The nasdaq yesterday had been up more than 1 and the s p 500 more than half of your percent. The geopolitical tensions earlier this week, that briefly took a toll on the markets being shaken off as buyers are stepping in. When we look at the breadth of the market, there may be some reason to be concerned and think that perhaps the rally we have seen for two days could be shortlived. His is a oneyear chart in white, the s p 500 and in blue the percentage of members above the 50 day moving average. Yesterday, the s p 500 moved above the moving average, considered to be bullish and saying buyers are moving back in. In blue, the percentage of the members over the 50 day moving , thege, 43 , declining market internals are deteriorating is what that is telling us. Suggesting that the rally we see for stocks today this week could be shortlived. Lets look at a sector doing well, homebuilders. Bid. All getting a decent Credit Suisse estimated they could lose 1. 1 billion in the wake of the devastation of harvey. Holmes has been upgraded. Homes has been upgraded. , gas look at gas and oil is higher in a big way. Up about 11 . Nymex crude up for the first time in four days, up 2 . Investors taking a different view on oil which had been down in the wake of harvey because refineries are shut down in texas and that means less demand for oil. Today, a rebound and not surprisingly, that is weighing on two of the refineries, bolero and holly frontier. Valero and hollyfrontier. Mark investors choosing to invest on the macro, whether u. S. Data, euro zone inflation data, and chinese take chinese pmi data. Best friend for two weeks. Trend for two weeks. A big corporate story, shares earlier down 15 , the biggest drop on record. For the french biggest retailer. It warned a second half of the year will be as tough as the first was gives the new chief executive a bigger challenge to turn around the company. The outlook prompted for analysts to reduce recommendations. Four analysts to reduce recommendations. A drop in earnings was a bit of a surprise because they previously said secondquarter sales beat estimates. Volumes in food failing to offset the effects of a price war and the operating margin in france, which accounts for nearly half of sales. It fell 70 basis points, down 14 . Inflation in the eurozone taking up speed, more than economists predicted, underlying cost pressures, failing to accelerate. ,he headline is Consumer Prices up 1. 5 in august from 1. 3 in july, ahead of estimates. The biggest best reading in four months with the acceleration almost exclusively down to the increased an energy prices, following stronger than expected inflation readings from the likes of germany, spain. ,he blue lines core inflation which strips out volatile elements such as food and fuel, holding at a tepid 1. 2 . Food for thought ahead of the next thursday ecb meeting. Interesting day in the euro today after a report that various ecb governors are beginning to worry about the euro strength, raising chances of a slower qe taper. The European Central bank meets next thursday. On monday, the ecb temporarily cross 1. 20. Bank of America Merrill lynch says they shot the positive Economic Data out of the region and disappointing inflation surprises. 2 downside risk. Currency strategies revising forecast highs and keeping them below the current levels. Morgan stanley is the most bullish for the end of this year. Cannot wait for the ecb next thursday. Vonnie it will be the event of the week. Fomc not long after that. Lets get to the first word news. Two explosions rocked a Chemical Plant in the houston area, they lost power in harvey. Arkema had one of the plant was without power to referred rate chemicals that become volatile as the temperature rises. Arkema makes organic peroxide at the plant. Flood waters are receding in houston today, firefighters plan to conduct a block by block search in areas that have been not accessible. The death toll has risen to 31. Harvey has knocked almost one fourth of u. S. Oil Refining Capacity offline. Department has responded to disruptions in the oil market, authorizing the release of half a Million Barrels of oil from the Strategic Petroleum reserve. It will be refined at the phillips 66 facility in louisiana. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. I am emma chandra. This is bloomberg. Vonnie thank you. President donald trump kicked off his effort to sell the American Public on his tax plan yesterday in missouri. We are here to launch our plans to bring back main street by reducing the crushing tax burden on our companies and on our workers. Trump before president launched into the latest goal for major tax cuts, he offered support to texas and louisiana in the wake of harvey. That moment revealed how the storm, which is claimed several dozen lives, and cost as much as 90 billion in damage, may i knew limits to his goals of historic tax cuts. Instead of telling people what will be in it, he made a point of saying that this is on congress, he does not want to be disappointed by congress. He listed the support. He said he did not want to be disappointed. Why . There are two reasons, he wants congress to act, and he does not want to be blamed if congress does not deliver what he has promised. When you hit a president , this has been consistent, talk about what he envisions for tax relief, it is broad things, closing loopholes, streamlining and simplifying the tax code. Cuts,rm category of tax one is reducing Corporate Tax , aes to 15 , down from 35 huge asked in a year when money is in short supply. And middleclass tax relief, exact details to be determined but when you put them together, probably in the range of 3. 7 trillion over 10 years. Mark well the this corruption will the destruction in Tropical Storm harvey limit the deliver ittruck to donald trump to deliver these historics tax cuts . It may, the impact of the storm takes the ability to control it out of the president s hands and leaves it into the hands of mother nature, texas lawmakers, and the American Public. Here are the particulars, looking at around 90 billion in terms of assessed costs. When lawmakers come back next week after the august recess, many want to attach relief to a shortterm spending bill and or to a debt ceiling extension or expansion. President trump had talked earlier about forcing a government shutdown, if his border wall funding is not met. Conservativesal who want any spending increases to be offset in some way. We have a new dynamic entering the mix. This may reduce the chances of a shutdown, because of the optics and reality of lawmakers not wanting federal services to be suspended. But also as more costs have to be offset from somewhere if fiscal conservatives carry the day. Vonnie thank you. According to one republican lawmaker, the need to address damage from harvey could result in a veneer of bipartisanship that helps the tax reform effort. Here is what he said yesterday on bloomberg markets. The hurricane event that is taking place in houston, while incredibly significant as that is, it does not slow down the congress capacity to operate on a dual track and i do not think you will see the slowing things down. Vonnie joining us is the head of washington policy research at Renaissance Macro research. You heard what the congressman had to say. You pointed out that this potentially could be a time for reevaluating as many as half a dozen fiscal policies. Not likely to happen. That is right. When you look at the schedule in front of congress, there are five to six separate but related physical items that have to be down with fiscal items that have to be dealt with. Overarching, would be issues such as physical balance fisal balance, what will be paid for and added to the deficit . What the congressman said, the pace of legislating in washington has already been numbingly slow. It will speed up by necessity as they have to address the debt ceiling, the fiscal year begins october 1. They will have to address what to do about health care, spending for insurers and providers to make sure the markets do not get worse and suffer blowback politically in 2018. And they want to talk about tax policy, which will possibly necessitate the passage of a budget resolution. There is a lot of Work Congress has for itself in the fourth quarter. Harvey only adds to the weight. If they come together in separate entities that congress will deal with, a lot of it will be the focus on what does it mean for the fiscal balance and what does it mean for the people. Vonnie you say, as part of the challenges, they need to build functional trust. The president is meeting with gop leaders and tax writers on tuesday, can any functional trust be addressed at that meeting . So, the firstope time the president and Senate Majority leader, and bigger ryan will be facetoface bigger ryan will be facetoface and 3, 4 weeks, in that time have been skating tweets from the president about members of congress, not just the leaders, but other members. The political business is one of relationships, as is most businesses. That will matter going forward. For the functional trust to be restored and for it to lead to action on some of the calendar there willda items, have to be a better relationship between the president and some of the leaders on capitol hill. Mark can we talk about the Corporate Tax rates. Donald trump vision is 15 versus 35 , can you outline for corporateod is a 50 Corporate Tax rate it 15 Corporate Tax rate is, somebody says it is a race to the bottom, what are your thoughts . I agree in large part because the tax code is complicated, overly complicated, but highly interconnected. It is difficult to imagine cutting the statutory the marginal rate of taxes for corporations from 35 to 15 without there being a host of intended and unintended consequences. There are very few people and i cannot think of anyone watching this space with background in fiscal policy, who believed in a 50 corporate is a likely outcome. 15 corporate is a likely outcome. Unless you offset it. There has been a talk of offsetting by closing loopholes, that phrase closing loopholes is tried and true to the pillars of marble that stand in this town and the 1. 7 trillion per year that u. S. Taxpayers forgo collecting for the loopholes is growing, not shrinking. A good one to watch, if you are looking for an indicator of whether or not congress get ,erious about closing loopholes right now there is a mortgage interested actions for principal residence and second residence. If Congress Takes away the interested action for the second home, i would be more inclined to believe they may tackle the first one. Tax expenditures are broad and large for corporations, but mainly for individuals, there has never been a lot of serpas local support for cutting them. Mark the president has yet to sign a signature law of his own. When will it happen . [laughter] that is pure guesswork. I imagine before the 2018 midterm elections and maybe as soon as the end of september, beginning of october, because congress will have to send him legislation on debt ceiling and in fy 2018. On tax reform, my senses you are looking at december and well into the First Quarter before we know whether the president will actually receive a meaningful tax policy bill to sign. Did notthey president make mention of territoriality, is that still part of the plan . I do not think so. What is possible in washington on tax policy right now is relatively wide from a theoretical standpoint. Largely because nothing has been done to date. In terms of political reality and in terms of physical reality , my sense is that the tax package, whether at the end of this year or next year, will be constrained by a number of the events we discussed and others have discussed this morning. I sent is that you are not my sense is that you are not reform,at meaningful just a few tax cuts and the prospect of that bill will depend on the relationship between managers of the legislation, their ability to gain the votes for a plan, and the purpose of that plan. All of that work is in front of us. Thing, it ise more difficult to imagine, politically, that a tax bill will make it through the house and senate and to the president without people knowing the impact on the president and his businesses. Vonnie we believe that there. We will leave it there. Thank you. Mark coming up, gasoline extending a closure of a major u. S. Fuel pipeline, futures in focus next. S is bloomberg here in this is bloomberg. Live from new york and london, i am vonnie quinn. Mark i am mark barton and this is bloomberg markets. Lets get to the daily futures in focus, gasoline rising, extending his largest rally since 2013. Crude rising 47 and gold turning higher after u. S. Economic data. Great to see you. Where does this gasoline futures rally take us, the eight day of gains. We will have to see how much more news we will get out of harvey. In the last few minutes, we saw that the big refinery is going to be offline for the next few weeks. We are seeing an acceleration in the spike in gas. We are probably near the top of what we will see. Not only is it the tragedy of harvey that is causing a lot of this, coming into the labor day weekend, one of the more heavily traveled weekends of the year. The combination is what is fighting the gas prices. Spiking the gas prices. I see a topping off quickly. Mark Weaker Oil Prices which is wising rising. Mid 42 to 43, why are you bearish . It is rising and i think it is rising in concert with a little bit of the gas prices. Overall demand is still terrible. It is very low. Opec continues to produce more and more. Most of the countries are not abiding by the limits that had been set. I think there is major downward pressure on the oil market. The 42 level, 43 level is where the next significant support trend is. Change, up aittle quarter of 1 . Is geopolitics going to be the main driver of gold in the shortterm . You have two things, geopolitics and the dollar. The gold has rallied on geopolitics and the weakening dollar. The dollar seems to be stabilizing somewhat. The wildcard, along with much other economic news, is geopolitics. If things do, down with north korea if things do called withwith calm down north korea, that will put pressure on gold. If something happens, there could be a big spike up. I think chances are pretty minimal and the economic factors in play, the dollar stabilizing, that is putting pressure on the gold rally we have seen her i. Ould not b 1290 is the level i am looking for. Mark great to see you. Vonnie mark expedia wasting no time naming a new chief executive after his old one unexpectedly quit to join uber. We will meet the new chief executive later. This is bloomberg. Time for the Bloomberg Business flash. A look at some of the biggest business stories in the news right now. The wells fargo fake account scandal is growing, they say employees created two thirds more bogus accounts than initially thought. A total of 3. 5 million bogus accounts. They are ready great to pay 185 million in fines. Delivery feessing an effort to compete compete with amazon. Com. This is bloomberg. Vonnie live from bloomberg world has go to in new york and london, i am vonnie quinn. Mark i am Mark Okerstrom. I am mark barton. They cost of rebuilding from the storm may be a roadblock for taxcut plansps as he calls on congress to quickly deliver a harvey a package. Aid package. U. S. Consumer spending rose by less than expected last month. Of the 3 10 of 1 . An upward revision to june cuts and rising income but the economy on a stable footing and Consumer Spending makes up about 70 of the economy. Be goinglks appear to nowhere as the eu chief negotiator says the talks are far from making progress needed to move to a trade deal. The u. K. Has refused to reveal its hand on crucial issues and forth accused the eu of being too rigid. China has announced the start date of the Congress Party reshuffle that happens twice a decade went 2300 delegates will gather on october 18. The president of china will reorder scores of top positions, as many as five of seven officials on the politburos and each committee could be replaced. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. I am amit chandra. Emma chandra. This is bloomberg. Vonnie back to harvey, a fire plant,es to burn at a following an earlier explosion, the company says the best course is to let the fire burn out and the sure of says the smoke is a nontoxic irritant as a vital fuel point between texas and the east coast is being forced to maybe not shut down, but to shut down in part. Gas prices rising for an eighth straight day to a twoyear high. On the harvey impact on oil and gas is a veteran of the industry. Normally, based in houston, but because of the events, you are stuck in new york. Lucky to have you in our new york studio, even though your thoughts are in houston. You say there are some development regarding the Colonial Pipeline. It originates in houston and other locations in louisiana and delivers product through the midatlantic and southeast, it is receiving product from louisiana refineries. Refineries that are operating in lake charles and new orleans, and mississippi, they are delivering product into Colonial Pipeline. Colonial pipeline is not operating in texas. In houston and beaumont, port arthur where there is not enough product to make the pipeline operations, they are waiting refinery refinery restarts. Vonnie why is this pipeline so important, and the idea it is only shut down in part, does that make it better for gas prices . A public and consumers will feel better knowing that supplies are not completely shut off from the gulf coast. It will still impact gasoline prices, futures market up over . 20 per gallon because the bottom line is that refineries have cut back operations so significantly. Vonnie you mentioned that one thing people have not talked about too much yet is airline fuel. It will Impact Airline fuel. Exactly, because of the refineries cutting throughputs by