For our economy over the past several years and persistent increases will only bode well for them. More notes on this puzzle that is facing fed officials over the contradiction between low unemployment and the lack of inflation, they will not get much help from this report, several districts reporting worker shortages on one hand, including atlanta and st. Louis reporting turning down business because they cannot find the necessary workers, but despite all that come a majority of districts reported limited wage pressures and modest to moderate wage growth. So, even though fed officials are facing this decision of whether or not to move Interest Rates up again for the end of the year, theyve been puzzling over the lack of more inflation. Scarlet the conundrum remains. Thank you so much. In two hours. Lose lets get a check on where stocks are trading right now. Abigail in the green. Not much of a reaction to that beige book report. Not much of a reaction to the news that President Trump and congress have agreed to Hurricane Harvey aid and extended the debt ceiling to december 15. Stocks had been higher earlier. We havent even retouched the highs. Weve seen a turnaround for the nasdaq. Is important to note because it suggests that investors may see that agreement as a bit of a bandaid as opposed to a longterm solution. Lets take a look at the stocks that are helping the dow. Exxon mobil up 2 . Oil up for a fourth day in a row. Also upgraded at ubs from a neutral to a sell. , up 2 . Ot gaining investors think the store will be incremental in rebuilding efforts. Apple had been down 1 . That has a bit of a sentiment barometer. Perhaps that is gaining after the debt ceiling extension was released. Yield is where we did see a reaction. Up for basis points. Up four basis points. Bonds are selling off. Despite the fact that the stock gains are small, even bonds are selling off. Investors feeling good in the near term about the debt ceiling extension. Overall, a modest risk on tone today. Julia the vacancies at the Federal Reserve are mounting. Stanley fischer is stepping down next month. He cited personal reasons in his letter of resignation to President Donald Trump. He said that three years as vice en said stans insights contributed in valuable Monetary Policy deliberations. He led our efforts to foster financial stability. Michelle meyer, joining us from her office in new york. A huge opportunity for donald trump to reshape the Federal ReserveGoing Forward. How does it change the probability here that janet yellen leaves in january and the decision on who replaces her . Michelle i think yellen has every intention to serve out her term. If you think about what the hemp administration has said believes is important for the head of the Federal Reserve is somebody who believes in low Interest Rates, supportive Monetary Policy. And financial deregulation. The takeaway of Stanley Fischers resignation is twofold. One, it means one more vacancy to fill. There will be more influence in terms of the overall board. Two, it means the fomc is losing a really important voice on the committee. Stanley fischer served as someone who had incredible expertise and knowledge in the economics field. Highly respected. We are losing somebody whos been really important in terms of shaping the path of centralbank policy. Im thinking you can go to someone whos a bit more of thenusual character if second in command is someone with so much experience if hes not around, does that alter the decision . Stanley fischers term is officially up in the summer of next year. He would have only overlapped with the new fed chair for a few months. Im not sure that would have been a critical part of the decision. Certainly if fisher was still around, it would have helped the new fed chair. Helping the person to take over the head of the fed in a more smooth fashion. Now that there will be two vacancies at the top next year, it could create a larger vacuum in terms of leadership. Scarlet we already have three vacant fed board seats. Confirmte would need to a lot of people have said this is taking a long time. What does it mean for a Federal Reserve that will be shorthanded as it goes through this critical period of beginning to wind down its Balance Sheet and raise Interest Rates . Michelle that is a really important point. Theres fewer people on the fomc, fewer voices, less capacity for debate and discussion. That is problematic. The only have three members on the board is incredibly thin. It puts a greater burden on the Federal Reserve regional president s in terms of computing to the discussion. Desk intervening to the discussion and communicating to the market with the fed intends to do. Getting to a full board as quickly as possible would be beneficial. Scarlet Stanley Fischers resignation becomes effective on october 13. What needs to happen before then . The septemberave 20 meeting, which is important for a number of reasons. Balancectation is for sheet normalization to be announced. Which is highly likely at this point. Perhaps even more in focus will be the fep. Stanley fischer will be giving his forecast. We will see what happens to the forecast. Going forward, you have fewer and fewer contributors to those forecasts as welcome at becomes more problematic, i think it as well, which becomes more problematic, i think. On december 15 mother there will have to be another extension. What do you make of this deal . In terms of fed policy Going Forward and the potential rate rise, a potential showdown coming in december as well. It isle in a way, isouraging when anything said and decisions are being made. To have the debt ceiling and the budget looming for the next few wakes was worrisome. The fact that there will be some resolution around the debt ceiling, that is encouraging. The attention shifts to funding the government. Will there be a bigger Budget Authority that allows for that reconciliation orders to go through that could facilitate tax reform . For is the agenda policymakers into next year in terms of setting policy . In a way, there is some kicking the can down the road. At least theres baby steps being taken in terms of finding some resolution. Julia great to have you on, michelle. Michelle meyer, head of u. S. Economics for bank of America Merrill lynch. Scarlet lets get a check on the first word news this afternoon. Mark florida is bracing for a possible hit from Hurricane Irma. The storm has already made landfall in the caribbean with winds of up to 185 miles per hour. Some models project it could hit florida this weekend. Forhis has the potential significant storm surge last , irmine happened in an area where there werent many people mark it could cause the most damage since hurricane katrina. President trump think congressional leaders and congressional leaders enacted emergency aid for hurricane rv Hurricane Harvey. Billione passed 7. 4 for federal Disaster Relief. The bill passed by a vote of 4193. It will bring relief to thousands of homeowners. Theresa may is calling on employers to train more british workers to fill vacancies after brexit. Prime minister may said immigration has hurt british wages. U. N. Mandated investigators said today that syrian president Assads Air Force conducted a sarin gas attack in the spring. Offers thereport strongest evidence yet of allegations that president assads forces conducted the april 4 attack on the rebel held province. Syrian government officials have denied responsibility. Global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Scarlet coming up, the deal on shortterm debt and harvey aid. Three months for washington to solve a range of issues. We go live to the white house with the latest. From new york, this is bloomberg. Julia this is bloomberg markets. Scarlet President Donald Trump is in route to north dakota to pitch tax reform after meeting with congressional leaders at the white house earlier. He told reporters aboard air force one that hes agreed to a very good deal to fund the government and increase the nations Borrowing Limit for threemonth. Cirilli is at the white house with details. Give us a sense of how this deal got done. What went down . Kevin President Trump meeting with top democrats, including nancy pelosi and senator Chuck Schumer of the house and senate respectively. They put out a statement after this meeting and said the president has agreed to lump , the 7. 5 funding billion relief package, with raising the debt limit for a threemonth extension. The president has not that he agreedid it lookse terms, but like there is seemingly some consensus to kick the can down the road on raising the debt limit for december. Like as of today they are kicking it down the line to december. Julia democrats also talked program, hoping a dream act could be signed here. Is there some hope here for congress to do something on that within a sixmonth timeframe . Kevin its almost like theres been a shift in tone from the president in the last 24 hours. The president said there were no mixed signals as a result of this decision to let congress tried to address this issue. The Business Community very much speaking out against it on wall street. Wall street saying they want lawmakers to first tackle daca and then tax reform. Where do paul ryan and Mitch Mcconnell stand . There was a report suggesting that they spent 20 minutes together with the president talking. I think quite frankly what you have seen from this white house is they have tried to work with outside of leadership in an effort to pressure leadership. Thats white House Freedom socus chairman ouare fascinating in these policy debates. It seems the president is more engaged with them then with his own party leadership. Julia senator cornyn speaking right now following the president s remarks. Tell us more about the congressional meeting that the president had earlier today. And the debtca limit, what else came up . Any movement on the other issues the president is eager to get done . Kevin the president wants to talk about tax reform. That is something lawmakers have been pressing for. Is still mnuchin optimistic they can get this done by the end of the year. The president is headed to north dakota to speak on taxes. Julia consolidation in germanys banking industry. We will hear from from new york, this is bloomberg. Julia does germany have too many banks . Scarlet that is the question being asked after 5 of the german small sized banks failed their stress tests. Andreas dombret spoke about whether consolidation is indeed coming. It depends on the size of the bank. The top level banks need that regulation. If you get to very small banks, i still believe the capital rules, liquidity rules are correct. We may do less with the amount of and the frequency of notification to supervisors. For example, if you were to cut off banks below 3 billion euros come in germany, you would reach some 82 of the banks with only 4 a rather small risk with a large number of banks. Some relief in the administered of issues administrative issues considered changing the regulation per se. You dont need to notify the supervisor about each and every asgle data in highfrequency Large International banks. David im not going to ask you about Interest Rates heading by the ecb. Are some of the Smaller Banks under a great deal of pressure in germany because you have this low Interest Rate situation . Andreas actually, they are. , three quarters of all earnings are interestrate sensitive. Only 25 come from traditional income. If you have that Business Model prevailing in germany, you can imagine that this very low Interest Rate environment is creating a lot of pressure on Interest Rate margins. This didnt start with the ecb policies. Since the 1980s, weve had compression of Interest Rate margins and we have seen Interest Rates going down, so banks have a lot of time to prepare for that. Our Business Models are very much geared to the Interest Rate income, which means you are more heavily affected by a low Interest Rate environment than others. This very on how long low Interest Rate level will maintain. We are expecting that each and every bank is adjusting to which ever Interest Rate level there is. Julia its not just within germany. Theres a fair amount of Foreign Investment hna from china investing in deutsche bank. I know you cannot comment on individual banks, but there is a concern of Foreign Investment into the german Banking System . Andreas nope. In principle, theres no worry about that sort of investment. We are an open economy. We will look to each and every investor. We will do a fit and proper check. If we dont do it ourselves, it will be the ecb for the larger banks. Those same criteria apply. They need to be fit and proper. And finally, earlier bank, joh the head of deutsche spoke out in germany and said frankfurt was an alternative for banks coming into the continent from london because of brexit. Andreas let me start by saying germany has always had a Good Relationship with great britain. We will maintain that. I strongly believe that london will stay the most important Financial Center in this area. Still, in case of brexit, we are assuming brexit will happen, there will be movement and there will be a need for banks on the continent. We are in no competition with other european Financial Centers. As a representative of the german central bank, i will not be competing with others. Earlierndreas dombret on bloomberg daybreak americas. Still ahead, the commodities close. From new york, this is bloomberg. 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. Scarlet from bloomberg World Headquarters, this is bloomberg markets. Commodities markets are closing in new york. We sort with energy come with oil approaching a fourweek high. Refiners are revving up plants that were pounded by Hurricane Harvey, which sparked the demand for crude. Weekly inventories are due out tomorrow. We continue to watch gasoline futures. They are falling 1. 6 as refiners get back online following harvey. Another wildcard is Hurricane Irma could the category five could strike florida in the coming days. Orange juice futures have been on a roller coaster. They are down 3 . Lets talk more about orange juice. We are joined by marvin perez. Great to have you on the show. Weve seen doubledigit rallies for the last few days. Actually coming off in the session today. Some give back given the rally weve seen. India. Weve had 10 gains the last few days. The crop is very low. By some be knocked down has lessened ak little bit. Theres still some this groep and see from International Models discrepancy from International Models as to where its going to hit. If it continues north, it will hit the gross. Julia what about previous cases . In 2004 and 2005, it wasnt just the damage to the current crop. Output was suppressed for future years as well. Why . The storm surge can bring salinity to the soil and weaken the roots. The trees in florida have been suffering from a disease for more than a decade and the hurricanes made it worse because the insects that spread the disease get spread out further by the strong winds. Output is the lowest since 1964. Itand has been ebbing is still the favorite juice in the morning. Lower supplies have increased prices. There was concern about caloric content a difficult situation for our farmers in florida. Scarlet im looking at the commodity ranked returns on the bloomberg sugar up one 1. 5 . This is the best performer. You are looking at a muted reaction in sugar considering there could be potential damage to production facilities. We will have a surplus this year. Although theres a lot of concern that cuba and the Dominican Republic crops could be hurt. Theres been a rebound in supplies in asia. Scarlet a sugar conference in miami is being rescheduled. Very important 200 people had to reschedule. Marvin perez, thank you so much. Julia lets stick with commodities. Bloomberg has been at the Energy Conference alix steel sat down with David Anderson from barclays and asked what the big takeaway from the conference has been so far. David the biggest take away is company iseach making a pitch in terms of my company is better positioned than your company. Not all are created equal. The best positioned among the large cap Service Companies is baker hughes. Hughes just recently integrated with ge oil and gas. Free cash flow is an important element here. Thats what we are seeing right now. Short cycle versus long cycle. America where long production can come on in a number of months what about schlumberger and transocean . Is a schlumberger defensive company. Their challenge right now is eight a decent is a decent number of positions offshore. I will make the same case for transocean. Chevron continues to talk about short cycle opportunities. They are not investing in the deepwater side. Thats the concern we are hearing. Contrary to that, weve heard offshore drillers talking about an inflection offshore. It is hard to tie those together. In some cases, its about hope. When you talk to Service Companies, they are not seeing any pickup in offshore. That leaves north america with shale what have been the changes over the past two years . David a big difference between and three or four years oil Service Companies used to provide chemicals and engineering services. They provided a lot of the technique and expertise of drilling and completing wells. A lot of that intellectual capital was shipped to the emp side. Its highly commoditized particularly on pressure pumping. They are not even providing sand anymore. You are taking another chunk of revenue out. The concern is really how we get out of that more commoditized nature. How do we see prices pick up . Have 80 smaller Oil Services Companies in the u. S. Versus the big five or six that how theinternational retain that Pricing Power in north america when you have all that competition . David we dont think you can. Halliburton talked about their digital oilfield. Oilfieldt the digital and analytics and data. Everyone has a way to play this. Halliburton, schlumberger, thousands of wells they have data on, they take that information and create algorithms to create the perfect well. A lot of it is proprietary information. They have their own capabilities inhouse. They are providing their own data analytics. The value of that will be the collaborative nature when everybody shares this data. Thats not how the market works. I cant imagine the independents going that route. Tell me about the oil services earnings. When do they peak in this cycle . David our view on how these cycles are emerging the last few cycles have been five or six years. This is how Large Cap Companies have been conditioning us the reason baker hughes got out of pressure pumping. They are not wellpositioned they dont have a great track record. Halliburton is embracing the shorter cycle business. These are only 23year long cycles. American earnings peak in 2019. The last thing is sand. Theres a big debate in the community about how expensive what is your take . David the change is on the supply side. Last cycle, we were looking at sand from wisconsin and illinois. That sand is considered ideal for fracking wells. It had to be railed down to the basin. That creates a cost. Right now, its around 100 a ton. Sands another type of called regional sand or brown sand. It comes from different parts of texas. For a while, we thought it was in a high enough quality. We are creating microfractures and putting sand and water in open andkeep it overtime come, as pressure increases, they may collapse. This sand is 80 a ton. This is sand they are finding in the delaware basin. Its like finding oil underneath your refinery. The cost of that sand is somewhere around 40 a ton. That is where the debate comes from. Theres a tremendous amount coming online. Theres some environmental issues. This is texas come i think they will get through this. Thats where the debate lies. Julia alix steel speaking with dave anderson. As Hurricane Irma continues to better batter islands in the caribbean, florida is bracing for landfall as early as sunday morning. Two Nuclear Facilities are in the path of the category five storm. They are both on the atlantic coast. Turkey point withstood hurricane andrew with minimal damage. A spokesman for Nextera Energy told bloomberg that they will shut the plant long before the onset of Hurricane Force winds. Paul ryan backs President Trumps plan to give congress six months to come up with a solution for dreamers. He made the right call. Im encouraged by the fact that he gave us time to work out a consensus. To find a compromise. These kids dont know any other home than the united states. I think the president was right to give us the time we need to find a compromise. Mark we got word yesterday that the president would resend the theram rescinds the program. With the is speaking leaders about north koreas latest nuclear test. The white house released details of calls with theresa may and malcolm turnbull. May stressed that all options remain open the white house said the president and mr. Turnbull confirmed that their countries will intensify joint efforts to do do clear eyes the new clear eyes north korea d new clear eyes de new nuclearize north korea. Informed authorities after noticing suspicious products in an apartment. Global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Scarlet a headline here some stocks to watch. Hasbro and mattel slumping following a report that one of their biggest this to readers, toys r us, has hired a law firm to restructure some 400 million in debt and may file bankruptcy. From new york, this is bloomberg. Julia this is bloomberg markets. Time for the stock of the hour. Is getting a boost from its online competitor, amazon. To find out whats happening here, lets bring in abigail doolittle. Abigail thats exactly what happening here. We have a partnership going on between kohls and amazon. Sells is agreeing to amazon products at their stores. This is an effort to boost traffic. They will be 10 stores with 1000 square foot areas that sell echoes and fires. We are going to see the story here on this chart. Inestore sales doing well 2014 and then slumping in 2015. Now coming back to even. Maybe this will be a deal that can boost them back up to positive. Scarlet the samestore sales still negative. What does amazon get out of this deal longterm . For now, it gets a place for the echos and fires. Is that the possibility amazon could over the longterm use the kohls stores as pickup centers. Btv 1651. In pink, we have all the kohls stores. Theres thousands of kohls stores all over the country. In yellow, we have the amazon distribution points. All those pink dots are the kohls stores. Ultimately am amazon would like to use those in stores as pickup points for their products. Julia cheaper than buying whole foods. Sense, especially if you dont have norman doormen to pick up your packages. Thank you so much. Julia time for the Bloomberg Business flash. Automaker completing an investment round in south koreas as k holdings. Sk holdings. A Group Representing enterprise claims tourist marketplaces is illegal tmobile offering customers. X to u. S. New subscribers have at least two lines and an unlimited data plan to qualify. Carriers are battling for new customers ahead of next weeks new iphone launch. That is your business flash update. Turns to alls fargo new playbook to improve diversity in its workforce. With reaching a settlement advisers earlier this year, the bank is steering away from traditional diversity training programs. , jordanof walk the talk holman joins us to explain wells fargos new initiative. Tell us the backstory for wells fargos adoption of focus groups over diversity training. There was a settlement. There was this lawsuit by a bank a class of Financial Advisers claimed they werent given the same opportunities as the nonblack peers. Wells fargo is saying we will make voluntary focus groups to figure out what the problem is and how to solve that. Scarlet help of a harvard professor who said mandatory diversity training is not working and it feels like a control tactic. Now, we are turning to voluntary focus groups where people are signing up saying i want to solve the problem. Its not just wells fargo. Other companies have also been charged similarly and have sought different forms of settlement. In 2013, Merrill Lynch had a record settlement of 160 million. They had a nonfinancial plan of Leadership Councils to get Financial Advisers in the room with their managers to figure out how to direct people to more lucrative teams and not have this perceived this termination. Perceived discrimination. Scarlet talk a little bit about the use of data here. These financial Services Companies collect a lot of data and they can really harness it. To what extent have they been maximizing their assets to measure and quantify their efforts and the results of these Diversity Efforts . The harvard professor was surprised that the financial sector, they werent using the demographics of how many africanamerican advisers we have the data is there. Useow other sectors grievance systems or whatnot. Now, they will look at the demographics and see how we build on that and do better trial and error. Scarlet you can see jordans story on bloomberg. Com. Julia the blame game may not slide for u. S. Equities. We will take a look at the stockpicking theme of 2017. This is bloomberg. Julia this is bloomberg markets. U. S. Stocks are edging higher today after plunging yesterday. Recent reactions to geopolitics and the weather. Takes a closer look at the investing theme of 2017. Oliver thank you. Indeed, i will propose something i think will finally put an idea that has been plaguing the stock market to rest. That is it has been impossible to make money in the bull market. The evidence here is showing us otherwise. Heres a chart a lot of people have been circulating the past month or so. This is looking at volatility in the market versus actual dispersion or correlation. The blue line is the vix. Looking at volatility in the s p 500 measured by the basic gauge of volatility. The correlation over the past three months, if we look at the higher around november, this trend has been lower and lower. Looking at low correlation, which means high dispersion, which Means Companies in the market are going a different direction. Lets look at whats happening with that turn churn in the market. This tells a great story about 2017, the amount of turnover and reversals of trends that weve had. This goes back one year from today. Lets go panel by panel. The top panel is the s p 500 versus small caps. Look at the Inflection Point. The Inflection Point is the large caps versus smalls. Looking at growth versus value, financials versus health care, strong Balance Sheet versus weak Balance Sheet stocks all these changes in the market create opportunity, whether its individual companies or sectors. Overall come a trend that is slowing down a bit. So far this year, weve seen a bit of a change. The orange bars are looking at outflows from each will funds. This is this year. Outflows were a lot slower. The question here is whether it is the chicken or the egg. Our investors slowing down money because they see opportunity in thererket or is dispersion cropping up because we dont have that constant buying power in etfs . Your chart suggesting theres opportunity there. That is pretty hard to make money. Thats what you are paying for. Scarlet thank you so much. This is bloomberg. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. I am julia chatterley. Scarlet scarlet fu. Welcome to bloomberg markets. Julia we are lies in bloomberg World Headquarters in new york. Here are the top stories we are covering on the bloomberg and run the world. The future of the leadership of the fed, coming into question. Vice chairman Stanley Fischer is stepping down, effective in october. Vacancyinto what the means for President Trumps plans for the fed. The president s shifting his focus to tax reform. He is taking his legislative pitch to north dakota, and is reaching across the aisle. We will bring in his remarks. And a special report from Recovery Efforts underway in houston. What does the process look like . Meet one of the key players who will drive the recovery forward. Lets get a check of markets with abigail doolittle. We are looking at small to moderate games for gains or averages. Not quite hitting the highs that we saw this morning. We did have the news today that President Trump and congress were able to extend the debt limit to december 15. That is an overhang on the market, and yet not too much of a bullish reaction ar. If we take it look at a 10 day chart of the intraday yield, we see a big spike higher on yields, on that announcement, telling us that investors are moving away from haven bonds, of in a big way, but a bit a selloff in those haven bonds. This move up in yields is influencing the sector composition of the s p 500. If we happen to the bloomberg, this is a great way to get a quick look at what is happening sector wise for any of the indexes. On the bottom we have two of the high dividend yielding sectors. We have the financials, which were so beaten up yesterday, near the top. But really, at the top is energy. Lets take a look at some of the movers. For the Energy Sector we do have exxon mobil and chevron, both trading higher. Upgraded a writ ubs from a neutral, to a cell. Not really an endorsement, but a the the right way for bulls, at least. Analysts say oil is going in the right direction and we do have these stocks trading higher for the fourth they enroll. Finally, at t and verizon are trading lower on yields rising. There is some thought that this could be due to Hurricane Harvey, and perhaps Hurricane Irma, if communications are wiped out. Abigail, thank you. There is some of that dispersion oliver was talking about. You said vice chairman Stanley Fischer is resigning from the fed, effective next month. President trump and congressional leaders, agreeing to an emergency aid package for Harvey Victims and the debt ceiling deal. Way tont trump is on his north dakota where he will pitch his tax reform plan. This president the president said this just moments ago, on air force one. We essentially came to a deal, and i think the deal will be very good. I had a very cordial and professional meeting. Which have an extension, will go out to december 15. That will include the debt ceiling. That will include the crs. And that will include harvey. Joining us now is bloombergs Senior Editor for government and economics, and also, our correspondent on capitol hill. Marty, the the president and with ats have come up deal, much to the chagrin of some republicans. Marty just hours before, paul ryan described the democratic proposal as unworkable, and untenable. And then, at this white house meeting, donald trump listens and decides, we will go with the democrats. So, they do have a deal. But, beware of december when you are doing your christmas shopping. We could be in another crisis. Sahil, how does this change the probability that they can get something done on tax reform, i the end of the year, as they keep promising . It is hard to know how it changes that probability. It does clear to big items off their plate, that they had to get done this month, the debt limit extension and keeping the government funded to a bar to shut down. It gives them a little bit more room. Keep in mind they have to do other things. They have to extend flood insurance. They have to extend the Childrens Health insurance program. All by the end of this month. So, they still have other things to do. This does open up a little bit of a window, though. The president , though, not doing any favors in terms of winning over, or getting closer to his allies on capitol hill. This was quite a remarkable thumb in the eye for speaker ryan and Mitch Mcconnell. I think Republican Leaders were blindsided. This is not something they expected the president to do. Julia you mean another thumb in the eye. Scarlet right. What are you hearing from republicans and their teams, about how the president may be turned on them, little bit . Nobody saw it coming. Nobody quite knows what it is that led to this. We know democrats came out with an idea this morning, schumer and nancy, in a joint statement. Republicans wanted to extend it includinglonger, treasury secretary steven mnuchin, by the way, obviously, a close trump ally. He wanted a longer debt limit extension of the president went the other way. They are blindsided by the president and they have to react, they have to adapt. Senator mcconnell has responded by saying, hes going to move this in the senate. He made it very clear that the president agreed with democrats on this, but he also doesnt want disaster to strike at the end of the month. Marty, have we opened the door, perhaps to bipartisanship in washington, where the president the democrats can Work Together in the future . That remains to be seen. We were talking about the dreamer zach and it does clear some room for that, for a couple of months, until december. I think if there is an issue republicans and democrats can agree on, it is that issue. I think that will be a test of this new bipartisanship, but i would not hold your breath. Nancy pelosi Chuck Schumer actually mentioned that in their statement, the hope for a dream act to go forward. Again, the tensions that are being created here, the leadership of the gop, whether it is paul ryan, Mitch Mcconnell, or President Trump. How do you think those relationships play out, in light of what we have seen here . And given that we have president tying up with nancy pelosi and Chuck Schumer, how does that play with the days . That with the base . Does that matter . I dont know if it matters. You had better get used to it. I know we all drop our jobs, and are stunned, but this seems the way the president is going to rule, and we had better get used to it. This is pulling all sides together and saying, this is what needs to be done and we are doing it. It is president ial, because Donald Trumps president. Scarlet very well said. When the president does it, i guess by definition, it is president ial. President rule of trump, everyone knows to expect the unexpected. This is not a politician that has a consistent pattern of behavior or a consistent pattern of policies he has supported. He has sent mixed signals on the issue of daca, he seems to be changing his mind and zigzagging on this issue in unpredictable ways. The president said last night in a late tweet, that he wanted it to happen, but only after is attorney general Jeff Sessions argued, not only that was it unconstitutional, but it was bad policy. He said he will revisit it, but then denied being unclear today. Is beingthat president ial, as we made clear. Another president ial initiative, perhaps is, Stanley Fischer resigning as vice chair of the fed. That leaves for vacancies on the fed board. Urat leaves fo vacancies President Trump needs to fill. President trump does not really want to go against the current, go slow Monetary Policy. To be where donald trump stance. He has talked about, he loves low Interest Rates. If you do want to get to the growth rates he is projecting, a low Interest Rate environment would be helpful. And so far, his choices at the fed have been more mainstream. They have not been doctrinaire. They have not been outliers. And i suspect that will be the trend for his fed appointments. Investors like clarity. We did not see much reaction today, at all. That, d thought would have thought that, if investors responded to instability at the fed. Janet yellen is still there, and she could stay there beyond her Expiration Date if she is asked to do that. So i think there is continuity and i dont think donald trump wants to change that. So, i wouldnt expect any real surprises. Julia continuity is the word. Hank you, marty lets check bloombergs first word news this afternoon, with mark crumpton. Irma isrricane barreling for puerto rico, with florida possibly in its si ghts. Barbuda rains slammed gua this afternoon. Barclays estimates insured losses from Hurricane Irma at 130 billion. If the states and the District Of Columbia are challenging President Trumps plan to end the dreamers program. The suit was first announced by Washington Attorney general bob ferguson, who called trumps movie dark time for our country. Yesterday, attorney general Jeff Sessions said the program will end in six months, to give Congress Time to find a legislative solution. British Prime Minister theresa mays office distributed a letter to major companies, for Senior Executives to sign, raising her governments exit strategy for brexit. Governmentsid the repeal bill would initiate a program of legislation to prepare britain for life outside the european union. The Prime Minister is trying to win support for her brexit program, as talks in brussels remain deadlocked. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Coming up, houston gets back to work. What challenges are businesses facing after Hurricane Harvey . We will hear from a key player, driving it forward. This is bloomberg. Scarlet this is bloomberg markets. Im scarlet fu. Julia im julia chatterley. Lets turn to Hurricane Harvey. Jason kelly has been reporting from houston, and he caught up with a local realtor. The Office Market was the softest market in houston. Its most impacted by the energy crisis. There is quite a bit of sublease space on the market in houston, which is a great opportunity for tenants looking for space. Prices have been depressed just a little bit, because of that. However, the Retail Market is over 95 leased. The Industrial Market is over 95 leased. Great activity was coming out of the port, continued growth and some of the manufacturing sectors, and residential was doing quite well, singlefamily. The multifamily market was a little overbuilt, but if i were to size up houstons real estate community, i would tell you it was doing ok, for most of the sectors, prior to the storm. How does harvey change that . Harvey is going to fill up the apartment vacancies. The multifamily market is going to be the biggest beneficiary of this storm. The Office Markets, very few Office Buildings took on a little water area so, the Office Market is back up and running. Although, those that are down, there will be some temporary space taken in some of the sublease space we have available. Folks have a need for temporary space. We see that right now. Reallyustrial market is unchanged, and the Retail Market is really unchanged. I think houston is going to recover fairly quickly as a result of this. I will tell you, automobile sales are going to go up again, because so many cars were flooded. Houston has been a fast growth city for a long time, largely based on light regulation, the zoning laws. How does the Business Community and the government balance those knees, Going Forward . That really is the question for houston today. Designed our city around a hundred year flood. Any city in america that is designed for 48 inches of rain in 48 hours. Were just not equipped for it. On the other hand, we cannot stick our head in the sand. Houston has really got to do something, and study this really hard so we can deal with mitigation, retention, flood control, and make our city safer and better for the future. This is not a time for our communities to sit back and say, we need to continue. We need to stop a little bit, think through what we are going to do next. Do feel that sense of urgency right now, and do you think that will carry through . The one thing about houston is that we dont just sit around and do nothing in a crisis. We are going to do something. I can assure you, Business Leaders and our government leaders, who i thought did a great job, i think our mayor, our county judge, all the county judges did the best that they could in this crisis. I have nothing but high regard and respect for the way our city managed what just happened. That we all need to step back now, and ability knows this, we need to take a step back and say, what is next . What can we do better . We are going to get better. We are not going to crawl out of this and say it is perfect. And we are not just going to assume that the status quo is ok. It is not. I think we will be bigger, better, stronger, faster as a result of harvey. Bellow int was dan houston. Now, time for the Bloomberg Business flash. Stocks, commodities and Quantitative Strategies are all helping gains. A bank is moving its headquarters from stockholm to finland. The move will save regulatory costs. Of thellows criticism swedish government. The only nordic member of the european banking ewing. European banking union. The national Highway Safety administration would be responsible for regulation, and developing new standards. The action now heads to the senate. That is your business flash update. Coming up, how to protect your portfolio. From new york, this is bloomberg. This is bloomberg markets. Im julia chatterley. Scarlet im scarlet fu. Its time now for options with julie hyman. , a downturn yesterday that did not last very long. We are seeing a next picture today, and a little bit of once, surrounding events in washington. What is your take away from the market action, in the wake of these headlines on the debt ceiling limit the back . Scott that is definitely good news, or i should say, a relief. A relief for some of the markets. We are seeing today is, some of the risk on, or the flight to safety that we saw yesterday, abating quite a bit. Littleseeing gold down a bit. We are seeing the 10 year, after getting absolutely hammered this morning, down to its lowest level before the election, actually has rallied back very nicely. We are tried to make an overall run on the market to try to get back some of what we lost yesterday. Julie your case today have to do with, we are bouncing off today with the 10year. Where do you think we go from here, in terms of rates . Scott just looking technically here, throwing out any sort of geopolitical events that throw the market turmoil, i think we have bottomed out. I think this is a great opportunity to short the bond market. Tlt,an do you that using the u. S. Treasury twentyyear etf. Extremely liquid. High volume. A great way to trade options. Im looking at the levels that we hit preelection. I am a shorting that by buying a going out to october. Im buying a 127124 put spread going out to october. I can do that for about . 75. That is my maximum risk, no matter what happens to rates, no matter what happens to tlt. If we have, in fact, come somewhat near a bottom, this thing is going to be fantastic in reward versus risk, in a very short. Of time. That we got word vicechairman stan fischer is going to be stepping down from the fed. Does this change the outlook in december . Will we see a rate increase that . Increase then . Scott it removed some of the dovishness and tips the balance toward the hot side, in terms of a rate hike. Thats why we saw a rates bounce after we saw the news come out today. Julie i have to let you give a shout out to your students. I know you teach a class right now, and you talked about this trade. Kelly Business School in indiana, we talked about Interest Rates and we talked about the overall market, buying insurance when you can, and not when you have to. Really forade is them. I love this trade. It is for everybody looking for a rebound in Interest Rates. Practical usage for that Business School education, i guess. Thank you, scott. President trumps tax roadshow continues. We will have full coverage. This is bloomberg. The state departments warning americans to reconsider travel to cuba, haiti, or the Dominican Republic and, due to the expected impact of Hurricane Irma. Flashorm could bring flooding, mudslides and storm surges, while travel and other services will be disrupted. The state department has authorized voluntary departure of american citizens and their employees from three countries affected by their again. Eight for Hurricane Harvey has been tied to an extension of the debt limit and funds to keep the government running, through december 15. The house passed a 7. 4 billion federal Disaster Relief plan. The funding comes to days before it was set to pass. Is designed to provide relief for tens of thousands of homeowners, from flooding caused by harvey. Senator Chuck Schumer applauded the deal. This i