, one of the three softer currencies against the dollar. I wanted to follow the tech selloff. Nasdaq futures are down again. 7 . We have seen that industry continue. Lets get an update and wants making headlines. Emma chandra is here. Am it there is a turn in the tax bill debate and Republican Leaders are scrambling to save the bill. Mitch mcconnell sent lawmakers home last night. They are looking to offset the cost of the measure. While republicans are asking the tax cut not drive up the nations debt. The price of oil is rising after opec will keep production curbs in place. Libya and nigeria have joined the agreement. Opec and allies like russia are trying to reduce global stockpiles. Oil prices are up 20 since september. Parties on both sides of the irish border issued are refusing to compromise. They are trying to deal with the hard border. The eu will not let trade talks continue until there is an agreement. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Alix thank you so much. Back to what is happening in d. C. Republicans are scrambling to reform their tax bill. 1. 3 trillion problem. Joanathan its friday. Alix its been a long week. Senators johnson, corker, and flake objected to the measure increasing the budget deficit. Joining us is Kevin Cirilli. Are we going to have a vote . Kevin its unclear. They will reopen the debate after a dramatic showing on the senate floor. Mitch mcconnell spoke with the senate parliamentarian, who ruled that the proposal put forth by bob corker, who had reached an agreement over a trigger point it would raise taxes should the reform package not fund itself, there is a Clear Division among republicans over the trigger point. Even if this does advance out of the senate, it is headed for a showdown with the house republicans. Several prominent republicans in the house feel this is not the way to best day for deficits. They feel Economic Growth is the result and it would pay for these deficits. Tax is just another increase being proposed by senator corker. Alix some senators are not on bill on board with the bill. Kevin we had some people who on the issue of revealing the individual mandate as well as the passthrough rate, the rate being targeted by ron johnson from wisconsin, that had been coalescing behind Republican Leadership. There had been a deal made. All of that is off the table and scratched because this is going to ultimately come down to the dealmaking this morning when republicans will huddle together and in which case they will get this out of the senate here it as you play this forward, senate. Ityou play this forward, could come back to the forefront during the reconciliation in conference process. Who is chosen to be part of the committee that ultimately reconciles the Senate Version, it will get out of the senate, once that happens, how they will reconcile them remains to be seen here in seen. The passthrough rate and the issue of the trigger point will definitely the involved. If Senate Republicans do not get to a vote today, what happens . Kevin it would go into early next week. I would suggest strongly that Mitch Mcconnell feels he will advance this out of the senate if not today then next week. Then it does get to that process of getting this on board with the house. That is where there will be a lot of you making. The preview for investors watching is the dynamic between ted cruz as well as bob corker. Senator cruz is against the trigger point. His alliance and the house is as well. Joanathan thank you very much. We should not be surprised by this. Wieldficit hawks know to real leverage, you wait right before the vote. We might see bad policy with these triggers. We have had conversations about how ridiculous it is so many of fiscalp physical policy. Alix growth is not achieved. Meanwhile the reports coming out of the Treasury Department that Steve Mnuchin has been saying they are working on a report, and its questionable if we will see it, that says it will be deficit neutral. There is a lot of noise at the last. We closed out november for an eighth straight month of gains. Its the best since 2007. Around the table with us in new york is Mike Schumacher. We shouldnt be surprised i this. Jim we should not be surprised. The disappointment is its all about the tactics. There is a big strategic picture marginalginal lower tax breaks improve the economy. In the last two weeks, the equity market likes it did lower marginal tax rates also need a broadening of the base. Thats up light way of saying take away someones tax breaks. That becomes intense in the washington environment. If you get the tax reduction without the broadening of the hawks are notcit going to like it. The deficit hawks in the house will be more assertive i suspect that in the senate. Joanathan what is your best case . Back to getting some of the broadening of the tax base to work. To do that and lower the tax rate, you will get better growth and you will get a sustained. Sustained time. Because 10ple say year treasury yields of not gone up and bond traders are not worried about increasing deficit, this indicates the tax cuts will not juice growth. Jim its interesting talking to our traders. They say we still have a bull market. Why is that . The answer is the treasury is talking about the issuance program. Ishink the mechanism here the bill gets through in the deficit goes up and issuance goes up. There are probably a lot more fiveyear treasuries. Shortened rates will move a lot. Long end rates people are confused. You say the short end has been due to the expectations the Treasury Department is going to front lewd issuance massively frontload issuance massively. Mike its been a different dynamic and we have had. Part of it is more front and stuff, three or treasuries get hit. Mark e dollar western dollar . Dad ii woulds us thed think i would think fund rate would be somewhat firm next year. Its very hard to be clear. They are quite confused. Affirm dollar would be my best expectation here it expectation. I think something will go through with the deficit that makes people uncomfortable. Alternatively, the tax rate is not going down as much as 20 on the corporate rate. You are going to see a messy compromise. Will it preserve some of the market benefits, the economic benefits of the lower marginal tax rate . Joanathan i want to challenge the idea that the bond market is confused. I think its pretty convinced everyone i speak to seize a flatter yield curve next year. This speaks to that. They are convinced he notes are going to go up and they are convinced the long end will be anchored. Is there a difference between being confused and the reason how to interpret them . Does that mean there is going to be a recession . Is there going to be a change in the issuance . Mike if you look at the relationship over the last nine years since the financial crisis , youen yields and growth may as well throw spaghetti at the wall. They dont connect. As far as a recession indicator, not very helpful. Joanathan he will be staying with us as well. Coming up, the brexit breakthrough is in jeopardy as the debate on irish border continues to heat up. Can an agreement be made by monday . Sterling strength is dominating much of this week. That is next. This is bloomberg. Joanathan the view from our new European Headquarters in london. Its a Beautiful Day in london, im not so good for one for brexit talks. Sterling is a little bit softer. The breakthrough may be in jeopardy as they did again on the irish border. The border is a big stumbling block. Negotiations are not where they need to be to make progress rid what does it mean for theresa may . Its great to catch up with you. What does this mean for the government domestically . What is mean for brexit . We have heard that london is pushing back against the deadline of monday. We were led to believe that monday was going to be a breakthrough. Now london is saying the deadline is the middle of december and not monday. Joanathan what does that mean for the Prime Minister . Andlooks to her government it looks shakier than a couple of weeks ago. Northern Ireland Party that props up the government is taking a hard line on the border. It goes to what they are about. Last nightlawmaker was conciliatory. This morning, we have had the irish warned mr. Say a deal is possible in the next few days. The possibility of an 11th hour deal, just before middecember. If the irish were happy with the situation on the border, you could imagine to eu would accept it did the eu has been intractable with time limits so far. Joanathan what are on the ticket what ideas are on the table . ; in order for them to not have a border war, Northern Ireland would have to sign up to the same rules as the republic. For the Northern Island part propping up the government, that is a red line. The whole point is to keep Northern Ireland as part of the u. K. Do you bisected . She depends on their votes to govern means the views of the dup are important. Joanathan thank you. I want to bring in Mike Schumacher as well. You spent a lot of time in london. How are they going to address that . How are they going to solve the bill, the rights of citizens, the irish border . Mike the rights of citizens shouldnt be that hard. The irish border is impossible. You either have a order in orland to satisfy the dup you have no border in ireland, in which case the u. K. Is out of the customs union. You have a border on the irish sea. You have something for customs and immigrations. I dont think either of those is acceptable. Joanathan either the government breaks down in her agreement, brexit talks break down . Mike that is really hard. Joanathan thats what some the table. Mike i hope none of that happens. It feels bad for Prime Minister may right now. That is the biggest fear in the government isher gone. You get a general election and that means a Jeremy Corbyn government, which would not be market friendly. Alix you can see that reflected it. What is the difference between a flat spread in the u. S. And what we see in the u. K. . Mike i would go back to last year. What happened last year, people could not get enough of those things. Its not a huge flight to quality. Theerterm, you might see economic platform, shortterm investors need safety and they will buy whatever they can get. Saved thesterling u. K. After the brexit vote. There is a Downside Risk in sterling. Are you seen any opportunities open up over the negotiations . Do you buy a certain asset . Jim not really. There isnt actually a clear good out turn to hang your hat on. Ive been saying for a while, u. S. Equities, european equities sell on strength. That is still my point of view. Why this strong up stuffed animal . What is that . Jim i think that is because the border was a place where there was a lot of tension. Its kind of a memory of the tensions. Its not a brexit symbol . Jim i dont think so. The irish have a very longterm perspective on these things. Alix you are both sticking with us. Coming up, the trump trade and the yellen rally. Who should take the credit . This is bloomberg. Alix the dow is breaking 24,000, guess who is taking credit . President donald trump. He tweeted yesterday. If the dems and one, the market would be down 50 . Thats a call. Consumer confidence is at an alltime high. Is it true . Joining us is matt winkler. These are the numbers. Is the tweet accurate . Matt no. Lets start with some basic facts, which one needs to frame the discussion. Anald trump inherited expansion that is in its eighth year. Has the lowest Interest Rates we have seen in generations. Thats a wonderful combination for a boom, thats why the stock market had a wonderful year. It had a wonderful year in 2013. Here we are in 2017. He inherited something that was going for a long time and will continue to run. The second thing is, these are ideal conditions for stocks. The reason for that is you have very low volatility. That is something he had nothing to do with. There is low volatility in the treasury market and the stock market. I like certainty and i hate uncertainty. This market has been very certain in the sense that there is low volatility. Rates,e the low interest which says to companies, you are stupid if you dont invest. Alix i love the volatility point. Up,ou go ahead and bring it there is implied volatility for yellen versus 100 for the others. Did she do that . Matt i would say yes and a very simple way. She took it upon herself to make sure she was communicating to investors and chief executives in a way that was unprecedented. You can see that in the Forward Guidance that she had a lot to do with it coming out of the financial crisis. She worked for bernanke. She devoted herself to communicating to the markets, to the public in a way that the fed had never communicated before. That clarity of message was consistent. It turned out to be accurate or it everything she said increasingly became true. Removing ourselves from whether the trumps are accurate or he can claim credit, how do you respond to people who say the tax cuts have had a material effect on certain stocks, people pricing in saving money. That has been responsible for some of the gains . Matt Larry Summers on this program, a very distinguished said if you look at the market right now, the stocks rallying are not the ones that would be most affected by tax cuts. The stocks that are doing well have been the ones that would be affected at all. Its difficult to make the argument, which is the one he is making. We havent got a tax cut yet. We are still waiting for your it the market hasnt responded that way. It has responded to optimism in the future. Stocks rallying the most are the ones investors get excited about, technology stocks. Alix we know that. Thank you very much. Coming up, a flattening yield curve . Loretta mesters says that is not what investors should be worried about. You should look at the stock market instead. More on that in a minute. This is bloomberg. Joanathan a little bit of weakness creeping in, just a little bit. Futures are up. 4 . The dow is up by one third. The only down month so far, march, it was. 04 . Lets switch out the board. The bond market is the story. Yields are lower by three basis points. There is a little bit of risk aversion. We are seeing some yen strength come into the market. To 135. E rate is up lets give you some headlines. This is first word news. Emma there has been a setback and plans for the tax bill. Mitch mcconnell sent lawmakers home last night after the collapse of a compromise. They will have to find ways to make up several hundred billion dollars. A final vote is still expected today. There is a report that President Trump may take a step. According to the associated press, the present is considering recognizing jerusalem as the capital of israel. That could anger palestinians, who claim part of israel. It would be a way to offset a campaign promise. The Senate Ethics committee has opened an inquiry into misconduct by senator al franken. He asked for the investigation himself after he was accused of groping. He is given no sign he plans to resign it. Sign he plans to resign. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Lisa beretta mester says she agrees with Jerome Powell that the case for a december hike is coming together. She spoke with mike mckee. He is with us now. What was her justification . It is important that she does. She is a voter in 2018. She says the economy is getting stronger. We are seeing more growth and unemployment is continuing to decline. We will see faster inflation. Longer, butay take she said she does expect us to see it pick up toward 2 by the end of next year. Its important that the fed get ahead of that and not be behind the curve. Lisa what did she say in response to the flattening yield curve . Why was she so confident this is not signaling something the farias or detrimental . Mike the yield curve moves up and down. There are reasons to think it would flatten at this point. The fed is pushing up the short end and raising rates. The term premium has fallen on the long end. As the fed continues to tighten, that will come back into play. We will see a steeper yield curve Going Forward. Lisa did she say anything about the leadership next year . About jaydid talk powell been a very smart man and some with great leadership skills. She thought the fed would not miss a beat Going Forward. Marvin good friend would be a great addition. Is said his analysis terrific. She looks forward to working with everybody. The fed has a long tradition of transitions. It will be fine. Lisa thank you so much. We love to hear your insights. Be a most says the yield curve could avert after march. Inflation is the biggest concern for treasury markets. Still with us is Mike Schumacher. Jim, we have talked about how it is hard to interpret the yield curve here and when do you get nervous . I do think the fed will continue to be disappointed that inflation doesnt go up. The reason i say that is the fed has consistently for several years underestimated the deflation in the economy. That is why in past recoveries you have seen inflation picking up i now. The idea that it will suddenly pick up next year doesnt seem right to me. I think what we are looking at is a continued deflation rate to the economy, which will keep short rates isolated from long rates. It will keep the long rates down. That is the right answer. Short rates should go up, even if the economy has very little inflation. Joanathan that makes me think we will have another year of goldilocks. Its a continuation of what we have had. What will it take to break out of this goldilocks theme . Volatilityked about surging. Bad call. Its a friday. Its a shift in central bank policy. Balance sheet reductions of just started. We have had pretty minimal reductions so far. That ratchets dramatically next year. The ecb is stepping up purcha