tv Bloomberg Markets The Trump Economy Bloomberg August 31, 2017 1:00pm-2:00pm EDT
storm moves inland. the rescue effort continues as explosions rocket a chemical plant northeast of houston. president trump stumps for tax reform. they return to washington to raise the debt ceiling and figure out funding for the next year. troubleder company's finances. jared kushner dealing with several challenges, including hundreds of millions of dollars of debt. mark barton has the first word news. houston, texas, fire personnel and search and rescue teams have begun conducting door-to-door searches now that the weather has cleared.
are trying to determine how much damage there is and whether any civilians were left behind. the processls say could take as long as two weeks. congress may vote as early as next week on a multibillion-dollar aid package for houston. that's according to the white house, which says emergency requests to replenish tricking reserves will be addressed in the next few days. government reserves are running low with a political debate looming. congress may have to act sooner government'she borrowing authority to cover the unexpected and additional costs of harvey. aasts overnight at chemical plant near houston. is the epicenter of the u.s. chemical sector. dozens of plants in the path of , knockingshut down
out half of u.s. production for some of the most frequently used chemicals and plastics. it may take weeks before damages our properly assessed and operations restarted. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. david: and houston, the rescue effort continues. tens of thousands of texans without power. that is affecting industry as well. the pipeline has shut its diesel and gasoline lines. representsson lee the 18th congressional district in congress. commerce moment, thank you for -- congresswoman, they give joining us. what have you set it your colleagues about the need in houston right now? said, wee continuously are resilient people. we are facing a long journey
indicating that they don't expect one bit of sunshine or light to divide them in getting money quickly. thingsre some regulatory we need to address as well. we need money now. there's so much harm, we don't know how many properties will be hurt. have given the number as high as 40,000 homes. honestly, the loss of life. we've had people who had to leave and be evacuated from their areas. we believe the damage is going to be substantial. was $70 billion. they wound up getting $51 billion. we don't think that is going to be enough. we think the numbers will be
much higher and we need congress to act as quickly as possible. we also need them to put a provision in that says we can have the money's upfront as opposed to reimbursement. right now commode there are local entities and people who are still getting reimbursement from hurricane ike. david: have you gotten any assurance that this will be top priority when you get back? there's a lot the congress needs to do here in the next few days, including figuring out funding for the next fiscal year and raising the debt limit. are you assured that this will be top priority when you get back to town? >> if we put our mind to it, we can multitask. the debt ceiling has to be number one. the president came here and looked the texas population in the eye and said he would be on their side. leadership have committed to drive this funding. -- it hasthat i get
to be the number one party. we are literally an ocean. diminishing,ter is i last night was at a rescue at 10:00 at night where waters were -- we are still checking to see where people are. i cannot imagine that this would not be the number one priority. that is what has been said to me. i will hold them to their word. i don't think it will be something where i have to use a mmer. i believe they realize the devastation we are facing and we'll get right to it. we just cannot delay. they will see the devastation. rockport cannot afford to delay. i'm hoping as soon as we start our session we will begin work on the funding package.
i'm already working on one. we will work with any suggestions to move this in a bipartisan way. i want political things to not be a part of it. we don't need political commentary and provisions. david: thank you very much. texas congressman sheila jackson lee, thank you very much for your time today. houston is a sprawling city by population. the fourth largest metropolitan area in the united states. in ann is situated endless swamp. says the city is suffering in harvey's wake from the lack of an effective plan to deal with flooding. of new orleans, you think of the levees and the levees and intricate construction that went into making that city viable. how improbable a place is this
for a city? >> new orleans has the mississippi and the subsidence along the banks -- new orleans is below sea level. houston is above sea level, but it is swampy. slow-moving bayous and clay soil that does not absorb water quickly. and a history of flooding going back to the 1840's. german exports got their wheels stuck in the mud visiting houston. there have been things done over the years -- there are a couple of good flood control reservoirs. that did buffer a lot of that rain. eventually, it had to be opened up to his billing even more. -- spilling even more. sending even more water into a flooded city. they have not done enough to make sure the city can withstand the heavy rains that it frequently gets. the clay is impermeable.
david: there's also a lot of asphalt. a city that has grown quickly. how big a problem has development been? >> on the one hand, development is a good thing. growth is good. prosperity, we all of that. houston has always had an act n ow, ask questions later attitude toward growth. the only major city in the u.s. without a zoning code. you can put a skyscraper next wastefully level -- next to a split level. it doesn't jive well with needing to recognize the power of mother nature. have water absorbing capacity and that is what is lacking and more and more of houston has gotten paved. david: this is bigger than just houston. , but theon houston
storm is affecting more communities than that. what is texas' attitude toward flooding and development in general? andhe homebuilders in texas nationally resist strong controls that deal with flooding and so on. raises the price of houses. is destroyed by flooding and wind, you have to rebuild it, that's just another job. you have that pressure constantly. pressure comes from ordinary homeowners, too. they don't want to pay more to a house when they can pay for emergency disaster aid. this is not about blaming the victims. i got any mail from a reader who
said i like your article but it's too early. i understand that. but this is the time when these eyes are on houston. it is time to ask some questions. david: what is a city we can look to that has done this well? has invested in trying to prevent this from happening. >> would you believe, singapore? singapore is a city state. has expertly dense population. -- extremely dense population. over the past 30 years, while the population doubled, the amount of green cover has risen from 30% to over 40%. it can be done with careful planning. david: a great piece. thank you very much, peter coy. that story is the cover story on the latest issue of "bloomberg businessweek." president trump makes his case
david: this is "bloomberg markets: balance of power." abigail doolittle is here with the latest. abigail: we are looking at nice gains for the major averages. we'll tied a rally for the s&p 500, up five days in a row. nasdaq up .8%. the s&p 500 and the nasdaq on pace for their best weekly performance since the middle of july. on the month, let's take a look at the monthly performance in
the bloomberg by taking a look at g #btv 2087. we will see for the month of august, we have both the --daq in white and that the let's see if that can be reversed by the end of the day. if not, it will be the first monthly loss for the s&p 500 since october of last year. interesting to see how that plays out. taking a look at one stock that has boosted all three averages this month, apple. today, we see an intraday spike. the eight this month. the company sent out invitations for its product launch event. they will be talking about three new iphones, the apple tv set-top box and the new apple .atch the stock on pace for its best year since 2010.
we have lots of winners here with the exception of five below. all these companies beat earnings estimates. five below with a disappointing forecast. shoe carnival on pays for best year since 1996. -- on pace for its best year since 1996. david: abigail doolittle but that market update. misery yesterday, president trump outlined why he wants to see comprehensive tax reform. the president said he wants a lower corporate tax rate to incentivize companies to bring trillions of dollars of to the united states. republican leonard lance he's on the house energy and commerce committee. let me ask you about this storm
and what we heard from your democratic colleague moments ago. on the republican side, what is the expectation here? >> i think it's very important. i would place it at the top of the agenda. we want to make sure our friends and neighbors in texas and louisiana received the funding that is necessary. i was heavily involved in the sandy funding because that affected new jersey and new york .nd connecticut it was the responsibility of the american people then. i think it's the responsibility of the american people now. david: it's a conversation about sandy -- there was some politicization of the conversation then. what's changed about how the government approaches disaster relief? >> i want to look forward. we have an obligation as a society to help those in texas and louisiana. this is a responsibility of the
federal government. i don't think they're necessarily has to be an offset. it's the responsibility of the federal government to fund the general defense. i don't think we should talk about offsets regarding funding for fema and related activities to these natural disasters. let's hope there's never another natural disaster, but that is unrealistic. in thisll be somewhere country and the american people have an obligation to help those in need. david: there was a speech yesterday from the president. he took criticism for not saying enough about tax reform. what did you hear from him? what are you waiting to hear from the big six? what would you like to see them produce here these next few weeks? >> we need to tax reform. i'm not sure it can be done by the new fiscal year. the last time there was major tax reform, it took two years. certainly think this congress
should produce a document related to fundamental tax reform. i would like to see a lowering of the corporate rate from 35%. 15% might be aspirational. i certainly think we need to lower the corporate rate. we need a territorial system so we can be competitive with other industrialized nations. if profits are earned abroad, you pay taxes abroad and then dollars home to create new american jobs. david: have bigger hurdle will revenue neutrality be? the border adjusted tax off the table now. how big a hurdle isn't going to be to figure out how to pay for all this stuff? >> we should examine how to pay for it. i'm not sure we should have to pay for all of it. we should look at that closely. i know there's a debate between static scoring and dynamic scoring. we should examine that.
there can be some dynamic scoring. i'm also a budget hawk. i think we should examine that issue. david: still resonating with many people here is the phrase the president uttered a few weeks ago. sometimes a shutdown is necessary. as we grapple with the funding from a shutdown could be a good thing. >> i'm opposed to shutdowns. i've always voted to fund the government. the government has certain essential response abilities like paying our troops in the field on time. i will be one of those republicans advocating for making sure we fund the government appropriately. we have the debt ceiling issue. there's a responsibility to be fiscally responsible. i think we can achieve these results in september and that certainly is michael -- is my goal. david: coming up, the u.s. retaliates against vladimir
david: this is "bloomberg markets." a press release from the state department spokesperson in the spirit of that we are requiring the russian government to close washington, d.c. and a conference center in new york. russia announced several hundred u.s. embassy staff will have to leave that embassy in moscow. statement. the how hot is this back-and-forth between russia and the u.s.? russia's decision to expel those
diplomats a few weeks ago. >> the state department is not requesting that any russia nationals leave the country, just that they close these facilities. they made it quite clear that they want this to be the last of this issue for the moment and it want to improve relations. they are trying to cool it off. president trump was asked about what he made of the russians decision if you expect. "we are trying to cut down on payroll. i'm very thankful that he let go of a large number of people because now we have a smaller payroll. there's no real reason for them to go back." fit this into what we've seen at the state department lately. statee a secretary of who wants to bring the budget down. >> it has that ancillary affect.
i'm sure he would have liked to have orchestrated it in a different way. at the same time, tillerson is seeking to have better relations with russia. a spokesperson said he and lavrov spoke before this announcement and expressed their desire to improve relations and donald trump said the other day that it would be great to have better relations with russia. hopefully this is the end of this tit-for-tat on the diplomatic front. david: it was a couple of weeks back, the secretary of state said he hadn't seen the relationship been at the low that it was at. what is the state of the relationship? with your perspective on how the relationship has been, how low of a point are we at right now? >> we are probably at the worst point in a couple of decades.
it's hard to see it getting worse because they are so bad. the only place is up. there are some very major issues they need to work together on. being one of the most important parts of what donald trump wants to accomplish. he needs russian help to do that. david: i will ask you lastly about the impact of this said 700after russia plus u.s. diplomats had to leave, there was a lot of concern about what that would mean for americans traveling to russia. what does this announcement mean for russians here? it is going tot be more difficult for russian nationals to keep an eye on silicon valley with that facility in san francisco closed. it doesn't mean that russians traveling in the u.s. will be restricted in any particular way, getting visas may be a bit
more difficult, but ultimately, it will not have a major impact. david: marty shanker, thank you very much. on that news that the u.s. is going to close the consulate general in san francisco and a couple chancellor -- chancellery annexes. promising a proposal of cumbrian's of tax reform soon -- comprehensive tax reform soon. plus, brian moynihan. what he says about the prospects for tax reform, next. this is bloomberg. ♪
have been evacuated due to harvey that's according to elaine duke. and there in shelters goal is to move people from shelters as quickly as possible. happened crested yet and may peak by saturday. full people are dead and 14 others injured after a five-story building collapsed in india's financial capital of mumbai today. another 25 people are trapped in the debris. helped pull 13 people out of the rubble. buildingsof mumbai are more than 100 years old. they are reportedly at risk of collapse following the heaviest rainfall the city has witnessed in more than 15 years. local disaster management officials say heavy flooding in the indian state has killed over 500 people.
beeneds of thousands have housed in relief camps across various states in northeastern india following the seasonal monsoon rains. the u.s. state department is telling russia to close three buildings including its consulate in san francisco. a retaliation for russia's decision last month ordering washington to cut staff at its embassy and consulates. said thesperson closures need to be completed by saturday. the u.s. has not planned to expel any russian officials. president trump will not be in the room when nafta talks resume tomorrow. his threats to blow up the trade deal could play a big role. first round talks ended august 20. the president has threatened to withdraw from nafta four times. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries.
i'm mark crumpton. this is bloomberg. to return to taxes and how corporate america is processing the policy debate that is taking place in washington. bank of america chairman and ceo brian moynihan said lowering the corporate rate is essential. taxes really matter when it comes to how the bank makes strategic decisions. vonnie: we just moved our operations in europe to dublin. it is half what the u.s. tax rate is. it's a matter of competitiveness. competitiveness on rates and territorial is him. the territorial -- and territorialism. i can get raw materials and build a car and sell it outside the u.s.
30 years ago, much of that demand was in the united states. erik: democrats and republicans alike agree on the need for some kind of tax reform. the question is, when is it going to happen? what is it going to look like? do you have any confidence in this administration getting tax reform done? term? end of this brian: i have confidence that of all the issues they have faced so far, this is the issue of the moment. we had to get tax reform done. during the obama administration going back to the bush administration -- erik: it is still hard work. brian: the devil is in the details when we start making adjustments. all these issues are on the table. of the issues that have come up so far, this has more of a saying group of people
we have to do this because it is so obvious we are not competitive. we have to do something for people in the were paid areas so they can take more home. erik: can you break it into your planning at? brian: i don't take a lot of -- erik: can you bake it into your planning yet? lot -- then't bake a reality is the economy looks a lot like it did not months ago and it will continue to look that way until something changes . erik: we cannot sit here and say the president doesn't have a consequence. the decisions the president makes doe have consequences for the economy.
right now, you are seeing the economy grow and we expect it to. david: you can watch the whole interview on bloomberg.com or on tv . i want to bring in a congressional reporter who focuses on tax reform. brian moynihan just a moment ago saying on that clip that there's a lot of unanimity here. where is their disagreement? when you look at the republican party in particular -- paul ryan was saying we are 80% of the way there. have we narrowed that gap much? brian: it i eric: it is somewhat narrowed. the republican party is more united on tax policy than health care reform. there are still major device. whether you will add to the deficit or not.
paul ryan and mitch mcconnell talked about a deficit neutral tax reform. something that lowers rates and lemonade eliminates loopholes. aboutent trump has talked majorts -- paul ryan's pay for was the border adjustment tax. that creates a trillion dollar hole in their plan that they are still trying to figure out. we expected a plan by august. we have not seen it yet. david: i was struck by the anecdote that brian moynihan told at the beginning of that clip about bank of america electing to move its operations to dublin. that is an anecdote the president would want to hold up, making the argument that something has to be done with regard to repatriate profits
from overseas. what of the stumbling blocks to doing that? >> there's a lively debate about what happens with repatriation. that occurred under the bush administration. there's a big question about whether that creates jobs or not. a repatriationg piece, that is probably very likely. the bigger question is what do you do with the deductions and loopholes, especially on the individual side. there is little appetite for doing what the obama administration suggested, corporate only tax reform. they want to do it on the individual side and then get into the whole convocation of all the popular text inductions -- complication of all the popular tax the dungeons. -- complication of all the popular tax deductions. ofid: just had to members
congress saying they want a relief plan to be top of the agenda when they get back to washington, d.c. i'm moving with trepidation to ask you about the politics. what does that mean for tax reform? you have 12 legislative days in the house before the funding has to be decided upon for the next fiscal year. how does that change the calculus for tax reform going forward? eric: as far as congress is concerned, a popular bill like rvh can grease the wheels. -- allt see it used as of that is a net positive. getting that political fight off the table helps congress do the delivery of work of working on tax reform. harvey will cost something. it could cost $100 billion. that will add to the deficit. we will see an increasing deficit year-over-year. that could help ryan and
mcconnell as far as their argument that tax reform needs to be paid for. into a more sticky situation as far as finding those as opposed to a simple tax cut. much. thank you very kushner's family company made a big bet on a skyscraper in manhattan bit the debt burden has gotten increasingly heavy. this is bloomberg. ♪
lululemon is our stock of the hour. emma chandra is here with more. what are investors looking for today when the company reports? a: all eyes will be on lululemon because a lot of other athletic companies have done poorly. make big tends to moves. we have a chart that shows that . the stock has moved by double-digit seven of the last eight reports. estimates at the committee are looking for $.35 a share and projecting same-store 4%.s growth positive it was down 1% the last quarter. david: a lot of people saying athleisure is dead or dying. : one analyst saying the
trend is over. there's another side of that where some people are saying that lululemon is doing well. they have innovative fabric and innovative products in a way that their rivals like foot haven'tnd under armour been able to develop things in the same way. this chart shows how lulu is doing compared to nike and under armour. this twocause you have sides of the story, some saying it's dead and some saying they are fairly well set, they will need a lulu of a report to see good moves on the stocks. david: you look at under armour trying to get the shoes and brought in what it does. does lululemon intend to stay true to what it has done? emma: they want to do it for
men. a lot of people saying there's a real opportunity for them in terms of men's athleisure. i'm not sure if you are a you get enthusiast. -- yoga enthusiast. lululemon will be looking to you. , the kushnerde ago company bought six execs madison avenue -- 666 madison avenue -- let's start with why they decided to go in on this building. 80 stories tall come a big plot of land in a prominent part of manhattan. why did they do it? >> and was 2006 much early kushner had just gotten out of prison. jared kushner was very interested in manhattan specifically. they wanted a big building to
make a big splash. with the benefit of hindsight, hen market was really hot t and not so hot after, so they paid more than they should have. -- how$600 million due have they been trying to get investment to pay that down? >> the most prominent way is going around looking for the wholeto raise tower and build a new one. a huge moonshot of a project. we report in this new story that they look to the korean sovereign wealth fund, they talked to a saudi mall developer coming israeli companies and the ceo of a luxury goods brand.
they haven't had any luck so far. david: what has been the quality of those conversations given mr. kushner's position in the white house? has that changed the way these conversations have unfolded? >> it certainly seems that way. were able to get in many more doors after mr. trump's campaign started its meteoric rise. the exact finances of the project and what the project looks like, it is so big and so expensive that even though they are getting meetings, no one is biting at. now?: what is his role as the kushners try to get investors, what role is steve roth playing at this point? >> very little publicly. he's said on earnings calls that the issue is being debated. he did not comment to us.
we know roth made his fortune buying an operating off buildings like this one. as we can tell from the people we've talked to come and he doesn't seem particularly bigted about the kushners' raising of the building and redevelopment. david: he described the albatross around the neck of this company. how worried do they seem? >> not at all. they say they are very excited about some interest from investors. they say we have contingency plans. we could modernize the office building. it's currently at 70% occupancy. there is some upside in the numbers for them. ticking., the clock is david: jared kushner has been before congressional committees in closed sessions.
how has that affected all of this? just trepidation or nervousness? stakeod has divested his in the family company. he's not any longer financially exposed to it. at the beginning of the trump administration when jared kushner and trump held onto their businesses, there was a lot of concern that there would be buying of influence. we haven't seen much of that so far. it seems like the added scrutiny that comes from reporters and watchdogs is making people kind of squeamish about going into some deals. david: a heck of a piece. check out his article on bloomberg.com. next come a we turn to the effect of harvey on the u.s. turn to theext, we effect of harvey on the was economy.
david: this is "bloomberg markets: balance of power." tomorrow is jobs day in the u.s. the storm is likely to affect other sets of economic data going forward. write that it's going to be unsettled. what do you mean by that? what is the implication of unsettled economic data? >> in the case of past storms like this, there's a couple months following the storms where data jumps around. you see an initial impact from this and then it bounces back later. david: let's start with the employment data. going forward, what have we seen historically? >> the first tent we will get is the initial jobless claim.
after katrina come it happened two weeks after. that's days for a couple of weeks. we can probably expect it through next month's nonfarm payroll. david: i expect a big influx of people going to this region for the reconstruction effort along the gulf. how is it more complicated this time by the tightness of the labor market we are in right now? ,> one of the big problems while it does create all this destruction come it also generates a lot of rebuilding activity. we already know the construction markets are really hard to find people in. #btv 3357. an overlay of the storm's landfall with dots indicating
the oil refineries. we are having a conversation about inflationary headwinds. that continues. how is the rising price of gas going to affect inflation? >> in the past, we've seen just after a major catastrophe like this, gas prices will rise. cpi will rise on the back of that. the fed tends to look through numbers like that. that is something to keep your eye on when you are thinking about inflation data. david: let me ask you about car sales. what do we see with regard to auto sales tomorrow? >> auto sales are one of the quicker ones to respond. you see a real plunge right off the bat after a natural disaster. it tends to revert really quickly. cars are pretty much down and write back up. david: you talk about the
uncertainty of the data here. at much better are we processing the effect a storm like this has on the processing of economic data? >> it's this really hard thing to adjust for. it's not like seasonality where it happens over and over again. it's also hard to predict how long it will stay for. we are still in the fallout stage. we don't know how quite bad the damage is going to be. riccadonna went back to look at the dissolution of these committees focused on business. was looking at this divide between the cost data in the hard data -- how aligned are those two things at this point now? >> it's a good question. we have solid gdp.
we have been seeing pretty good economic data across the chart. that would make you think solid consumer confidence and business confidence. we are still not seeing them spend the way you would expect them to. we might be indecent alignment, but not perfect yet -- in decent alignment, but not perfect yet. david: what are you going to be looking for? the same old story of are we seeing any movement whatsoever in wages? >> that is absolutely the number one story tomorrow. harvey is not going to be in this data report. what'sngs to watch, happening with wages qamar people still coming in from outside the labor market and his participation picking up -- is participation ticking up?
david: you can get the latest on global politics in your inbox every day. a lot of conversation in washington about the future of deferred action president obama implement it. president trump is going to allow dreamers tuesday through --ir work program that to dreamers to stay through their work program. tomorrow is jobs day. atwill talk with gary cohn 9:30 a.m. new york time. look for that interview on bloomberg television and bloomberg radio. this is bloomberg. ♪
lisa: we are live from bloomberg world headquarters in new york. apple is officially gearing up for the iphone, picking symptom or 12 to reveal massive changes to its best-selling device. -- september 12. cleanup efforts continue, including for oil and gas companies. harvey restraining oil capacity. add new limits to president trump's goal of delivering historic tax cuts. the red lines being drawn as lawmakers get set to return to washington. we begin with the first word news this afternoon. lisa: