Transcripts For BLOOMBERG Whatd You Miss 20170831

Exact number of the troops are what the rules will be, but said they would support Afghan Forces rather than do the fighting for them. The state department has told russia to close three buildings in the u. S. , including a consulate in San Francisco. The move is in retaliation for the russian decision last month ordering washington to cut staff at its embassies and consulates in russia. The state Department Spokesperson said today that the closures needed to be completed by saturday, over however the u. S. Does not plan to expel any russian officials. 12 People Killed and 14 others injured when a fivestory building collapsed in the indian capital of mumbai today, after torrential rains. Another 25 people were trapped in the debris. Local management Officials Say that heavy flooding in bahir has killed over 500 people, hundreds of thousands have been in relief camps across northeastern India Following the seasonal monsoon rains. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Julia live from bloomberg World Headquarters in new york, im julie chatterley. Joe im joe weisenthal. Scarlet fu is off today. We are 30 minutes from the close of trading in the u. S. Julia u. S. Stocks rising, the radio zillions with the resilience of the economy, but the dollar turning lower. Joe the question is, whatd you miss . Julia it was not just bad weather, it was that planning, why the only major u. S. City is without a zoning code. And top advisor for donald trump wakes up each morning to a growing problem that will not go away. We look at a major problem for his familys real estate business. Investors gear up for the jobs report tomorrow. We have the information you cannot miss before the numbers come across. Border wallumps will probably be delayed past the funding deadline, according to white house officials. Last year after a rally in phoenix donald trump suggested a Government Shutdown might be necessary. Believe me, we have to close down the government, we are building a wall. Let me be very clear. The democrats in congress, who oppose a border wall and stand in the way of border security, you are putting all of americas safety at risk. Julia oops. Here with what it means for the debt ceiling is our congressional reporter in washington dc. Erica, not only the debt ceiling, but we also have the financing required to help with the Hurricane Harvey fallout, so if you add all of these things together, something had to give and it looks like it is the wall. It does look like Hurricane Harvey will smooth things over in congress, it is a popular measure. It could be about three different pieces of a package needed in order to help the victims. They can become vehicles for other things like the debt ceiling, the building to keep the government open. We got a white house official to acknowledge with those in congress have already been saying, the fight over the border wall is not happening in september. If a shutdown was to happen, the victims of harvey would be impacted as much as fema and other parts of the government, urban and Development Model needed in the recovery effort and a shutdown would be a black eye for the president , said he will not be able to do that battle as he talked about to get the border wall funding anytime soon. Joe essentially, the need to Fund Recovery for harvey becomes the offramp, because there was a view that there was no way that border wall funding was going to pass and the white house said that it would not, it would be willing to close the government over it, but you are saying that the growing perspective is that they need to fund the Harvey Recovery supersedes all of that. Erik that is right. The offramp is how the members of congress have expressed it, basically saying it allows donald trump to save face, saying i still want the border wall, i can have the fight in december come have the fight later, but right now we need to help Harvey Victims and avoid the shutdown. Basically it is a get out of jail card right now. And they could use a combined ability raise the debt ceiling through the next midterm election, the next time when we get to this border wall funding fight in december we do not have the added competitions of the debt ceiling that could rattle the financial markets. Julia get out of jail free, i like the idea of that, a graceful way of turning around for President Trump. Dream, us about the speculation all week that donald trump will end of the program. And it will clearly be controversial. Going headtohead with some big ceos in the country. Will we see it next week . Erik it is looking likely that he will allow the current dreamers, those who have applied for a temporary work permit to stay until those expire, but at that point to sort of open them up to possible deportation. That could be extended. There is leeway. Nonetheless, there will be a Major Political fight, some backlash from democrats over that. Thesegument there that people who came here as children, undocumented, put themselves forward and registered and now police know where to find them and this is sort of like breaking up with them. It is certainly playing to the donald trump base, his core supporters, 34 Approval Rating that he has now, a big part of the court wants to see this program, daca, and it appeared joe ended. Joe thank you very much. Julia houston is falling, the fourth largest metropolitan area in the united states. It is larger than the state of new jersey and it is situated in an endless swamp, as one explorer put it. Editor in his latest stories says the city is suffering from a lack of a plan to deal with chronic flooding. Great to have you on again. Great article. We want everybody to read this. You say houston is making itself more vulnerable than it should be, for many structural reasons, so lay them out so we get a sense of your arguments. I do not want to seem like we are blaming victims. They are going to a terrible time right now and i have gotten reaction from people saying, why would you dwell on the negative . This is not what it is about, it is about what they can do better. Going back to the early 19th century, it was built in a swamp and they knew it at the time. Houston has always had a cando attitude, the texan pride, and it has thrived. The fourth biggest city in the country and so much going for it. It has done it in an unconventional way, just by the build first ask questions later attitude. Cityally it is the biggest in the country with no zoning code. An as you say, houston has antizoning philosophy, but on the flipside to that you never hear about Affordable Housing crisis in houston, you hear about it in new york, in los angeles, San Francisco and washington dc and boston, almost everywhere else. Houston is good for the middle class. Peter that is the point, that is the upside. The downside, they have done it by pay much unbridled construction, including in places they probably should not be building. If you are going to live in a swamp, you need to make plans for it and you have got to have places for the water to collect when you have a big storm like this. Joe is it your assertion that you could have a sort of, build wherever with a few more roles that are more sound rules that are more sound . Peter i think there is a way that they do not have to get rid of the texan cando spirit, but within reason make sure you are accommodating nature, not fighting it. Julia one of the questions as well was the stunning facts here, less than 15 of individual homeowners actually have insurance. The fact they have been built on the floodplains, and looking at the lack of insurance, they can kind of record highs the problem here. That is a piece of it. Peter it goes back to fema requires Flood Insurance if you are within 100 for the flood zone, but many people affected by this may not have been in the flood zone, or maybe not carrying a mortgage, so they do not need to have the Flood Insurance. The number of people with insurance policies declined over the last five years. You know, you let it lapse. You think it is expensive, you can probably get away with it and then this happens. Joe the National Policy toward Flood Insurance is controversial. It is coming up for debate in congress. What is the direction of that program . Peter my coauthor had a great interview with the head of fema on this. And one of the things that he said, this is more on the topic of emergency disaster aid, rather than Flood Insurance, but the concept is the same. If you choose not to have stringent building codes, if you will run the risk that a flood will wipe out a lot of buildings, then you as a city should expect that the federal government is not going to come in with first dollar aide, there might be a deductible. You might have to pay with local funds and then the federal government comes in after you have paid your deductible. Julia is singapore, which is heavily impacted by monsoons, some kind of option as an example of a model that we should look at . Peter i mentioned it because it was mentioned to me by somebody who said, and i went back to get the data, singapore has doubled their population since the 1980s. At the same time the amount of land is extremely dense, the city state, and it is green and it has risen by 40 , improving its ability to withstand monsoons even while it was growing. Julia fantastic. Joe it is funny how often singapore is looked at as a model. We had the same discussion during the health care conversation. Peter and he cannot sit on the sidewalk. Julia because of the chewing gum. I want to bring up headlines crossing the bloomberg terminal right now. Donald trump pledging 1 million to Harvey Disaster aid. I assume that is his personal money here. Briefing, saying that he has plans to go to lake charles and the houston area, originally planned for this weekend. He is trying to get to those places he did not get to earlier this week because he did not want to interrupt those rescue efforts. Peter, great to chat with you. You can read his story with his colleague in the latest issue of bloomberg businessweek. I said it already, but good article and worth reading. Coming up, Jared Kushners family made big bets on a skyscraper in manhattan. And the debt burden getting heavy. We will be discussing it. From new york, this is bloomberg. Julia whatd you miss . About a decade ago with 50 million down Jared Kushners coming purchased 666 5th avenue. I was trying to change those numbers. They bill comes due in 2019 and the businesss position has become precarious. Thousands of pages of financial documents have been reviewed and caleb has taken a look. They purchased this several years ago and we have heard plenty of stories about their attempts to travel the world to try to get financing and it has been happening for a couple years, so i have they failed to do that . There are a few reasons. The plan they are going for is so expensive. They are going for a moonshot to save this aging tower. They can update the tower and use it as an office tower, maybe refinance it. That is not what they want to do. They want to knock it down, put in a fivestory mall, condos that would go for about 9,000 per square foot on top of that. It is to get really expensive ask and there has to be only a handful of partners that would really be interested in some they like that. Joe lets take a step back and talk about how they accumulated this massive debt. It was 2006, they put down 50 million on a 1. 6 billion loan . Caleb 1. 8 billion. Joe what is coming due . Julia what is their ownership . Caleb they now own about 50 of the offices and none of the stories and they owe half of the mortgage. The other half belongs to a realty trust that entered into a partnership with them in 2011 with the office spaces. Interestrate are going back up after the refinancing agreement and they have until 2018 to figure out what they are doing. Julia tell me something basic, money in, money out, down or up . Joe this is the essence of all business reporting, down or up . Andb interest is going up occupancy is going down. Right now it is 70 occupied, which is in part because of the design, because they do not want to bring in people if theyre going to knock it down. So it is that for sure. Right now the red is getting bigger. Joe now that family owns other properties besides this one, they have been trying to extract cash from those holdings in order to keep on with this one. What is going on with that . Caleb my colleague and i have reported a few things that are going on. They sold about 18,000 of these apartments in new jersey, maryland, which were not particularly sexy, but Good Business to purchase the tower back in 2006 and 2007. They have fewer of those and now they have a fractional stake in new York Properties that they purchased with a lot of debt, so their overall position around the building, it is a much larger part of their portfolio then it was a decade ago. Julia that is a good point. It is only one piece of the puzzle. I cannot believe we have not mentioned the administration or donald trump, because it is interesting to rise when the campaigning for the president ial election was going on. To what extent do you think that this is complicating the issue, the investigations going on, the sense that you just do not want to get too close to this, because we should make the point that Jared Kushner has separated himself, it is his father now dealing with this. Joe before he joined the administration, he was trying to help make the deals happen and now it is his father and the official president of the company is different now and he has divested himself from the company that owns it, but the ownership stake went back to his dad whom he is close with. You pointed out the phenomenon where we were able to charge them getting through more doors and into more meetings as Trumps Campaign star rose, but the deal is such a hard sell that they are not getting any investment. Caleb there was a great phrase in the article. Joe something like, investors who are not looking to make a profit. Which there are not many in the world. Maybe zero. What does that mean . Caleb the closest they got was has a chinese insurer that bought up real estate and the waldorf and evaluations are different there. So a high price for them, for the u. S. Real estate, or for u. S. Buyers is not for them, it is still some big of a bargain. And they are trying to get cash oout of the country and that is another issue. Julia i could leave you two talking. More questions. So good. You have to read the article. Joe caleb, check out his article on the bloomberg or at bloomberg. Com. Time for the stock of the hour, Dollar General extending a fourday slide as if all the most in a year after earnings showed the effects of increasing conviction among retailers. Oliver renick is here to talk about the company. Dollar general. A dollar store. [indiscernible] scarlet somebody watching over caleb. Not having a good day, down 6 , the most in about a year. If you look at it in the past year, it is a rough chart with up and down and it has generally done pretty well the couple years before, but now it is a volatile chart and a good spot to be in. This is somewhat company specific, but overall very industry sort of general if you will, because it is a story about retailers having to figure out how to get bodies in their stores and keep them there. And before we started, to answer your question, they break down into two categories, the sacred Dollar Stores and the real one, the real ones only selling products for one dollar. Im not sure of those still exist. Dollar general has different pricing, so markdowns for people to get inside and they hope that they spend more on the larger items. Right now the margins are streaking are shanking. Jump into the terminal. This is a look at where they are compared to peers. Where i am is the gross margin, they are above 30 right here in the blue bubble. On the y axis i have the growth. You can see this corner is not a good place to meet, it means they are trailing on margins and in the past 12 months the earnings are not looking hot. Put them together and that is why you have the worst of the year. Julia you always bring awesome charts. Oliver renick, thank you for that. Next, the Indian Government taking a gamble when it when cash would no longer be accepted as legal tender. What has been the payoff . We have the answers. This is bloomberg. Julia whatd you miss . Inflation cannot break above the 2 no matter how you look at it. Take a look at the chart, we had inflation this morning from the eurozone and we do have mario draghi next week said to give hints on what is going on as far as the millis is concerned as stimulus is concerned. We are looking at the blue line, core inflation. Excludesve cpi, that packaged holidays. You can see it goes a little bit bit nape the core level beneath the core level. And we have the purple line, fiveyear swap. I made the point earlier in the week and i wanted to illustrate it again. We have the ecb looking at this, below where it was when they initially announced qe. For all those people borrowing the euro and arguing for mario draghi to do more, we do not have the numbers. Joe here are some not so pleasant numbers, indian gdp has been falling below chinese growth and the reason it is interesting, remember the big demonetization plan by the government. They wanted to clear out all of the hidden money that was corrupting with bribes. 90 never sent of the cash has come back. 99 of the cash has come back. Market slowdown. Julia they are not giving up. The market close is coming up. Here are the averages going into a short break. Stay with us. This is bloomberg. Julia whatd you miss . U. S. Stocks closing higher with the s p 500 the racing a monthly loss erasing its monthly loss. Im julia chatterley. Joe im joe weisenthal. Scarlet fu is off today. And if you are tuning in on twitter, we want to welcome you to our closing bug coverage every weekday from 4 00 p. M. 5 p. M. Eastern julia we begin with our market minutes. Let me give you a look at how the equities have gone into the session close. We have the dow higher by 3 10 of a percent. S p 500 up. The nasdaq outperforming a 1 ,rd high, just shy of 6428 is the figure. Lets break it down to give you a sense of what is driving it. Expedia has been in the news, having its best day since november. And they have chosen a new ceo. Quickly filling the job with a 10 candidate, of course a wellknown candidate after Dara Khosrowshahi quit this week after he was offered a job at uber. We have that interview with the new ceo. It will be interesting to see what happens with that stock. Disney considering cost cuts as much as 10 at its television group. We know they have been struggling with declining viewership figures. For announced the shift streaming back in august, but they are back in double digits. 8 in thell soup, off session. The company posting disappointing earnings and delivering a weaker than expected forecast. Investors looking at this and is saying perhaps it is an ongoing sign for the consolidation in general. We have Warren Buffett throwing cold water on the idea that hides would heinz would purchase the company. Dollar general we just heard oliver speaking about it, the worst day in the year, down 5. 5 . Joe take a look at government bonds. Today, whichaction is interesting because we did get a lot of data this morning. More on that in a second. Twoyear yields flat on the day. 10 year yield, a little bit weird that it ended lower on the day, because we have good data and we have a risk on move in equities, nonetheless treasuries being moved a little bit. Year, 2. 12 . 10 julia remember we were talking about this being above 120, now pushing down, around 118 earlier in the day and now pushing back higher, so real choppiness. I want to show you a chart that pulls together all of the analysts and their readings on where they expect currency the end for the year. You can see the white line is where the euro dollar is trading right now, the year end forecast, the blue line, you see we are talking about this, significantly higher than what the analysts anticipated for the end of the year. Joe it will catch up. Julia caution as we could see further movement higher in the dollar. And we want to bring this in as well. A whopping big number, blowing past expectations. A lot of people looking at perhaps justification for the bank of canada. To maybe do something further on rates. I want to bring in the moves in the mexican peso as well. We have heard donald trump talking numerous times over the last couple weeks about walking away from nafta, not necessary to be engaged in the negotiations. We heard from the economy minister today who said mexico refuses to negotiate under unnecessary threats. Pushback from the mexicans, raising concerns that perhaps these talks are not going so well after all. Joe finally come on commodities, take a look. Green across the board, oil bouncing back after some weekdays. Gold catching a little bit of 1 . Last one, gasoline futures up 13. 5 today. Gasoline prices absolutely soaring in the wake of the hurricane. Take a look at a oneyear chart of gasoline and you can see that is just a vertical line at the end. So expect a Ripple Effect across, you know, at the pump and in the a lot of different places around the country as you see this remarkable spike in the gas prices. Those are todays market minutes. Julia whatd you miss . The fed to not catch a break on inflation. 1. 4 ,s coming in around below the 2 target today. Continuing the slide. Processing the data with the jobs coming up tomorrow. We will bring in mark who is in town from singapore where he works on our asian markets team. Good to have you. Talk about this number and how it filters into the feds thinking, one last clean reading before harvey impacts the numbers. Mark clearly no headline inflation. Themselves togged the number, yes there is inflation, but as long as it is focused on consumer prices, it does not matter. It is trending down and has been for the last two months. Unless you believe the fed will change, they will not hike rates. How can they justify it when they are moving away from the target. They have unemployment, but it doesnt really matter. This kind of means it is less than normal. I believe it is better to be in the pub anyway, because these payrolls by a lottery number and it is always a disaster. Particularly tomorrow, just they embed, wake up in bed, wake up after, because it is unlikely to change the narrative. [laughter] joe i respect your opinion. Why cant they just say, cell phone prices, drug prices, transitory. Mark; it is impressive they managed to hike in june even though the number was coming down. At some point yellen will have to say, keep something transitory for like three months, six months, nine months . It will be a struggle to hike again until we see the headline above 1. 6 . Minimum. Joe the data has been solid this week. Gdp, very strong. Soft readings and a survey looking good. If it was not followed the headline risk coming in september, usa these are looking good for the u. S. Mark risk reward and the 10 year bond symmetrical at the moment, unless you think they are starting a rate cutting cycle there is much further for them there is not much further for them to follow. You have to assume the basis points next time will be higher rather than lower. But the problem is it is hard to justify. While the risk is asymmetrical, they will not go much lower. It means they will probably bounce around in this range. They might say yields go back up to 225 or 230, but unless we shift with inflation, they are going back there again. Julia what about when we get through the debt negotiations and spending bill. Do we reassess and say, all the concerns we have about a exist, whathey ca about then, what are we pricing . You look at rates when youre out and they say the lowest since the growth scare in 2016, so that is not right to me. Mark one of the problems with that is nobody is sure how to trade it, they are not sure. Assuming that we clear the debt ceiling, you think it would be good for growth, get back to the narrative, but we have no inflation so they will not be hiking rates and it is hard to justify the higher yields. Joe on the lack of inflation question, which seems more plausible, that there is a breakdown in the relationship between unemployment and inflation . Or maybe the models do not really work as we thought. Or that the models work well, but we are not as close to full employment as we assumed . Mark i think first of all the models are broken. The phillips curve does not work as we thought. We need more selective phillips curves for Different Industries and we need to be more intelligent on how we apply them. It is broken. We closerstion of are to full employment, that is a valid question because the Labor Participation rate is lower than what it was precrisis, so with a lower than it was, even countries like japan have way more people at work. I think that is important, the way that we are not closer to full employment as some people think we are. Julia brilliant. Always good to have your inside. Mark from singapore, thank you. Joe breaking news, we have earnings out from lululemon, the cup at a reporting q2 earnings. . 39, ahead eps of of estimates of . 35. Revenue, i am looking at the number and i am not sure if that number is correct, so i will pause. The fullyear adjusted eps, that is nicely ahead of estimates. You see the market really liking the numbers. Up 7. 5 . There you go. Eps, . 39, also beating on gross margins. Julia and a raise of those with the adjusted eps, 242, the forecast giving concers from what we heard earlier this week. Finish line with concern. Joe foot locker. Julia them as well. Joe all of the sports retailers. Julia Great Results for lululemon. Coming up, we will take a look at oil. How the industry will recover from harvey and what are their prospects in asia. From new york, this is bloomberg. Mark im mark crumpton. It is time for first word news. President trump pledging 1 million of his personal funds for victims of Hurricane Harvey. That is according to the White House Press secretary sarah sanders. The president was in texas on monday to witness the destruction firsthand and visit with victims. He was advised to only visit areas where his presence would not be a distraction. Aide says the house could vote on the first phase of relief money for Hurricane Harvey in midseptember, and Sheila Jackson lee of texas told bloomberg that lawmakers need to get started because there is no time to waste. We need money now. There have been so much expenditures, we do not know how Many Properties in terms of homes will be hurt. Some people have given the number as high as 46,000 homes. Mark the congresswoman also expects costs from damages to run higher than sandys, which reached 70 billion. There could be more explosions at a houston area Chemical Plant that was damaged by harvey. The french operator of the plant says the fire this morning knocked out Power Supplies needed to refrigerate volatile chemicals and eight more containers could burn and explode. The blast this morning sent 30 foot flames and black smoke into the air. In houston, fire personnel and search and rescue teams have begun conducting doortodoor searches, now that the weather has cleared. Officials say they are trying to determine how much damage there is and whether any civilians were left behind. Fire Officials Say the process could take as long as two weeks. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Julia whatd you miss . Harvey has brought disruption to the Gulf Coast Oil industry, closing down ports and refineries. Crisis at the pump have risen, while crude has fallen. To discuss the effects on the oil industry, we will bring in jim, cocio for Management Advisors that manage 50 billion in assets. Good to have you. You said barring any further storms you believe the oil and Gas Supply Chain will be back on within two weeks . Jim the industry is wellprepared for hurricanes. But the most Significant Impact in the human toll taking place, we have friends and family there, so our prayers are with them. From a financial standpoint, the industry is well prepared for hurricanes, they have gone through it several times. As they go through checks, looking at the offshore production and the refineries, we think it will be about 14 days once the water receives that they can get back online. Maybe not 100 , but a large part of it. Joe in terms of industry resilience, what has been the biggest change since katrina . Jim i think one of the biggest changes since katrina is we have more refining in the gulf, so there is a bigger impact. We see that with gasoline prices. And we are starting to see shortages around. That will have the impact of reducing inventory in the u. S. Because refineries are offline and will bump up crude inventory, but i think the impact will be reducing the inventory worldwide for oil liquids. Julia i know that investment horizon is in far longer, so we have been talking about the shortterm impact. You see opportunity in the energy space. Talking about oil and the sense that we will look at inventories rather than the big picture. Do you think we have underestimated the future demand potential . Jim absolutely. There are a couple things happening, one is the overall supply and demand. We have seen inventory drop since the beginning of the year, but the longerterm, the low price of oil is no longer production,g future the investment for future production. You have two of the biggest populations in the world, china and india, and their gdp per capita is rising and they are spending on energy. We also see china developing their one belt, one road, really the modernday silk road. There will be a lot of infrastructure spend on the. We are looking at the impact on copper and steel continuing to rise come and we think it will impact oil prices. Joe the project is very interesting, some people think it will be really nothing materializing there, so why are you optimistic and what is the best way to get exposure to this extraordinary project . Jim one is the inventory in the commodities has been coming down for the last seven years and the industry has gotten better aligned from a supply and demand standpoint. And our belief is china is really is intent on creating this economic zone. The fixed income fund, we set our portfolio up so 20 of the fund is positioned in commodity companies, oil and gas companies, and industrial as the investment builds out. Julia you mentioned china and the fact you believe people are misinterpreting, or maybe not appreciating the extent of all of the demand. What about the fact that we saw the iaa currently underestimating not just about the projects, but also about people that we watch every single week and their reports misinterpreting it too. Joe if you look at the reports for demand over the last 10 years jim they come out with a report and over the subsequent five years they revise them higher. The industry has underestimated the demand for five years, by about a Million Barrels a day. Nine out of the last 10 years. The San Francisco fed came out with a report saying they are still underestimating it for the next 10 years. We see that as support for a much higher presence. Julia go ahead. I was going to say, break it down, you said 20 for your portfolio, what is the rest of it . Jim we are split between treasuries and corporate and the rest is for industrial bonds, industrial companies, highgrade investment bonds, we have walmart, wells fargo. Joe on treasuries, that was one of the bigger debates, whether we would start to see the turnaround from the huge secular decline we have seen for a few decades now. The shortterm has flopped, so no turnaround in sight yet. Where do we go from here . Jim you are right, the 10year has gone down, not up as people expected. We think at the next meeting they will really concentrate on normalizing the balance sheet. I do not see the fed raising rates into next year. We have soft inflation rates and they seem to continue, so in that respect we will remain short duration and the lower end of the curve, and we think eventually that the fed will want to raise rates but it will take time. The magic word, walmart. You will be back. We will talk about retail next time. Jim, thank you for joining us. And hisp, can macron government reform labor laws in Union Opposition and low approval numbers . We will go to paris for the insight. From new york, this is bloomberg. Joe whatd you miss . The government of the french president macron is facing its biggest challenge in reforming labor laws. The president wants to free up businesses to reduce unemployment that continues to drive down the economy. Multiple french president have been routed for pursuing similar measures and now macrons popularity has already plummeted. We have more from paris. This is the first major and the most expected reform for many french president. To labor market reform aims get rid of an employment in france to reduce an appointment in france where it is at double the u. K. And germany. The key changes include negotiations to be done at the company level, rather than the national level. In some cases by passing the unions. Then caps on penalties in case of dismissal, more flexibility for Small Companies with less employees. Finally layoffs will be based on a companys financial situation in france and not on the Global Situation of the company. The biggest french union, the cg t expressed disappointment and it said they were opposed to the but measure about layoffs, they will not call for protests. Only one union, the second biggest one, has called for a strike on september 12. Most executives believe the country will not be paralyzed by major strikes, like we have seen in the past. And that president macron will manage to pass the decrees by the end of september. His popularity however has gone down, more than 20 point over the summer and more than 60 of the french say they do not trust the new president on the labor reforms. If protests turn out bigger than expected, it could damage president macrons authority at home and his credibility abroad, especially with his german partner. Bloomberg news, paris. Julia so this for me is fascinating, not only because france has tried to reform the labor market, it is always something we come back to. They have protests planned on september 12 and actually the critical angele is the workers union, one of the major unions, has decided not to purchase. He has the mandate to push it through, and we will say protests, maybe not the same extent that sarkozy saw, but he has got the mandate to do this, but the question is can he do it in time . He i find it amusing that was pretty clear on what his goal was when he was running that he wanted to reform the labor markets and sort of be a moderate neoliberal candidate. So to say his popularity plunges this that is interesting. Very interesting there seems to be a time an opportunity, so maybe it will still happen with his support in the parliament. Julia are the french ready to reform . That is the question. In europe we used to say, we know how to reform, we just do not know how to reform and get reelected. You do it early on. Hard, why the industry could see a loss of 1 billion. Next. From new york, this is bloomberg. Its time now for first word news. Asgress may vote as early next week on a multibillionaire aid panel for houston. Thats according to the white says an emergency reserves willish be sent by the administration. Major concern that government reserves are running low with a debt debate looming. Congress may have to act early therder to uncover additional costs of Hurricane Harvey. Be in thetrump wont talks resumeta today. Sense the first ground of talks with canada and mexico ended 20th. Iran has not violated its nuclear deal with the u. S. And five other world power. S that according to the latest Quarterly Report by u. N. Agency monitoring irans complains with deal. The International Atomic energy does notport out today say iran is oning the the deal. Military war ordered his arrest after he murdera to appear at the trial. Overseas was exiled for providing Adequate Security in london people have been kensingtonutside thece as britain observe anniversary death of princess diana. Hours a day and country. This is bloomberg. Julia Trump Administration set to slash spending on obamacare. Servicesh Human Program will cut spending on to 10 million. This 100 million. Th there will be costing cutting payments to groups to help law. E understand the President Trump following through on his promise to allow deteriorate. To force the democrats to the table here to negotiate something else. On there can be done front. Ration its very symbolic that theyre not going to much effort into new people into the program. A demand side. You further headlines on that as we get it. In terms of Market Performance can see the dow ending percent record close 6428. For the nasdaq, whatd you miss . , one of the cities. Active since Hurricane Harvey floodwaters wash over the city. Builders have been hit hard. Betweenstry could lose 740 million. The storm. N from maklari they were withg sound system there susan. Please carry on. Has 27,000 annual housing starts. In most hurricanes, builders lose four to six weeks of activity. Taking that six weeks of loss starts and considering the average home price in over 350,000. We get to that 1. 1 billion number. It would assume starts. Ld lose 2100 of rebuildhe sort period officially begins, is be an opportunity for these companies . There will be. This results in more of just a terms of timing. As opposed to a loss in volume or sales. Youll see that houston will recover. Youll get new Home Construction that certainly rebounds. Youll see is more activity coming in to 2018 likely to make for some of the loss in this year. About, laborious shortages. Its been well discussed. Especially in texas theres been of competition for workers between the energy industry, building industry. Lots of companies talking about finding workers. Would so much rebuilding thats going to need to happen over the years, howhs and much of a strain would that put on some of these Home Builders . Its going to add to the strain. The large certainly builders given the volumes are to retract and obtain labors. Its certainly has been builders have been struggling. They have been doling with. Adding toncrementally construction levels to even flow production and have that house ready to go for sale. Andill be tight for a while it will get incrementally tighter probably, over time we dont think it will be that much different. Youll get a lot of resources that will move into the houston area. That help to some extent. Julia we spent great deal of this show talking about some of the building zoning in particular. Area in also the insurance or lack of it for homeowners. You address me how this works for some of the home bidders. How they choose. High Flooding Risk areas. Just how tie those things together. Which Home Builders will be least effective and those most effective. Avoid builders tend to flood prone areas. That is makes it easier for them. Uction for its more attracted to the homeowner. For all those reason, they tend to avoid more coastal locations instead theyre focused more on side of houston as well as the southwestern side of the city. Incrementally, there will be some flooding, there will be some damage. Shouldnt be as dramatic. Exposure, amongst the builders that are most kbosed to houston would be homes, and meredith. Among those that are less exposed will be Toll Brothers and kyle atlantic. That being said, builders are all building within the same kind of core location. The damage is going to be probably fairly well spread out across the group. Said, the labor shortages will hit everybody across the industry. The builders are actually going to make up for time. N they are insured against the losses. You on thet to have show. Thank you so much for joining us. From credit swiss. Joe coming up investors gearing up for the job report. We have three charts you must see before the numbers. Is bloomberg. Julia lets get you caw up on the breaking news. The Trump Administration spending onslash obamacare as budget to fromillion. Thats down 100 million last year. Bloomberg healthcare reported join us. Symbolic just in terms of the number. Access toding to get information. This is vital. What this is going to do is obamacare. Eness of the sign up season every year, people sign up. This will probably depress sign ups. Joe does this give us any clue . Theres been talk about the doingadministration something more dramatic to help move subsidies. Anxieties. Ot of does this give any clue . The administration said they will do everything required to do under the law. This is making it clear maybe not much more than that. Is certainly not a positive sign for the market. Its going to depress sign ups. It will be bad for insurance companies. They trying to operate in this market. Have to start making decisions for next year. Think,d of see this you probably going to go badly here. One more negative sign for insurance companies. Should they participate in this market or not. They have to decide pretty much in september. The corner. Joe when Congress Comes back going toion, theres be discussion about whether theres bipartisan bill to stabilize the Health Insurance market. What are the prospect of that . Hard. Yre going to work they have five hearings scheduled over the next month. Line. Type of time they have end of september to. Et this squared away julia we had the blue print and cken looper hickenlooper and kasich today. You have this bipartisan group. Thats the most optimistic you will hit on. Julia thats republican and democrat trying to Work Together. Great. Healthcare. S. Reporter zack tracer. Joe whatd you miss . , payrolls friday is tomorrow. We have three must see charts. Ahead of the data. Us now from for is matt who cover the u. S. Economy for bloomberg. Matt, you have this chart here divergence between u. S. Wages. Giveese two lines kind of what are supposed to be equivalent measure of total Income Growth in the u. S. Economy. The blue line is from the jobs report that get tomorrow. The white line is consumer income and spending report we got today. Theres been a deceleration in that consumer spending. Income report, in the Income Growth that were seeing coming report. Hat the question is, do we start to see a similar deceleration in the jobs report either through a or lower in job growth wage growth joe just to be clear, this blue line is aggravate weekly payroll. Number of people working times the amount of hours theyre working. Number you want to look at in terms of what can we support. Spendingl of consumer we can support. Julia what about the numbers tomorrow . We see thisxtent continuing to play out . Really interesting thing here, you seen such steady Income Growth in the jobs report. Part of the reason as we keep getting these big blowout job growth numbers, even though we up in wages. A pick this isnt really what you supposed to see when you get full employment. You supposed to see a slow down in job gains and pick up in wages. Raises the question. Either were not really that employment. L or perhaps, these numbers actually get revised down and they look. Good as julia that gives element individualsower to here to fight. Whats the scoop on that . You got a chart here. Theamazed looking at direction of the lines. This is the big question. You would think that if the rate is going to lead to higher wage growth. Workers have more bargaining power. What we see in this chart, this is from our weekly Bloomberg Consumer comfort survey. About 40 of consumers are still taking negative view of their situation. Nance the blue line shows the percentage of prime age people between ages of 25 and 54 who arent working. Of reinforces the notion that really its that age nonemployment rate that you should be looking at. A better signal perhaps of the state of labor bargaining power. This could help explain why we havent seen a bigger pick up in wages. Your final chart is looking at number unemployed. Thisare we looking for in chart . This is kind of continuing theme. E this is the number of people who when you look at the number people who are unemployed, theres various reasons given in survey for why theyre unemployed. This is basically tracking the reportage of people who themselves as unemployed who arent on temporary lay off. 67 are unemployed are temporarily laid off joe what were showing here is the nature of the people who are unemployed. That pool of people looking more like historical period than during the crisis when pool of people unemployed. When you compared this chart to the last chart, you can see that. Unemployment rate is at 16 year low. Some of these other measure have not made it back to the lows of the previous expansion. That notion that Unemployment Rate is not telling the full story. Continues to be the case. Joe we have this joke of the last three months that we can sort of prewrite these jobs report. Very impressive headline growth really surprising. Where is the wage growth . It seems like you can copy and that question after each one every friday at 8 31. Another moreo get of the same . Every indication is yes. The question for federal talk about the reserve and interest rites. We need to shift in relationships in this narrative. Now, it looks Like Labor Force Participation is increasing. That suggest were not close to full employment as they say. Is to leave interest low. Julia matthew. Joe up next, part of our expedias new ceo. He tell us about his plan for the Company Including a possible uber. Rship with this is Bloomberg Joe whatd you miss . Investors are watching expedia tumble after ceo leaving. D he was they didnt waste any time mark okay ceo promote okerstrom to the top job. These things you talk about for years. You prepare the team for the big game. You get a call on sunday night and suddenly game isnt two weeks from now. Its tomorrow. Like that. Ed we were all ready for this when did unfold. I think were all pretty excited around expedia. Were very happy dora. Im happy for the people at uber. No one else was even considered. Know you and dora have been working together for years. What is your vision . Are some things might do differently . I said, ive been very involved in the Strategic Direction of this company for a time. Dora and have been lock step in really all of the major along withecisions our chairman barry diller. A long list of things im dying to change. We got a number of priorities across the company. Certainly becoming more internal one of our keys priorities. Big transition were doing at home away is a huge priority. Going to see a us. More of the same from lets talk about that. You have some deep ties to ubers new ceo. What are new ways you can Work Together . Like perhaps, free uber rides expedia customers . Weve talked a long time to that weble ways could work with uber. Integrating their service into can media app expedia app. Future, those the talks might be easier. Into anis walking incredibly challenging situation accounts. Several lawsuits, difficult dynamics. Weve heard how you can deal with big personality. Why you think he has what it takes to take on some of these personnel challenges . I think above all, dora has theof the highest levels of Emotional Intelligence that ive seen. He knows people. He is humble. Listens. I think above all, dora makes the people around him better. Be around him. People want to think like he duds. Hes a great role model. A man of high integrity. He values diversity. Values gender balance. He really stands for a lot of whatreat things that from we read, lacking at uber. We have 100 confidence that much better a company under his leadership. The information retracted a going with you were dora to uber. They were wrong. Theres a point there that dora a lot of executive positions to fill. Number concerned that a of executives from expedia are going to follow him there . Think we feel very good about our executive team. Thee got, i think t one of most talented executive teams out there. Beenn together for a together for a long time. Theyre really excited about the inc. Ects around expedia theyre highly engaged. Theyre highly committed. Ave been working together on strategy that were not yet done. Theres lots of work yet to do of us. I think we feel pretty good about our team. Expedia,ng of about google in particular, becoming a bigger potential threat. Moves inaking bigger the travel business. Do you see more opportunities from an take them on u. S. Antitrust perspective as they make these moves . Given the political climate, skepticism around big tech in general . Well, i think were going to continue to protect our we always have. Google has been we expect continue will be really great partner for us. They obviously have a very in thel position industry both in the u. S. And around the world. To keeprage regulators them in check. So we can continue to have a economy. Meanwhile, organically were very focused on making sure that we execute strategies to ensure were always the first place for people to come to shop their travel. Theres a combination of all that. I hope well have a constructive and positive relationship with google for many years to come. Expedia ceos new Mark Okerstrom earlier on bloomberg. Julia gear up for tomorrows day. Ng julia u. S. Jobs report august. 8 30 a. M. Eastern. Joe ill be looking at u. S. Sales. Julia second round of nafta negotiations going on in mexico city. Joe Bloomberg Technology is with featuring allstar line up of guests. Have a great evening. That is bloomberg. Youryoure watching bloombg technology. On emergency vote relief money for Hurricane Harvey money. No time to wait. We need money now. There has been so much expenditures and so much harm. We dont know how Many Properties in terms of homes hurt. E some people giving number high homes. 00 Vice President pence is is in texas to visit victims and survey the damage in the wake of Hurricane Harvey. Christinded in corpus and welcomed by Texas Governor abbott and Energy Secretary rick perry. Pledging trump is 1 million in disaster aid for victim of the hurricane. House white houseto White Press Secretary Sarah Huckabee sanders. Tomp arrived in texas witness the destruction. To pentagon has begun deploying additional troops to afghanistan. Jim mattis said members of congress will be briefed before details are made