A new report predicts the superrich will keep heading to london, voting to leave the European Union. 13 million or more living in london, rising 30 in the next decade. The report says new york city for thethe top spot altra risk. 127al news in over countries. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Scarlet live, im scarlet fu. Joe i am joe weisenthal. Scarlet u. S. Stocks are adding to record highs despite a lack of details from President Trumps speech last night. Joe the question is what did you miss . Scarlet the dow more than 300 20 1000ross milestone. The s p 500 reaching 400. Light on details. President trumpss time speech to Congress Failing the of a treasure investment. A policy prescription. A nobel prizewinning economist sits down with us exclusively for a halfhour. Joe lets look at where the. Ajor averages stands this is the best rally for major averages. Well more than 1 as you can see, a string of new record highs here. 21,000, 19,000, 20,000 today. Pretty impressive. 5096, and we have the dow in purple, the s p 500, in white, we have the nasdaq. Is ae 1990s, this frequent occurrence. We have simultaneous record high after simultaneous record high. Averages really associated with the trump trade, the dow transports, these are all putting in record highs. It is a broadbased rally. The chief head of Technical Analysis there. He says it does confirm our bullish view. Thateadership and momentum it is an early cycle. Time forstill investors. Scarlet we have breaking news. Valeant shares are tumbling. Possible violations, it started a formal investigation into that, looking into securities violations. The regular of session, valeant up by more than and . 15 per 13 share. We will keep you posted on a further development. President trump made his case for increased Infrastructure Spending. Askident trump i will congress to approve legislation that produces a 1 trillion investment in infrastructure to the United States, financed through both public and private capital, creating millions of new jobs. Budget promises 2 gdp growth. Can get a way the u. S. To this level of growth . Joining us now is paul krugman, the state which professor of economics, a Nobel Laureate and New York Times oped columnist. Great to have you back on the show. With the first question. 3 growth, is this a sustainable pace . We could get there if we get very lucky. If Wonderful Technology comes along, productivity surges for reasons we dont understand, but no, nothing a policy would raise the growth rate. You can make me total dictator into everything i believe would work and it would not get you up by more than a percentage point. Are saying the u. S. Economy is already at its speed limit . Probably close. They are suggesting an economy pretty close and the underlying sustainable pace of growth does not look like it is above 2 between an aging population Labor Force Participation stagnating. See how youway to could get that growth. It just does not make sense. You have noted demographics to oneould limit growth percentage point lower than what we had under president reagan. That is right. Back in the 1980s, still entering the workforce, now we are leaving, we also had a surge of women in the workforce, which peaked. An aging society. Were not quite japan where the working population is shrinking rapidly, but it is growing slowly. Unless there is a productivity miracle, nobody knows how to make that happen. Go back to the idea of a big Infrastructure Spending boom. For a long time, you and others had called for that. Putting aside a cyclical question of whether we are at full employment now, does it ake sense to do that from longterm productivity standpoint . In other words, spend a lot of money because we have more modern airports and roads and systems and everything that will raise productivity . Yes. Three reasons. There are clearly a lot of productive public investments to be made. The second thing is, despite the fact Interest Rates are going up a bit, they are incredibly low. When is a time to borrow if now is not . A little bit of stimulus would be helpful even though we are no longer in a deep slump. Joe i have a chart showing how little infrastructure we are getting. Looking at total spending, as a share of gdp, is there an opportunity for the trump lists to coalesce around a unified policy . You might have thought there was but you notice he did not say lets spend 1 trillion. He said lets have a plan. So if he actually provided a clean, lets spend one giant dollars in infrastructure, it would be hard for people like me to not before it. According to the wall street journal, the Parent Company of snapchat is set to price the ipo at 17 per share. It will take place after the market closes today here at it will be priced at 17 per share. The company had marketed it between 60 and 18 per share. Another key component of trumpss ideology is his restrictions on immigration. He said last night during his speech that restricting immigration particularly at the low skill level will boost wages. Two questions. Is there any evidence there is an effect on wages and what does total productive capacity going back again to the speed limit question if we curtail the pace of population . In principle, you would think immigration of low education workers would be pushing down wages to the bottom. It is amazingly hard to find any evidence that is true. It is something that ought to be true but there is a lot of evidence immigrant workers really for the most part do not compete with nativeborn workers. If there is in effect, it is really quite small. If you restrict the growth of the labor force, you will limit the growth of the economy. The idea you will simultaneously cut off and drastically excel or a growth is wishful thinking. Scarlet in terms of what you a lot feasible, it is likely to happen. A get the economy at least to higher gear, what would be a policy prescription . A clean infrastructure plan. Not just because were not building up new infrastructure. To fullretty close employment. It will give us insurance. Stronger base of commands. We will not reliable fed to keep us at unemployment. Policy,immigration bringing in more and not less. There is longerterm stuff. Debtor education and Better Health care, not worse, which is what we will probably get. To growth. Ontribute underlying Economic Growth as opposed to recovery from a recession, longerterm is a needle that is very hard to move. With that move the needle on gdp . Try to find me any evidence besides just prejudice that says tax cuts are important right now. Scarlet further headlines from valeant. This is following headlines we filing thaturities the division is under investigating under investigation. We have paul krugman. We will talk tax and tariffs and trade next. This is bloomberg. Scarlet paul krugman is with us. Paul 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 manufacturing is are very good at selling services, service exports, you know, it everything always adds up one way or the other. Sellingre successful at services, you will be less successful at selling manufactured goods. Of people will bring money to invest in the u. S. , it will mean a stronger dollar and less competitive manufacturing. Way to have a lot more manufacturing through trade is to convince people not to invest in america and buy our services. Trump is making a start through instability. Maybe he will do it through that route. Donald trump himself is not completely sold. Is there a simple way to entice more workershave at home that does not take us down the road of the dollar . Paul i think it is all misunderstood. Unless you can figure out a way to have a smaller surplus on the financials account, then you cannot give me a smaller deficit on the current account. Things have to add up. A misunderstanding to believe a lack of competitiveness is the reason the United States has lost manufacturing jobs. Even to the extent trade is the cause, it has more to do with capital flows than any of these things. Joe obviously one of the first things trump did was draw the u. S. From the ttp. What our longterm economic ramifications of the u. S. Pulling back from its role in trade agreements . Agreements a huge that actually stepping back. In the first case, it was not a lot that would happen. I just did not see, i did not really understand why the trade case was compelling. It was not the devil but not a great idea. To naftaginal changes and not a big deal. If you create an environment that is hostile and uncertain, you can unravel why goebels asian has taken place and you can talk about shorter supply change which i believe he has said, you start unraveling this and turning much more inwardly focused, which would make the world a bit poorer, extremely disruptive in the process, we have no idea. The amazing thing is there has been no substantive policy enemy front. I do not know what whether they are serious and what it means. Scarlet the white house seems to be turning its focus on enforcement rather than renegotiating trade deals. Lets listen to what kevin was told. Of makings not a lot trade deals if you do not enforce them. Everybody. Specifically with china, what are you looking to do . When can we anticipate that . As soon as we have a proper case. No details there. He would not say what they would get tough about. It is a misconception. Subsidize when they should not, and they are really bad. Is that really an important part of the story of what is happening in america . It is not. In trump world, other people, it has to be a story. That is all going on. That is winwin for both sides. Know who the two sides rp the u. S. As a whole, probably not. Maybe trump can say is a victory while they can say what they are doing. A winwin in this case. The idea that we are being taken advantage of by trade deals is not true. It is basically a false narrative. Where is the winwin . Paul krugman, stay with us. About europe and we newsto reiterate breaking about snapchat, pricing its shares in the 18 range. The earlier range have been closer to 14 and 16. That looks solid on that front. This is bloomberg. Joe still with us, paul krugman, distinguished professor and economist and Nobel Laureate. Simple question. Will the euro be around in 10 years, eight years on from the beginning of the crisis, it keeps bubbling up, will it hang together . My political forecasts in europe has been consistently wrong. My Economic Analysis has been good i think. The economics have worked pretty well. The euro has not worked well at all but the political code vision of the euro has been incredibly strong. European elites have been determined to defend this thing even at the cost of depression levels in places like greece. If the elites lose control, the whole thing blows apart and until now, it has been amazing how robust it has been. Happent know what will at this point. You have to put significant weight, a significant probability, on the whole thing blowing apart. Is therein economic benefit to the u. S. If the euro collapses . Paul no. There end, the idea that is competition with currencies is really nonsense. Europe is a trading partner. Thatrope goes to hell, will wash back on us. It is not a good thing. Mentioned president le pen. I dont know if you are totally tongueincheek or whatever. Lets say she wins and starts to raise a real possibility of redenominate in the french thennment into frank and they say what will happen to the how seriousrnment, a problem with that be for the Global Economy . Will bee short run, it very disruptive. A euro about to collapse, Interest Rates would be shooting craziesave had several and they were contractionary for europe. Collapsed, we have a go frank and things might back to normal. The idea that it is a permanent drag on the World Economy financial crisis due to financial banks owning . There might be, a lot of winners and losers. They might oh money to other people. It would be quite crazy. The mechanics of breaking up currency are very hard and could do a lot in the short run. Scarlet what will be the catalyst for the euro to fall apart . Paul if there is a clear antieuro in one of the then theycountries, may may force the hand. Even if she wants to wait a couple of years, she may not. Ave that luxury something will have to be done. Capital controls right away and probably that is the story. Great stuff. Laureate,an, nobel thank you so much. Scarlet we are moments away from the closing bell. The dow jones topping 21,000 for the first time, confident the fed will hike rates. I am scarlet fu. Joe i am joe weisenthal. Whatd you miss . Thank you for tuning in live on twitter. We want to welcome you to our coverage. Scarlet record highs all around for the dow, the s p, and nasdaq finishing just off the highs at 3 00 p. M. , the final hour drifting lower. Rising, the biggest gain of the year, and lots of economic data. Market wouldd the selloff off if there were no details. Everyone was wrong again. Scarlet in terms of the sectors moving, what did not move higher is the better question. All getting a big boost. Saw all members higher. One stock worth mentioning is s, the biggest gain since november 2008. Fourthquarter profit and sales beat estimates, so reinforces that optimistic picture home depot painted. Higherpot projected Property Values will keep the Home Improvement sector strong. Shares proven by lowes today. Joe the bond market, yields higher come along end and short in the short end dictated by fed policy, which moved a lot the last 23 days with fed speakers putting march in play. Lifting 10nce today year yields, back in the center of the range. I want to bring up a chart of sixmonth yields. This is a 10 year chart of sixmonth yields. That is at the highest level , noe 2008, incredibly low were close to the old days if you consider that normal. Those are super sensitive to nearterm fed expectations. The dollar rally back on thanks to rising expectations the fed will raise rates on march 15. Climbed above 114 for then camet gain, back down. The mexican peso an interesting mover, stronger for the most part. This comes on the heels of the meeting with Stephen Mnuchin on monday, reportedly janet yellen as well, but that report has been denied. Definitely something to watch. Lets look at commodities. Not much happening on oil and gold today. Bit, the safettle haven selloff. Aluminum had a good day, reports china is curbing production to deal with pollution, so perhaps a supply cut coming. Taking perhaps china the lead and pollution controlling. Those are todays market minutes. We want to take a deep dive in our bloomberg. Here is one metric i am paying attention to. Ism manufacturing report from the headline number was better than expected. 42 of factory purchasing managers of said orders were better than february come up than january at 32 , so a big move. , there you go,l that shows 26 of purchasing managers are reporting rising order backlogs the highest since may 2015, a sign production will accelerate. The data is looking pretty good then. I have a chart that speaks to the same phenomenon of the data. A bloomberg strategist sent this chart around earlier, saying this chart is so sexy it is not safe for work. It is the combined Citigroup Global economic and inflation surprise indices. Measuresee the combined is surging. This chart goes back to the beginning of 2003. We can see things are going through the roof. We are in this extraordinary data andere growth inflation data is better than expected. Pretty impressive move to start 2017. Scarlet these are not the exact levels . Relative to expectations. The data is better than expected everywhere and in every category. Wont move their forecasts, estimates. Revertingould be mean , but they cant catch up. Whatd you miss . Industrial closing above 21,000 for the first time lessstory despite trumps than detailed address. So what is fueling the optimism . Our guest. Nswers is what has everyone so excited . Brought the bond guy in today. Joe you can make fun of them. The Market Reaction is quite sensible. You talked about the surprise atex, but if we looked nominal growth expectations, our expectations for the u. S. , we expect the u. S. Real growth will be close to 3 , and inflation close to 3 , so we have not talked about those types of nominal Growth Numbers for some time. Just broughtrt i up, growth, inflation, gdp, earnings look better then you have to ask yourself what is the fed doing with the fed funds rate. With the market is trying to do is react to that. Of theu show the chart change on the twoyear note and the 10year note, the curve is steepening. Typically if the market was overly concerned that the fed would be going too fast, the curve would be flattening. That is not what is happening. I think all of this is frankly quite understandable. Scarlet where does that mean we are in the credit cycle, the end of it, cresting . When we manage fixed income portfolios, there are two bank cycles we care a lot about, the Interest Rate cycle and the credit cycle. Are fairlythose two unlined. This is a different situation because the alignment of those hasis off, because the fed been so aggressive for so long, even though the corporate sector was not in trouble, so the corporate sector has e