Has made it at the top of my board. 10,000. Jonathan im not an idiot and i am not trying to call the top. Alix it will be a topic of conversation. David there are some things going on inside the business emma chandra is here with first word news. Emma it is the Biggest Online shopping day of the year in the u. S. Ecommerce is expected to rise almost 17 from the year ago to 6. 6 billion. Online spending across the Holiday Season is projected to rise 11 , the most ever. Germany is edging closer to getting a new government. Chancellor Angela Merkel has began negotiating with the social democrats over a potential partnership. She says any Coalition Partner would have to support a balanced budget and probusiness policies. And there will be Royal Wedding bells in the u. K. Next spring. Prince harry is engaged to american actress meghan markle. The announcement came when his father, prince charles, puts him fifth in line for the british throne. Global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. David thanks. Clearly that news about royalty is the lede. Congress has returned to washington today and it is getting ready for a long weekend of tax reform, with the president having meetings with Senate Leaders today and tomorrow. The senate is scheduled for a marathon round of amendments on wednesday and a full Senate Vote Coming maybe as early as thursday. Joining us from washington, our Bloomberg White house correspondent. That timeline is pretty aggressive. What does the reporting tell you about the likelihood the senate will vote on this by thursday . They will not vote if they do not have to vote. It will really depend what happens over the next 48 hours. The president will be meeting with a number of senators, the Senate Leadership will try to convince the number of holdouts that have not voiced their support, try to address their concerns, twist some arms, tried to get the votes to become hard yeses. Some people are withholding their support in the senate right now. Over the next 48 hours, there is going to be a fullcourt press to try to firm up those votes, and if they do, they will vote on thursday. If not, they can push it to next week, making it much harder to get something to the president s desk. David what do we know about the issue or issues that might sway those votes one way or the other . There are a couple different issues. The biggest is concerning the most numbers of senators is the issue of the debt and deficit. There are a number of budget hawks, including a couple senators who are retiring, bob corker and jeff flake said they dont want to blow up the debt, and right now the numbers show that at least 1. 4 trillion would be added to the deficit by this tax reform. They are going to try to convince those senators that there will be enough Economic Growth to cover all of that spending and all the tax cuts that will be heavily weighted toward Corporate America and corporations. 4 idea is that if you have additional growth, you can pay for that 1. 5 trillion in tax cuts. David before we let you go, what about the cfpb . There is a big drama about who runs it, and there are two people showing up with think they run it . Yes. You have President Trumps interim director, chosen last week, mick mulvaney, and the outgoing cfpb directors deputy, that was also selected last week. They have both been selected. There is a debate over which statute will prevail as to who has the power to install the interim director before a permanent director is installed. This is something that could be decided by the courts. Right now there is a lot of uncertainty about who was at the top, and it is important that the white house wants to have its way and have its person in there while the outgoing director wants to have someone who more aligns with his vision and his thinking on what kind of agency the cfpb should be. Jonathan appreciate your time. A busy week for you. Bloomberg d. C. Reporter. Joining me, the absolute Strategy Research chief investment strategist. The fiscal hawks have gone quite quiet over the last few weeks. Will they reassert themselves . I think we will see that coming through this final weekend. Clearly the president wants to get that deal done, but there is a question about the bipartisan support, which is why the Consumer Protection board is so important. Its critical to get this through, and that question mark about will it bus the debt ceiling, how much growth can you generate to get this through the cbo . Those are the key questions, and we are still very dubious about whether we will be able to drive this. Jonathan do you think bipartisan support is crucial . Think you have got to Say Something that works for both sides, and there is a question mark about favoring the corporate sector, the rich over the Broader Community . It is still an issue. I think that is limiting how far you can push these tax cuts. Reforms, andtax that is the thing that limits how much growth you are going to get next year. Our sense is this isnt going to be a massive game changer for you was growth in 2018. It is only about a quarter percent, half percent and most. T encourages the fed to raise rates more aggressively and you will nullify the effect. The president will want to get something through, but the impact for the market in the economy will be limited. Francine you mentioned the economy more, but what will it mean to the market is the big question mark. I want to point out what our correspondent said, traders and investors they have brought Economic Growth forward, and they are betting the comprehensive progrowth policy response will eventually validate what otherwise could be quite fragile markets. I know you are a cell rally kind of guy, but what do you think . That is the rate story. The question we have been asking clients is have you changed your longterm forecast . Most of them say no. If you havent, then we have a 20 gain in equity markets. How many years of return have you bought, exactly on that assumption that the shift from loose money, tight fiscal two loose fiscal, tight money will really change the dynamic. My view is one is loose and one is tight. You still go nowhere. You still have this muted growth environment. We are not going toward 3 or 4 growth. The muted cycle makes it very difficult to break out to the other side and change the dynamics from growth to value. Francine you do get a Corporate Tax rate of 20 . That has to create some winners. How do you play that will still keeping this pessimistic view of the market . You have to take the viewers to where does that 20 play out . It certainly helps smaller cap stocks. I think the worry we have is that, if that is offset by these tighter Interest Rates, then the ability to take advantage of that from the market, and how long can those earning gains be sustained . Equity markets drive off that longrun Earnings Growth. All it will do is bring equity market multiples down, from 20 times to 16 or 17 times. But the truth will be is Global Growth is slowing, if u. S. Growth is slowing, it will be hard to sustain this market. David the fed has said time and again that they are going in the direction of tighter Interest Rates, irrespective of what goes on with taxes. Arent we better off having the fiscal stimulus, and can extend the Business Cycle . That is the key point, david, which means what can you do with this Business Cycle . If we drive down the fiscal expansion toward 3 , we are starting to see wage pressures coming through, we are starting to see breakevens not coming down when the bond market comes down. We are starting to see signs of inflation. The thing that has boosted the equity market this last year is this very benign tradeoff between gdp growth and inflation. It has been better these last three years, but it works around the tech bubble. You have to go back to the 1960s before you had it as good as this last time. This fiscalthat stimulus will change that dynamic between growth and inflation, and that is the thing that tends to undermine profit shares, so you need the tax cuts to offset that, and it undermines valuations, which is why this market will find it hard to really break through in 2018. Jonathan as we go from capital returns to Capital Spending next year, is that a positive point of view for the market . Capital spending would normally be very positive, but you need to have strong Earnings Growth to support that. You need higher oil prices, and you need Pricing Power for the corporate sector to drive Capital Spending. Everybody is expecting its already priced into equities, but you havent got the underlying drivers. Jonathan ian will be sticking with us. Still ahead, President Trumps pick for chair will have a hearing tomorrow. He will be grilled on Monetary Policy. What should we be watching from his remarks . That is next. This is bloomberg. Emma President Trumps kick for the fed will be in the hot seat tomorrow when he faces his confirmation hearing. This will see our real first chance to find out what he thinks about regulation, Monetary Policy, and for a preview we are joined by our policy correspondent, Michael Mckee. Still with us, ian harnett. Mike, whether or not he gets confirmed is not the question, it is what will we hear . I dont think you will get a very strong group. We already know what he feels. He is a centrist on the fed. He has voted for the last five years so we know what he thinks, unless he has been hiding some disagreements that he couldnt bring up, he thinks the fed is on target, trying to raise rates toward a neutral level, and inflation is likely to rise to the feds target, although it will take longer than we thought. There are reasons to be concerned about Financial Stability. Markets may be getting ahead of themselves. The fed may have been too low for too long and it is time to keep raising rates. Alix but the inflation question, where will he said . Dovish or hawkish . It feels like we saw a dovish tone than the minutes last week. He is probably going to come down somewhere in the middle. He has not spoken in depth the way janet yellen has about inflation and why they think it has been so low. She has brought up the idea that maybe our ways of calculating or forecasting inflation dont work anymore, but we dont think that is the case. I would think he would be in a similar situation. Hes not an economist by training, he is a lawyer. No offense, david. [laughter] so whatever he says about that is probably going to be informed by the feds staff, which has made its views clear, that the models they use still work. Ian, i want to come back to the inflation question. Its going to be very hard in this hearing without raising the question of what happens if the tax cuts go through . How will he react . We dont know the answer. I think we come back to the question about the phillips curve. If you think these tax cuts are supposed to boost growth, drive unemployment lower, the belief is still there in the Federal Reserve that the phillips curve works, and if that is the case, you can add to those inflationary pressures. I agree with the idea that, as a lawyer, he is likely to be more rulesbased, which means he will be looking at these models that suggest Interest Rates go up higher and faster. Yes, they will be concerned about inflation going higher in a fiscal stimulus environment, which is why they will be prepared potentially to raise rates faster than they should. Know, do wewhat you have any indications about whether it is right to the rulesbased and inclined to raise rates, or whether he might be more patient with President Trump and his tax plan . That is two different questions. The tax plan, the argument is simple. We dont know what it is going to be, we dont know what effect it will have. That it is and say not only the stimulus to Consumer Spending that might boost inflation, it is also the idea that they will push stock prices higher, which seems to be Donald Trumps whole goal. If you are worried about Financial Stability now, you would only be more worried in that case. Powell has not suggested in the mode oft he is of the alan greenspan, but i think at this point, since he is not presented with a decision tree, he probably doesnt have a strong you. Jonathan how does what he says this week differ from what chair yellen says . That is interesting, and that is probably what the parlor game will be. They will be dissecting both testimonies, because she talked to the joint Economic Committee on wednesday and tried to see if there is any daylight between them. Your baseline is what janet ifllen has said and done, and powell suggest any change, that would be news for wall street. Theres a pollard game about have a parlor game about how many times they can raise rates. That is what they are going to be trying to do. Jonathan if they say to chair yellen, do we need a tax cut . Is her answer different than governor powells . I dont think they will be different. The one thing we know about governor powell is that he is a consensus builder. Our expectation would be there busy we get a very similar answer. The key question is, who are the other appointees going to be . How was the rest of the shape of that board of governors going to shape up, as to how you build a consensus with what kind of person, . That will be the defining factor, i think, in this new era of the Federal Reserve, and our guess is that President Trump is going to launch a have that growth coming through. About calls to deregulation, how does that fit with Financial Security . Something has got to give. Alix the time is ticking. Thanks very much, ian harnett. You will be sticking with us. A programming note. Bloomberg will have big coverage of jay powells confirmation hearing at 10 00 a. M. New york time. We will bring you fed chair Janet Yellens testimony before the joint Economic Committee. Coming up, bitcoin approaches 10,000. The cryptocurrency is up more than 45 over the last two weeks. What if anything can slow it down . This is bloomberg. Alix this is bloomberg daybreak. Meredith hasisher agreed to buy the struggling for 2. 8corporated, billion, including debt. The Koch Brothers are supporting the deal with an equity injection. This was thanks ceo since 2009 boris colletti is leading to join a private group, replaced by a deputy ceo. Has said the region will account for a third of the banks. Business. It was less than a year ago that bitcoin hit 8,000 and now the cryptocurrency has blown past 9,000 and is showing no signs of slowing. It has attracted more mainstream attention despite warnings of a bubble. It has gained more than 800 this year. That is your Bloomberg Business flash. Jonathan thank you. Im struggling to keep up, genuinely. How many bubble conversations can we have about a cryptocurrency that keeps going up . Jonathan every year we have had that conversation. David it was just last year we had that 10,000 call, which we thought was bold. I think we end the year at 10,000 in bitcoin. He said that maybe end of the week is where things will go. Its clearly driven by global liquidity. I think the interesting question is could the ecb defined what happens to that coin . The big driver of global liquidity, 1. 5 trillion of global liquidity, 1. 3 billion of that has been from the ecb. If we start to see ecb tapering, is that going to be the thing that undermines the bitcoin dynamic in 2018 . Jonathan it depends on what you think is driving it. I done think retailers are looking at the ecb right now. Absolutely not. Jonathan and the stat that went around, the amount of accounts that have been opened, 13 million. This is a retail phenomenon. Retail investor gets involved, it becomes more tricky. The interesting point, as you suggested, is that the retail is ahead of the investor. We are hearing more Institutional Investors getting involved. You cant ignore 850 return. But the question is, what is the liquidity in this asset, and how much is it global liquidity driven . My view is that anytime you get an exponential trend, it is a bubble. How much do you lose with bubbles burst . 80 of value. That will be the question. Will we suddenly find no liquidity and get real money . Alix to me, the quote of the day comes from david cycling. He said the behavior seems deeply irrational, but those inclined to dismiss it and bet on an inevitable decline must remember that humans are deeply irrational. But at the end of the day, you need liquidity. You need someone to have liquidity to buy this. Gives said by the amount of liquidity in the global economy, and what we know as the Central Banks are playing a crucial role. The other thing we know is that next year, the fed is going to be on qt, taking money out of the market, and the ecb will be reducing the amount they inject. With the fed also starting to raise rates as well, that liquidity environment has to get harder. Longerterm, we are going to see a move toward cryptocurrencies. What we are