting with the next couple of years. jonathan: what is the store you want to play around retail of the moment? there is this x -- obsession around brick and mortar, but payment processing services have ripped through. do you have more enthusiasm for that sector? liz ann: i do not follow industries. it is the case that some of these payment processors figured out how to tap the corn frenzy and probably got a little lift in their stock prices as a result of that more so then maybe underlying fundamental business success. fromhan: my experience talking to you is a very thoughtful outlook around the

bond market, but at the same time, the king about what amazon means to your world -- what does it mean to your world right now? brandsou think about how used to work. now you are shifting the nature of commerce in terms of what a brand is. a brand can change instantaneously in terms of have -- how they are changing. inflation does not have to grow. it is that dynamic around the cost of data transmission, the cost of data storage, going to zero. jonathan: is low inflation something to fear or something to welcome? rick: no. even average earnings -- we think inflation will move in the low twos. it is hard to see goldilocks living like this for a long period of time. you will not see significant

inflation. jonathan: what is the big conviction trade for you guys going into 2018? rick: in fixed income, the sense of going global. real rates are positive. developed markets are raising rates. like you saw the last few months, you'll see this convergence of em to dm. that is where the opportunity is. a bunch of it is owned in, particularly, spread assets. ofathan: rick rieder blackrock, appreciate your time. chuck grom, of gordon haskett, thank you. almost 10 minutes into the session here in new york city. by one 500 advancing third of 1%. the dow positive 33 points. ♪

♪ emma: i am emma chandra in the hewlett-packard enterprise green repair coming up, said harris, the former u.s. acting secretary of labor. this is bloomberg. ♪ jonathan: from new york city, this is "the open." a stronger than forecast jobs report to the economy adding a better than estimated 228,000. that is how many jobs were added in november. hourly issue -- outward earnings coming in just a bit lower than forecast. here is some of the reaction we have had on bloomberg tv.

the topline number was spot on to what brad was expecting. wages are little week, but 2.5% is edging up. at least it is moving in the right direction. the labor for staying steady. incredible dynamics. there is a must this commentary of what is it telling you, what does it mean for the economy. it is not a pernicious sign. there is a dynamic at play with the demand for income, for yield. >> there is some hidden labor out there. their participation rate is down significantly from where it was 4, 5, 6 years ago. that is part of the answer. the other part has to do with continued globalization. the technology which displaces labor and keeps the price of labor down. jonathan: a look ahead into 2018. still with us, keith parker of ubs and liz ann sonders of charles schwab. we started with the payrolls

report and what it meant for the fed. as you sit with individuals planning for next year, is there still a fear of how many times the federal reserve will move next year, and should there be a fear? liz ann: anyone who has an income orientation uses this in the opposite way. if you think about the deleveraging happening across household sectors in the last couple of years, it is about a five to one ratio of assets on household balance sheets that benefit from higher rates versus rob -- liabilities on household balance sheets that are hurt. that is something missing in the argument. in addition, financial conditions have gotten looser in the last two years since the fed again -- again raising interest rates. what is sometimes lost is we have easier financial conditions now than we had two years ago. jonathan: is it a downside case for you, the defendant? our downside case is the

fed continuing to hike as we get growth stagnation. we quantify that as down the little more than 15%. the fed has proven that they would respond to a growth signals. so we see the upside case likelihood much greater than the downside. jonathan: one of the biggest beneficiaries is banks. a conversation has emerged about rotations. rotations out of tech into financials. does one have to do well at the expense of the other? or can we have another year where tech and financials perform well? keith: i think you can get banks benefiting from a rising fed rate. valuations are not full. you benefit from lower tax rates . we are talking about wage costs. looking at unit labor costs of financials in the u.s., they have outstripped that of non-financials by 15% since the financial crisis. and high-growth is cheap. we still see those beneficiaries

of corporate sprint is the second quarter affects our trade. andthan: liz ann sonders keith parker, thank you. of next, gary cohn. that conversation right here on bloomberg tv. ♪

♪ about 20 or soe minutes into the session here in new york city. let's get you up to speed and financial markets. the jobs report coming in from her on the headline number. unemployment coming in line. wage growth slightly disappointing. the s&p 500 up by around nine points. of by one third of 1% pay the dow up by 50 odd points.

a rally in year up as well. some enthusiasm for adding a to potentiallyk close out for a weekly gain. the story of the dot -- bond market looks like this. treasuries unchanged at 237 on the u.s. 10 year. on the dollar, a story of dollar strength. we stay there as we approach a 94 on the dollar index. the euro-dollar just a little softer. down to 1.1759. for the trump administration's views on the jobs report, we are joined from the white house by gary cohn, national economic council director. decent jobs numbers again. the obsession on the street not the jobs report about the tax bill that will go through congress. you said to me about a month ago ratethe 20% corporate tax is a redline. it does not look like a redline

now. the president suggested it could go to 22. is it still a red line? gary: here's what we know. we know we passed two bills, one in the house, one in the senate. they both had a 20% corporate tax rate in them. conferenceare in right now. the conference between the house and the senate -- they are supposed to conference the differences between the two bills. that is what we know. sounds like we are 20%. jonathan: what is the message you are giving? that's one of percent is negotiable now? the president is adjusting it is. gary: we are in the process where we have taken two bills, one by the house, one by the senate -- they have written independent bills. we are trying to bring them together into one bill that will be re-voted on. agree onttee needs to what will be in there. they're supposed to merge differences and agree on the differences. that is the process going on.

a lot of that will happen this weekend. hopefully by the time you get back to work on monday -- we are working all weekend. jonathan: we work the weekend as well, you know that? gary: i know that. pretty final tax bill him know where we will be. there are a couple of moving parts in the air. inhave to get an agreement both chambers. we have to deliver votes in both chambers to there is a lot of progress being made. jonathan: i know you will get super frustrated with me, but you have not answer the question. as 20% a redline for the white house? gary: the president talked about 20%. the bills have to percent in them here that is where we are. that is what is in the conference committee. jonathan: there is a conversation about expanding that $10,000 property tax cap to include income tax. does the white house support that? -- is thati think on

there are about 70 south state members in the house. we are concerned about them. no one really wants tax increases. they are trying to say maybe we should expand the $10,000 deduction not to just include real estate taxes but to also include income taxes. the white house is fine with that, if that is where the conference committee goes. jonathan: would use a increasing the corporate rates would accommodate that? conferencees -- the working thatare out themselves. we have told you the whole time that the white house is involved, but ultimately, the tax bill is written by the house and the senate. we have to get a voted on by both changes. s chambers. -- chambers. jonathan: people found out the amt rate is still in there. would you like to see that repealed? gary: that is one of the areas

where there is a difference between the two bills. that is one of the issues that are working.ees we would love to get rid of the amt rate, because we do not want people to do their attack twice and pay the higher pay one of our corporate sepals was to signify the tax system. amt makes the system much more complicated. we would love to have a simple system where people can do their taxes on a postcard or a simple sheet of paper. amt complicated the system. jonathan: the jobs report coming 200,000. but wage growth still disappointing. you said before that this administration is driving some of the payrolls gains. the also accept is possibly for the wage growth story as well, that is not proving the way people want it to? .ary: we do that is why we need tax reform.

we have been saying consistently that we need tax reform. when he to allow workers to keep more of what they earn. more importantly, we need to be able to drive more wages to our hard-working citizens of this country. we firmly believe tax reform will drive to wage growth. yet seen reports -- you have seen reports that we believe driveax reform plan will real wage growth. jonathan: you understand financial markets, so i can talk to you about what is happening in the two-year, 10 year spreads. some people believe the market is casting a vote against the administration -- what is your read on the bond market? gary: the bond market right now is a function of a lot of stability in the economy. growth in the economy. as you said.,

and lack of inflation in the system. the same thing we have been looking at for a relatively long period of time. we want to break this trend of low wages in the system. we are confident we can do that. we move away from tax cuts and tax overhaul, once that is completed, do you think we can get infrastructure spending back on the table again? is that something you want to drive? gary: absolutely. there will be two major initiatives in the new year -- welfare reform and infrastructure. our infrastructure plan is intricate and expansive. the president is really behind the infrastructure plan. he is spending a lot of time with us to go through the plan and really understand it. he is driving us aggressively to get out there with an aggressive infrastructure plan. jonathan: i had to ask for a timeline because that timeline for taxes just drifted through 2017. but for you? gary: we will start at the

beginning of the year. infrastructure tends to be a slower process. there are about six or seven committees in the house that have jurisdiction over infrastructure. the thing we can do that has the most impact is the approval processes. we need the speed of desk speed up the approval process so money can be spent. jonathan: guess what i will ask you next about markets --bitcoin . is the white house watching what is happening with bitcoin? is this a serious risk? it is something you're worried about? gary: of course we are watching it came right now, we do not think it is a serious risk. jonathan: is a something you want to act on? is it something you need -- you think needs to be regulated? gary: as you know, i think the cfd has approved some of the

futures contracts. there has never been a trance mark -- transparent market in bitcoin. we have watched this happen before as markets have evolved. jonathan: gary cohn, white house director.ouncil joining me a land -- around the table, lisa abramowicz. we saw the aggressive choice than in the yield curve. it was about infrastructure spending. lisa: alan krueger of princeton said something interesting. he said the tax plan, as currently drafted, is actually negative with idea of infrastructure spending. it takes money away from high tax states that may need to invest more in infrastructure. it also removes one benefit for many bond funding. should there be an infrastructure bill, it may just achieve some kind of equaling out of the playing field, which

is interesting to watch. jonathan: you and i have gotten back and forth on this -- is two tends a no? lisa: i was lookinglisa: back on this. fed officials are saying this is nothing. just technical. we know what happened afterwards. the nikkei, february, 2007, saying this is no big deal, this time it is different -- it was not. weathan: this time around, are blaming the ecb and the bank of japan. lisa: that is right. the reality is it has always been a predictor of a slowdown. always. every single time in history. to those people who say this time is different -- history is working against them. lisa: 3% is coming through on gdp, though. have you met anyone who thinks that is sustainable? lisa: here's the big question. why are we getting 3% growth if we are not also getting

inflation, also not getting a material increase in labor participation? why are these other signs not showing the same kind of strength we are seeing from the employment and growth picture. these are the questions people are asking themselves. it seems like a but give. we have to see faster inflation, otherwise gdp numbers are too high. jonathan: you have been busy. thank you. that does it for us as we counted you down to the market open. a 4/10 500 positive by of 1% and back at a record high. the dow up by 63 points. from new york city for our audience worldwide, you are watching bloomberg tv. ♪ >> it is coming up 10:00 p.m. in new york. i am vonnie quinn. live from our

brand-new european headquarters in the city of london, i am mark artan. welcome to bloomberg markets. .- i am mark barton welcome to bloomberg markets. vonnie: we are going to continue our coverage of the jobs report. brexit news. we start with breaking economic data. julie hyman is here to give us the details. reading foris the consumer confidence, slightly below the 99 that was estimated. we are seeing cooling for a second month. it does remain at a level consistent with a steady economy and a solid job market, which we heard about earlier this morning. it is the expectations measure that appears to be responsible for this decline. it declined 84.6 from 88.9.