Transcripts For BLOOMBERG Whatd You Miss 20170905

In the humility humanitarian stuck in theople city. I am jessica summers. This is bloomberg. Julia live from bloomberg World Headquarters in new york. Im julia chatterley. Scarlet im scarlet fu. Joe im joe weisenthal. Julia we are 30 minutes away from the close of trading, as another atlantic hurricane threatens to make landfall. Joe the question is, whatd you miss . One Million Immigrants in limbo, as President Trump announces the end of an obama era immigration program. And a state of emergency in florida. Hurricane irmas potentially when isins are luxury cruiseg stocks. For perspective on how investors are likely to be positioned for the rest of the year, lets ruchirn Morgan Stanleys sharma. Ruchir, we have u. S. Stocks falling, the dow off by as much as 270 points, the dow the dollar declining, and treasury rally. Our People Holding off on doing anything . The markets are really 2 off their alltime high, so it is very hard to read much into one days moves. There is extremely low volatility. Thatnk it is quite obvious the markets are this expensive. It doesnt take much to knock markets up a bit. The year isstory of just how resilient the markets are, despite all the negative headlines out of washington. Joe what do you attribute that to . I think this has much more to do with the Global Economy. Time since first 2010 that we have seen rises in every part of the economy, from japan to brazil to russia, we have seen an upside to Global Growth. Is noe United States longer the life of the party, as it was the last five or six years. It is the rest of the world. And i think that is what really is helping. Market, the stock snp, it is much more of a global animal that a local creature. Joe scarlet referenced in the entry, the synchronous Global Growth that we have not seen a long time. What would it take for some other headline to change that markets to suddenly get concerned about politics, or geopolitics, or something to take Investors Office Global Growth story . Ruchir geopolitics has been in the focus. Markets have a very bad history of pricing in geopolitics. The markets are totally blind sided by it. If something were to happen in north korea, the markets would be taken by complete surprise. But until something bad happens out there, unfortunately, i dont think the markets are going to care much about it. We will see these declined to take place, but they are very shallow declines. I dont think deal will suddenly take the markets off. What could take the markets down are basically two things. Remember the last five to six years, we have seen Global Growth oscillate within range. And we are at the high end of that range. It would seem to me that possibly a downward surprise could come in the next six months. The strain of the last few months. But the single biggest risk to the Global Economy now is, i think that now, the tail wags the dogs. Thate used to thinking markets will face economic reality. With the size of Financial Assets in the world so big, it could work the other way around. In perspective, in the 1980s, the size of the financial economy, the value of stocks and bonds, and the Global Economy, were about the same. Today, the size of the financial economy, which is stocks and more thanally, is three times the size of the underlying economy. So, it is quite possible that something happens there, that would have a knock on effect on the economy, rather than the other way around, as we are conditioned to thinking. If the Financial Sector has enough of an impact on the economy, what is the achilles heel . Where in the Financial Market is the real achilles heel . There are two things there. One has to do with interest ines, because this explosion Financial Assets has been underpinned by a massive decline in yields across the world. So, i think that is one. Julia we have to check the box on that one. Some are fearful of the markets. Their look at some of statements by central bankers. Youre getting concern that they need to pay more attention to financial stability, rather than just inflation. Is that,ing now because inflation is so low, we easy inue to run an from time to time. Years,t three to four beingial stability is begi featured as a financial risk. And the second one has to do with china. I think china comes back into focus next month, when they have the Party Congress. So far, the consensus is they will not allow anything to go wrong before the Party Congress gets underway. To their credit, they have been able to achieve that. But we are still seeing a big explosion in chinese debt. Once the Party Congress is out of the way, i think you could see much more tightening out of china, which could be a big risk for the Global Economy. To pick up ond your first point, which is interest rates. When it comes to centralbank policy, some people see that as a threat, as a potential worry point for investors. Seems to be a lot of complacency about the reduction of the feds Balance Sheet. Wellidea that, it is so choreographed and telegraphed to the market, that it will be fine. What is the reason for people thinking that, qe is positive on the way up, but that reversing qe wont have any negative effects . Ruchir there are more risks for the downside. It is just a fact that a lot of inflation keeps pricing on the downside. The big story of this year has been that, the last five or six months, inflation has systematically disappointed on the downside, even as Economic Growth has held up. That is something that the markets were not expecting. Ked in this sort of, goldilocks euphoria. Theproblem is that, financial economy just keeps getting bigger, until it doesnt. Joe do you have a favorite theory all right everyone keeps getting inflation wrong . Ruchir there are many reasons but i think the two buzzwords and are globalization amazonization. The fact that you have the bystant pressure on prices somebody like amazon. I think those are the two big buzzwords as to why inflation has been systematically low. This is where the thinking has to change. We are used to thinking that Consumer Price inflation, that high Consumer Prices are bad for the Global Economy. But, is quite likely that asset Price Inflation is as big a risk to the Global Economy is Consumer Price inflation. Asset prices keep inflating away is a something that i think Central Banks have to incorporate and their frameworks, sooner, rather than later. It will possibly be after the next crisis, unfortunately. Crisis,have the next which is led by a Financial Market meltdown again, then the Central Banks will say hey, we more timeend much looking at asset Price Inflation rather than just Consumer Price inflation. Sharma, thankr you. We are going to discuss china and emerging markets, more after this. From new york, this is bloomberg. Scarlet im scarlet fu. Whatd you miss . Funds, speculators are increasing their positions in copper. Here is the bloomberg, and we aroundpper is trading at 83 year high in london. Large speculators have increased their positions, to the most on record. This is according to data going back to 2006. Copper prices are up about 25 this year, and have breached technical levels, indicating a pullback is due. We are here with Morgan Stanley chief global strategist ruchir sharma. I am wary of drawing too many conclusions, because this is a really catchup trade. Copper and other commodities have lagged over the last several years. And there are some supply issues with copper, in particular. So i think this is a big catchup trade that is going on. There is optimism about chinese growth, but chinese growth seems to have peaked in july and we are seeing a level off, and it. It is not falling off of a cliff, or anything, but it is leveling off. I think chinese growth explains some of the optimism, but there is a bigger story here. It is as much of a catchup story, after such a long. Of underperformance. Joe a lot of people are using the word goldilocks to describe e. M. Right now. Growth looks good. Monetary policy positions are not especially tight. Nothing is causing major Central Banks to tighten. And we had that huge e. M. Rally this year. Is the rainy thing you can see that would derail that come in the shortterm . Ruchir no. A lot of this is explained by two factors. One, is a weak dollar. Every time you get a weak dollar, you tend to get em outperformance. In the second thing i think, has to do with china. Has become so linked to what happens in china. As the situation stabilized in china last from worry, when they seemed to be on the brink of a crisis, i think it is about outperformance. The risk to e. M. , if chinese Economic Growth starts to fall and the growth that we had in 2015 and 2016, that comes back into play, but until then, i think e. M. Continues to go higher. Weia you said earlier that see priced in geoPolitical Risk. But we see the United States considering whether to walk away from their nuclear deal with iran. We have tensions between north korea and south korea. Donald trump talked about ending a bilateral trade pact. You kind of worry that there are so many countries, involved with this problem. It could be a emerging markets. But my point is, markets are not really good at pricing and events until the events really happened. For some reason, over the last 20 or 30 years, whenever tensions have escalated, things have died down. The most remarkable thing for me in terms of the korean tensions, is how well the south korean market has done this year. , south korea is right at the doorstep of what is going on, and but look at the south korean market and the south korean wan. That is telling you about the fact that, it in south korea they are seeing these signs of like, it is hard for global. Arkets no scarlet you can only focus on one thing, at a time. Perhaps the biggest Political Risk though, maybe President Trump. Joe julia mentioned trade. It feels like a turn away from global trade, is one of those things people warned about for a long time. There is a lot of fear about that, postbrexit and post trump. Trump tweeted over the weekend, and plausibly, that the u. S. Could just cut off trade with any country doing business with north korea. But what if we do something meaningful on the trade front, out of this administration. What if nafta collapses, what if some of this stuff becomes more than just tweets . What is that due for the outlook . Julia sanctions on the chinese . Ruchir i totally agree with this point. A narrow im deglobalization. I dont think that is going away. So, broadly speaking, i do think that the explosion in global trade that we saw in the last three to four decades, that has come to a screeching halt. We are likely to see a reversal of that. What pattern that reversal takes is hard to chart out. But i think we are entering an era of deglobalization. And for emerging markets, this is a problem. The underbelly of the emerging markets, from brazil to russia, the big risk they face in the next five to 10 years, is that the basic model that they were relying on, which was exporting your way to prosperity, that model is worn. Typically, export growth is very robust and that has caused some of these countries to climb the development ladder. It now, that model is shot. You can see a case in point is india. That countrys struggling to climb up the export latter. Trade is a big risk for the Global Economy. I think deglobalization is here to stay. The biggest risk from the Trump Administration, i completely agree with trade. But that is one area that the administration can act a lot more on its own, then in concert with the congress. Scarlet you have written about how a countrys Economic Performance to tens to deteriorate when those at the to powerolitics cling for too long. What happens when it is the opposite . We have an administration now that is doing everything it can to reverse what the Previous Administration put in . What does that due to the economy . Ruchir i wrote a piece for the back in may, and i wrote the good thing about the the United States is the strength of its institutions. Despite so many negative headlines out of washington, you have not seen much impact on the markets. I think the strength of u. S. Institutions is so much, that it is quite difficult for the administration to do that much for lack the economy, of a better expression. I think the big story in the United States is that. But yes, in emerging markets, if the same headline was seen in an emerging market, trust me, the reaction would be much more negative. Negative headlines from there, regarding the impeachment, the scandal, you had a big knock on the brazilian markets. But the u. S. Markets have been much more resilient. I think we should just step back for a while at least, and complement the resilience of u. S. Institutions, in the way they are able to deal with these issues, rather than just keep thinking this is just a negative, downward spiral. Julia italy has had 64 governments and the last 70 years. Shir, thank you for joining us. What are the biggest one of the biggest drags on the dow today is the insurance firm, travelers. We will discuss. From new york, this is bloomberg. Scarlet it is time now for the stock of the hour. Just days after Hurricane Harvey hit texas, Hurrican Irma is expected to hit florida this week. Somedouble whammy has insurers on pace for their worst day of the year, including travelers, the worst one of the worst drags on the dow, now down more than 3 . Heres a bloombergs abigail doolittle. Abigail Bloomberg Intelligence analyst was saying, investors are just a bit more cautious on the outlook. It is more of a psychological factor, knowing that it will eat until the bottom line, because we wont know about that until weeks after these storms, in terms of how these storms into capital losses. But we do know that sellers are in control. If we hop into the bloomberg and take a look at this chart here, it is a longerterm chart for travelers over the last year. In yellow is the 200 Day Moving Average, and it is moving higher. But, the stock over the last years down, and really, on these storm related causes. Over the last two weeks we have shares of travelers trading lower, not just on harvey, but slicing into that 200 Day Moving Average on irma, telling us that sellers have really stampeded in. Houston,eems that, in not many houses had flood insurance. So there was a big get between total economic losses and insured losses. E,florida, a lot more robert they are on the hook for than in texas. Abigail i dont know the answer to that question. I think you are probably right about that, that more homeowners would be prepared for it. The travelers has a lot of exposure to florida, so i think that is one reason why the stock is down. But 1. 2 he made. A lot of these stocks bounce back after a storm. If we take a look at travelers and hurricane sandy, we see travelers put in a high, and then around the time of the storm really get down, but then, closing down the year higher, by about 25 . And when the actual losses came out, they were less than what investors were looking for and the stock popped four dollars or five dollars. There was a bit of a recovery there. Abigail, thank you. The market closes next with the major indexes down. But if you look at the intraday chart of the s p, the dow and the nasdaq, they have come well off their lows of the session. The dow might be off by 200 points, but at one point it was up in more than 187 points. From new york, this is bloomberg. Julia whatd you miss . The dow falling as much as 278 points, as tensions with north korea mount and Hurricane Irma becomes another potentially catastrophic storm, heading toward florida. Im julia chatterley. Scarlet and scarlet fu. Im joe weisenthal. We want to welcome you to our closing bell coverage. Scarlet we begin with our market minute. Stocks, tumbling today, relatively speaking, off by more than 1 in the case of the doubt. At one time, all three indices were down by more than 1 but they have come off their lows. Itss p is up about 30 from 20 Day Moving Average. So, the return of everyone from Labor Day Weekend in Summer Vacation means a pickup and trading. And as you point out, not massive losses, but big by recent standards. And a sign that the recent headlines are perhaps, starting to have an impact. Equities,n terms of it is monday because of the holiday. We are also seeing banks among the biggest decliners here. As a group, financials were the leading losers in todays than 2 . Up by more there are jpmorgan and bank of america. We are watching the movement of Hurricane Irma. It is perhaps making its way toward florida, given its trajectory right now. Barclays is putting out a bearish note, talking about the potential that the storm could impact a highly populated area, and that irmas insured damage in florida could be the highest ever in the United States. Joe lets take a look at the Government Bond market, because that is where a lot of the action is. Twoyear yields, down to 2. 19. 10 year yields, a significant move lower to 2. 0 six. We are back at november 9 levels. Northly, a lot of the korea headlines causing a flight to safety havens. A very interesting move there. Lets take a look at the two 10 you saw the steepening in november but then it is all downhill. Not much inflation, not much rate hikes, coming up and we are really seeing the long end of that curve coming down. I want to bring you into the terminal. The title of this chart is, this isnt good. The white line is the yield on fourmonth deal beale fourmonth tbill, the shortterm treasuries that rocks and off today. And this reflects those debt ceiling in stearns. The fourweek tbill, briefly yielding higher than the twoyear government yields, showing the premium that investors are demanding, to buy shortterm debt until this debt ceiling is resolved. Though, lots of stuff going on. Lights to safety, decline in expectations, curve flattening, and this very version,hortterm and with fourmonth rates exceeding 10 year notes. Whatever it is, whether it is funding for hurricane pushes back the possibility of getting any tax reform done. The dollar is very much moving in line with tenure treasury yields. Talking about this sleight of quality going on in the market today. Not so, for the dollar. Lets take a look at what else is going on in the world. Dollar canada is also very interesting. Forcan see twoyear lows dollar canada. The central bank of canada is expected to raise rates by 25 basis points when they meet on september 6. That would take them back to levels before they announced emergency cuts in 2015, when we had that some 30 a barrel oil. 30 a barrel oil. This kind of goes back to the conversation we were having with relativearma, the resilience of emerging markets, with palm in oi with bumps in oil today. Joe oil is having a very strong day. I to nearly 48 a barrel. Up 3 . It fell in the immediate wake of harvey, but it is coming back. We have seen gas prices come down, so, a lot of those harvey moves coming down. Gold is up over 1 . This fits with the treasury rally. The flight to say havens is pretty much everywhere around the world. And, frozen concentrated orange juice, up 6 . With irma coming to florida, this is the key commodity coming from florida, so a surge of orange dues prices, head of potential damage caused by Hurricane Irma. We dont know just yet but the market, obviously is concerned about it. Scarlet whatd you miss . The month of september, shaping up to be the cruelest month for stocks. We have a number of Central Bank Decisions and the u. S. Deadline to raise the debt limit. We have more on the events to watch. It feels like the debt ceiling is what we have been talking about for a while, but people are fixating about whether congress will get anything done. Were already getting conflicting messages today. Until something happens, that is going to remain in the minds of traders. You can definitely see it in the Treasury Bill curve, you can see that pink develop kink develop. And if you look at volatility in the s p 500, a flattened out this afternoon. We are also seeing a flattening out in the white line around the onemonth to five week. That is around the time where we would expect to get either final word on whether the deadline has been expanded. Joe just to be clear what we are talking about here, we typically talk about debt ceiling anxiety showing up in shortterm Treasury Bills. Now we are seeing it a little bit in the forward volatility curve, a little bit of a kink in equity risk. Toit is certainly nothing write home about, but in the past couple of days we have seen some signs of inversion in this curve. Joe we had a list of the other calendar events. The debt ceiling is number one, but we have fed stuff coming up, they havetions, ecb to give the government open. What else do you think is really the market is really keying in on, at this point . I think the markets are looking for some sort of clarity, and betting on an announcement from the fed, turning its Balance Sheet. We have seen the dollar consistently slump. And one reason why the Balance Sheet became more involved as a that it might take the pressure off the dollar, rather than moving short rates. However, maybe this will turn out to be the impetus against the dollar going, that they are actually moving on the Balance Sheet, qe infinity is really happening, maybe this is it. Anything that can break that dollar downtrend, i think of as the revolve around the dollar will be important to watch. Risk off inlk about these kinds of environments, but that is really not what we seeing, to go back to everything we have seen. Energy higher, the dollar is there are fixations on a full back in equity prices. Andave a differentiation products here, rather than seeing the traditional safe havens rallying and then the reverse another asset classes. Dollarou believe in that smile kind of theory, what we are seeing in the currency markets, it does not play out in that. It does not look like people are so scared that they need to rush into reserve currencies. Those are not the ones that are benefiting the most. We are seeing, even in the safe havens, odd movements that we. Ave not seen before are some kind of implied volatility mixup, there. When you look at things that have caused risk off, it is in the unexpected events, it is in the north korea, it is in the china cracking down on icos. Julia we will talk about that again, no doubt. , thank you so much. We have breaking news from hp enterprise, this is the part of the business that still sells ofnters, the hardware share the business. Hbe has cut its earnings ofecast, now seeing earnings 1. 36 to 1. 40. It had previously forecast 1. 56. Revenue topped estimates. From new york, this is bloomberg. Summers. Im jessica lets get to first word news this afternoon. Hurricane irma could hit florida this weekend. Today irmas winds hit a maximum sustained wind speed of 185 miles per hour. Refineries on the gulf coast are coming back online, following Hurricane Harvey. Exxon mobil has also resumed shipping fuel and houstonarea pipelines. At one point, the storm shut of u. S. Refining capacity. And the Trump Administration has the down the program for children of illegal immigrants. House Speaker Paul Ryan says he hopes to find out permanent remedy for dreamers, whom he said have done nothing wrong. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im jessica summers. This is bloomberg. Breaking news. Disney ceo bob iger is the latest ceo to weigh in on the to and protections for the children of immigrants. He said the backa decision is cruel and misguided, and is urging congress to protect the affected people. The president decided to end the Obama Era Program in six months, and a hope that congress would find a permanent solution. But what would that solution look like, as lawmakers return from the summer recess with Hurricane Harvey and the debt ceiling on their agenda. Thank you so much for joining us today. What do you make of this daca decision there the legality of it is one point, and the morality is another . John that is exactly well put. The practicality of it, and the are this of it, if you trying to round up 800 thousand people that dont know any other country but the United States. It is unthinkable. On the other hand, congress does makethe responsibility to policy decisions. So, hopefully in the next six months, congress will get attacked together. Had a realress has problem in trying to pass any form of legislation. This is part of the dream act that they failed to pass. What is the risk here that congress cant do something in the next six months . John i think there is a big risk. Has not distinguished itself. A lot of people say, well, it is the republicans. Republicans are in charge of both houses of congress. But in the u. S. Senate, it is extremely difficult to do if there are 48 votes against doing almost anything. I think there is a lot of blame around. Lo but i would Hope Congress would apply itself to the task. It takes an enormous number of recesses, and i think it has to make room to deal with this and the other big issues that are before it. Joe in the immediate wake of the election, there was a lot of excitement in the Business Community. We saw stocks rally. People thought there were good of the outcomes of reforms in tax cuts and everything. Since then, the optimism has cooled. With seen the collapse of trumps business councils. And a lot of ceos, coming out thisis decision daca decision, slamming the decision. Beenhe Business Community in denial about this wherestration, and about the party is going, in general . John i think first of all, it is important to understand that major legislation has not passed in the last seven or eight months of an administration. That is not unusual. Normally, it takes a couple of years. I can remember back when i was in the senate, confidently protecting the major legislation will be passed three years before it actually happened. So i think the delay in getting major legislation passed is not exactly surprising. I think there are a lot of people in the Business Community, in the Republican Party, in the country, who really dont know what to make of donald trump or it they view him as being make of donald trump. They view him as a very divisive figure, which he is. May be a surprise to most a surprise to some people, but most people so i coming before the election. And now that he is president , it is true that he has been a very, very divisive president. President trump is speaking with lawmakers and he talked about great love for the dreamers affected by his decision. President isthe making comments on tax reform and says we must make the tax code as simple as possible. He says we are going to cut taxes, were going to reduce taxes. Given what you have heard so far from his administration, whether it is stephen cohen, whether it whether it is steven mnuchin, or gary, what is your take on whether congress can come up with tax cuts and an offset to that . John the wait has been done is on a bipartisan basis. I was on the taxwriting committee in the senate, and everything that was done in the finance committee had to be done on a bipartisan basis. Now that is shot. The regular order, which is what they call the normal legislative process, really doesnt exist anymore. The democrats, 45 of the 48 democrats, have set forth their ust be inor what m a tax bill, which isnt exactly a move toward bipartisanship. So now, they are talking about doing this and reconciliation, which means it can be done by republicans alone. That is really too bad. It is not the way to legislate, in particular, tax legislation. Julia what is your views on what is going on in north korea, given your former role as u. S. Ambassador to the united nations. Situation that a has gone on for many years now, but it does feel like the urgency of tackling north korea is heightened because of the ongoing missile launches. Isthis administration this administration getting it right, and how they are vocalizing their concerns about north korea . John i dont know what else it should be doing, to tell you the truth. I thought that general mattis, when he made his statement about war, the actual use of Nuclear Weapons by the north koreans, would be ivastating to north korea, think that was a statement that should have been made. We are really back to the cold war days of mutually assured destruction. That was then, and i think would be, the preventative of actual use of Nuclear Weapons. There really is no easy answer to this. Joe senator, you wrote in the Washington Post recently, that we cant allow donald trump to redefine the Republican Party area what percentage of republicans tolerate trump, and think he is a vehicle for getting their agenda done, and how many republicans in d. C. Have fully absorbed trumpism, and this is what they believe in . John it is hard for people in elective politics to trade on that has to take on trump, verbally. Can make note of the fact that they are very different from trump. That it is easy for me, someone who is long out of elective verbalize this, then people who are in it. It is very hard for the Republican Party to make it clear that we are not like donald trump. If we dont make it clear, if the public does identify us as the party with donald trump, then we are sunk. That, maybe 35 of the American People approve of trump. Well, 35 does not win any elections. So, we really have to distance ourselves from him. You for senator, thank your time. John danforth, former missouri senator and former u. S. Ambassador to the united nation. Coming up next, a recent upsurge investorsity shows preferred haven assets are changing. From new york, this is bloomberg. Julia President Trump has been meeting with key members of congress and his administration, talking about tax reform. Lets listen. We lost the competitive edge. You see what is going on all of the world. Growthhave real job around america. We cant be the jobs magnet around the world, if we continue to tax our industries at rates of 60 or higher than other countries. Backinally, we must bring trillions of dollars that are currently parked overseas. , 4ave, in my opinion trillion. 4 trillion, massive amounts of money they can come back to our country because of our tax code and the rates. This is more than just tax reform. This is tax cutting, to put it in a very simple term. We are going to cut taxes. Were going to reduce taxes for forle, for individuals, middle income families, were going to reduce taxes for companies. Tax reform that follows these principles will create millions of new jobs and ensure that re products are stamped with the very beautiful letters and usa. Made in the this will bring back more growth and make america the jobs magnet that he can become him a quickly. I dont know if any of you have heard the expression, it is time to make America Great again. Has anybody heard that expression . So that is what we are doing. Weve seen it with the numbers, we see it with the jobs, we seat with the companys coming back in. Theyre coming back into our country and you have not seen that in a long time, so we are very proud of that. I appreciate you being here. Thank you everybody. What about the dock at aca decision . Lot for these people, and hopefully congress will now be able to help them and do it properly. And i can tell you, from speaking to members of congress, they want to be able to do something and do it right. Really, we have no choice. We have to do to the area i think is going to work out very well. And longterm, it is the right solution. Thank you very much, everybody. Julia that was President Trump speaking about tax reform, and also making comments about the jeff sessionshat Just Announced would be phased out over a six month. Also said he had great love for the dreamers affected by his decision, that drew the distinct and that they are not children, they are now adults. Bloombergs washington correspondent Kevin Cirilli joins us now. What have people been saying about the daca decision . We have a number of ceos coming out in condemning this, but what are people there saying . Kevin i just let capitol hill and i am telling you, throughout the day, the condemnation from democrats has continued over the president decision to end daca and ticket to congress, mandating that they come up with a new solution. People like 2020 potential president ial candidates, like joe biden and a lizabeth warren, leading the charge today for democrats, coming out against this. But we have also heard criticism from some republicans, including senator john mccain. Conservative, evangelical hispanic leader who told me, while the evangelical Hispanic Community is very much against resending daca, they are hopeful and optimistic the lawmakers on capitol hill will be able to come up with a new solution. You are seeing that play out in senatortions, led by lindsey graham, a republican, and a senator dick durbin, a democrat, who have a more moderate approach. Outside the beltway, we have seen condemnation from business leaders, including mark zuckerberg, the head of wells microsoft, who suggested terraform reform is more important than tax reform. Joe it has been a pretty safe bet that if Congress Needs to join together on a bipartisan basis to do something, that it wont happen. I am an optimist. When you look at there to do list, it is staggering. It tomorrow, they will be voting billion Hurricane Relief aid for harvey. I spoke with sources throughout the weekend heading into the today, who tell me they are anticipating lawmakers to kick the can down the road into the fall to push off the debt limit. Those stocks dipped a little bit today based on Hurricane Harvey and irma. The optimism for there to be tax reform diminishing. It looks like folks in that financial communities in washington are more mystic for tax cuts, less for comprehensive tax reform. Joe you mentioned Harvey Relief. Does it look like the debt ceiling will be folded into that or taken off the table . Caucus the House Freedom caucus gets its way. This could come down to the wire tomorrow. As of now, it looks like republican leadership, paul ryan, want to avoid anything that would prevent folks from getting their Harvey Relief aid. Saw the president was speaking earlier, meeting with lawmakers. We saw to his right and left, paul ryan and Mitch Mcconnell. What can you tell us about what congress has done so far on tax reform . The Trump Administration has passed the ball to congress, relying on them to lead the way when it comes to legislation. , to be a fly on the wall in those meetings when trump was tweeting against Mitch Mcconnell saying, get to work, mitch. Now they are trying to get to work. But the details on tax reform have been sparse. I have spoken to several Treasury Department officials over the congressional recess who told me they are trying to theorrect the course, right ship, in terms of strategy on health care. In terms of who they are giving the charge, look to majority Mitch Mcconnell to take the bull by the horns. Especially since house Speaker Paul Ryan lost a huge policy battle with that border adjustment tax left out of the blueprint. Kevin cirilli, chief washington correspondent for bloomberg news. Lets get a check on first word news with jessica summers. Wille Trump Administration end of the program that prevented the deportation of immigrants born illegally to the u. S. As children. Jeff sessions made the announcement. A lawful system of immigration that serves the national interest, we cannot admit everyone who would like to come here. It is just that simple. Sessions of said there will be a sixmonth delay in Hopes Congress can come up with its own solution for socalled dreamers. It leaves one Million People in legal limbo. Trumpds are gathered at tower in new york to protest his decision to end the dreamer program. Than 30 people were arrested for disorderly conduct, blocking traffic. The protest is said to last into the evening. President trump is losing another white house aide. This one can be the most aging, leaving oval office bodyguard and his close confidant. The rankings of the top universities in the world are outofdate. Twolist has u. K. In the top slots, oxford and cambridge university. Re is a tie for third with the California Institute of technology and stanford university. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Scarlet lets get a recap of todays market action. Everyone came back with the threeday weekend and stocks declined, the dow losing. The s p losing 19 points, led by financials. The dollarcks lower, weaker, treasuries rallying. Quite the return to business. Of theseeems a lot headlines, said speak, debt ceiling, north korea, having an impact on the market. 10 year yield down to 2. 6, the lowest level since november 9. In the immediate wake of that election. To start the new season risk off. Scarlet a quick mention of hpe recording thirdquarter earnings. That was not the issue to read of the issue was, they reduced their fullyear outlook. Investors like what they are seeing from the latest results. Focuses on the Services Part of the company. The hardware part was spun off into hp ink. Inc. Julia wage growth below forecasts. They pointed out weak wages are an argument against another way wage hike. Our guest joins us from washington. Great to have you on the show, jed. Lastoke to gary cohn on week and he admitted that as far as policy is concerned, the Monetary Fund has gone is far as it can and needs to be more on the fiscal side, getting tax cuts for companies, and that will filter down in terms of wages. Do you believe that . Jed i think we are at a point where we are seeing possibly a plateauing in the labor market. What we have seen in the past six to nine months, the deeper measures we look at the broader Unemployment Rate, unemployment population ratio which takes into account those that dropped out of the labor force those are narrow, plateauing over quite a period. It suggest that maybe less likely there is slack in the labor market than it might have looked at a few months ago. Joe it is been a mystery people have been talking about. Companies complain about oneility to higher hire, of their biggest problems. Yet that does not necessarily lead to higher labor bargaining power. You sit in a position where you see exactly what companies are looking for. How do you explain that, from your perspective . Jed what we see, we see the hosting postings companies are putting up. And we also see the types of jobs workers are looking for. One thing we are always looking at is whether we see workers willing to move it for other jobs. There is been a longterm trend in people moving less for jobs, a longterm decline in mobility. But there are certain places the still attracts people from other parts of the country. One of the concerns is, this decline in mobility may be part of a broader decline in economic dynamism that could be reflecting itself in productivity and other issues. That is one thing week we track closely. If you are looking locally or further away for different jobs. As people look around for different jobs in different cities, they are looking where there dollars will take them the farthest, where they get the most bang for their buck. You put together a list that highlights cities in which you have a high adjusted salary, places like birmingham, fresno, el paso. Did these get disproportionately hurts in the housing crash and of not fully recovered . Is that one reason why you get the most bang for your buck there . Jed some of the places hurt the most in the housing crash were in the southwest, places and arizona, nevada, parts of california. Those are places where adjusted salaries tend not to be as high. Places where salaries go least far is tucson, arizona. Another is miami. Those were places hurt badly in the housing bust. We tended to see places where it salaries go furthest, where your salaries will be highest after accounting for local costofliving, tends to be smaller, midsized metros in the west but not in the pacific coast. Like birmingham, jackson, inland california, not the expensive, coastal parts. Julia donald does not miss an opportunity to talk about the jobs market. He talks about the improving forecast since he took over. I know you have been doing work on the politics of jobs being created. You said it has improved more for clinton supporters than likely trump supporters. Can you explain what is going on and why isnt it being translated in some of the surveys we have seen about this administration and their Economic Performance on a relative basis . Look ofently, we took a uses to data about dls calculate the official Unemployment Rate to calculate what it looks like for people who were likely clinton supporters versus likely trump supporters. Since january, the inauguration, the Unemployment Rate has fallen more and wages have risen more for people who probably supported clinton, not trump. This goes in the opposite direction of what we have seen in Economic Confidence. There is a huge boom and Economic Confidence among republicans after the election, and a drop among democrats. Some of the gaps that opened up during the recession where folks were hit hardest were folks that were more likely to be clinton voters. Folks who are young, africanamerican and hispanic. They saw their Unemployment Rates go up most. They are seeing a bigger rebound as they close those gaps. That is not being reflected in the Economic Confidence. Julia jed kolko, chief economist of indeed. Floridautures rise as justs for Hurricane Irma, days after harvey hit texas. This is bloomberg. Scarlet insurance stocks are the biggest decliners in the s p 500 as they dissipate the impact of Hurricane Irma. Level fivene the could strike florida as early as saturday with citrus crops and oil assets in its path. To discuss the impact of the storm we are joined by our new meteorologist. Everyone looks at the storm in comparison to Hurricane Harvey. What do the math and science tell you about how this compares . Firstly, it is rare that we backtoback hurricanes potentially making landfall in the u. S. As far as how similar they are, aside from the geography, they are similar in that they will be very powerful. Irma perhaps even more powerful than harvey was. Joe quantify how powerful irma is. Ive seen extraordinary wind speed numbers. Explain the conditions allowing it to get there. Declaringory five, that just this morning. As it heads toward south florida, it will remain that way or be downgraded slightly to a category four. As far is the impacts are concerned, the state of accuray to the coming days. Oil assets andg refineries in its path are shutting down. Julia you are talking dropping demand of 30 . It is quite significant. Joe what are the conditions causing this hurricane to be so high on our ability to measure . Sea surface temperatures and temperatures in the waters are very high, around 30 degrees celsius. For meteorologists, that is an indicator of a lot of energy for Hurricane Irma to strengthen. Scarlet we are showing the path of Hurricane Irma, the white storm right here. You also have hurricane jose on its heels, as well. Give us a sense of how quickly we can anticipate another rash of storms following. Just as we begin to talk about irma, you see jose in the background. We have multiple tropical waves coming off the coast of africa, gradually gathering up steam and drifting last. Of theo toward the peak Hurricane Season and through september and october we could he more storms making their way across the caribbean. From what we saw from Hurricane Harvey, it interrupted deliveries of gasoline. Talk about the impact were likely to see on prices, given it is a double whammy. Shunondo there is definitely some tightness in the supply market in florida. That is because those tankers that make delivery of gasoline down there were interrupted during Hurricane Harvey. As people fill up their tanks and evacuate in the coming days, you will notice higher prices at the pump. The how confident are current trajectory paths that they could change . Shunondo they could change. Beyond a 72, 82 hours. Especially when they are over the water, can diverges significantly. It is something we have to keep an eye on in the coming days. Julia thank you for that. We take a look at french president emmanuel macrons struggle and declining approval ratings. This is bloomberg. Scarlet whatd you miss . French president emmanuel macrons popularity has taken a hit in just four months after his presidency. One wrote, his new leader squandered his support with stunning speed soon after. He has what napoleon said a general needs most, luck. The luck is that the opposition cannot get it together. They are basically in civil war with each other. War has deep roots, each side is in and it identity crisis. How did he blow his popularity so fast . Isnt he doing what he said he would do on the campaign trail . Pascalemmanuel that is not why they voted for him. They voted for him because they did not like the other guy. He had a scandal with his financing and his wifes finances. In the second round, he was against marine le pen, who most french still do not like. Julia it makes him vulnerable because they were voting le pen out, not voting macron in. They have decided retracting was a mistake. Joe is there a makeup budget . Pascalemmanuel that was a fake scandal. Fake news from the french, as well. He had a highprofile military leader resign. Is it bad as much as anything that has impacted his ratings . Just the sense it has been a rocky start . Pascalemmanuel with a small base and french people generally unhappy with their leaders, he basically had no room for error. He made a couple on forced errors. A couple were serious. Then he just crashed. Scarlet when you look at what he could bring to the table, it is plans to change brandss labor laws, which were pretty onerous. Was the elected in spite of that or because of it . Pascalemmanuel there is a significant number of people who support those kinds of reforms. It is just not near to a majority. He does have a base of support, just not the majority. Luck. Ou say macron has in addition to the opposition not united in any way, he has a big majority in the french parliament. Lets talk through specific policies. What do you see as likely and or plausible for him to get done . Pascalemmanuel labor reform looks likely. What came out was not earth shattering. There is some good stuff, but it looks like al to pass without too much trouble. There will still be protests, but it looks like it could ask. Reform is one of those words people throw out. We hear all the stereotypes about the french labor market, cant work, cant check your email, i do not know if it is true. How is the french labor market going to look different if and when his reform is passed . Pascalemmanuel the big problem in the french labor market is market. Is a two tier you have highly secure, openended jobs contracts rate is hard to fire people. If you do, they can see you and you are almost guaranteed to lose because they go to a special courts, whose judges are elected by unions. It is kind of a mess. Because those contracts are so protected, only a minority of people get them. The other half have shortterm contracts. It is not just about the contracts themselves. If you have those sorts of contracts, no one will give you an apartment or let you borrow money. It is that divide that really breaks the system. Macron is trying to smooth out over a little bit. He is not getting rid of the bite, absolutely. Absolutely. E, there could be one labor contract with protections that kick in overtime. He makes it slightly easier to fire people. Europe, reform takes time to read a things can deteriorate when you loosen up things. Does his low popularity change anything . There is recognition in the first two years of your ministry and that you have to do the dirty work, and then hopefully it will him your administration that you have to do the dirty work, and hopefully it will change near election day. Pascalemmanuel he is very new in french politics. All of the experts have been wrong about him, myself included. Anything could happen. I do think where he is making a big mistake politically is that he is doing structural reform like the labor market at the same time he is doing fiscal tightening. I think that is a really bad idea. The french labor market does need to be more flexible. What might happen, if you are doing fiscal tightening at the same time youre doing that, businesses will layoff a lot of people. But they are not going to hire the other people and people will go, what is this . Julia a great point. Trying to do too many things at once. Thank you. Joe scarlet it is time for look at the biggest is the stories. Fund,could be a new hedge stanford capital could raise between two billion dollars in 10 billion. There have been advising clients about the new firm. Fac capital pleaded guilty to securities fraud and steve cohen is barred from borrowing outside january 1. Buying sealants for 1. 58 billion. They supply a industrial goods for commercial roofing. It was sold by american securities. There is a new chocolate in town. It was unveiled in shanghai. It is made from the ruby cocoa bean. It is expected to reach several markets and appeal to millennial. It is the first new chocolate since the white bar was introduced. Julia i love it. Scarlet new innovation in the chocolate industry. Joe coming up, what you need to know for tomorrows trading day. This is bloomberg. Scarlet whatd you miss . In u. S. Equities after higher than average volume of banks and insurers leading the decline. Nonmanufacturing imfs tomorrow. Joe and i will watch for centralbank decisions after out of canada and brazil. Meets President Trump with leaders, much on the agenda. Scarlet that is all. Joe have a great alisa i am Alisa Parenti in washington. You are watching bloomberg technology. Irma is now a category five hurricane. The monster storm continues to gather strength as it roars toward the caribbean. It is the strongest atlantic hurricane since rita in 2005 and comes less than two weeks after harvey devastated parts of texas. The storm get it florida this weekend. South koreas navy conducted an exercise as seoul continues to put its military might on display. This follows north koreas launch last weekend. Thegyang joins the u. S. For long going stand offense is the only way to solve the crisis is for the u. S. And south korea to stop joint military exercises, which it called a rehearsal for war. President trump is losing another white house aide. Insiders say it could be the most damaging. Keith schiller is lose leaving. He was once mr. Trumps bodyguard and closest confidant. They welcomed back john mccain in washington. He had been receiving chemotherapy for cancer i