probably not the critical part of what caused it. rep. cleaver: i had too many questions. repealeffort to dodd-frank, there is a section in their where the wording is not as strong as i am saying, but essentially saying we're going to get oil companies the elected officials so weicials in countries are removing a section of --d-frank so bribery is now is now again apart in the way in which u.s. companies -- my time has run out, i apologize. >> the chair wishes to advise members that i intend to recognize mr. royce, mrs. beatty, mr. kissinger and then

declare a 10 minute recess. very much, mr. goodman and chair yellen, to see you. i would like to follow up on a question -- vonnie: to break away for a moment, there you can see prime minister netanyahu getting out -- you see them entering the steps of the white house in front of them. they will -- there will be a joint news conference meant to be taking place around now. give them a couple minutes to be get scheduled -- settled and we will bring that to you live. we hope to get an update on the u.s. ambassador to israel. the israeli prime minister and his wife are meeting with the president of the united states and first lady melania.

it is the first in person meeting since the president took office. we will bring you that news conference live. increasing tax revenue and while the cost will be borne by borrowers in the form of higher funding cost and the economy as a whole with less capital formation and the lower gdp, you have that on the other side of the equation. as you have said in the past, the cost-benefit analysis is difficult work and i agree, it is not easy, but it is not impossible and it is important 2010 the committee did work on this subject and researchers at george mason recently published a paper on the benefit and cost of a higher bank leverage ratio. how do we get to the right number? should it be 5%?

10% in the choice act? 23.5% as proposed by the minneapolis fed president? there is quite a range there and i don't expect you to say a number today, but can't you agree that a cost-benefit analysis could help us more capitalely require that ? i will start with that question. chair yellen: i do agree in appropriateh the standard, we are weighing cost and benefit, the benefit of a lower probability of a financial crisis that has incredibly high cost against the cost of slightly higher intermediation and borrowing costs and as you three was basel partly informed by the committee

analysis of the cost and benefits and the federal reserve participated in producing that analysis and i think it did inform our views as to what a reasonable level of capital requirements would be. the minneapolis fed study that you mentioned also contains cost-benefit analysis and draws the line. rep. royce: from my standpoint, it seems to me that the fed would be best suited to conduct the analysis and research on this. as you are explaining, we have such a range of opinion although we agree on the basic concept. my question would be short of us mandating the fed do it, would there be a way for you to try to move forward and approximate what that ratio should be? chair yellen: there are

different aspects over this. i said we did do cost-benefit analysis and it informed our judgments at the time you have referred several times to a leverage requirement and i think our understanding of the risks facing banks lead us to think that a simple leverage requirement would not be an adequate way to determine capital, in particular, a simple leverage requirement treats the risk associated with the u.s. treasury and the junk bond identically and we think capital requirements need to be risk thank them --risk sensitive. vonnie: we are going to break out of the testimony to go to capitol hill and the white house where there is a bilateral withng held later today

prime minister netanyahu. to the whiteived house. we want to go to washington, d.c. and kevin cirilli because there will be a news conference in a few moments and we will take that live. kevin, maybe you can give us context. what should we expect it -- be expecting to come out of this news conference? kevin: prime minister benjamin few shortarriving a minutes ago. he will meet with president trump and they will discuss u.s. foreign-policy. i am told this has been a receptive meeting. after that they will begin a joint press conference and it is almost certain that president trump will face questions about a bombshell report regarding his previous campaign dealings with russian intelligence officials. vonnie: at the same time, relations between israel and the waning since the

president took office, finishing a -- after a cold finish to president obama's 10-year. they won't want to do anything to shatter a fragile, warming relationship. andn: of course not president trump has said repeatedly that the u.s.-israel relations remain strong. he has said israel is one of our important allies, if not the most important ally in the region. i just spoke with paul manafort and he told me he is denying any communications he had had with russian officials during the campaign. he said he never had any communication before, during, or after the campaign with any russian intelligence official and he also said the only times he spoke about russia inside the campaign was when he was following the news and whenever news reports came out, that was

the only time he was able to talk about russia. a flat out a nile coming from denial coming -- from donald trump's former campaign manager. yesterday, calls were growing louder from people like senator bob corker and mark warner, a democrat from virginia to have people like paul manafort and general flynn testify about the relationship with russia. i would anticipate president trump faces a lot of questions about that at this press conference. vonnie: there have been mixed messages on russia and israel in the last couple of weeks to a month, not even fully a month yet. what do you think will be the safest option for the president? they are having a news conference before they even speak in person, it seems like. is that to get rid of any pressure and let them talk freely?

kevin: we will have to see. i think later today they will have that private meeting, but all early reports -- we're getting word that this press conferences shortly over with -- vonnie: that is kevin cirilli, the white house correspondent who is listening to the press conference about to take place with president donald trump and prime minister of israel benjamin netanyahu. they arrived just a few minutes ago, the prime minister and his wife. they were greeted by donald trump and his wife. a little bit later on, there will be a private meeting between the president and prime minister netanyahu followed by a bilateral meeting -- a more formal meeting between the two in their retrospective heads of state capacity and they have a working lunch. it is an all afternoon affair and the president has other things on the agenda.

in the late afternoon he will speak with argentinian president -- the argentinian president. we want to go to bill. he is our national security team leader. what will be the most important thing to avoid here today, it seems like there are a lot of landmines that could potentially be stepped on. bill: i think the trump team wants to keep the narrative under control on the departure of michael flynn and what it means for the president's national security agenda it is obviously what they would not have wanted to see what happened -- to see happened and it should be noted that this takes place this takes place as much of trump's national security team is in europe are on its way to europe at various conferences this weekend where secretary of state rex tillerson will be there, pentagon chief general mattis is there, and the

vice president himself is due to fly out on friday. it is a complicated time for the president's national security apparatus. vonnie: that is for sure and obviously that is a conversation taking place with our own kevin cirilli. these headlines coming out just before the meeting with the presidentster and the . assuming questions about russia, up, will they try to divert the conversation to other matters? there are other thorny matters like irani and sanctions -- iranian sanctions and the resolution where the u.s. abstained to vote. bill: the president has a full plate with the visit of netanyahu today and what exactly his u.s. policy is toward a settlement in the west bank. other issues is the north korean missile launch and what will really be the concrete u.s.

approach to that, what can be done at the u.n. where sanctions have been tightened multiple times and clearly as we have seen the last week, that has had -- not had much of an impact on the north korean regime. you have the south china sea and the decision this week to put the vice president of venezuela on a treasury department sanctions list. place isgn-policy extremely full at this point. it is more full than any white house would like to have and it doesn't seem like they have the staffing around to be able to handle it. vonnie: what role will jared kushner play in today's events? has pointedesident to his son-in-law as someone who can help resolve or help bring peace to the middle east. he could end up having some role as an envoy or informal

go-between, but i think netanyahu and the israeli's taking part today will be more than any one personality wanting to know what the president's policy is on settlements. do they stand by the historic decision to support a two-state solution? i think that more than jared kushner or his nominee to be -- it is more the issues than the personalities involved. vonnie: it appears the prime minister and donald trump will be speaking on these issues, but the u.s. has backed off some of what has been said regarding settlements and also on iran in the last few days. bill: i think a lot of people were taken by surprised -- a week ago or two weeks ago when

the administration -- the white house put out a statement that it did not think the expansion of settlements was very helpful for the middle east peace conference. that was the first sense of criticism we have seen from the trump administration toward israel. if you go back to the early days of trump's campaign, he talked about being a neutral arbiter in the israeli-palestinian issue. in general, he has been very much been very much pro-netanyahu and israel and his comments. that statement earlier this week or last week kind of took a lot of people by surprise. on iran, he has gotten a lot of it by not withdrawing from the nuclear deal reached with five other countries. to tightenht sanctions, but it doesn't look like he is pursuing that promise to get out of the nuclear deal.

vonnie: that is our national security team right there, bill faries and we saw jared kushner and ivanka walk into the room and -- as well as steve bannon. they are waiting for the news conference to begin, donald trump andy prime minister of -- and the prime minister of israel, benjamin netanyahu. i want to reiterate some headlines, kevin cirilli having a conversation with paul manafort telling him that the ukraine work had nothing to do with russia and he was not aware of any link between the campaign and the russian government. bill, if i could come back to you for a moment. what do you imagine benjamin netanyahu is saying to donald trump right now? actually, we will have to ask you afterwards. we have the prime minister of israel and the president of the united states. president trump: thank you very

much. thank you. today i have the honor of welcoming my friend, prime minister benjamin netanyahu to the white house. with this visit, the united states reaffirms our unbreakable bond with our cherished ally, israel. the partnership between our two countries built on our shared ofues has advanced the cause human freedom, dignity, and peace. these are the building blocks of democracy. the state of israel is a symbol to the world of resilience in the face of oppression. i can think of no other state that has gone through what they have and of survival in the face of genocide. we will never forget what the

.ewish people have endured ofr perseverance in the face hostility, your open democracy in the face of violence, and your success in the face of -- is truly inspirational. the security challenges faced by israel are enormous, including the threat of iran's nuclear ambitions, which i have talked a lot about. one of the worst deals i have ever seen is the iran deal. my administration has already imposed new sanctions on iran and i will do more to prevent iran from ever developing -- i mean ever -- a nuclear weapon. our security assistance to israel is currently at an all-time high, ensuring that israel has the ability to defend itself from threats of which

there are, unfortunately, many. both of our countries will continue and grow. we have a long history of cooperation in the fight against terrorism and against those who do not value human life. america and israel are two nations that cherish the value of all human life. this is one more reason why i reject unfair and one-sided actions against israel at the united nations. it has treated israel, in my opinion, very fairy -- very very unfairly, or other international forums as well as boycotts that target israel. committedstration is to working with israel and our common allies in the region for greater security and stability. that includes working toward a

peace agreement toward israel and the palestinians. the united states will encourage peace and really a great peace deal. we will be working on it very diligently. it is very important to me also, something we want to do. it is the parties themselves who must directly negotiate such an agreement. we will be beside them working with them. as with any successful negotiation, both sides will have to make compromises. you know that, right? >> both sides. theident trump: i want israeli people to know the united states stands with israel in the struggle against terrorism. as you know, mr. prime minister, our two nations will always condemn terrorist acts.

upholdequires nations to the dignity of human life and to be a voice for all of those who forgotten.red and those are the ideals to which we all and will always aspire and commit. this will be the first of many againtive meetings and i, , mr. prime minister, thank you very much for being with us today. mr. prime minister, thank you. chair yellen: president trump --p.m. netanyahu: president trump, thank you for the truly warm hospitality. you and melania have shown me and my wife and my entire congregation. . deeply value your friendship

it is so clearly evident in the words you just spoke. israel has no better ally than the united dates and i want to assure you -- united states and i want to assure you the united states has no better ally than israel. our alliance has been remarkably strong, but under your leadership i am confident it will get even stronger. i look forward to working with upgrade ourtically alliance in every field, security, technology, cyber, trade, and so many others and i certainly welcome your forthright call to ensure that israel is treated fairly in international forums and the slander and boycotts of israel are resisted by the power and moral position of the united states of america.

as you have said, our alliance is based on a deep bond of common values in common interest . increasingly, those values and interest are under attack by one malevolent force, radical islamic terror. mr. president, you have shown great clarity and courage in confronting this challenge head on. you call for confronting iran's terrorist regime, preventing iran from realizing this terror into a nuclearl arsenal and you have said the united states is committed to preventing iran from getting nuclear weapons. you call for the defeat of isis. under your leadership, i believe we can reverse the rising tide of radical islam and in this great task as so many others,

israel stands with you and i stand with you. mr. president, in rolling back seize a islam, we can historic opportunity because for the first time in my lifetime and for the first time in the life of my country, arab countries in the region do not see israel as an enemy, but increasingly, as an ally and i believe that under your leadership, this change in our region creates an unprecedented opportunity to strengthen security and advanceleadership,. let us seize this moment together, let us bolster security, let us seek new avenues of peace, and let us bring the remarkable alliance between israel and the united states to even greater heights. thank you.

thank you, mr. president. president trump: thank you, again, thank you. we will take a couple of questions. david brody, christian broadcasting. , mr. president. both of you have criticized the iran nuclear deal and at times even called for its repeal. i wonder if you are concerned at all as it relates to not just the national security adviser michael flynn who is recently no here, but also the events going on with communication in russia, if that will hamper this deal at all and whether or not it will keep iran from becoming a nuclear state. on a settlement issue, are you on the same page and how do you term that as it relates to the settlement issue? president trump: general flynn

is a wonderful man and i think if that she has been treated unfairly by the media -- as i call it the -- wonderful man and i think that he has been treated unfairly by the media -- the fake media as i call it. isngs are being leaked, it criminal action and it has been going on for a long time before me, but now it is really going on and people are trying to cover up for a terrible loss that the democrats had under hillary clinton. i think it is very unfair what has happened to general flynn, the way he was treated and the documents and paper that were illegally -- i stress that, .llegally leaked as far as settlements, i would like to see you hold back on settlements for a little bit. we will work something out, but i would like to see a deal be

made. i know a deal would be made. i know every president -- most of them did not start until late because they never thought it was possible and it wasn't possible because they didn't do it. we have known each other for a long time. a smart man and a smart negotiator and i think we are going to make a deal. let's see what we do. >> it is hard. president trump: that does not sound -- sarah, you have been so nice to melania and i appreciate it, could you stand up? [applause] please, goahu:

ahead. >> mr. president, in your vision for the new middle east peace, are you ready to give up the idea of a two-state solution adopted by the previous administration on are you willing to hear different ideas from the prime minister as his -- fors are asking example, unrestricted settlement constructions and are you going to the fill your promise to the u.s. embassy in jerusalem and when? mr. prime minister, did you come here to tell the president that theare backing off two-state solution? president trump: i am looking at and i am and one-state happy with the one at the both parties like. i thought the one-state would be

easier of the two, but if israel and the palestinians are happy, i am happy with the one they like the best. as far as the embassy moving to jerusalem, i would love to see that happen. we are looking at it very strongly. we are looking at it with great care, believe me. we will see what happens. you.netanyahu: thank i read yesterday that an american official said that if you ask five people what two states would look like, you would get a different answers. mr. president, if you ask five israelis you would get 12 different answers. rather than deal with labels, i want to deal with substance. it is something i have hoped to do for years in a world that is absolutely fixated on labels and not on substance. here is the substance, there are

two prerequisites for peace i laid out several years ago and they have not changed. first, the palestinians must recognize the jewish state. they have to stop calling for israel's the structure and and i have to stop educating their people for israel's destruction. israel must maintain security control over the entire area west of the jordan river because if we don't, we know what will happen because otherwise we will get another radical islamic terrorist state and the palestinian areas exploding the peace and exploding the middle east. unfortunately, the palestinians the heavenly -- palestinians vehemently reject -- -- deny ouren i

historical connection to our homeland. i suppose you have to ask yourself, why are jews called jews. the chinese are is the japanese are called to the news because they come from japan. because called jews they come from judea. that is our homeland. they deny the past but also poison the present. they named public squares in honor of mass murderers who murdered israelis. i have to say, they also murdered americans. monthly salaries to the families of murderers, like the family of the murder of a wonderful american who was stabbed to death while visiting israel. this is the source of the

conflict, the persistent palestinian refusal to recognize the jewish state, persistent rejectionism that is the reason we do not have peace. that has to change. i want it to change. not only have i not abandoned these prerequisites of peas, they are even more important because of the rising tide of fanaticism. change.his to i want the two prerequisites of peace, substance, want -- not labeled, i want them reinstated. would say the premise of my country would blindly walk again and see description of my country, they are greatly mistaken. the two prerequisites of peace, recognition of the jewish state in israel's security needs west of the jordan, they remain pertinent. we have to look for new ways, new ideas, on how to reinstate

them and how to move peace forward. and i believe that the great opportunity for peace comes from a regional approach, from involving our newfound arab partners in pursuit of a broader peace and peace with the palestinians. and i greatly look forward to discussing this in detail with you, mr. president, because i ,hink that if we work together we will see change. president trump: it is some dignity is very different and has not been discussed before. it is a much more important deal, and a sense. it would cover a very large territory. i did not know you were going to now thatning that, but

you did, i think it is a terrific thing. i think we have very good cooperation from people that in the past never would have even thought about doing this. so we will see how that works out. katie from townhall. >> thank you, mr. president you said earlier that both sides will have to make compromises when it comes to a peace deal. katieyou mentioned a halt on settlements. can you lay out a few specific compromises you have in mind, both for the israelis and for the palestinians question mark mr. prime minister, what expectations do you have from the new administration about how to either amend the iran nuclear agreement or how to dismantle it altogether and how to overall work with the new administration to combat iran's increased aggression, not only in the last couple of months but the past couple of years, as well? president trump: it is an interesting question. i think that the israelis are going to have to share some flex ability, which is hard to do.

they are going to have to show the fact that they really want to make a deal. i think our new concept we have been discussion link -- discussing for a while is something that allows them to than ine flexabibility the past because there is a lot bigger canvas to play with. i think they will do that. i think they want to make a deal or i would not be happy and i would not be here and i would not be as optimistic as i am. israel, itandpoint of really believe they want to make a deal. have tothe palestinians get rid of some of that hate they are taught from a very young age. are taught from a very young age. they are taught tremendous hate. i have seen what they are taught. you can talk about flexibility there, too. it starts at a very young age and in the school room.

israel.e to acknowledge they are going to have to do that. there is no way a deal can be made if they are not willing to acknowledge a very great and important country. and i think they are going to be willing to do that, also, but now i also believe we are going to have other players at a very think it might i make it easier on both the palestinians and israel to get something done. thank you. very interesting question. pm netanyahu: you asked about iran. preventing iran from getting nuclear weapons, something that president trump and i are deeply committed to do, and we're obviously going to discuss that. beyond that, president trump has led a very important effort in the past few weeks, just coming into the presidency. he pointed out iranian violations on ballistic missile

tests. by the way, these ballistic missiles are inscribed in hebrew that israel must be destroyed. the iranian foreign minister said our listed missiles are not intended against any country, no. they write on the missiles in hebrew, israel must he destroyed. on itslenging iran valorization desk violations of ballistic missiles and imposing sanctions on hezbollah, preventing them, making them pay for the terrorism that they ferment throughout the middle east and beyond, well beyond. i think that is a change that is , and sincedent president trump took office, i welcome that. let me say this openly, i think it is long overdue. and i think that if we work together, and not just the united states and israel but so many others in the region who on the greate

magnitude and danger of the iranian threat, then i think we aggressionck iran's and danger. that is something that is important for israel, the arab states, but i think it is vitally important for america. they are developing icbm's. they want to get a nuclear arsenal, not a bomb. they want to have the ability to launch them everywhere on earth, and including and especially, eventually, the united states. us. is important for all of i welcome the change. i intend to work with president trump very closely so we can thwart this danger. since yourident, election campaign and even after your victory, we have seen a sharp rise in anti-semitic

incidents across the united states. i wonder what you say to those among the jewish community in the states, israel, and around the world who believe and feel that your administration is playing with xenophobia and maybe racist tones? mr. prime minister, do you agree about the need for israel to stop settlement activity in the west bank? and do you back off from your solution a two-state or do you still support it? president trump: well, i just want to say that we are very honored by the victory that we had. votes whenal college we were not supposed to crack 220. you know that, right? there was no way to 2121 and thn 270.y to

there is tremendous enthusiasm. i will say that we are going to have peace in this country. we going to stop crime in this country. we are going to do everything within our power to stop long simmering racism and every other thing that is going on. a lot of bad things have taken place over a long period of time. i think one of the reasons i won the election as we have a very, very divided nation, very divided, and hopefully i will be able to do something about that. something that was very important to me, as far as people, jewish people, so many friends, a daughter who happens to be here right now, a son-in-law, and three beautiful grandchildren. i think that you are going to see a lot different united states of america over the next

3, 4, or eight years. i think a lot of good things are happening. you are going to see a lot of love. there is a lot of love. ok? thank you. pm netanyahu: i believe that the issue of the settlements is not the core of the conflict, nor does it really drive the conflict. i think it is an issue that has to be resolved in the context of peace negotiations, and i think we also are going to speak about it, president trump and i, so we can arrive to an understanding so we do not keep on bumping into each other all the time on this issue. we are going to discuss this. on the question you said, you just get back with your question to the problem that i said -- it is a label. what is it meant by two states? a state that does not recognize the jewish state? a state that basically is open for attacks against israel?

what are we talking about? costa rica or another iran? many different things. i told you one of the conditions i believe are necessary for an agreement, the recognition of the jewish state, and it is theel's security control of entire area. otherwise we're just fantasizing. otherwise we will get another failed state, another islamist dictatorship that will not work for peace but work to destroy us and destroy any hope for a peaceful future for our people. i have been clearer about those conditions, and they have not changed. have not changed. if you read what i said eight years ago, it is exactly that. i repeated that again and again and again. if you want to deal with labels, deal with labels. i will deal with substance. and something i know from personal experience, i have known president trump for many years, and to allude to him or

some ofle, his team, whom i have known for many years, too -- can i reveal, ared, how long i have known you? well, he was never small. he was always big, always tall. i have known the president and his family and his team for a long time, and there is no greater supporter of the jewish people and the jewish state than president donald trump. i think we should put that to rest. president trump: thank you very much, prime minister. i appreciate that very much. >> [indiscernible] mr. president, can you guarantee that nobody on your campaign -- vonnie: you are just seeing the end of the news conference with

the israeli prime minister, benjamin then that najib -- benjamin netanyahu. many things said, particularly in response to some questions, including donald trump sang he would do more to prevent iran from developing a nuclear weapon and that he feels the united nations has treated israel very unfairly. and he would encourage peace between the israelis and palestinians. he said he did not mind whether it was a one-state or two-state solution, as long as both parties were happy. the meeting. what was surprising? >> there was an illusion by the prime minister about some sort of broader peace agreement for the middle east that would presumably have all israel and the palestinian authority and arab allies, and president trump seemed a little surprised that

prime minister and then yahoo! raised that. we do not have a lot of details on what that means, but it suggests there is some sort of new approach in mind by both men about how to bring peace to that region. the second thing was, you know, president trump reiterated that he does not think the expansion of settlements is a good idea for the peace process right now. we know that israel has accelerated the approval of settlements in the west bank area and the pushback on the administration is a little bit surprising. if the third thing i would say is a lot of this is also about optics. netanyahu and former president obama, it is no secret that they do not have a great personal or cordial relationship, and part of what we are seeing today is the idea that these are two leaders who get along, and they will try to work out a deal with the understanding that they have, and some ways, a shared vision for how to go forward. vonnie: he did mention other

allies in the middle east, but he did not say that the palestinians might be part of that alliance. bill: right, it was clearly something president trump was not expecting to talk about publicly today. net yahoo! raised it. we do not know the details. but as i like the u.s. will be -- netanyahu raised it. we do not know the details. we do not know what the agreement would be. bill faries's is our national security team leader. thanks to him from washington. servese, daniel kurtzer as u.s. ambassador to israel and egypt. he has executed u.s. policy towards the middle east peace process under george w. bush. he now teaches at princeton university. ambassador, thank you for joining us.

did you hear anything out of prime minister benjamin netanyahu that was in a different than what he has been expressing in recent years? particularly want to please the president of the united states are he wants to please his people. ambassador kurtzer: i think mr. netanyahu used the opportunity to reinforce positions that he has held for a very long time. -- you noted that the preconditions for negotiations had been articulated first in 2008, so there is really nothing new that came out of the netanyahu side of the press conference. the president did allude to some different ideas and did push a little bit on the settlements question. but bottom line here is that it how anythingto see more than a u.s.-israeli peace can be made to the fact that prime minister netanyahu talked about regional partners, there

are also regional people, and the palestinian issue is very significant in arab public opinion. unless there is some consideration for that, it will be hard to see this go forward. vonnie: interesting, one thing that president trump said was i would like to see a hold back on settlements a little bit. later, prime minister netanyahu played down the role of settlements, saying they were not the driving force behind the conflict. so it is nothing like the prime minister is really ready to take donald trump's opinions on these matters too seriously, if you like, at least in terms of making a deal. but he did say there might be some kind of a different regional alliance. ambassador tothe egypt, so you know how these things work. who can israel rely on if the u.s. is leaning more, you know, sort of a traditional stance, seems to be in recent

days? ambassador kurtzer: what is different about today's there is a lot of interaction between israel and arab states with which israel has not had relations before. there are treaty relations with egypt and jordan, but israel is our talking with a lot of countries in the region, doing intelligence sharing, and that his new. but it is all behind the curtain, and one has to really distinguish each when what you can a commerce very quietly and what can be a cobbler's out in -- what can be accomplished quietly and what can be accomplished out in the open. we have deceived the prime minister is ready to move from behind the curtain and talk about this openly, which will embarrass some of the arab countries which have been willing to talk to issue a quietly. there has to be some calibration here. if the israelis want to continue their relationship with these arab countries, they may not be able to get public affirmation of it, but rather, be up to strengthen things behind the scenes.

vonnie: if you would not mind holding on for a mom and come i want to the room where the press conference took place -- if you would not mine holding on for a moment. kevin cirilli is there. was the atmosphere in the room and little tense? there were many questions left and asked including questions about my gulf and -- about michael flynn here in the u.s. kevin: there were two book questions from u.s. reporters, including from christian broadcasting, as well as townhall, two conservative outlets, sending a single to is really prime minister benjamin there arethat questions about pro-israel positions. he did stand by general flynn at this press conference. president trump did, despite having reportedly asked for general flynn's resignation, he did stand by him, saying that

the leaks were "illegally obtained." he emphasized that. he described a situation that resulted in general flint's resignation -- general flynn's resignation as being sad and he was disappointed about it. accusations surrounding his previous campaign's involvement with russian officials, he offered a full-fledged denial, if you will, that general flynn had any wrongdoing. shouted onquestions his way out about the accusations. vonnie: thank you for that, kevin cirilli, our white house correspondent. i want to return to former u.s. ambassador to israel, daniel there duringwas george w. bush's time, now at princeton university. kevin talked about the optics of this, and president trump said for a deal to be made, and he was very optimistic one would be

made, that the israelis would have to show more flexibility than in the past and the palestinians would have to get rid of some of the hatred. do you see either of these movie? ambassador kurtzer: it is hard to see it after we heard prime ,inister netanyahu talk about giving a very conventional hardline is really response to the question about his own flexibility. when the president talked about palestinian flexibility, he adopted this trope of ofestinian nonrecognition israel. since 1993, the palestine liberation organization has recognized the state of israel. they have not recognized it in a particular way that netanyahu would like, but i think it needs to be some understanding here that both sides are not on a goingrical scale and are to have to do is a hard thinking if there is going to be progress here. vonnie: ambassador, there were

--ns that sean carey felt john carey felt like he had done things did notd look well for a two-state solution. would trump saying he consider any state solution that both parties were happy with. the problem is that there just is not one out there. ambassador kurtzer: that is right. the president is wrong in saying he would accept whatever the parties agree to. over the years, it has been shown time and time again that the two-state solution is the only minimal requirement of the two sides have for each other and that they can glom onto. if you want to explore regional approaches or something else, that is fine. but you are going to end up coming back to the idea that the two people's who want sovereignty over the same territory are going to have to share it and split it, and that is the tough heart of this deal. how do you deal with the

territorial, the religious, the security issues that are involved in partitioning the land? vonnie: and the philistine and foreign ministry said that they would form and it are national front to preserve the best option. both sides trying to broker an alliance. is really prime minister benjamin netanyahu throwing his support behind president trump and the nation of islam state. pm netanyahu: under your leadership, i believe we can reverse the rising tide of radical islam. in this great task, as in so many others, israel stands with you, and i stand with you. vonnie: if the u.s. tries to dues and thing regarding sanctions, whether it is iran or russia, what does this mean for any kind of alliance that might the made? ambassador kurtzer: with respect to regional issues, there is broad consensus against isis,

and there is significant concern about russian inroads. so there is some room here for if the unitedmacy states tries to bring about a resumption of strong ties with traditional allies, with egypt, saudi arabia, jordan, and the gulf states. they are already fighting isis in syria and iraq, and i think they are prepared to continue to do so. but they are going to want to see a committed united states on the peace process. so the president is going to have to balance this overall push against isis with the need to move on palestinian issues. vonnie: daniel kurtzer from princeton university, thanks for your time. during the news conference between president trump and prime minister netanyahu, janet yellen continued to speak on capitol hill. joining me is michael mckee him

international policy and economic correspondent. a member of jpmorgan pulling forward projections to from junemay. what else did yellen say today that might have market medications? michael: not a lot to her juice of the economy is in pretty good shape. what is that the data validated what janet yellen said, with cpi rising more than expected, retail sales stronger than forecast. though the fed has an excuse to go ahead in march or may if they want to. she talked a lot, because she was questioned a lot, but bank regulation, and it was split on partisan lines peer group in saying bank regulation is holding back the economy and democrats saying there's nothing wrong with the banks. they have seen an enormous amount of lending and are in good shape. yellen siding with the democrats. hadie: steve mnuchin meetings with jack lew.

yellen seemed interesting to meet with mnuchin. michael: yes, she is interested in meeting with mnuchin and has given all the politically correct answers. vonnie: that is our international economics and policy correspondent. michael mckee will be covering janet yellen's testimony much more in the next hour. coming up tomorrow on bloomberg surveillance, tom keene in conversation with federal reserve vice chair stanley , 6:30 a.m. new york time, 11:30 a.m. london time. you are watching "bloomberg markets." this is bloomberg. ♪

>> it is 1:00 p.m. in new york and washington, 6:00 p.m. in london, 2:00 a.m. in hong kong. i am michael mckee. welcome to "bloomberg markets." it has been another busy day so

far. here are some of the top stories we are watching. israeli prime minister in jim and netanyahu is that the white house. we will recap the headlines from the joint news conference with president trump, including the presidents promised iran will never get a nuclear weapon. janet yellen is back on capitol hill, telling numbers of the house that the economy is in pretty good shape, and so our are american banks, even under dodd-frank veered what does it mean for bank investors? the controversy over former national security advisor michael flynn continues on twitter and the east room of the white house here at what do we know, and where does this story go from here? michael: joining us now from our washington bureau, bloomberg's head of national security reporting.

the president cannot get away from it -- he did not call on mainstream media, but he still got the first question about general flynn and what he did and what is going on. the president was remarkably defensive about it. bill: that is right. he has taken the position that, basically, his former national security adviser, mike flynn, has been the victim of theberate leaks by intelligence community. this morning in a series of tweets, is intestate at the national security agency and the fbi were behind those. he tried to avoid a lot of questions about who knew what, nce apparently pe was not aware he had been misled onflynn when he went television last month to defend the national security advisor, so he was speaking with the

prime minister of israel, trying to talk about middle east peace, but this will continue to dog him, i think. it is the question on everyone's mind. michael: the new york times had a report this morning that members of the trump campaign had been in regular contact with russian officials. do we get some sort of major congressional investigation? we know the fbi is looking at this. what next? bill: we have already seen today increasing calls, even from her on capitol hill, to look more deeply. the head of the foreign relations committee, republican senator bob corker, has taken a much more serious tone about the need to investigate the trump team's ties with russia, communications with russia during the campaign. we know now and have been reporting that there are multiple investigations out by both intelligence agencies and the fbi into exactly what was when,icated by whom, during the campaign and leading

up to the inauguration. michael: somebody said this these stories are being broken. but under the obama administration, they try to prosecute reporters and people within the administration for leaks. do anticipate a similar kind of move from the trump white house? and: we're looking closely asking sources about whether that angle is something that will be coming soon. will the justice department, for instance, be prosecuting or investigating people who have made some of these leaks? mr. trump, president trump, has alluded to the nsa and the fbi being behind this. it is possible that other people associated with campaigns have been involved. once you start down that road, it can be a minefield. michael: the president did suggest today on twitter and

another conversations that perhaps this was a coordinated effort by his enemies, i.e., people who were left over from the obama administration. that therey evidence is some sort of coordination going on here? bill: i do not know that we have seen coordination and keep in mind that this is fully staffed up. they do have a lot of the top officials in place, secretary of state, treasury secretary, fbi director. and twohe next level levels down, you do not have a lot of people in those positions. you do not have a lot of political appointees. you have career people to the national security council tend to be staffed with people who come from other agencies. when he wasflynn, injured to the national security council, had been putting a layer of his top aides into place there. but with him gone, there are questions about the future of those officials and who will

they will be the national security adviser, and he will be running the nsa. michael: bill faries in our washington bureau. the man in the middle of all of our washington affairs correspondent, kevin cirilli. -- veryinteresting. interesting. the president once again seemed to back away from some campaign positions, suggesting that maybe they should stop the settlement process, that maybe the u.s. would reconsider the idea of moving the capital to jerusalem. he was not as firm as he had been on the campaign trail. kevin: perhaps what we are watching is why exactly they decided to do the press conference before the private meeting. israeli prime minister benjamin netanyahu saying this was "the art of the deal," during a lighthearted moment. what we saw today from president

trump was someone who was looking to have an opening set of negotiations with the israeli prime minister and to do so without any major gaffes. it is notable that he took his first two questions from two outlets who have been incredibly supportive of israel in their coverage, christian broadcasting and a conservative outlet, townhall. from a policy position standpoint, he did say that being such an important key ally to the united states, also would have to be willing to be able to negotiate with the palestinians. he also said this would be one of his top priorities at a clear goal of his administration. he also received praise from israeli prime minister benjamin netanyahu, who said it was time for people to put behind the allegations that this was an anti-semitic administration. michael: the president said iran

will never get a nuclear weapon. is this a kind of line in the sand or throw away? kevin: president trump has been pressed by some, even those within his own party, to issue some kind of redline, if you will. we have not seen that it explicitly at this point, but he has been quite good: former president obama's iran deal -- quite critical of former president obama's iran deal. netanyahu reiterating that he liked hearing the criticism. prime minister netanyahu saying that there is no better alec to israel -- no better ally to israel than the u.s. oneident trump answering question regarding former general flynn, who resigned earlier this week. trump said that flynn had been asked by president

trump to resign, but president trump said he thought the entire situation was sad, reiterating that the leaks were "you legally obtained," and he praised general flynn for his service to the administration and the country. candidly, there are bipartisan questions on capitol hill right flynnat could have testifying on capitol hill. more important, there are questions coming from the fbi and the justice department about other members of the president's campaign team, including paul manafort, who you spoke with today. kevin: yes, just before the press conference, i spoke with the manafort via telephone, second of three campaign managers to donald trump. he vehemently denies all allegations that he at any communications before, during, or after the campaign with any russian intelligence officials or any members of vladimir

putin's administration. he said there were notes on conversations regarding sanctions. but he's at the only time he personally spoke with the campaign and campaign officials regarding russia and allegations of such was when it was in the news. so he is vehemently pushing back on this. again, with flynn in the news and now mena fort in the news, this is a strong denial coming from paul manafort, but there are growing calls that some of these affiliates might be called to testify on capitol hill about all of this. michael: kevin cirilli, thank you. bill faries there was national security, thank you for keeping us up-to-date. i know you guys will have much more. meanwhile, earlier today at the white house, president trump met with retail industry leaders to talk about house republicans' border adjustment tax rebozo, a 20% tax on imports -- tax

proposal. let's get insight from someone at the negotiating table. a washington congresswoman who serves on the house ways and means committee. she joins us now from capitol hill. congresswoman, thank you for joining us. there has been a lot of talk about the idea of a border adjustment tax losing ground within the ways and means committee and on capitol hill. it is very complicated and would hurt retailers. on the other hand, the republican plan would lose $1.1 trillion if it were not adopted. do you think it goes forward or not? >> i think there is a lot of confusion, lack of detail, and what we have seen from this administration and this congress so far is a lot of chaos and .onfusion

i am a former businesswoman, and he kind of failed business 101-- here. i think businesses need to understand the impact of the tax reform proposal and individual sectors. we need to know that detail is dependent on a lot of issues, like the value of the dollar. many variables going to that. how the wto would react in the impact that would have on potential retaliation from other countries, trade retaliation. these things aren't clear. : the president and prime minister have gone from the east room to the oval office. this is from just a moment ago.

president trump: thank you very much. michael: all right, the president and the prime minister in the oval office with their wives. they are both wearing blue ties. i do not know what that means. you are mentioning that we do .ot have a plan house republicans do have a plan, and it was to do obamacare by april 1 and then move on to tax reform. it is beginning to look now that they are not going to get there. ways and means deals with obamacare and deals with tax reform. what do you think of the timeline? are we going to ce the move forward before the end of this year? rep. delbene: we have not even started yet and have not had hearings on health care or tax reform. i think that republicans are trying to figure out how they agree with each other first

before they make a proposal him and there are clearly differences between the house and the senate and even with the administration. so it is hard to know how we even discussed a plan if there is not a detailed plan, a piece of legislation put on the table. michael: a lot of people say they expect tax relief for corporations. is there bipartisan agreement that we should have a different kind of corporate tax code? can we at least get that far? rep. delbene: i think there is bipartisan agreement that we need comprehensive tax reform, so this should be something we should be able to work together on. unfortunately, this has been something that republicans are doing on their own in the back room, and there has not been an ability for us to have hearings or have a chance to have that bipartisan discussion. that will be critically important if we are going to be able to move legislation forward that works for all americans come a for small businesses, for our farmers across the country. en contactas theire be

with white house officials trying to move the process forward with members of ways and means? rep. delbene: we have not had any contact with the white house. right now, this has been more about chaos and confusion. it is unclear where we get that information right now. until there is a detailed proposal put on the table, we are not going to see movement. that has not happened in our committee yet. michael: we assume there will be one at some point, and we hope you will talk to us about it when we get there. thankentative delbene, you for joining us today. much more ahead on "bloomberg markets." we going to hear from david solomon of goldman sachs live from the goldman sachs technology conference in san francisco. also, a conversation with a nobel laureate and new york economist, paul krugman. this is bloomberg. ♪

michael: this is "bloomberg markets." 100's, focusing on politics and policy in the new administration. let's check in on bloomberg first word news. mark crumpton has more. the: the president attacked nation's intelligence community again today on twitter, accusing the agencies of illegally leaking information to the news media. he tweeted about disclosures about his condo with russia during and after the presidential campaign. in brussels today, there was an ultimatum from the u.s. defense

secretary. he told nato allies that if they do not decrease defense spending, the u.s. may alter its relationship with of them. nato countries will spend at least 2% of their gdp on defense, but many have not lived up to their commitment to the cia director met in secret with palestinian president mahmoud abbas in the west bank yesterday. that is according to palestinian officials who expressed concern over the trump administration's suggestion that a two-state solution to the conflict with israel is optional. the white house had no comment. officials said the talks took place at president abbas headquarters. the meeting was described as "warm and positive." in malaysia, a vietnamese woman has been arrested in the death of the half-brother of kim jong un. authorities say two women andoached kim jong nam poisons and with either a needle or spray. he was a critic of north korea who lived outside the country for years. global news 24 hours a day, powered by more than 2600

journalists and analysts in more than 120 countries. i am mark crumpton. michael: we're halfway into the trading day. julie hyman has the latest. a lot going on in washington, but only one direction for the markets. seee: seemingly, as we gains, relatively small gains. we are in session 46 of the less than one present move in the s&p 500, but it is enough to bring the major averages to records. in addition to everything else the folks have to digest politically, we have data about of janet yellen's testimony. on that, not a lot of reaction. the big move today was after the consumer price index this morning, coming in higher than estimated, a gain of .6%, the fastest rate we have seen since february of 2013. that is when the rise in yields

can come up four basis points, and then a little bit of volatility as yellen was speaking. dollarlook at the u.s. and track that against her testimony today, we saw again based on the cpi, but the u.s. dollar has now turned lower and is at the moment little changed. which usesat wirp, fed funds futures and the probability of rate increases, still holding steady today, 42% probability of an increase of the march meeting, up from closer to 30% from before the testimony yesterday. now at 61% from a. now a check on some of the big movers. proctor and gamble rising. bank of america, jp morgan, and goldman sachs all higher. jpmorgan and goldman sachs are at records today. michael: the indexes deep going up, that is their reaction in

the market on the news out of washington today? julie: i want to look at a couple of israeli etf's that trade in the united states. up about .5%. not clear if there was that much reaction to the press conference. there is another etf that tracks israel. this shows a little bit more reaction from during the press conference, but not a lot of reaction. both up 10% over the last year. as for retailers today, who also met with president trump, other political news of the day, and who have been pushing against a border tax, they are not really moving today. is a board or being priced into retailers? here is a look at a couple different retail indices since disease ofn, the department stores, specialty --arel, and mass merchants the indices of department stores.

they do not think a border tax is necessarily priced in here. we did not get headlines on that today or movement on it, but we will be watching for it. michael: thank you very much, julie. only fedlen is not the official talking today. the president of the boston fed is out with headlines. he says there's very little andk left in the job market there is limited room for the job market to tighten any further. so he says the fed needs to move as quickly as possible to raise plot says.he dot more on that, coming up. ♪

michael: this is "bloomberg markets," trump's verse 100 days, focusing on the politics and policy of the new administration -- trump's first 100 days. janet yellen finishing up her

testimony on capitol hill. let's go to our executive editor for global economics. today, it was about what she did not say. dan: correct. she came out yesterday with forecastinking the dot -- sorry, it is not a forecast but an idea, that that would three increases. did not step on the message today. and help from the data. michael: this is also a political hearing, much more so than the senate side. republicans and democrats on both sides of the bank regulation debate. is saying if the administration wants to appoint a vice chair for the financial issues, that is fine. that person will do what they need to do, but they need to work into the boards. so no sudden lurches. there will be process and everything else. get to post-2008

regulations overnight. the house was always going to be about regulation. the senate is much more deliberative. rullo suggested there is still more regulations to come, even if he is not there. yellen said we could do some before he leaves. dan: they could, but does the fed wants to put us off to much in the political crosshairs right now? if i were the fed, i would stay quiet. daniel poppa executive -- michael: up next, fed chair janet yellen did defend dodd-frank, saying it reduced the problem of too big to fail. more on that and comments about the volcker rule. ♪

♪ >> this is bloomberg markets. we are focusing on the politics and policy of the new administration. i am in for david europe. it continues.

the first word news. that theting republican leaders have asked the white house to withdraw the nomination of puzder. there have been documents of an undocumented housekeeper. his past that has been run on television. according to the washington post, there were at least 12 republicans who would vote against him. cnn is now reporting that officials ask the nomination to be withdrawn. no reaction from the white house. let's get the rest of the headlines. crumpton has more. mark: we will see what trump can do with nuclear weapons and iran.

he has been meeting with the visiting prime minister. >> the security challenge is enormous. siran'ing the threat of nuclear ambition. >> the president said he would like to see israel back. full sides must make compromises to achieve peace. --ven mnuchin has passed past eli miller to head his administration. cheaps where he served as operating officer, he served as an aid to john boehner. been following the president's executive order on health care. popular -- aof a law that required people to have

health care. planss says they did have to reject the terms if a taxpayer failed to indicate whether they had coverage or did the irs will continue to process returns. traffic fatalities on roads jump to the nearest -- the highest number in over a decade. 40,000re more than deaths, because of americans driving more. there is an improving economy and lower gas prices. global news 24 hours a day powered by more than 2600 journalists and analysts, in more than 120 countries. i am mark crumpton, this is bloomberg. >> turning to immigration. this allows companies to bring in high skilled workers on it their visa in the u.s. are i

the president is trying to overhaul the work these of program. bill aims to limit the visas to outsource jobs. she joins us now. this has been an important source of labor for many people in your district of california, but also a lot of these people, what is wrong with the program? well, actually, a lot of people in silicon valley believe that the system though important needs reform. are allocated on a random basis, that does not make sense. allottedoposed, the are based on the most qualified people.

it is determined by salary. more than half of the visas 02 outsourcing firms, 80% go to entry level wages. that is not really the best and the brightest that the program is meant to entice. i think we can do better than that. , someone who appreciates the of skilled people in other countries but they play in our economy is very important. about silicon valley, half of the startups have been founded by people born in other countries. that has been great for our economy, we want to make sure the cost -- the program is what we intended. >> the president has been on both sides of this during the campaign. one of his main concerns was that it pushes u.s. workers out of jobs doesn't do that? it can if it is misused.

people have heard about the issue in southern california regarding southern california edison. and disneyland where people were andght in under the program were paid a small fraction of what the americans were making. the american engineers were forced to trade their jobs to -- they're underpaid replacements. it is meant to facilitate really skilled people and to come into the united states, help create a great economy that fuels jobs and is good for the workers. i am hoping that the bill that i has that intent. i have a lot of engineers at my constituents. i will look to them and the companies, if you are in silicon valley, you appreciate how important immigration is to our economy and our country.

we also want to make sure that the program works well. a high program would set standard for minimum wage for people. could that push people out of jobs, they would say they would not want that? >> that is that with the bill does. if there is a division on thater you half to a test you are not an american worker if you are a dependent company. ex used -- excuse from that if you pay $60,000, the medium $135,000 obviously that $60,000 number is meaningless or did i would like this third by 35% above the median. what my bill does is, we have

more people asking for visas than there are visas or did we are going to allocated this way, of thewant to pay for 2% highest level, you get first crack at the people. rather than just randomly hand these visas out. >> this is one of the few issues were have seen bipartisan cooperation. similar bill in san diego, you to work together. on the same kind of issue, do you think you will be able to get together. work with him, it was a little bit of chaos. i finally decided that i should just introduce the bill that makes sense. he has a bill that does not really accomplish anything. the minimum to 100,000 that is belowut

the median income in my county. certainly well below what engineers are being paid. that does not accomplish anything. i think the bill i introduced would. it is a good starting point, i am hopeful it starts a discussion on reform that will build our economy and make for a better community. >> can you get something like this done right now? >> we will see. the republicans have the majority in the senate and house decide every vote and every bill that gets heard. as a democrat, i do not have the capacity that my bill gets heard. i think it makes a lot of sense. i have decided to introduce it because our country would be better off if we did something along these lines. >> thank you very much

representatives so is offering. lofgren. toy are going to mexico city discuss this next thursday. we will see what happens. of coarse rex tillerson met with them last week. defends godlen frank. and the impacts on liquidity. that is next. this is bloomberg. ♪

♪

>> this is bloomberg markets. we are focused on trump's 100 days.

-- airlines, warren buffett said there is increased position on major american airlines. they first disclose positions back in november of last year. 50%, yetp more than another waiting that -- winning

that for berkshire halfway. been words out that the economy should have free rate increases. this cpi is stronger than expected. dan tarullo announced last week that he is stepping down. today he joined bloomberg daybreak in an exclusive interview. >> i do think that there has been an awful lot of progress made for two big to fail companies. it is substantially greater than indicated, capital levels are way up, because of what i mentioned, we now have liquidity

regulations and a much better management system. made progress on a revolution regime that will make sure that no industry is too big to fail. i do not think we are there yet. that is why we are very aware of the progress needed. when somebody comes and tells you that we have solved the problem that is when you should be worried. because the financial system adapts so readily and so expertly and a lot of ways to create opportunities, the financial regulatory system needs to be attended by those changes. that is what needs to happen. >> he speaks exclusively with us earlier today. testifiesjanet yellen before the chair.

what you said about the dodd frank. >> we are looking at the living will process, visiting the capital, making decisions of the largest firms. , can wee be certain feel free to engage in criminal the one or of even two? >> and and there is a reasonable chance. , here issonable chance bloomberg intelligence. he joins us from our washington bureau. stocks have been start -- soaring under the idea that republicans are going to pare back dodd frank. make the case that you do not have to do a whole lot, that the banks are in good shape. how much of his regulatory

structure is going to be paired away. be theink it is going to process that the republicans in the house have this plan, they are going to come out and say it could be up to two years before that bill gives pare down to have bipartisan support. have janet yellen at the chair. at that point, all of the regulators are going to be , theyg to donald trump are going to have some credential standards. going tohe point happen before 2020. one of the things we have seen is positions taken public and then more practical positions behind the team. when you look at what might happen in terms of capital

standards, could it be paired back as much as people think, or is it most likely tweaking around the edges. >> i think it is mostly tweaking created in the confirmation , and heof steve mnuchin said this should not be allowed in the fdic. when they actually get down to fed, i think you can see that you reasonably expected demand. they have to be on point there. i think we will see more tweaks than anything. >> with a financial services, that is something us nerds call c car.

they are trying to get rid of stress tests. expect a stress thatto go in its entirety. is probably where the debate is going to be. we can see the banks that close to $250 million, we are going to loosening uptial of a stress test in the fed. it is not going to go away. >> one of the things they all agree on is that the structure that as it exists is dependence on small banks. are we going to see those small banks with janet yellen? >> the biggest thing there is congress. the way it is written right now, it is not a bipartisan bill.

there is not enough there, it is rod and overreaching. if the democrats and republicans were able to pair that bill down and put it below $10 billion banks. then you have a decent chance of success. we do not see any thing like that happening. suggests thatn the bank should be having funding, with interest rates that is up. of banks will do the of banks will do the best under this regulatory regime for investors. who gets the biggest bang for the buck? >> we think that the sector that has the most chance are banks under 500 billion. the reason because there is bipartisan support. the big banks, they have a lot of work here in washington.

there is a lot of regulatory reach. i would look at the banks that .ave 250 to see the best re >> a quick programming note, coming up on bloomberg surveillance, a key conversation with stanley fischer. that will be happening at 6:30 a.m. this is bloomberg. ♪

♪ >> this is bloomberg markets. we are focusing on politics and policy during the new administration. ceo has hisurant long-awaited labor department confirmation. according to cnn, top republicans are asking the white house to withdraw the nomination. we will bring in our chief white

house correspondent. any reaction you from the administration to the skull? -- call. >> i can anticipate we will be getting something from the white house. been several concerns about the legitimacy of whether the president will be able to have him confirmed. or is going to be a meeting scheduled for tomorrow. yesterday i spoke with a republican senator from south carolina and he is one of the republicans who has been withholding his support for andrew poster. i asked him about this yesterday, let's look. [inaudible] just heard it, he

still has concerns about whether or just heard it, he still has concerns about whether or not he will support poster -- puzder. >> this already for a white house already embroiled in the national security council. officials,campaign not just former national security advisor michael flynn. you spoke to paul manafort today about that. he denies that he had any indication with russian intelligence out of putin administration. before during or after the campaign. this would be the second campaign manager for donald trump. , theremently denies this has been a bipartisan call for metaphor to testify in front of the intelligence committee. , thel that wasn't enough prime minister of iran and top

leaders with the retail industry, i am told that meeting which was very successful, it was made clear to president trump that they oppose the border adjustment tax. >> the busiest man in washington, thank you. just a reminder, you can catch all this on our website. you can also find breaking news, charts, and related function that we discuss. markets, on bloomberg we are talking about the president of goldman sachs, live from the technology conference in san francisco. this is bloomberg. ♪

♪ i am scarlet fu and i am joe weisenthal. as good a bloomberg. go to the bloomberg.

>> we are live in the world headquarters, over the next hour. here are the top stories we're following across the world. stocks are once again in the green and in record highs. it would also mark the seventh straight day of having its best run since 2013. that hikesure for a in march. this also for a discounted deal for yahoo!? we will discuss the bigger technological landscape. economics, paul krugman discusses the potential impact of president trump's agenda. the markets close in two hours

time. let's look at how the stocks are doing. >> record highs and they are extending. we are seeing the averages up, 4/10 of 1% as we reached new highs. looks like the odds are increasing. 40% is where they stand right now. we are going to get vital economic side of this. then we will look at what happens at the bond market. we have that janet yellen testimony. you can see this rising at 6/10 of 1%. that is where we saw the leg up in the yield. there was also a little bit of a balancing our around yellen's testimony.

chart hereook at a on the bloomberg. when you are looking at is white and orange, those are the cpi price index. there are also the core cpi, and cpe. those are the preferred inflation measure of the fence. here, we aree seeing that climb above. it is still not quite there. there has not been quite a decent read. we will see if it has indeed crossed over to the all important line of 10%. we will be keeping and i am that area it is interesting that we are not seeing the dollar trade in line with the rates. lower.lar is now it has been going for its next straight day of gain or it it

was that may not happen. we got yesterday, procter and gamble which was a health firm taking in over $3 million. only a $5cussed million stake. bank of america was the most but stock by money managers in the fourth quarter. millionk a total of 390 stake. that is an increase of 40%. scarlet: thank you so much. joe: another world leader made his way to the white house, the prime minister of israel. the two leaders appeared together at a joint press conference. nothe united states has

better ally than israel. our alliance has been remarkably strong. under your leadership, i am confident that it will get even stronger. >> for more let's get to kevin cirilli. kevin, let's start went with a very specific point that trump has talked about, moving the embassy to jerusalem, this could be a very agitating move, what did you learn about whether that could become a reality? >> he said that is what he would prefer. he said he would be open to negotiating with the prime minister and the palestinians. a the campaign trail, he had resolution to get to this position. it, now hewasn't for is for it. he has started to back off a little bit. the meeting today was trying to

establish they have a strong relationship. israel remains one of our most important allies in the region. scarlet: kevin, what is interesting to me is that the two of them held a joint news conference that may have a private meeting. ,hy were they doing that presumably you have the private meeting first and then come to an agreement about what you will discuss and then have a news conference. >> the sources i am talking with mr. trump asd that well as the prime minister are hoping to avoid any scuffles publicly. they wanted to have that private meeting after they talk about this issues. we heard president trump talk about new issues on his campaign, his liaisons had ties with russia. he defended that.

he is facing more intense criticism from both parties. i want to point out that what president trump had to say about flint. eaked.ngs are being late o that has been going on for a long time. before me. now it is really going on. people are trying to cover up for a terrible loss that the democrats had during hillary clinton. >> what you saw there was donald trump criticizing the media and the u.s. intelligence committee for leaking the information about flint. ,e saw this on the twitter feed he reasserted that at the press conference. joe: kevin cirilli, reporting there from the white house, thank you. scarlet: michael flynn's resignation as to confusion on foreign policy.

we will look for more answers today in germany. reportt guest, a recent looking at these findings, a columbia university researcher joins us now. good to see you. good news regarding the administrations contact with assia, that is going to be factor? >> i think it is a point of concern for many countries especially in europe who are facing problems and their own election prospects. then of course you have the residual concern going on in the ukraine, what is going on with those missiles appointments there. i think there is a lot of concern with u.s.-russia relations o. joe: when you look at the connections between the trump administration, where does this leave us, with their role in the

election. what do you want to see what exactly is going on? >> certainly we are hearing a lot of voices from congress that there needs to be an investigation. let's find out what the nature of the relationship was during the campaign and what it is now. let's ensure that the relations are taking place as a part of a normal, rational discussion. opposed to anything that may have a lingering affect on the campaign. youret: i want to get perspective on what drives this relationship towards russia. do they see russia as a partner of equal, or someone we can make peace with because of other issues?

>> i think it is a combination of those created there is the wanting to have a great power relationship. they want to figure out how to solve global issues. you can ignore the facts that there are personal relations and financial investments that have been made because of those who are in trump's orbit. nature of his business ties only increases our concern about what is going on for his desire for closer ties. >> we know somebody who is a cabinet member, rex tillerson was a very engaged with the having government and the state owned oil company. what is trump's own concern? >> i think it we do not know everything about it.

we do not know how far it goes, we do not know which partners, i think this is part of the reason why we have to ask the sorts of questions. there are certainly a lot of russian ventures that are legitimate. they are a part of our normal economy. u.s. sanctions percent, the fact that you do not have a lot of insight into what is going on. that is a problem. there isot think that a problem with that unprecedented tax, what could be the most hot button side of things for trump? would it be golf courses, thats, the oil company and seems like something that could run a bit deeper. what could there potentially be for trump? >> there could be a lot of things. as a former sanctions person,

there are a lot of ways to see sanctions. criminals seek to move money around call-up money laundering is a big thing coming out of russia. it is a big concern and has been a big concern since the cold war. the moneyabout where might be coming from, you may .ot know, it may seem innocuous it could be a reasonable business transaction and it could be much more insidious. scarlet: what indication of you have that donald trump approached sanctions differently with russia? >> i think he already talked about sanctions in a much more transactional way read that is for u.s. policy. actthing is you trade a bad for progress towards that bad act. he has already talked about sanctions for arms control. maybe even doing away with the sanctions altogether. if you lose that link with the

bad ask you are trying to fix and the actions themselves, at that point they are just another transaction and they lose a special value and leverage that allows you to get those changes and policy. scarlet: thank you so much. , markck on the bloomberg crumpton is in the newsroom for your first word news. anyaul manafort is denying claims of putin and trump. in a statement to bloomberg, he said that he has never had any connection to putin or the government, rather directly or indirectly. during before or after the campaign. this in response to a new york debt reportowards that shows trump had repeated contact with russian officials. united nations is calling for aid in the eastern half of mosul.

where heavy civilian casualties are happening. directly or the eastern half and it is fully liberated. fortants are still fighting control of western mosul. they are moving ahead of an anticipated assault. lawyers for minnesota police officer who killed a black man during a traffic stop want the manslaughter case dismissed. prosecutors want the case to go to trial because it is still bylear if he was impaired marijuana or if the officer saw a gun. was in theirlfriend car and livestream the aftermath, a decision could come today. global news 24 hours a day powered by more than 2600 journalists and analysts, in more than 120 countries. i am mark crumpton and this is bloomberg. up, wind wallg

street top bankers converge. we will share an exclusive look. the ceo of goldman sachs is life from his internet conference in san francisco. this is bloomberg. ♪

♪ scarlet: david: this is bloomberg markets. let's go over to the annual conference taking place in san francisco. that is where caroline hyde is standing by with an interview. caroline: i am indeed, i am joined by the ceo -- the of goldman sachs. there are some of the biggest

ceos and texture. with the likes of twitter and oracle. what can you tell me about the technology industry right now? >> there is a lot of optimism. when you are in san francisco this is the tech community. the optimism comes from the fact that a lot of these companies are having a significant impact on businesses and industries, there is a lot of change and growth. this is certainly a place on the economy where there is significant growth. you are out here, sure you are a lot, when talking to companies in the tech sector. you tend to get a more optimistic view. caroline: as that growth perpetuates, everyone knows about the videos wind up in the quarter. wide for the tech

community in the private sector. >> there is certainly a lot of capital available. there are tech companies growing. this is away from the public markets. ast year was urgently historic year for activity. we will probably see the same kind of ad and flow. we are hopeful and optimistic we will see more activity this year. when you look at the world, if you are able to run a business and run it well, if you are able to access capital and there are not a lot of pressures from shareholders. these companies are trying to put that off so that capital growth is available to them. i'm more expect to see companies going back to the public matter -- market than we saw last year. that is still a big process for a lot of these companies.

caroline: we saw plenty of , weolidation and cash back may see more cash if we see money back to the united states. activity in the tech space is pretty active right now. we have been involved in 14 transactions in the last year. in that. period you would have to go back to the late 90's to see that kind of activity. one of the things that is is a number ofe very large companies that are growing very quickly. grew 27% as those companies are growing they are generating tax and market is all taking away

revenues and business. that was some of these other businesses in a place where they have to think about things more carefully. i think we are going to be seeing more consolidation and a lot of these activities will continue and see a level rise. if it stays the way it is now, i think it will be a good year. caroline: let's talk about disruption and tech. we had someone say back in 2015, how are you adapting to far more technologists? everyone,rly, like use technology more than we ever will. it is very easy to go back and look at the trading business. when people traded equities that was voice to voice.

person to person, now we have personal connectivity. that is a massive shift obviously in the people you need -- read we hire all kinds of different people. we obviously need all kinds of talent, we have increased the number of graduates we have hired. obviously there is a lot more engineering work. we are trying to make estimates that are a requirement. we need more of those kinds of people. majorseeds to be finance and those from a business background, but people who are there to service our clients. we discussed this before we came need great people to differentiate the firms. caroline: you have a lot of

innovation in the investment banking, the you feel comfortable having to change or track? do these people want more holiday,-- >> i do think it is fundamentally different. young people want to work for a great organization. it gives them the opportunity to learn and grow and excel. onhave always been focused creating the best work environment for long-term growth , positive experience, economic rewards. if we can do that that is good for our shareholders and our clients and it is a very positive cycle for staff. caroline: in digital lending there are the markets, how is that? >> that is a new business for us any new platform. sheet anden a balance look at our funding, without the latest history, there are a number of banking competitors that are in a position where

they had really tailored technology products. targeted pacelly that we are after. we are off a good start and we are excited by the opportunity. caroline: let's talk about something that a lot of people are talking about and that is share prices. potentially --at the reason what is driving the stock, many feel is the new administration, what do you look for a regulatory practices? -- wewill environment will try to live in the environment we are given. -- manageo manus it that risk. we are trying to talk about safety, that is really positive. because this happened all very quickly, there are a number of

things that have happened, that are not functioning. site eight or nine years later, there are things that we can do to improve lending. especially in small businesses. there are things that we can do to improve a lot. we are in a position to have a great opportunity to revisit and optimize for everyone without taking away safety. caroline: getting there could be too much risk-taking? think it's awfully and responsible discussion about andng to optimize markets liquidity especially for small businesses where there is a lot of growth, taking a look at some of the hind site. sure we are focused on those things. let's talk about the goldman guys and girls who are

now in close proximity to the administration. we have steve mnuchin named. and several others, there are a number of executives in the administration. is this a positive thing long-term for goldman sachs? >> we have always had a culture growth in goldman sachs. people are proud to work for goldman sachs. back tot to give society and community. view how when people go to washington from goldman sachs that people what to talk about that. these people have their own reputation, they want to in any way shape or form prove that they are the right thing for the country and they should serve.

there is more work for them in response to this. service to of public give back, i think that is a good thing for our culture, i think that is good for society and i think it is right that there are people who are serving in washington. caroline: great to have you here with us. the c 00 of goldman sachs joining us. scarlet: caroline hyde in san francisco. , paul krugman joins us for exclusive interview. hear what he has a say about president trump's decisions. this is bloomberg. ♪

♪ >> from the bloomberg headquarters, this is bloomberg markets. the markets are closing in new york, let's check on the bloomberg. you, i want to focus on

oil in particular. it got lost in the shuffle today. we did get the week cleat inventory -- weekly inventory number. we saw issue when it came out, now it is down. it is down to about 2/10 of 1%. you have the opec cuts on the other. to walk you through the u.s. side of this equation. this showing the weekly change in numbers. this is the weekly change we get from the government. this shows the weekly change, the change was a large bill of inventory. it was about nine and a half billion barrels. s --tockpile in the you u.s. is at record levels. you have gasoline in the aqua color. although those climbing to record number.

there is ample supply in the united states. counterbalancing that with the cuts that opec has made great this is going to continue to put some pressure on oil prices. >> thank you so much. let's get a check at first word news. trump welcome to the premise are a of a rant to the white house today. for their first face-to-face meeting since the inauguration. they are trying to push for a peace deal with the palestinians. >> our administration is focused to working with israel and they are our common allies. includes working towards a peace agreement with israel and the palestinians. president asked israel to hold back on settlement

construction, he said both sides need to make compromises to achieve these. what there was bipartisan legislation to have congress review sanctions on russia. spoke outcrats against alleged ties between the trump administration and russia. >> this will ensure that the -- trumpinistration administration will repeal sanctions by the states in response to their pernicious behavior in the ukraine. as well as their meddling in our elections. shift -- scve hiff would be nothing more than the destabilization. some groups must give prior consent of economic activity affecting their ancestral lands. this comes as the trump

completeation works to the dakota access pipeline. sued tothem have continue construction. their religion depends on clean water. potential embarrassing act for onlysraeli government, five football players arrived to boost the country's image. the players were a goodwill activist for the country. urged to skip that trip. global news 24 hours a day powered by more than 2600 journalists and analysts, in more than 120 countries. i am mark crumpton, this is bloomberg. scarlet: thank you so much. we have some breaking news, according to abc puzder will be

withdrawing his nomination. this is according to nbc news. that top been news republicans have been calling for his resignation. with his previous hiring of undocumented immigrants, his health of the employees. we will keep you posted, the latest headline here and according to nbc news, he has his name -- with front for the hearing. but get back to the first 100 days in the trump administration. we go to kathleen hays. news playing right into the topic, paul krugman who needs no introduction. is a new york times columnist

, and a nobel laureate. i just have to let you respond to that breaking news. yeah, we are having as much news as we are for a month. he was a very unique nominee. we were wondering if anything to derail these nominees, there was just too much stopping have. maybe they will actually nominee -- nominate somebody who believes in the mission of the labor department. the labor department head is not one of the most important positions, correct? >> yes it is not strategic. there is a lot of policies like the enforcement of rules and the law on union organization. some of the most important

statistical agencies, the bls which we rely on so much is under that regulation. it does matter if you have somebody who cares about the mission. >> let's cut to the chase a little bit. through your columns and tweets you are opposed to much of what donald trump has done, said, and what he is proposing. this, you haveou a sense of the economy, is there any sense where donald trump's policies work? , maybe they dots lead to more investments and more jobs. with infrastructure, that creates likely -- jobs quickly. is there any positive thing with this? >> i have been arguing for a fiscal stimulus. the dollar is a lot weaker now than it was a few years ago. we are not all the way there.

then there is an insurance argument for a stimulus, what there is a downturn, having a little bit extra. , with a stimulus reconstructive stimulus could be a good thing. it is really badly constructed. there is some case for that. infrastructure, yet, and that is a largedous case for infrastructure bill. we do not have that chemical closest thing we had on the campaign would generate almost no new infrastructure. it is disguised as one. there is not a lot of governments that in there. dodd-frank, there is zero evidence that they are holding back the economy. there has been a lot that is doing good there. this is just a way of setting up the next crisis. lending,business

shrunk to 19% and having small business employment. there is a compelling case made for regulations hurting retail customers like small businesses. >> there is a regular survey of small businesses. the fraction that say they are loans,any issues having is a historic low. there is not evidence, everything we can see is that they are not poorly because they have nothing to spend. we are really reaching to find something. the very people who are complaining should not be. >> is a broad headed to start having raises. janet yellen seems to be on that. are they in that direction. >> i understand that they are not stupid.

we are probably not at full employment. we are not at the 2% market. we have a really strong case. i think i was the first one to say it. i would not be doing this. they are making 2% milk like a target, that is a bad thing rate >> why not give it some more infrastructure spending? >> if it was infrastructure spending, then i would have to endorse that. but looking at democrats, they are all for that. >> what is the risk of a fed hike. the soonest bet is may? if it turns out that something marketsens and the

decide that that is not actually a good idea. the economy starts to slump. they view this as a ceiling, moreis going to be a much effective signal. you just set yourself up. if you are bound like us, they are our repeated stories of reported hikes that happened in japan. in both cases, they clearly damaged their credibility. we really do not want to go down there. i'm afraid that is what may be happening. we have a lot of questions for you on trade is get started. donald trump, the tpp, bilateral him and the prime minister seem to have agreed to go forward on something.

korea,ngapore and south why would a bilateral deal not be a good idea for the u.s.? >> it may be. the tpp was a funny deal. it was not about trade, it was about intellectual property. bilateral deals do not do as good of a job. there is a problem with bilateral gains, they do have a complexity. when you look at all of these deals, that is a real cost for business. that is going to discourage trade. it is not the worst thing in the world are it there is more bilateral trade deals, it could be on my list. it is not clear whatever is supposed to be happening. >> maybe south korea will buy cars. >> we have already made some deals of that kind.

i think the way to promote exports, would be to have people goodur stuff by having political theaters. you need to have a good sustained budget deficit. that is elected for exports. dollar, ita stronger translates into a wider tried -- trade deficit. >> we're going to continue with , we're going to continue right here on bloomberg. >> much more ahead. this is bloomberg. ♪

♪ this is bloomberg markets, i am oliver renick. we are joined with an exclusive interview, paul krugman. so much. >> i want to talk about this question with asia, scarlet is well-versed with asia. people are talking about the region with an economic partnership. it includes that whole region, is that a threat quote on quote to the states? >> it is mostly a geopolitical thing. these companies are just too diverse.

there is an extent with rule setting. there is a general sense of who you are looking at. i have had a lot of conversations with the tpp, people are asking what are you doing this? they always said geopolitics. >> here is a pretty quick thing, if the u.s. is not in your trade. you have to sell to somebody, and we had the biggest consumer and the world did we are able to leverage deals with china, or the eu, germany. is that the reason why people are going to have to deal with trump? >> nobody is going to cut us off.

we are going to be breaking our commitment to wto's and tariffs. step, the nextra if we go downrt another path. if we are that crazy, i did nothing to leverage is going to matter one way or another. >> this is something for our eco-news here, my fellow reporter here asking for nafta. why have they not been able to move up the value chain more? does this seem like this is a , that is where low income workers really one, the workers did not. i >> think if you want to make the case for maximum benefits. you really need to look at the

region. if you look at the five most northern states of mexico it is a very different story. they have emerged significantly from the u.s.. it is still disappointed. people that thought they are going to be the next south korea they have been very disappointed. we will have to see if being open to international trade is enough. it has problems with corruption. no one really knows how to do it. itself, yes, it tries, some of that is actually helping the u.s. enterprises compete. of actively for either side of the border for the workers. to ask about the border adjustment tax. that there is that

budgetary plan. one way to do that is with a border adjustment tax. there is those import taxes with consumers, with any other text. it seems like it is going to fall on foreigners. it is just another tax. it is just another kind of border adjustment tax or it everybody has this, it is really just a part of a back tax. is a dft, which is a concept that is a serious headache. it is much more complicated. it is not clear about what the alternative is. it is basically just shifting around to bears the responsibility. ,t the end of these proposals

these corporations always paid less. >> is there anything that the u.s. can do for these manufacturing jobs to get back to get states? are they lost for good, are we doomed to have a large trade deficit? having a trade because of the trade surplus. we have money flowing into the united states that we are selling ious to the rest of the world. should our dollar a just? >> the dollar is a symptom as well. because of the weakness of economies elsewhere. i do not know if there's much we can do. even when all is said and done, some of it cannot happen. for a balanced budget, that will do something about the budget.

we're going to have to have you back a. >> i have measured are not been to be any major shocks in the next 20 minutes. >> think so much. graduatet of the center in new york. back over to you. >> coming, netflix and amazon landlords seeing dollar signs. this is bloomberg. ♪

♪ scarlet: there is a change of the guard in the streaming markets. there is historic buildings across the lake. angeles,story in los

this feels symbolic for netflix who is making his treatment productions also taking up a lot .f real estate in hollywood >> it is a really big deal out here. we are seeing a lot of this happened because of the big push to have original context. netflix in particular has been a pioneer in this area. the con -- company has seen a lot of success in original shows. we saw with the crown picking up a letter recognition. lot come back a in may as well. that gets a whole i think isnd what most significant they have their own independent studio space where they can have their own lock to produce more original content.

scarlet: i'm sure with the side they now take up it is the equivalent to five walmart stores read what is the effect on los angeles"? >> it is having a pretty significant effect. we are seeing los angeles having 2009owest rates since right around when the recession hit. we can tie that to some of these companies that are tech oriented, which are more streaming, they are moving towards los angeles where the talent is. not only where it is on screen, but also on screen -- off the screen. are tons of people who have set up camp here. now we have data that shows that entertainment-based companies have 3 million more seats than

last decade. bonavista,eas like google has moved in. you to, facebook, all of that. that has been significant. >> getting closer to hollywood. thank you so much. hour, up in the next exiting the public markets. to the managing partner about that deal and more. this is bloomberg. ♪

oliver: it is 3:00 p.m. in new york, 12:00 p.m. in san francisco, and 8:00 p.m. in london. i'm oliver renick. scarlet: i'm scarlet fu. welcome to "bloomberg markets." ♪

oliver: we are live from bloomberg world headquarters in new york for the next hour. plus, we will be covering stories in chicago and tokyo. here are stories we're following on the bloomberg terminal and around the world. once again in the grain for the seventh straight day of gains, giving the s&p 500 longest streak since 2013. a lot of cabinets falling in d.c. but not in the equities market. softbank, three point $3 billion. in politics, reports say andrew poster -- puzder has withdrawn himself from labor secretary. let's check out all the markets which are going pretty crazy right now. i would love to have a political volatility index versus the vix.

the political volatility would be off the chart. oliver: what specific volatility now? >> maybe you should develop that. all three major averages rising. they are at records as well. the s&p isght days higher, the longest winning streak going back to september of 2013. indeed, it is notable for a number of different reasons. now we are on the 46th straight session the s&p has not moved at least 1% as of the close. the gains have been coming incrementally. what is gut -- what is tried and the gains? a lot has to do with financials. if you take a look, financials, the second-best performer on a percentage basis but they are heavily weighted. controlling the most within the s&p 500 in terms of gains. health care is also an out performer today. pharmaceutical makers are doing well on the session. consumer staples and industrials

rounding out the top groups. utilities and energy are under pressure. what is helping the financials? it has a lot to do with the yield today. we see them rise once again in the wake of the cpi data this morning coming at higher than estimated. thettle bit of a pairing of rise in. up three basis points, as much as five basis points at one point today. still around the highest yield we have seen all year. that is boosting the financials. there is one financial in particular i want to mention. fortress investment group. milestone for the company today, it was the first private equity firm to go public. now it is the first to be bought. thatain is in the wake of purchase from japan's soft group. $3.3 billion is the purchase price. 7.99 is where the stock was trading today. when it went public, it was 18.50 a piece. it plummeted to as well as 77

cents in december of 2008. another chart that is associated that caught our eye today has to do with what happened yesterday, before the deal was announced. 5.is is g #btv 602 we have got the options -- the call options. yesterday, before the deal was announced, there was a 6% gain in the stock. a surge in trading volume. likewise, the call options volume, the highest it had been in nearly a year. this is leading some traders to question who knew what when going into this deal announcement. inver: a little suspicious terms of the surge in call volume. glad you pointed that out. julie hyman, thanks. julie justat mentioned, joining us now is the -- a globalder of hedge fund firm.

what are they going to do with this? >> i think there are a lot of synergies. softbank's business is similar to what fortress is doing. 100 are trying to raise billion dollars in a private equity fund to invest in tech companies. that is analyzing companies. at some point, they may want to diversify. from fortress'standpoint, it is a home run. your stock has done terribly over the past 10 years. thehave not done well on hedge fund side. you do a good job on the private equity side and you are about to hook up with one of the greatest investors of all time. scarlet: what does this mean with others such as apollo? are they going to be looking for a softbank like suitor? donald: there are not a lot out there. they very exciting because

can tap into softbank's distribution. softbank is getting funded by some of the greatest investors in the world. that is really valuable to fortress. fortress needs a shot in the arm. it's brand has been hurt. to be hooked up with softbank, i think it will be very energetic for its employees. at the end of the day, fortress can only doto be hooked up withi as well as the investors think it can do. if the investors don't like it, they will bail and it will be a bad investment. oliver: now that i think about it and we are talking about it, maybe there is some synergy. maybe softbank is not necessarily steeped in the financial markets and operating like a hedge fund. the question is, when you have active management and hedge fund industry that has had a very rocky 18 months, especially when you look at 2016, and we have a conversation about whether or not the market will ever really occur again where asset managers

can beat the s&p repeatedly, beat their benchmarks, is there going to be a sort of new regime in which companies say maybe we are not going to necessarily do what you are doing and be a hedge fund, but we want your skill and ability to assess companies and markets question mark donald: -- markets? donald: i think the answer is yes but not a lot. these are very expensive. you have the benefit of hopefully buying an undervalued asset by public markets and you also have the synergies to add significant value. there are not that many opportunities out there to do that. reverses and banks begin to build out again, you will probably see a lot of hedge funds. scarlet: what will they do as softball -- softbank owner that they could not do as a publicly traded company question mark --

company? donald: i don't know the intricacies of the deal, but the potential investment bank -- base that softbank knows, if they could introduce that to fortress, they could get a lot more assets under management, they could do coinvestment's on various securities. there are a lot of synergies that could happen between those two organizations. oliver: hedge funds have had a pretty good quarter here. a little bit of a rebound from the first part of the year. i want to bring up a soundbite we had from the chief executive officer, speaking earlier this morning about the future of hedge funds. let's take a listen to that. >> by for -- by 2030, do i think 30% of hedge funds will have shut down? i think it will be much higher by 2030. number too high or too low, and what exactly do you think the trend is? donald: i think only 10% of

hedge funds add value. comparison to the mutual fund industry, i think 5% of mutual funds will outperform their benchmark long-term. theoretically, 90% should go out of business. it is a very darwinist take -- darwinistic business. will 30% go out? i think that is probably a reasonable number. it does not mean the industry will shrink. it means money will be cycled from that hedge fund. scarlet: so it will go to bigger players. also said isis quantitive easing drove down risk premium. hedge funds specifically have found life very difficult. what kind of strategies are best positioned in this kind of environment where the fed is likely to raise rates while the ecb and the boj are still staying very cute motive?

donald: you are seeing a lot of people take money off of strategies that have a lot of data in them especially on the fixed income side. interest rate down, spreads are tight. a lot of fixed income strategies have done phenomenally well since 2009. money is rolling out of those and it is going to strategies that are correlated. you see a lot of money going into cta's. have a market selloff, a lot of strategies correlations increase. a lot of cta's's correlations can get negative during the fall of markets. you will see money go to stuff like reinsurance. you will get returns above were fixed income markets are and it has no correlation to the capital markets. you will see money going to direct lending, where the previous guest, they were having a discussion of small company's getting funding. in actuality, they are having a

tremendously difficult time getting funding and are having to pay very high interest rates and hedge funds are taking advantage of that. demand for strategies that don't have high correlation, i do think you will begin to see more interest in equity strategies that don't have a lot of market exposure. because volatilities should go up. it should be a good environment. , thank youteinbrugge for joining us. check of the a headlines on bloomberg news this afternoon. trump welcomed benjamin netanyahu to the white house today for their first face-to-face meeting since the inauguration. speaking at the joint news conference, the president announced what he considers a harsh stance by the united nations on israel. trump: america and israel are two nations that cherish the value of all human life. why is one more reason reject unfair and on cited --

one-sided actions of the united has treated israel in my opinion very unfairly. israel's -- ed in the occupied territories. and the ceo of c qe restaurants is expected to enjoy himself -- for consideration for labor secretary. this comes after cnn reports top senate republicans are urging president trump to withdraw the nomination. housekeeper who is not authorized to work for the united states. woman is being arrested in the death -- north korea leader kim jong-il and. poisoned him with either a needle or a spray. he lived outside the country for many years. dayal news 24 hours a

powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. oliver. oliver: coming up, fantasy sports sites draft kings had a merger in the fall. we will see how it is going with the ceo. this is bloomberg. ♪

scarlet: this is "bloomberg markets." i'm scarlet fu. oliver: i am oliver renick. time now for the bloomberg "business flash," a look at some of the biggest business stories in the news right now. of the world passes biggest hedge fund firms eye with drove about $13 billion over the last 13 months. the company settled a five-year

bribery probe. also single doubt by regulators for ignoring red flags and corruption risks. clients pulled it billion dollars less you and another $4.8 billion last month. plans to press good more than a dozen international and local banks for allegedly and local banks for allegedly informed currency trading. lenders named by the company's's competition include bank of america's merrill lynch unit, j.p. morgan chase, credit suisse, and hsbc. ony are accused of colluding bit offer spreads for bond trades involving the u.s. dollar, dating backs -- dating to 2000 11. making it harder for government lawyers to open an investigation into corporate wrongdoing accordant people familiar with the matter. the acting chairman requested an examination of what is known internally, delegated. it gives senior attorneys across the s&p broader power to probe.

that is your bloomberg "business flash" update. scarlet: discussing the business of sports and money behind the game. yesterday, i sought -- i sat down with nigel eccles, ceo of fanduel. i began by asking him for an update on the deal. nigel: things are progressing as expected. the third quarter this year. the process is going well. we expect to continue on the timeline. scarlet: the third quarter this year. give us your best read on the antitrust review process under president trump. on the one hand, you have got a who isiness president

very much looking to increase gdp and get countries going. -- companies going. on the other hand, media time -- a media tie ups whether it is time warner or at&t and others. i think really under any administration, what they want to look at, is this bad for consumers, is this bad for competition? with regard to our process, what they are looking at is, who are we competing with? compete with yahoo! sports. we look at our ability to put these companies together. as startups, to better compete with those bigger incumbents in the market. scarlet: how will the merger work in the long term? will there be separate branding for each or whether they will be combined into one service? nigel: what i would say is we want to bring the best of both companies together. the brand equity from both

companies. orwant to take 300 engineers 300 in engineering and put them together to become one team and free up the resource to develop new products and new features. that is the in going design principle. what does that mean in terms of brand and platform? we are working that out. we want to see that come through and put everyone as one team working together. scarlet: some players play both sides. is it -- both sites. nigel: some people like to be able to play in two different ecosystems. this one and this one at the same time. also, people want to have more liquidity. they set want to have as many opponents as i can. you put the two together and you on one platform.

there are advantages both ways. that is why is -- it is not a simple and straightforward question. scarlet: espn would be a competition for you. how would that work? there is not any betting going on with espn. nigel: on yahoo!, it is a season long. all of those have financial considerations. the vast majority of fantasy sports leagues, picchu -- people pay an entry fee at the start. we are drafting how we grow the industry and how we compete, it is always going to be pulling away those players and saying, hey, we are a better form of fantasy sports. we always felt from the very start for us to be successful we have to compete with espn and yahoo!. scarlet: there are now disclosures on the website that the vast majority of players move money majority of the time. have you seen an impact on the number of people playing? nigel: we keep going back.

when you actually look at it, when you played in a tournament on sunday, it was $10 and you had a chance to win a million dollars and you don't win, you compare that to going to the movies or anything else you can spend money on. we felt it was a good deal. we talked to our players and they say the same thing. for a lot of people, they don't win over any given weekend or over a couple of weeks. at that is kind of not the point. the point is people play it because it is fun and they are willing to spend money on it. scarlet: that was a portion of my interview with fanduel ceo nigel eccles. the gold etf p or how to play the recent rally in metals? this is bloomberg. ♪

this is "bloomberg markets." i am oliver renick. scarlet: time now for options insight with julie hyman. , joe is out inme chicago at the cboe. thank you for joining us. i want to highlight something you talked to me about in your know today. it has to do with volatility versus the skew index. we have a chart on the bloomberg . it is simply the skew index versus the fix. we are seeing it elevated versus the x and it has been for a little while now p or what is your take away from this diversions we are seeing? joe: the couple of things i noticed, first of all, two things can be true, that volatility traders are expecting lower than usual volatility in the short-term. volatility traders are also expecting a potentially larger risk than normal to a market

correction. that is the first thing i am noticing. the second thing i want to say about the skew being this high , i am sorry, market traders let me start over. volatility will go faster than normal. the downside a lot higher, and the rate that they go higher is very high. a high skew signals that traders are looking for when the banks actually do go higher. is a: when there volatility inducing event, you can see a dramatic move in volatility versus a meek in volatility. the gold etf here. we have seen a little bit of a comeback for gold this year. what are you thinking will

happen going forward? for me, any trade without a strategy is just a gamble. i like to have a lot more thought behind it. something i want in my portfolio especially now, given the fact we might see some inflation out there. addition to the portfolio. something i want to have in the background as a diversified portfolio. gold is another thing which goes up and goes down, fluctuates up and down. it is something in overweight strategy is perfect for a derivative like gold. julie: how does that work? what are you thinking to do here? of: the strategy, instead buying futures, you can get into underlying by going, by selling a cash covered foot, and that is what i will be doing. theing the 115 gold gld, gold etf.

give longwilling to the stock under 115. i will put the stock in and then i will buy it. i will turn around and sell. high , able--y buy high. i will be collecting 7.8% for an annualized basis. all right. we will be watching gld and got inflation data today showing it is hotter than estimated. thank you, joe tigay. scarlet: still ahead, we are speaking with the former u.s. them back at her -- ambassador to ukraine. ♪

emma: let's get to first word news. it's better to draw himself from consideration as the u.s. labor secretary according to nbc news.

this comes after a cnn report that top senate republicans were urging president trump to withdraw the nomination. employing a housekeeper who is work in theed to united states. secretary of state rex tillerson and homeland security chief john kelly went to visit mexico next week according to mesko's foreign ministry which says both are expected on thursday. the u.s. officials will meet with various members of the government to continue the dialogue started on the phone by president trump and the mexican president in january. the european union has approved a landmark free trade agreement canada. it is the eu's first deal and will eventually and 99% of the tariffs on imported goods. the senate has still to ratify the deal. canada. it is the eu's firsttraffic fats jumped last year to the highest level in nearly a decade. 2016 tont is rate 6% in more