this is bloomberg. ♪ scarlet: paul krugman is with us. ryan is now converging on the adjustment tax. what are the merits in its current form. sumven if you are total democrats as well. used tothe proceeds are subsidize wages. making a tax break available to companies that hire domestic labor, they are not paying corporate into thumbtacks, we have the value added tax, including a border adjustment sales, if you will tax you also want to with foreign investors. domestica subsidy to labor. .t has been misunderstood it is about just changing the way we do -- wait -- the way we tax corporations. the main thing is to reduce tax avoidance, maybe, to lead to a stronger dollar. that will push up the dollar. the effect on the trade valve -- balance will probably be minimal. it might improve tax collection and reduce the amount of distortion. joe: could it create more incentive for companies to create more in the u.s.? the essence of what trump has promised his voters. paul: it could but probably not. the reason we have trade weicits in manufacturin

later, paul krugman will join us at 3:30 p.m. new york time.r go> on the with tv < bloomberg. ♪ scarlet: it is 2:00 p.m. in new york, 7:00 p.m. in london. oliver: welcome to "bloomberg markets." scarlet: we are live from bloomberg world headquarters in new york over the next hour. here are the top stories on the bloomberg and from around the world that we are tracking. the dow, s&p and nasdaq all hitting record highs. the dow topping 21,000 for the first time ever. dow transports and the mid-cap also hitting new highs. investors are growing confident of a rate hike in march. the likelihood of an increase has jumped to 80%. , theaker of snapchat biggest social media ipo since twitter -- plenty of reasons out there to buy the snap ipo. will investors to ground? -- stick around? let's check in on where stocks are trading with abigail doolittle. what a rally we have here. lots of risk on for the major averages. the dow, s&p 500 and nasdaq all sharply higher. the nasdaq in the s&p 500 having their best day since for the election. -- and the s&p 500

coming up, paul krugman joins for a full 30 minutes today at 3:30 p.m. eastern. we get his thoughts on trump's remarks to congress. and on the chair, janet yellen. eye on theep a close dow. it has broken through the 21,000 mark. it seems like yesterday it broke through 20,000. bloomberg will be keeping a big eye on this development today. this is bloomberg. ♪ i ame: from new york, vonnie quinn with mark barton in london. this is "bloomberg markets." over.g us is all yesterday we saw fed fund futures increase from 30 points up to 80 points. is a march hike priced in? could this reverse quickly with a disappointing jobs report? oliver: it started moving over the last week. --t monday there was a 30% last monday there was a 36% chance of a hike. yesterday afternoon we saw that go to 80%. so the chance of a march hike is increasing. with that being said, there is a lot of job market -- going on with the fed and i don't expect that to change. talking onet yellen friday. and we have payrolls friday. those two events will be very crucial in seeing whether or not we get

david: john, i still haven't heard a mea culpa from paul krugman at "the new york times," who claimed stocks would go down in value. instead they gained $3 trillion in value. this is quite an admission of he el-erian, no? >> absolutely. we began the show talking about where were the tax cuts. we didn't recognize how much regulation and threat of more regulation was holding the market back. el-erian was so far off in his predictions, removing regulation, not getting tax cuts set the market up. david: we rarely hear that. scott, i'm wondering how much further the trump rally goes if for example, you get a deal on obamacare and tax cut can by the august recess? i think we could forge ahead without a pullback, don't you? >> i do, david, and i think any pullback should be purchased. the market is a great future discounter. if you have things like tax reform and regulatory reform that boosts stocks. that takes prices higher. they know the future value what happens today is so much greater than where we are. david: scott, john, a comfort to have you on. you both are great. >> great to be wit

paul krugman said it would never recover. it did exactly opposite.'re too young, most people don't realize you're a young man. you were in your single digits when ronald reagan was elected but i remember when he was elected, there was this renewed optimism from limits to growth mentality to renewed optimism all of the tax cutting, all of the reductions in regulations led to the technological revolution, led to computer revolution. led to cell phones et cetera. i'm wonder if we're on the cusp of that again? >> you know, doing some math in my head, thinking about night of the election, overnight the futures were way down. david: 800 point down. >> dow futures were near 17,000. now here we are at 21,000. it is absolutely amazing. 22, 23%. david: extraordinary. >> clearly animal spirits, not dissimilar of the excitement when ronald reagan first came into the seat. let's see if we keep it going. david: tom, this is the last question. you were very kind to stick around. we had breaking news about jeff sessions and i appreciate it so i will throw a nice one

it's not normal that trump appointees and members of the trump campaign keep lying and paul krugman had a very good column today that pointed out that they lie about many things other than russia. >> right. >> but i'm also concerned with this obsession with the russia story and the supposed russia conspiracy which is traffic -- i'm concerned with that for two reasons. one is that it's trafficking in this sort of russia paranoia is that it's an intuitive sense that will have traction with trump voters and another reason is that this is intelligence driven. it's driven by people in intelligence agencies who are leaking. they're setting the agenda, we can't verify this information. reporters are picking up citing anonymous sources. the leaks are sort of -- controlled and timed by people not in the public eye. this is not a good situation. >> right. and i sort of share those misgivings. to me the two things i keep coming back to is the following -- strong consensus not just the intelligence agencies but other folks i've talked to in computer world that it was putin-aligned hackers in some f

. >> larry kudlow and paul krugman. when do you see them together on the same issue? >> i think your second point is super important when we still see manufacturers with all of this optimism. part of the executive order is looking at trade abuses, put aside the trade deficit. we hear from ceos behind closed doors, happy about the shift in attitude. >> okay. >> that they're going to be tough about those. >> the things that matter that take away manufacturing jobs. in the first order 80% to 87% is automation. in the second order, things like lower labor costs overseas. in the third place, you might put something like the idea that they have that we have environmental rules and labor rules and they don't, something, by the way, tpp was going to address, which we're not now going to address. and then you want to put the actual administrative things, it might be not even on the list. >> the thing i hear the most, the greatest frustration, is, for the most part, chinese companies can invest here in almost anything they want. the minute a u.s. company wants to invest in chin