Transcripts For BLOOMBERG Whatd You Miss 20170901

Been your kinds reports President Trump and his aides drafted it the New York Times reports President Trump and his aides drafted it days before the white house let comey go. A letter written by Deputy Attorney general robberson stein was later used to fire comey the kenyan president Uhuru Kenyatta has told supporters that the Supreme Court justice and his crooks decided to take away his win. He spoke out in nairobi after the court nullified his election. President kenyatta i respect it. I disagree with it, because millions of kenyans made their choice, and 6 people have decided that they will go against the will of the people. Kenyas Supreme Court says the Election Commission committed illegalities and irregularities after Opposition Leader raila odinga challenge the vote. Global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Julia live from bloombergs World Headquarters in new york, im julia chatterley. Joe and i am joe weisenthal. Scarlet fu is off today. We are 30 minutes from the close of trading in the u. S. Julia u. S. Stocks rise after a week of jobs report, and gasoline prices fall for the first time in almost two weeks. Joe but the question is, whatd you miss . Julia the jobless rate rose and wages climbed less than forecast. Plus, hundreds of ceos and Business Leaders across the United States urging President Trump to keep the dreamers program. We look at the policys impact on the economy. U. S. Auto sales after Hurricane Harvey slammed one of the largest car markets. We will be breaking down the numbers. Joe cap White House Press secretary we have White House Press secretary sara Sanders Holding the white house briefing. A she says dac that trump plans a daca announcement next tuesday. Sanders says that trump is finalizing the decision on the state of the dreamers, and the announcement will be made next week, on tuesday. Julia in administration gets a long weekend to decide, and we heard from President Trump is saying, we love the dreamers. Read into that what you will. Whatd you miss . Hurricane harvey through Haley Barbours eyes. Governor of mississippi went katrina devastated the state years ago. He talked about how he let the residence of mississippi through katrinas aftermath and how texas can give it to recovery mode. This is one of the Great Questions and the topics we were discussing with joe carroll as he was reporting on it this week. At what point, and are we there yet, do you give it to what next and recovery . Sure, and it was interesting to talk to governor barbour and the term he used joe, im sure you are familiar in his inimitable style, he said for a time you have alligators up to your armpits, with the rescue and recovery. Itall of these cases, happened with katrina and we are seeing the beginnings of it in texas you have to shift to this longterm recovery and rebuilding mode. This is tens of billions, if not hundreds of billions, of dollars that have to be allocated and resourced and, that obviously cannot all come from the federal government, so it has got to come from usually a collection of Business Leaders and get together, and that is what we are waiting to see here. Joe in the gulf coast after katrina, how much effort did they put you not rebuilding it the exact same way they had it before, to make themselves robust against this happening again . Jason great question, and when i talked to governor barbour about. It essentially hit the coast of mississippi, the same start with 2 distinct natural disasters. In mississippi, what they had to rethink was what does it even look like, but from a commercial and residential perspective. They built houses devoutly family, different types of homes. The other thing they did, from the commercials perspective, is in mississippi, casinos had been, by virtue of the law, floating in the gulf of mexico. Some literally threw them on to the land and over the highway. They had to pass a law and deal with a tricky Mississippi Legislature to get the casinos on land. One of the questions we will see in texas is, do they build this city differently Going Forward . Either neighborhoods that are built differently . In houston, there are some areas that are completely underwater, others that are dry. We saw that in new orleans how do you rebuild the city from the commercial and residential perspective . Julia we talk about this earlier, the idea that there are zoning laws. Jason and there are no such zoning laws in texas. In houston specifically i mean, it is unbelievable when you drive through their that you can have essentially a strip mall next to house next to a skyscraper, any sort of walk through and you dont know what you are going to see. Joe im curious about marshaling the resources. There is only so much the federal government can do. A lot of these homeowners do not have flood insurance, so that huge financial hit to a lot of people. The Business Community has thrived over many years. How do you go about organizing a meaningful response . Jason it is really interesting, and if you look back to mississippi, what governor barbour did come within days of the storm he called jim barksdale, a lot in the Tech Community specifically, he had run netscape, he came to the create that he created what came to be known as the barksdale commission, with Business Owners along the coast and interests in other parts of mississippi. One of the people who is emerging in texas even as of todays michael dell, who grew up in houston and made most of his money in austin, but he has put up i think he has pledged 36 million to test they are aiming to raise 100 million this weekend. Again, they are talking about billions and billions in recovery. Those are the sorts of things that can seed certain projects and pave the way for federal funding and state funding. Galvanize the Business Community. Houston is a very diverse business down. Just business town. Very diverse business town. It has the Worlds Largest medical center. It is a boom and bust town. But the booms have made for some very wealthy people who are coming together on this one. Julia it is interesting, and that thing he said in the article that i love, the efficiency aspect, what role the government plays and what role the private sector plays, and who can be more efficient are you saying that those guys get together and do the groundwork first and decide what projects they can achieve themselves, and then they go to the governor and go, hey guys this is what we need for this, can you find it, it, we haveyou fund done the background and we know what it takes . Certainly is an element of that and an element of having people with expertise in different areas, be it real estate, oil and gas, where you put certain things, and people who have lived in the area for a long time who can say that this is the place we should invest in, the place we may be able to pull back, and kennedy, who can call to new york or San Francisco or other places. That happened in mississippi get lines of credit and get the money flowing. Joe great stuff. Jason kelly, bloombergs new york bureau chief. Cohn coming up, gary feels confident that wages will rise. We will have highlights from our interview with him after this. From new york, this is bloomberg. Miss . Hatd you there was a big week for Economic Data around the world, and the spotlight was u. S. Jobs data for august. Employers added more than forecast, while the jobless rate ticked up to 4 . Gary cohn, president Donald Trumps top economic adviser, spoke about the report with alix steel. Mr. Cohn its part of the natural growth we are seeing with the economy could be headed gdp number 3 this week, jobs numbers still very good. I had told you at the beginning of the year, and occupation day, we would be a few percent gdp and 4. 4 unemployment, you wouldve said those are great numbers, that would be an amazing accomplishment by labor day. Overall, we are very, very pleased with where we are in the economy and the cycle. We still know there is a lot of work to do and a lot more upside, and the president is focused on that. That is why we launched our tax agenda this week, because we can grow the economy much further from here. Alix before we get to taxes, you painted a picture that jobs are very solid. On the flipside, wages arent going anywhere, 2. 5 year on year. And inflation is really stagnant. What is the right Monetary Policy for Something Like that . Mr. Cohn so, look we are concerned about the wages, and that has a lot to do with tax policy. You listen to what the president outlined earlier this week, he talked about our corporate taxes , and how inefficient our weiness tax is and how penalize businesses to be in america. When you penalize businesses to be in america, they dont hire american workers. We need to be competitive with the rest of the world and when we get our tax rates down, we compete for labor, and you compete for labor by driving wages and get more people to work for you. We are concerned about wage growth. We do want to get wage growth back in the system. You are absolutely right when i saw the numbers, the first thing i looked at was the wage number, and it is been flat for too long a period of time. We need to put more money into pockets, ands that is what we are trying to do with wage growth and efficiency. A fiscalseems that is policy issue, not on Monetary Policy issue. Do you think that Monetary Policy cannot help with the inflation debate . Mr. Cohn look my think Wage Inflation has to come through demand for more workers at a higher price. The way we create demand for workers is to create a better operating environment in the United States, and you create a better operating environment in the United States by making the United States more competitive and lowering the business tax rates and having businesses have to be here and want to be here in the united rates. United states. That is what the president laid out earlier this week. Alix lets go to tax reform for a second. We have been hearing, i feel, a lot of mixed messages from the white house on the next step. Are you going to release text detail and blueprint this month that is what we heard from secretary mnuchin and from news outlets. Youn i think we are are all acutely aware, secretary mnuchin, myself, leaders of the senate and the house, we have been working since november and december on a tax blueprint. We have met nonstop since then. The 6 of us have agreed on the skeleton. We agree on what we need to do for tax reform. We are now working with the house ways and Means Committee and the Senate Finance committee to finalize what that blueprint will look like. I would say to take a skeleton and put the muscles and skin on it. That could get released in the next, whatever, two weeks or months, as those committees get together and finalize all of the details as the National Governing process happens, and that will start literally next week. Alix gary, is the legislation in the hands of the taxwriting committee right now . In cohn the legislation is all of our hands. We are working together. The numeral six of us will be in the white house next week alix right, gary, i get that, but in order to move it forward, it has to be with the taxwriting committee. Have you passed it off to them . Mr. Cohn there is a communal effort going on here. We are trying not trying we are very slowly working to get tax reform done in a way that everyone buys in every step of the way, and that is what is going on. Ultimately, tax reform has to be voted on in the house and senate. We are working with the house and senate to do that. Joe that was gary cohn, White House National Economic Council director, speaking with bloombergs alix steel, and in that interview, he played c oy about his willingness to be chairman of the federal reserve, saying im excited to be doing what im doing. Julia didnt deny it, though time for the Bloomberg Business flash. Alphabet will legally separate business from google and waymo. Reorganize alphabet as a corporate parent. Hyundai will pay a settlement in the faulty the con airbag suited theag malfunction airbags, which could intoshards of metal passengers, led to 17 deaths. Inata declared bankruptcy june. There were once ubiquitous in the banking industry, and argentine held onto them, but i got to the point where Deutsche Bank held onto them, but he got to the point where they were made fun of by holding onto the smartphone pioneer. Nothing funny about blackberrys. Joe no. Ge shares are up 2. 1 for the biggest gain in months, adding to yesterdays gains. Bloomberg Oliver Renick it joins us now. Swhat is going on with ge . We will throw them a bone because it is the first good day in a while. Pretty serious about getting a seat on the keyboard, and what that will mean can even with conversations with the new ceo, John Flannery, but the bottom line is that it has been a rough year for ge, the worst performer on the dow right now. If you look over that, in a pretty stronger market the last time it had a market like this was 2011. The stock has not been doing too hot. Why isnt not doing too hot . Joe wondering that myself. Throw them the bone i promised there has been a move towards cutting expenses, and likely job cuts. Ceo John Flannery says she does not know how many jobs will be eliminated, but the parts of the business that do not generate profit will be the first to go first. Julia what is the likelihood they will be able to achieve this here, and the view that he will accelerate a process that the guys have been sluggish to attack here . Oliver i dont cover him and necessarily, but reading reports about the relationship, there is a lot of conversation happening here, and we have an interesting story in business week we talk about on the show this weekend, about nelson tells having a different attitude from activist investors, going in and talking about the longerterm picture for the sustainable approach to investing. Eight is something they are working on. Heres the deal there is a lot that has to happen with the covenant, and investors do want peltz or somebody on the board to take care of the problems. Verse problem the first problem is cash. Im looking at cash flow on the top. When were going to do this click through on operating activities. This is the august terminal function. This is going to chart a what you are looking at. Looking at cash flow operating activities dollarsd fewer available for use here. That is one of the issues that investors want to address. Flannery as talked about that, trying to get it under control. Now were looking at the relative value. Looking at the debt to relative value, these are big. If you look at it relative to its peers, all of that green, 94 , at the top compared to its peers with the debt load. Want to see if they have cash to do that. One of the big stories on the bloomberg right now, bloomberg intelligence, our guys doing a great job analyzing how they clawback the expenses that will come. This is a company that is a powerhouse for a very long time, but there are a lot of questions. Expenses quite high on the other side. Oliver everything having to do with debt. Julia brilliant. Great to chat with you, Oliver Renick. In the midst of the august us report, unemployment beat expectations. The good sign coming from the industry and the details on the jobs report. From new york, this is bloomberg. Julia whatd you miss . U. S. 10year yields hit an intraday low for the week. Take a look at my chart here. I want to point you over on the right hand side. 10year treasuries yielding less than the s p 500s forward dividend yields good not necessarily that exceptional, but it is usually a sign that a stock selloff is softening. Any problems here . Yes, because stocks are trading at record highs. Have a look at all this, the data in terms of what we are seeing, and come back on the lefthand side. The last time we have seen something that resembles todays ,onditions, back in august 2015 the crossover experienced as their happened just before the s p 500 experienced a 13 correction to hit a low in february 2016, of course. Now, at that point what we were worrying about is china what is the big worry today . The lack of global inflation, perhaps . People jokingr but buying stocks for the dividend and bonds julia [laughter] joe interesting to see that happening again. President trump come when he ran, talked about revising the manufacturing sector. You know what, it is kind of happening. If you look at data we got today, the jobs report was kind of mediocre. If you look at the manufacturing some component, this blue line, 36,000 manufacturing jobs added in the month of august. That has been churning up nicely this year. That is the best month in a long time. The white light is the employment something next of the isn manufacturing report. That is also really strong. Manufacturing report was really strong. While the jobs report was kind good production, manufacturing, is all really solid. Not saying you can tighten policy. It is just interesting julia we have not had any growth policy, we have not had any fiscal policy, and the weak u. S. Dollar there is an irony. The market close is next. Time to give you a look at the major averages, with less than four minutes until the close. They are higher across the board for the third trading day of the month and the final trading day of the week, of course. We will be discussing. From new york, this is bloomberg. Julia whatd you miss . U. S. Stocks closing high with the nasdaq setting and other record high, that index posting its best week this year. I am julia chatterley. Joe and i am joe weisenthal. Scarlet fu is off today. If you are tuning in live on twitter, we want to welcome you to work closing bell coverage. Julia we begin with our market minutes. As i mentioned, the broader indices closing off the session in the green. On average, 2 10 of 1 higher. But do not discount the minor gains to the nasdaq. A catchall for the nervousness we saw in tech stocks over the past few weeks. Joe a nice move higher. Not a big move, but solidly green across the board. Julia and kicking off the first day of the month. General motors in focus, all of the autos. We did have those auto sales numbers. Gm at the highest level since march. Also the best day of trading since march. Similar story for ford, best day since early april. To give you a broader flavor of what we had in terms of august deliveries, gm and toyota saw sales rise last month. Gm reporting august deliveries of more than 270,000. That is up from a year ago. Despite expectations about the ford, theen for decline not as bad as expected. Lets talk about lululemon. We talked about this in the show yesterday. The best day for their trading since june. Secondquarter sales topping analyst estimates. It was a forecast that was important, beating expectations, despite broader concerns from isuretitors about the athle future. And palo alto networks, another earnings report. The company overcoming challenges that had plagued its peers in the cybersecurity field. It was a pretty tough start to 2017. What about bonds . U. S. ,ets talk about the twoyear, and 10 year. Across the board in the u. S. , despite a weak jobs report, it was not terrible. But it came in a little below expectations with mediocre wage numbers. Wage numbers rising 2. 6 on the 10 year. 2. 16 and 1. 34 on the twoyear. In kenya they overruled last months election and rolled there would be a new one due to voting irregularity. Not something investors wanted to see. Investors typically dislike normality of the status quo. Significant widening. 21 basis point jump in the spread for kenya, signifying the anxiety this ruling is causing. Julia what a great chart. A fascinating story. Lets talk about currencies. Mario draghi and the ecb surprising people today, suggesting they will not talk next week about what their plans are for qe. They will leave it to december, when the plan was potentially to run up. They had caution about the runoff. You can see that is spiking the euro after the weaker payrolls report. The dollar weakening. It it all reversed with the report from the ecb. The ecb and mario draghi were the winners in the session. Lets look at emerging markets with the risk sentiment, gains across the board. I wanted to point out what we saw in dollar ruble. It has shaken off the normal trend of august weakness. It had been a plague for the past decade. Add in all the stakes raised by the sanctions added by the United States, we have weakness in brent crude. Also, boosting bets for the drop for the month too. Analysts recommended buying the currency this month. Joe lets take a look at commodities. Not a ton of action in oil, up modestly. Gold ticking up higher. Gasoline, we have been talking about the last few days, because of damage to refineries in the wake of harvey. Gasoline prices have soared. Finally taking a breather with gasoline futures down. Having a big day. One of the knock on stories of harvey will be the need to replace thousands of cars that will have been destroyed from this flood. Important medal in the technology of cars, having a nice day today, up nearly 5 . Julia we will talk about autos later in the show. Joe and those are todays auto minutes. Julia whatd you miss . The august jobs report was a resounding miss. Listen to what our guests have been saying about this number. Noise and thes next few will be because of the disruption with the hurricane. I am not sure we should put too much stock in the numbers. It is a little on the softer side. It benefits our positions. In danger National Number markets when we think returns are higher, this number will be on track before long. Claims are more stable than payroll. They are not showing any problem. We have had 36,000, also to numbers. Consumer confidence remains strong. I think the market will blow this off. Was ast thing i look that wage number, it has been flat at 2 for a long time. We need to put more money back into the u. S. Consumers pocket. Both by wage growth and tax efficiency. The fed is stuck on wages and inflation to the extent it is reflective of that. Mean the these numbers inflation in lowwage reality will return stay for the longterm . Our guest joins us from our washington bureau. Numbers aside, i think the big surprise was the utter lack of wage growth. That is a real concern and continues to be. Expect not much wage growth, because where is the unemployment growth since 2009 . Retail, hospitality, health care, relatively lowwage sectors. They mentioned manufacturing and construction account for half of the goods producing sector, 70,000 of the 156,000. That is good because that is where we expect higher wages to show up. We will not have a lot of Wage Inflation. The hiring rate still does not exceed job openings and vacancies. Firms are just not raising wages to get the people they want. You have to sit there and wait. Tick down in jobs growth and take up in unemployment, is that a concern . Or do you want to wait a few months before being concerned . Bill i would be very concerned if we are wrapping up to 250 and 300. The economy cannot sustained that. 000 gives you about 1. 5 growth in payrolls. Up ind in growth and and the range of 2 gdp growth, which is where we have been. This ratifies the story of slow andation, steady growth, maybe the fed should think about readjusting its inflation target. It does not look like we will get that 2 target. With productivity and improvements in the supply chain, we may not get that 2 inflation, because even though the Unemployment Rate is going down, there is not much pricing power. Wouldther economists argue the opposite, that what they should do is increase the inflation target on the view 2 is seen as a ceiling and not an actual target. What do you think about that idea, of signaling to the market they would be cool with the economy running hot for a while . Bill getting hot inflation is a hope and a prayer. Boy, i wish we could get that. But i do not think we will get that. Inh the kind of improvements supply chain and disruptions we have had, very few firms are able to raise prices because competitors will cut in and beat them with a lower price. We have a lot of new technologies in place. We are not measuring a lot of these price changes accurately because of the quality change associated with it. Said because was we want to allow for technology to give innovations and change business services. We will not get the 2 increase because we are seeing deflation from the technology side. The supply side is putting downward pressure. If this persists, it has been there easily a year now, the fed will have to rethink that 2 number. Julia back to what you are saying about the ism manufacturing, without seeing any type of positive growth or bolster theo try to economy can we continue to guarantee we will have the boost in the back half of this year . And to ask what gary cohn was saying about, lets try to organize these tax breaks for companies and then they will pass on the benefits in terms of higher wages how positive are we that will be the case . Bill gary cohn hit it on the nose. He is conceding the point i made, without a rise in inflation we will not have wage increases. The only way to get Consumer Power in play is to give people more disposable income, and that is through lower taxes. We have seen lowwage sectors. We need a structural shift to incentivize firms to hire more people in these high Wage Industries here in the u. S. That is the policies that is the policy change were hoping to see. But i do not think it is something we will see soon in the future. Julia on the dollar, what are your thoughts . That is been a tailwind here. Bill it has. The dollar has been a horse race tween the u. S. And the ecb. The question is, which central bank will be the leader in interestrate normalization . The weakening dollar is telling you the markets are not perceiving the u. S. To be leading that charge. The hope and prayer is been on mario draghi, but he threw cold water on that today, in terms of getting normalization. We may see a fed that may recognize we are much closer to normalized Interest Rates than earlier. They thought we would get the 3 . 3 . It is the real rate of if inflation is 2 , we are not far from the target. We may be more normalized after one or two rate increases. That is what the dollar is telling you, that the market is really reconsidering possibilities, and investors should, too. , think you for joining us from washington. Julia President Trumps decision on daca, the dreamers program. This is bloomberg. I am mark crumpton, it is time for first word news. Surrounded by religious leaders and members of faithbased groups, President Trump today signed a proclamation establishing sunday as a day of prayer for those dealing with the aftermath of Hurricane Harvey. President trump from the beginning of our nation, americans joined together in prayer during times of great need to ask for gods blessing and guidance. But we look across texas and louisiana, we see the american spirit of service embodied by countless men and women. The president also commended the families and rescue workers still dealing with the remnants of the massive storm. He returns tomorrow to texas and is expected to travel to louisiana as well, to review recovery efforts. An encouraging sign for texans as they were they struggle to return to normalcy. The Corpus Christi channel has reopened after being closed a week. The reopening is a step toward resuming operation that seven refineries transporting fuel to market. The channel was close to ship traffic, including fuel sectors, when harvey slammed into the Corpus Christi area last week. Officials in houston expect most of the floodwaters to reseed by de by later to rece today or early tomorrow. 00 structures136,0 were flooded in harris county. That is 10 of all the buildings in the county. People are staying in shelters and louisiana and officials expect that number to rise as more people are evacuated from flooding communities. About 1000 people were flown to dallas from a shelter in noumont, where residents had drinking. President trump will visit texas a second time saturday because there is still so much to do. 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 . The white house announced President Trump will make an announcement on the program known as daybreak asia on tuesday. It allows known as dreamers daca. Lets bring in the Bloomberg White house editor. This has become a really contentious issue. We saw a decision delayed when President Trump faced pressure by some of the biggest ceos in the country saying, do not do this. Where do we think President Trump stands . Earlier today he said, we lost the dreamers. Personally, the president does not want to end this program. He is torn. On one hand, he promised he would end this program. It helped him get elected. Now he has political advisers telling him he has to keep up, no batter no matter how badly some people may be hurt. As he has learned more about this program and the people who have benefited from it, he really does not want to keep that promise if he can avoid it. Think, isppening, i that the white house is hoping congress will bail them out and act to make the Deferred Action Program legal, and preserve these peoples legal status in the country. Joe does it seems there is a appetite for that action in congress . Alex it does. It is a little unclear exactly what is holding it up. Congress often does not do much unless it faces the deadline. Here, that white house has one attorneyy, the states general has threatened to sue them unless they end the program. You saw paul ryan and orrin hatch in the senate held the white house that daca should not be ended. There is a lot of interest, even among very conservative members of congress, in preserving this program or making it legal, is a better way to put it. But it is unclear how they move forward or when they actually moved forward. This to me is very in lightng, the events of charlottesville and people cohn and gary Steve Mnuchin faced, they will face the same pressure again that they stand silently by and allow President Trump to say he is ending this. Miller believe stephen and the white house is in favor of ending this program. He is a hardliner, a staffer to jeff sessions, the attorney general, who does not support this program. He is probably leaving the voices that are urging donald trump to keep a Campaign Promise end and the program. Joe is there a third path . They are going to make an announcement on tuesday. In theory, there is action that could be done in congress to save the program. Is there a third way out for trump, besides saying keep it or ended . Program, he end the will adopt a middle ground. They will let people with work permits keep them and tell them, we are not issuing any new permits. When the permits you have expire, you could be deported. That would mean that no one would be deported immediately and it would allow congress some time to work on legislation. Julia but these people are already working in industry. Quote fromead you a this, this ties that perfectly. Unless we act now to preserve 000 daca program, all 180, will lose their ability to work legally in this country and at immediate risk of deportation. For tonomy would lose as billion from the gdp, well as Social Security and medicare tax contributions. We willw and continue to have a Global Competitive advantage. It flies in the face of everything we have heard from this administration about american needing to gain competitiveness. For all intents and purposes they have been educated in the United States, they are effectively american. Alex they are americans. And i think donald trump understands that. That is why he is so desperate off out of having to keep this particular Campaign Promise. It is a real sad state of affairs for those people that are under this program. As i described it to joe, i think it is if the president does choose to end the program, it will be a middle road where people who already have worked permits will be able to keep them, the government will simply stop issuing new ones and stop renewing the ones that already issued. This weekend and then Congress Comes back and there is so much on the calendar. The timing of various legislation that needs to be passed, what is first on their agenda . Alex i believe the debt limit increase lets back up. The harvey hurricane aid will be the first thing they do next week. That is the most urgent thing, they cannot allow fema to run out of money to help these folks in south texas. Second will be the debt ceiling, they have to deal with that before september 29, according to Steve Mnuchin. That is a real tricky issue. They have not resolved exactly how to get around that obstacle they had with conservative members of the house. Joe alex wayne, thank you very much. Julia coming up, nafta talks underway in mexico city. We look at the changing dynamics of americas dynamic with nafta. This is bloomberg. Joe whatd you miss . Check out the latest move in the mexican peso. The peso had weakened significantly up to the election and after trumps win. It has had a very good year. Theas been rallying since day trump elected on this realization that maybe punitive action against mexico would not be as forthcoming as people thought. You can see the rally has stalled out a little bit since the summer, which is kind of to be expected. Thatt is interesting to us is still pretty strong, close to around its best levels, despite nafta negotiations that are not going all that great. There is no particular guarantee they will get a deal. The peso has maintained this big rally, despite countervailing headlines. Julia i cannot agree more with you. President trump is beginning to why we continue to negotiate. The fact he is not started those proceedings is looked at as positive. Lets take a look back and look at the relationship between nafta partners United States and canada but also the United States and mexico. Lot and initially heard a lot about the tensions between canada and the United States. Lets look at the white bars. This illustrates the trade deficit america runs with the u. S. Runs with canada. This has been coming down quite dramatically. When the canadiens throw their hands up in the air and say, why are we fighting over this, they perhaps have a valid point. To compare that with mexico, the the u. S. Traded deficit with mexico, you get a sense of the difficulties. The positive is that we are on the second round of talks. Framing, the u. S. May threaten to rip it up. There was a great quote that said, maybe canada should join the u. S. Side and gang up on mexico on the argument that they are the one party that seems to be doing particular well. Maybe the gains are not as clean as we made it out to be. Julia a stronger argument there. The second round of nafta talks meeting in mexico, speaking today. And President Trump threatening to walk away. This is bloomberg. I am mark crumpton, it is time for first word news. The Energy Department has approved the release of three point five more barrels of oil from the Strategic Petroleum reserve. That, on top of the one million approved yesterday. It is in response to one of the nations largest refineries at shutting down due to Hurricane Harvey. Increased to a 10 cent in the price of gas. President trump will make a decision on the Dreamer Program next tuesday. He is threatening to end the practice of allowing the children of Illegal Immigrants to stay in the country. Democratic congressman told bloomberg that would be a mistake. Dream,s not been a something in terms of government costs. It has been a boon and a plus in terms of the economic italic the of this nation, it is been a contributor. House Speaker Paul Ryan is urging the president not to end the program. He says he believes this is Something Congress should fix. The former head of saudi arabias Intelligence Agency r to endis up to qata the dispute between its neighbors. Doha hase princes said admitted to supporting terror and must cooperate. R does not as qata agree to the agreement it signed, the situation will continue as it is. Court ands in qatars they have to comply with that. They have to trust and accept responsibilities and be willing to undertake these responsibilities. The saudiled diplomatic crisis began in june when four said qatar funded terrorism. Peggy has been the last nine months on the International Space station, the longest stay by an american. During the mission, she became the oldest woman ever in space. Space, spent 665 days in more than any other american, male or female. 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 lets get you a recap of todays market action. In thethe u. S. Ending green, 2 10 of 1 up for the dow. The s p 500, and the nasdaq, a record close. It is a long weekend here in the u. S. Some investors joe a very quiet day, lots of empty seats across offices. Julia whatd you miss . Round two of nafta talks underway in mexico city. In the last few weeks, President Trump has threatened four times to pull the u. S. Out of the agreement. The peso fell after they said they need to look for an alternative to nafta. Lets bring in ambassador miriam sapiro. She has worked on the administrations of reagan, bush, and others. Also, active u. S. Trade representative. Great to have you on the show. It is a positive that we are on second round, not third rounds, and they are continuing despite threats from both sides. Miriam i think so. This round has started just two weeks over the last after the last one that ended. And some of the beginning of a long Holiday Weekend for the United States. I have worked on a lot of negotiations in the trade arena over many years, and i have yet to see another negotiations start on a Holiday Weekend. That shows seriousness of purpose on behalf of the united dates and canada and mexico United States and canada and mexico. Joe professionals, they know how doese doing the existence of the occasional outp tweet, when he dashes something about how fed up is in may threaten to walk away from nafta how does it change dynamics in the room . Odd negotiating tactic. It benefits the United States just as much of the benefits canada and mexico. Of all u. S. 1 3 exports go to canada and mexico. People are scratching their heads and hope it is just a negotiating tactic. If it is not, that is a serious situation we will have to deal that he the time comes does move toward a termination process. Moment,oment called they are focused on working through difficult issues. Some are easier than others. And seeing whether it is possible to try to do a deal this year. That is certainly the goal. During a doing a deal quickly would be in everyones interest. The longer it drags on, the more impatient President Trump is it drags on, the more impatient President Trump is likely to get, and thus the threat of termination becomes more serious. They are also looking at mexican elections next year, and we have Congressional Elections in the fall here. Julia i have read a lot about this and the risks surrounding the negotiation. And of course, the mexican wall issue. The front runner in the election is someone who potentially is seen as a populist, someone who see moreimately mexicans crossing the wall than less. Theis this filtering into negotiating strategy and tactics of u. S. Officials . The biggerare of political issues and the spillover to the United States . Miriam i think they are. That is one reason why there is an effort to accelerate negotiations. I mentioned how it is almost unheard of a second round in a few weeks. They have scheduled already several additional rounds for the remainder of this year. There is an effort to get as much as they can get done this year before you have to worry about the spillover effect. Are thehat do you think most contentious points between the mexicans and the United States . Rules of origin have been mentioned, can you give a sense of the core difficulty . Are severale baskets of issues. Among the most difficult are the ones you mentioned, the rules of origin in particular. The u. S. Has suggested perhaps it should set a higher level of ensuring u. S. And mexican and canadian products going to whatever the final finished product is. There is an effort by the u. S. To look at local content roles, to increase percent of the u. S. Component in a finished product. Both of those proposals have met with concerns from canada and mexico. It is not to say there might be a little tweaking. But there is a lot of concern about trying to adjust those rules. Consider how often cars cross any ofder, livestock, the many aspects of such a robust trade partnership that we have today. Joe the last thing we were talking about, the idea the frame we have used in which the u. S. Threatens to walk away from nafta while canada and mexico try to preserve it is wrong, and the perhaps canada might see things more from the u. S. Perspective than we give them credit for, owing to the fact, arguably, mexican productivity has taken away from canada. Is it plausible that it is not so simple and canada sees more i eye withees more eye to the u. S. . Miriam canada might be a little less worried. But over the last 20 years, the three economies have gotten so integrated, it would be very hard to suddenly separate them by imposing tariffs at the border. Tax anytime you try to export or import a component or finished product. Imagine Consumer Prices going up, choices going down. It could have serious implications in the u. S. That is what people want the president to understand. Just theot hurt mexican economy or canadian economy, but hurt the u. S. Economy. Texas and theut devastation it has suffered in the last week as a result of the hurricane, no u. S. State would be more affected by nafta than texas. States the last thing recovering from such a terrible hurricane need to worry about at this time. Julia another great point. Joe miriam sapiro, great stuff. They do so much. Julia u. S. Auto sales come in mixed after Hurricane Harvey slams the largest carmakers. We bring up the numbers. This is bloomberg. Julia whatd you miss . U. S. Sales were mixed for august. The devastation from Hurricane Harvey has erased any chance of the growth this year. Detroit bureau chief, great to have you on the show. Give us a sense what we saw on the numbers and what extent Hurricane Harvey did impact them. This is a decent month, they sold 1. 5 million vehicles. Adjusted annually more than 16 million. The market may have been up a little bit if not for the storm. A little tough to say. We lost about 20,000 cars and trucks sold in the month. Not crippling it, but enough to push it into the red for the month. And undercut what wouldve been good. Going forward, will carmakers give it get a boost, because people have to replace cars that were destroyed or damaged in the storm . Doubtr companies will no take part in building down there, if they sell built vehicles to the contractors. A bit of damage to car sales in the past month. But going ahead it could help them. Joe the houston area one of the cardenseents areas in the world. What did we see with cars in katrina . David sales were up 45 the month after. We saw a couple things. A lot of cars to get damaged, people have to replace them. A lot of inventory at the dealership level has to be replaced. You do have a pickup in sales a month after that because contractors and workers they go in and do repair work need vehicles. Tends to boost pickup truck sales. This is good for toyota. As we see rebuilding the coming months and year, you could see a boon for the car companies. Julia we are numbers that houston may have lost around 300,000 cars and trucks. Soldew vehicles that were was 325,000. Significantly more than all the cars sold in the prior 12 months. Can we break it down in terms of how many individual car owners versus just sitting on lots waiting to sell . Does that make a difference when we talk about the bounceback we potentially see . David we dont really know what the breakdown is in terms of the 300,000 to 500,000 cars. If they were damage to the point where they are totaled by the insurance carriers, they will be replaced. Keep in mind, whether we are talking about contractors and businesses owning pickup trucks or just the residents there, this is a sport and suvvehicle pickup trucky, country. A lot of those vehicles will be expensive. Tragedy, this is not a reason the cars want to see sales coming back. But if youre talking almost half a million vehicles, that is enough to significantly turn the tide for this year in terms of auto sales. Joe big picture, set aside a harvey and the catch up they expect. The automakers, their stocks have not been on a good run. There is concerns about the market generally topping out, concerns about electric vehicles slowly eroding their shares. How are they feeling up until this month . From your perspective, what are the prospects looking like . David they feel comfortable heading into this because they are still selling vehicles at a clip that will make a lot of money. This is good, Healthy Business for them. Investors see this as, the best days were last year. We do not see sales growth coming. You are selling more of the profitable stuff and less of the passenger cars, but we just do not see growth coming here. Layer on top of that electric cars coming into the picture and you have to invest money in that. You have autonomous cars, ridesharing. Investors were not enthusiastic about car Company Stocks leading up to this. They did get a boost today because this could mean a couple quarters of pretty good revenue and profits for the car companies. The near term traders look at this as something to trade on. Longterm, the thesis is the same. This is a weaker year. Next year could be weaker than this year. Slowly, not radically, slowly heading downward. Our Detroit Bureau chief had a very important angle, thank you. Julia the democratic governor of colorado seen with his republican candidate from ohio, john kasich. They are going for a partisan approach. This is bloomberg. Julia whatd you miss . The Trump Administration continues its efforts to dismantle obamacare, announcing it is slashing enrollment funds 90 . John hickenlooper and john kasich released a bipartisan plan to stabilize the individual insurance market. I spoke to governor hickenlooper yesterday and asked how those adverse spending cuts will impact the market. Certainly it is not going to help. If we are getting rid of the mandates, one way is to have marketing dollars, get more young people to join. There are reasons young people have not been joining. Part of it is the penalty. They feel they can get insurance when they need it, if they get sick. And when they get cured, they drop out. That makes it very hard because the people that remain in the insurance pool are the ones that have the worst conditions and cost the most money to the insurance company. Of course, that drives premiums up. If we can get more people in and brought in that pool, and there are a variety of ways we propose to do that, that will attract more young people so they would not need as much advertising money. Is thathe suggestion this is thrown down the drain and not having any impact they would like it to have. President trump has suggested he will let the whole situation with obamacare implode. Do you see this as a symbolic gesture down that path . John i think maybe it is. I havenstrating not seen the data for 2016 yet, but it is hard to use advertising to get large numbers of people to signup. What i would have suggested, that money could be well spent in other directions, in providing incentives or bonus to get more young people to signup. All agree we want more people in the insurance pool because that drives down the premiums. It is a selffulfilling cycle and the drive down premiums, more people come in. That is where we want to get to. Julia you are calling on the president to give insurers clarity on the subsidy payments. They have to make decisions about the next year coming up, very shortly. He wants to gain, leverage holding back on this decision . John no. Theou look at it, percentages of people that are really struggling in these individual insurance bulls are in rural areas, the people that supported the president most strongly. Work,e see this might might help people in rural parts of america afford insurance and have coverage not just for themselves before their family, when we begin to see that, the president and his administration will take a look and say, these are a lot of the folks that helped elect us and it will change a lot from the Affordable Care act. Enough change, maybe we should roll up our sleeves and began looking at, is there a Better Future here than just letting it implode . Letting it implode would be a disaster. I do not think President Trump or anyone wants to be remembered for the consequences of that kind of disaster. Julia you dont think the threat is credible . John there are a lot of choices here and we lay them out in our proposal. We are proposing a framework. The senate and house have to come together and the administration will have a loud voice in that. If there is one place we could begin to have a bipartisan discussion in this country, may be health care is it. We have gotten close enough to the edge that people recognize, this is serious. These are peoples lives. Reductions, we can make them a firm up for two years, the next two and a half years weve all help bring premiums down. Everything we do to reduce premiums will bring more people and the polls pools continue to lower the premiums. Julia that was my conversation with colorado governor john hickenlooper. Now, look at the business flash. President trump will decide block the china bridge from buying a semiconductor. Many oppose the takeover. It is valued at 1. 3 billion. The president has 15 days to make a decision. Mayeuropean central bank not decide on the bond by program until the current one expires. According to officials familiar, the band would lead leave traders with just 10 days to adapt. They say it is about paring back. The first formal talks happen next week. The foundation has pledged 36 million to harvey relief. It would donate half the amount to governor greg abbott. The fund aims to raise 100 million. That is your business flash update. Roku, theking news, maker of those boxes for digital s1 forng, has filed for 100 million dollars, intending to lift on the nasdaq. The Share Offering led by citi and others, reports a very crowded space because they are going up against apple and amazon. But also a very hot space. It will be interesting to see Investor Sentiment about this. Especially in the week of in the wake of weak ipos. This is bloomberg. Julia the bric summit convenes in china. In china. Joe and Congress Reconvenes in china. Joe and Congress Reconvenes so we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. Alisa i am Alisa Parenti in washington and you are watching bloomberg technology. President trump today signed a proclamation establishing sunday as a national day of prayer for those dealing with the aftermath of Hurricane Harvey. He also commended rescue workers in texas and louisiana. Trump returns to texas tomorrow and is expected to stop in louisiana. House Republican Leaders plan to vote next week on President Trumps expect a request for nearly 6 billion in International Disaster relief funding for Harvey Victims according to two deal p congressional aides. They say lawmakers do not intend to include a debt limit increase in the legislation. Special Counsel Robert Mueller reportedly obtained an early draft of a letter to fire james comey. The New York Times reports idesident trump and an a drafted it days before he was let go. The most decorated american female astronaut returns to earth this weekend. Peggy whitson has spent the last 9. 5 months on the International Space station, the longest stay by an