Harvey to the debt limit was feasible. They wanted something longer, particularly with the debt limit. It is interesting we are seeing this. We will have to get more information on it in terms of where we are in this process. Michael you have got a fiscal clip built in there. When there is not the deadline pressure. It will create an artificial deadline to do something, that the markets will be focused on. Julia lets bring in terry haines, the senior political strategist. Great to have you as well. You laying out all the different possibilities of the individual pieces and the likelihood of these things happening, what do you make of the suggestion that they managed to agree on several of these, whether it is the eight, the debt limit, and the continuing resolution . Terry haines i am not surprised. As we parse through it this morning, what i saw was a confluence of interest and when a confluence of interest happens in a republican democracy, things usually happen. What you have is a situation where the dynamic we arty saw the debt ceiling, a successful debt ceiling resolution tied. The hurricanes make that more likely. Nobody wants to be playing games with Government Spending at a time like this. You have got a likely resolution already. When Republican Leaders talked about kicking the can for three months on spending bills, you the response of leadership, leader policy, both saying, great, we will deal with the debt ceiling at that same timeframe. Sets up aid, it bigger confrontation in december. Megan what we are seeing now and reporting is that trump has agreed that this is a democratic furiousrepublicans were about this. That we do have mitch mcconnell, paul ryan, saying that this is not what they wanted. That is what we are seeing. We will have a lot more information to come out on this. That is what is surprising about this, while there may have been a conflict of interest in terms of how this played out, it is something that potentially had offset this. The Freedom Caucus is going to opposes the they do not need their votes if they have the democrats votes. It is a way around it. That will only make them matter and madder. Yes, he wanted to see some kind of spending measures. He acknowledged the likelihood. Tohink they were ready acknowledge the fact that as much as they would push back on this, unfortunately they will be able to stop it. You make a great point about how this tie up between nancy pelosi and Chuck Schumer and the sident, and incentive of how that will play with the base . Looming, weve arm a are waiting to see how that plays out. We cant separate it from daca plays in. Ch that has he is an unpredictable figure in terms of his own party. It is difficult to see where this is going to go in terms of how this will play out when you in terms ofge weather crises, coupled with huge Economic Issues as they debt limit, as what we see with the fed with a Stanley Fischer. Do not we do not we know what is in this agreement. We dont know if they of the wall, or planned parenthood. Megan i am going to say low. Michael we will see. Julia Stanley Fischer and his decision to remove himself from the Federal Reserve, for donald trump, a huge opportunity to reshape Monetary Policy and how that looks Going Forward. How does this change the probabilities of yellen leaving, and that gary cohn goes forward, someone like him, when they dont have the backup of Stanley Fischer of a more traditional person . Michael i think you divorce the succession of the fed from Stanley Fischers records resignation. He could have been a bridge between the new fed chair and his own term being up in june. He had about eight months left to go. Who the president picks to be the chair will depend a lot on what donald trump wants in a with, and how it plays congressional republicans. I am not convinced gary cohn is the likely choice. The mix. As a democrat and a wall street guy, it might be harder to sell him on capitol hill as well. It increases the urgency for the Trump Administration to get going and find people to fill these seats, and to make an announcement sooner rather than later on the chair to reassure. Julia an acceleration of a process to give clarification and certainty for markets. How do you think this changes things . It is a critical time, not only for the economy, but also the start of the Balance Sheet reduction. In terms of operationals, it is a difficult time to be losing the two top people. Terry haines of course it is your you are right to put it that way. Our view is that there is little changes in the short term. You are going to see the same kinds of decisions in the next few months and you still have got, even though fisher is , when you have got as you still have got yellen and dudley here as the rest of the policy. Those decisions will continue. By february, you could very well see five new people on the fed combined with the existing governors and the rotating seats. And the beginnings of a real change. The president s own directions here, generally have been dovish. We would expect that to continue. Says, who the likely picks are for these seats is not something that is known and is not something that is obvious, even in the case of cohn. Some great points are. Let me thank our other panelists. Megan murphy, and mike mckee, Bloomberg International economic and policy correspondent, and terry you will be sticking with us or lets get Market Reaction to havegress has agreed harvey aid. Abigail, what are we seeing . Abigail we are seeing small gains. We have the dow, s p 500, nasdaq, up. It is important to note after yesterdays pullback that the buyers are trying to prevent it from becoming a two day pullback. Earlier, the nasdaq had been down 3 10 of 1 . The buyers stepping in. The same thing is true for the dow transports. They were down fractionally. Now trading higher. Lets break down what is happening for the dow transfers. We are looking at what we have been looking at before that small gains. For the dow transports, the decliners are still the decliners. The airlines being hurt by the threat of Hurricane Irma. United,inental continental, a bit lower. Offsetting the weakness for the airlines, we are looking at gains for the railroad stocks. Up about 3 , more than 3 , despite cutting the outlook ceo hunter harrison. Worked through service snacks that were associated with his turning around the company. Investors seem to like that share. Helping union is epic and other railroads as well. We also have some of the Car Rental Companies trading higher. And avis shares are higher. This has to do with Hurricane Harvey. Car arees to rent a going skyhigh. There is a shortage of car rentals there. Renting for more than 120 recently. Investors seem to think that news is bullish. The pain around driving is not just for car rentals, it is at the pump. This is a chart of gasoline. We see up 14 this year, much coming over the last extreme gase days. Parabolic uptrend. The question is when will it reverse . Tend to lag in a big way. People may be paying more at the pump for a little bit longer, is actuallygasoline down. There is usually that lag time. Julia it will take time to get systems backup up to normal. Abigail, thank you for that. I want to recap the breaking news. President trump and congressional leaders agreeing harvey. De aid for they agreed an extension of the debt limit and the continuing resolution both to december 15. This is according to a statement from Chuck Schumer and nancy pelosi. Further information on that, we will bring you as we get it. From new york, this is bloomberg. Julia im julia chatterley. Lets kick off with a bloomberg first word news update from mark crumpton. Mark thank you. They are planning for the worst in florida which could line lie in the path of the most powerful storm two for many in the in the atlantic ocean. Irma has made landfall in the caribbean with winds up to 185 miles per hour. Some models project a could hit florida this weekend. There are projections that it could cause more damage is then hurricane katrina, the most expensive National Disaster in u. S. History. As julie told you, President Trump and congressional leaders have agreed to enact emergency aid for Hurricane Harvey, together with an extension of the u. S. Debt limit and funds to keep the government running both through december 15. The house passed with 7. 4 billion funding message funding bill. Is bill passed by the house designed to provide relief to tens of thousands of homeowners from flooding caused by Hurricane Harvey. The president responded to a democratic proposal to put off defaults on the National Debt for three months with a noncommittal quote noncommittal we will see. Senate majority leader mitch mcconnell, House Democrats leader nancy pelosi, and Senate Democratic leader Chuck Schumer. Policy and meeting, schumer said democrats were prepared to offer their votes for both the hurricane funding and a suspension of the debt limit. The president takes his campaign to overhaul the tax codes to north dakota. Heidi heitkamp. The president will argue that his tax cuts are worthy of support for both parties. He is leaving details of reform up to republicans in congress. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Julia . Julia for more on the president s push on tax reform, lets turn to terry haines. He is the senior political strategist for i as i ever court. Taxol ishe odds of the over 50 . That is before we got the announcement. Terry joins us from washington with more. I want to get to you on tax reform and how the odds haves shifted the odds have shifted. The announcement from the democrats here that they have reached an agreement with President Trump over the debt ceiling raise, a spending resolution as well. And of course the harvey a defending. Aide funding. I guess my question would be, and then what . Terry haines that is the right question to ask. Let me say, i tend to be oldschool about these things. From senateto hear majority leader and the House Speaker as well to make sure everyone is on board with this. Lets assume it is true. No reason to think it is not right now. What you have is you have either a threemonth extension or a suspension of the debt ceiling. The debt ceiling is taken care of for a period of time. You have the party relief Going Forward. What you have is you will have the second trunk, a truncheon of irma funding, that will come around a threemonth continuing resolution or temporary government funding bill. Then you will have by december the situation where the debt ceiling has to be suspended or raised again. Last time in 2015 it was suspended. You have to deal with government funding either by continuing to kick the can down, or coming up with some sort of resolution. The middle of all this, to confuse everybody further, republicans have to come up with something on the budget. The budget is necessary as a guidepost for spending. It is also important because they tend to in tend to use that to use tax reform. What you have is a kick down the thefor three months and on issues i mentioned. Meanwhile you will have a fight on the budget. Is it going to be a continuation of the last four fiscal years which has been Stable Funding . Or is it going to be a situation where, as the president would prefer, he gets more money for defense spending, less and takes that money out of domestic spending . If you can get a budget from the republicans, you have got a good chance for tax reform. If you cant get it it is done. Julia meanwhile, the conservatives are howling about the fact that they managed to pass it. We dont know any details yet. We have to assume there are not any spending cuts priced into this. For the conservatives here, they are going to be like, but to the politically we need to show we are fighting. That is going to come out at some point. You are 5050 on tax reform. Just tie all of those complications for me together, and give me your sense of whether the prospects for tax reform have changed . Terry haines i think today they have not change. I am at 50 which does not sound like a call at all, but it averages two things. One, we are at 7030 that you get a fiscal 2018 budget. If you get back, tax reform passes. We remain relatively bullish on this. I would guess what the president is trying to do is trying to buy goodwill with the democrats on the basic spending and basic debt ceiling issues. Orion and majority leader mcconnell are said to be furious. It does no one on the republican side to pretend to be happy about this. What you get ultimately is you get a few months of spending and debt ceiling peace. Republicans can make sure they pass a budget and get tax reform online. On line. Julia interesting. I was going to ask about the level of cohesion this indicates. As you point out, this will be a fury of people. It is difficult to have a fight when we have a crisis like harvey is at the center of it. Great to chat with you. Thank you for your insight. Senior political strategist. Still ahead, we will get to the analysis on escalating tensions in north korea from michael ohanlon. From new york, this is bloomberg. Julia more breaking news. We were talking about waiting for the president s response to the announcement over this deal with congress. He apparently is telling reporters he agreed to a threemonth debt ceiling expense expansion. He said he thinks the deal with the democrats will be very good, that he has given no mixed signals on daca, congress to help the dreamers. He said he loves the dreamers. Hes adjusted he might revisit, any to be less night. If congress does not act on the dreamers, we will see. President trump told reporters we will see what happens, when he was asked about military action on north korea. They have conducted a flurry of missile tests and it is escalating into international unease. Here with an analysis is michael ohanlon, he is senior fellow of also the author of beyond nato. Us now from washington. Michael, great to have you on the show. Donald trump suggested earlier that military action is not the first choice here as far as north korea is concerned. You say that toughening sanctions should be the ultimate response to the six missile launches. Have we had enough focus on what the longterm goal is as far as north korea is concerned . Greetings. Anlon nice to be with you. I agree with your question. What i have been arguing most recently is that we need a diplomatic strategy to go along with the sanctions. It is more realistic. The main reason we need that is because i dont think china is going to be willing to apply tougher sanctions unless there is a light at the end of the tunnel. That china believes north korea really has within its grasp. As you know, our insistence is that north korea has to denuclearize, get rid of all its weapons. I think north korea has concluded it Needs Nuclear Weapons for its own security. To change north koreas thinking would require many, many years. Or a huge amount of economic pressure that china is not willing to apply. I think if we want the sanctions to bite, we have also have to couple that with a carrot strategy. The sanctions being the stick, the character being some kind of a freeze on north Koreas Nuclear capabilities and missile tests that would give it limited amount of restitution of its economic benefits in exchange freeze onfiable missile testing. That is the kind of deal that so far, no previous american president has been willing to consider. But that donald trump really should at this juncture. Julia critics would say that we are rewarding bad behavior, and even if we agreed to freeze south korean exercises, there is no guarantee the kim jongun will continue and abide by his promises to freeze his Nuclear Weapon development. How do you get around that problem . Michael ohanlon you raise good questions. Brokenissue of previous agreements, yes, we have two verified we have to know what we would do in advance if and when they cheat. Including a snapback automatically of previous sanctions by the international community. By the way, most of the u. S. Sanctions should stay in place. I am not proposing generous u. S. Packages of forgiveness. While north korea still has these move these weapons. Im simply saying some of the more recent u. N. Sanctions that have try to limit the trade with china, some of those could be relaxed. Korean these u. S. South exercises could be suspended. I try to study this issue to some detail. As long as we can do small exercises, that would be ok. Julia im going to have to interrupt you. This is bloomberg. Julia this is Bloomberg Markets balance of power. Lets kick off with the headlines on the bloomberg first word news this afternoon. Swept overcane irma islands in the caribbean and barrels toward puerto rico with florida in its sights. The category five storm set to become the most expensive in u. S. History. The u. S. National Hurricane Center is saying with a potential landfall in florida this weekend. At 130d insured losses billion. Germanys finance minister warns theres no free lunch in brexit talks. Of the says the reality divorce is sinking in among policymakers. The goal now is to find solutions that will keep the damage to both sides as limited as possible. President trump and chinas president spoke today about how to result resolve the north korean crisis as the u. S. Seeks more stringent u. N. Sanctions. Reiterated chinas commitment to a denuclearize korean peninsula. The report did not say anything was achieved ahead of the resolution scheduled for monday. The Electoral Commission is changing the team overseeing next months president ial election could officials have been appointed to run the new vote ordered by the Supreme Court after nullified president kenyattas reelection. Campaigning officially began today. Global news 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. Julia Hurricane Irma is battering the caribbean with winds of up to 185 miles per hour. It is headed towards florida next, threatening to become the most expensive storm in u. S. History. Joining us from capitol hill to discuss the say preparations is florida congressman Carlos Curbelo. Great to have you on the show. Ifore we talk about florida, want to get your reaction to the announcement that weve had in the last 30 minutes about a bipartisan agreement here to raise the debt ceiling and approve harvey funding. Rep. Curbelo my preference would happen for us to extend the debt ceiling beyond the end of next year. I dont think we should be revisiting this every three or four months. I dont think that is a way to run the greatest economy in the world. That is certainly better than any questions about whether the debt ceiling will be lifted. We will get a continuing resolution passed to keep the government open and work on a spending deal. Republicans and democrats also for december 15. People have to mark that date on their calendars. Flurry ofee a massive legislative activity on a number of issues come obviously the one i just mentioned and perhaps an immigration deal as well. , butis certainly a punch its better than a congressionally induced crisis then we have seen in the past. Julia the showdown may have been postponed until december 15 now. There will be a lot of conservative republicans who are curious about what happened here. Harvey funding aside. Will there be a showdown in december . Rep. Curbelo i dont think so. We will have an administration in december that is calling for for at limit increase i bipartisan spending package. Now, it is harder to take the opposition position when your party is in the white house. Likenever supported ideas shutting down the government or putting into question whether the u. S. Will pay its debts. That is irresponsible. Some here have. That is regrettable. They are less likely to do that this year. Julia you mentioned Immigration Reform is one of the other things that congress has to deal with. Announcementca yesterday. Do you think six months is enough . Can congress act in that time . History suggests it will be tough. Rep. Curbelo i certainly think we can. You can look to that december 15 date for an indication as to win the deal is going to come together. Here in the wake of this announcement, we have already picked up a lot of republican support for the idea of affording these young immigrants i consider them americans many republicans are rallying around the idea of affording these young people a permanent solution. Thats exactly what the president has called for. My preference would have been to leave the order in place on touch while untouched while Congress Works, but this is increasing the chances that something is going to get done because Congress Works on deadlines. The administration has essentially put a deadline on this daca issue. I think you will see democrats and republicans come together in favor of such a solution. Julia critics are already saying that this would be an amnesty. There needs to be greater protections for Border Security, for the people remaining because their visa. Rstaying what protections must be put in place if we are looking at something in terms of this situation . Do you want to hear from the president about what he would actually support . Rep. Curbelo this is not amnesty. Some of these young people were brought by their parents when they were babies. They did not commit any crimes. We are not giving them amnesty from any crime that they could have committed. My legislation filters for anyone who has committed felonies or a string of misdemeanors, they would not be able to qualify. The path to permanent status would be an earned path. They would have to get a College Degree or show that they worked forfive years or serving the military with an honorable discharge. We could put together some Border Security enhancement, some reform to our visa system because half the people undocumented in our country overstayed their be says. Overstayed their visas. There is room for a deal that addresses the security concerns that some americans rightfully have. I want to ask you about florida and the preparations being made therefore Hurricane Irma. Being made their for hurricane being made there for Hurricane Irma. Rep. Curbelo the house will take up a major appropriations bill. Earlyaded home tonight or tomorrow morning because my wife and two daughters are back at home and my parents are there. We are bracing for what could be the worst storm in floridas history. Was a terriblew storm. This could be worse. What im asking everyone back home in my Congressional District especially, the southernmost district where this hurricane could make landfall, to make sure they listen to local authorities and obey evacuation orders. Those who live in the florida keys, this is a chain of small islands, very dangerous. The coast guard is evacuating the keys. There will be no one there to come to your aid. Please, take this storm very seriously. We have seen some movement in the track for florida to the east. Right now, florida is in the center of this storms track. Julia very important advice. Thank you. We are just getting further news , sayingsident trump hes likely to see more hurricane funds coming from congress at this point. We only saw three republicans in this vote for Hurricane Harvey emergency funding decide to vote against it. During theent tension over funding for hurricane sandy. Will there be greater cohesion, agreement on these kinds of things Going Forward . Rep. Curbelo certainly. I do think we bottomed out when it comes to hyper partisanship. Todays vote was next ample of that. Only three members who are. Ibertarian in nature one of the Important Reasons its important to support this type of legislation is you never know who will be next. I was proud to cast that vote today to help the people of texas because florida could very well be next or the carolinas. We need to come together as a nation behind common sense policies like aid packages to support areas that have undergone a major catastrophe like Hurricane Harvey and Hurricane Irma. I hope we have bottomed out when it comes to this hyper partisanship and this questioning of every single decision. Some of these decisions are just common sense decisions. Republicans and democrats need to come together. You see a pragmatic approach coming from the white house on this debt ceiling issue. I think thats what most americans are looking for. A government that makes less news by doing the right thing. Julia thank you for joining us. Good luck to your wife and two daughters. Rep. Curbelo keep florida in your thoughts and prayers. Julia congressman Carlos Curbelo joining us from capitol hill. From new york, this is bloomberg. Julia this is Bloomberg Markets balance of power. A notable stock you need to watch today shares of gaps surging as the companys outlining its strategy to investors and analysts any retailing conference. At a retailing conference. Oliver we are companies that beat for a long time, casting a positive light. Wall street has been responding well. Gap is presenting at a Goldman Sachs conference. Shares are moving as a result. They are outlining a strategy that has been much needed. Stock is down 50 from its bull market high. Today, shares are up 6 . It onors are pinning their outlook for the future and what they are going to do for this company. Julia they are shifting away from the traditional brands like gap and Banana Republic and towards old navy and athleta. Oliver they are trying to hone in on where they will make the most money. Theyve had some of their businesses that were struggling because they were too expensive without the quality people wanted. Companies Like Old Navy are cheaper they will shut down some stores and add a net 70 stores with old navy and athleta. Investors like that. Part of that will be a move toward margins. Of thistant part company has been the margin shrinkage with now hopefully some expansion. Im looking at the fundamentals the green bars are showing you the revenue adjusted on a yearly basis. In 2015 andthe peak how that has dropped significantly. The yellow line is what we are looking at for the actual gross margin. Some of these analysts are looking at their decisions on how they are going to modernize their stores. Its not just about closing, its also about finding the highest margin business. That is what investors are hoping will continue to go forward. I was having a conversation about lululemon and industry. Sure this is a company that is being rewarded for entering a fiercely competitive sector. Oliver the difference between a company like gap that has all those brands is they dont have to just rely on this one market. They have other brands here. If that is something they think they can push into that is worth it, you have these other brands that are the backstop. Its about finding the places where they are not making money and closing those locations and turning getting desperate arning it and turnin bleeding. Ting the buying Lattice Semiconductor because of National Security concerns great to have you on the show. Why does donald trump get to decide on this one . A group of National Security recommended has reviewed the deal for many months now and has decided there is a National Security risk with this china backed fund buying. Ettuce lattice the group itself can on its own lock a deal block a deal. The president can do that. It is a rare event in these takeovers from foreign takeovers of american companies. This is now on his desk and he has 15 days to decide. Julia weve had three instances in the past when president s receive the same kind of situation and vote the deal down. Ce hope to win trump over . Its 150 billion in terms of investment. Looks pretty juicy. We talking about a lot of jobs here, too. Is a fairly small semiconductor company. The way they hope to win trump appeal that an doing this deal is important to saving jobs at lattice. Trump talks all the time about preserving american jobs. A the flipside, he has been vocal critic of china when it comes to trade with the United States. That is the other piece of this argument. I think its going to be an uphill climb for lattice here. People i talked to think its unlikely that the president is going to go against the of the National Security officials in the administration. Julia a couple of angles here lattice is a maker of logic chips. They are used in military communications. Military anglee do you think if this werent china, this deal would be allowed . It certainly would have better chances. Verynited states is concerned about Chinese Investment in American Technology and in semiconductors in particular. The Obama Administration put out a report at the end of their administration highlighting that the u. S. Nvestment in to acquire summit Connector Technology was a National Security risk. Largely because of the military uses of this technology. China is the most scrutinized buyer of american assets. In other countries, they generally have an easier time. Right now, the bar is set higher for even other countries, even friendly countries are having trouble doing deals in the United States and a lot of it has to do with the bureaucracy right now, a backlog of deals, some missing apartments. Desk appointments. They dont have a full couple of people who can review these transactions. Some missing appointments. Coming up, we will look ahead at what to expect in the Nations Capital for the rest of the week, including the dreamers debate. President trump heading to north korea to sell his tax reform agenda. President trump heading to north dakota to sell his tax reform agenda. This is bloomberg. Julia this is Bloomberg Markets balance of power. U. S. President donald trump is heading to north dakota promote his tax reform agenda later today. Looking and Democratic Leaders agreeing on harvey a front the debt limit harvey eight, the debt limit harvey aid, the debt limit Chuck Schumer and democratici saying leaders made it clear that they strongly believe the dreamer act must come to the floor and pass as soon as possible and we will not rest until we get this done. Kevin cirilli joins us from the white house with all the latest. I want to start by getting your reaction to the deal that was signed today and whether or not this new form of bipartisanship could carry on in d. C. Perhaps theres hope for the dream act, too. Kevin the fallout from the reallys community reverberating here inside the beltway. This type of deal was first advocated first made public by democrats. Nancy pelosi the top democrat in the house and Chuck Schumer, top democrat in the senate, putting out that joint statement. Told reporters that he had a very cordial and professional meeting with the democrats. Hes not saying what was disclosed in that meeting. Talk about a bipartisan breakthrough. We will have to see if it lasts. Julia donald trump also commenting on whether or not herebeen unclear over daca , suggesting we love the dreamers what we might revisit it if congress cannot do something in six months. Dont people want greater clarity as to what hes going to support . Kevin the point about lack of clarity is an excellent one. Transgender people in the military now, we are seeing it again in regards to daca. Scholars will agree former president obamas executive order was questionable at best. The intent is something lawmakers have been avoiding grappling with. Had a developments from senator Lindsey Graham and senator dick durbin trying to find that more moderate path forward. Julia great to get your insights. Next, bank of America Merrill lynch senior u. S. Economist Michelle Meyer weighing in on the resignation of Stanley Fischer. Catch all the news on the bloomberg with the function tv. This is bloomberg. Scarlet breaking news. We are waiting the Federal Reserves reads of Economic Conditions in its beige book. Julia Stanley Fischer announced hes resigning effective midoctober. Sparking a slight reaction in the u. S. Dollar. Scarlet chris condon is standing by at the Federal Reserve with the latest headlines. Chris all 12 districts were reporting modest to moderate Economic Growth in july and august. The mystery over white tight tight labors why markets are not moving wages and inflation only deepens with this report. Manufacturing on the positive side. Modest increases in several districts. Particularlyding, nonauto retail spending was up in many districts. Notable positive side, Capital Spending increased in s