Precheck profits though felt a bit short. Short. About 5 million that is because of commodities such as steel and engineering costs. We will be talking with bob shanks, the cfo, and about 29 minutes time. Alix the stock seeing a nice move in premarket. Coming up, we will have home sales. Then, we have the weekly crude inventory report. At 1 00 come at the u. S. Treasury will sell fiveyear notes. Yesterday, the twoyear was solid. What will be fiveyear be . Bloomberg will have special Coverage Later today. David the senate voted yesterday to move health care forward. This is despite the fact that there does not yet seem to be majority for any particular approach. We are joined by craig gordon, our executive editor of washington knows news. Rama. S about votea we could have dozens of amendments thrown out on the floor for people to take a vote on. Mitch mcconnell, it is like target practice. He is trying to figure out where he can get votes. What things are popular, and what things are no go. They are going to try this much them together to vote on something. Outd Mitch Mcconnell throw he threw out his own bill for a vote, and he missed by a country mile. When did they start taking up these votes . We are looking at thursday afternoon for the votearama. Is a repeal only vote today, but that should also fail. You are going to see a lot of ups and downs, but until we get a final vote on a package, a lot of people are calling it a skinny repeal. A lot of it is people throwing ideas around in the senate. Everyone gets to have their say. The real vote will not be until Mitch Mcconnell throws it all into a bag, and believes he has something that can get 50 votes plus a tiebreaker. Alix what is the timeframe on that . All up thursday into friday morning. We know the senate likes the poll on minors. Alix is it realistic that on friday morning we will come into have something Health Care Analyst and investors can look at . That is a possibility. That is why we are in this rapidfire series of votes so Mitch Mcconnell can try to figure out how to triangulate the bill. Do not underestimate yesterdays bill. Even getting into a vote, three days ago i do not think that was possible. Mitch mcconnell is good at this. He knows when to push and when to pull back. There is a chance they could get a bill that he can get 50 senators to say aye. Jonathan from an outsider perspective, this does not look like the best way to pass legislation for a sector that counts for about 1 5 of the u. S. Economy. Is this just about finding legislation or getting something done . This is about survival mode. The Republican Party has been talking about getting rid of obamacare since it was upheld by the Supreme Court seven years back. This is something to take home for the 2018 midterms. I would like to tell you that there are actuaries sitting back there making it all work for health care, but i believe that is not what is happening. Political exercise which will have huge policy implications in the health care market. Alix is this good or bad for tax reform . Every day they are not talking about tax reform is a bad day for tax reform. It is so very complicated. Donald trump will tell you that we are still going to get a tax reform bill by the end of the year. If you believe in santa claus, you can believe that too, but it is hard to believe. In midseptember, early october timeframe, they could begin to talk about it. They have a timeframe for getting tax reform principles on the floor, but tax of form makes Health Care Look easy. David it almost makes your head hurt. We not only have health care possibly but also a tax reform for basel. Ceilinghave a budget and a budget itself all coming together in the same time period. Isnt that going to create a jim a jam . Yes, it is why i am so exhausted. We all know that congress cannot walk and chew gum at the same time. It will see it will be interesting to see how everything falls into place. Inathan we want to bring our next guest. Talk to us how difficult it bias fromo divorce Economic Analysis at this point. I think market practitioners have to do that. Ishink what has happened that, since the beginning of the year, the trump political ranking has gone down so much that whatever bias there is that it was not in the right direction. Ineffectiveness has been driving the market cents. I think if they manage to get , including ahing skinny Obamacare Repeal bill, it does give them some money to play this to play with when it comes to tax reform. When it comes to the lack of Party Discipline with republicans, it may be able to get together at the last minute. The market would pay a lot of attention to that. Maybe be a bit more optimistic if they can get anything past that we will be talking about tax reform on monday. If that is on the agenda, there will be ups and downs, but it becomes a more serious proposition. Jonathan is it possible to have tax reform conversations on monday . No, i do not think it is. The question is if they can get even the skinny reform through. Vote,k, even in an open some democrats if they did not have their Party Affiliation locking them, the question is whether they can get enough say weto stand up and are going to move in that direction. Alix early last week, we thought health care had completely blown up. It was the dollar that reacted most. Why is that . I think the bond market in the past couple of months has been much more focused on the inflation story. Died somewherery between january and april, and markets lost confidence. I think what has been the in february, march, april, may is the ongoing disappointment on the inflation side, and the bond market has already reacted to that. Alix if this ends up being on the upside for the dollar, what is the currency pairing that needs to be revalued the most . Guess is that there is a lot of upside to the yen. I think the tax reform would be viewed as an equity market. I think the dollaryen is going to jump. Ollar which has been writing on the fact that the u. S. Is going to do nothing and the europe is going to reform, it also will be affected by this as well. David theres also the market uncertainty about when we could have a bill. How much of that is weighing on the market this morning . Think the bad performance so far markets are kind of ignoring this and thinking that there will be some shadowboxing going on and nothing much will happen. Priced into the market is that they will go home without a vote on anything at this stage. I think that would be bad for the dollar, but also friendly towards bonds and things like that. We saw how difficult it is to forecast five or 10 years out. How can we forecast even five years out when we do not even understand what is going to happen down in d. C. When it could fundamentally change the trajectory of the economy . Hard to even forecast five weeks out with any consistency. I think you just have to be humble. You have to recognize that if you go back over a period of three or four decades and think about what you would have you realize1970, that you would have been completely wrong. The forces you thought at play were structural and just evaporated, and so you have to be very careful about what you think is going to be the driver. Alix great stuff. Great to have you back on the set. With us. Taying Second Quarter earnings for ford topping estimates. They are also boosting profit forecast for the year. This is the first result sense jim hackett became ceo in may. Questions about driverless cars. Coming up, Oil Continues to move to the upside am extending gains after hitting a sevenweek high. U. S. Stockpiles could be reducing. Head of Commodities Research will join us for his outlook on oil and copper. This is bloomberg. Alix the fed decides today at 2 00 tm p. M. Donald trump says he may reappoint janet yellen to a second term, or he will consider gary as a top contender for the position. Joining us now with more is Stephen Englander head of research and strategy at graffiti capital management. We are also joined by Carl Riccadonna. I want to talk about the rerating we saw just sent the last fed meeting. This is the market implied policy rate. This yellow line is where we were at the end of the last policy meeting in june. The green line is where we are at as a right now with hikes. To hikes have been forecasted over the next two or three months. Has this rating been justified . Karl i think it is justified given by this backsliding in inflation which seems to be a more enduring problem then a one or two category idiosyncrasy which janet yellen initially terrorized it as. Characterized it as. So, we are seeing Slower Growth partly due to the deadlock in washington and a lack of any major fiscal policies coming down the pike. So, you have slope love with very little slow growth with very little inflation. The market doubts that the fed could deliver on the rate past it was suggesting at the time of the june meeting. Alix we will have to see the fed maintaining its outlook to keep the market from getting too pessimistic. It all depends on how they categorize inflation. What word are you looking for . I think the market has discounted that they are going to Say Something about inflation in their opening paragraph. The question is, whether when it comes to policy paragraphs, they Say Something more interesting along the lines with what we have been seeing the past couple of weeks. That further hikes depend on it seeing inflation rise at the pace we are expecting it to. If they are honest about it, that is what they should say. It would still be a real surprise. The biggest possible surprised the fed could bring, that they actually follow up their comments of the past month with some adjustments to say that there inflation views were more tentative than they thought six months ago. Jonathan how did they do that and reconcile that with their views on Financial Stability at this point . The language of the Federal Reserve speeches over the past few months, if you put in that language of concern, it does create some risk in the market. That is what i do not see any risk return in betting on what the fed is going to do. It would seem to reflect the evolution of said view. Of fed view. And then there are the other guys who say that financial conditions are easier than they were in 2009 we thought the world was going to blow up. There was the concern about getting a margin versus the zero bound. So, they took the possibility to swing the other way. I think at their heart of hearts, they would like to be in a position to hike. That is why all you need is a good inflation number. If they do not get that and reflecting what they have said, they should probably be more tentative than they have been. Jonathan on the Balance Sheet, we have had some in a conversations about it not being data dependent but data independent. That policy is going to happen regardless of the victory of the economy. In this statement, it says something quite different. They have made it quite clear in this statement that to some extent it is data dependent. It is is it on autopilot not or not . Nothing is ever on autopilot. I think they are hoping that will have this dragging moment where they say it is not going to hurt and you will not even notice it because it will be so boring. Nothing is going to happen, the market believes it, and that is what gets priced in. If we have a situation where the or therket is faltering bond market says there is more bonds out there and we have to buy and we are not going to buy them as cheaply as we have been doing, then i think the conversation will change. For now, the market is where they want it to be. Think it will probably signal that they are going to do it sooner rather than later, because there is no point for them delaying it at this stage. Everyone has their expectation, and there is no angst in the market, so why not signal you are going to be doing it sooner . David can you answer that question carl . They have been signaling in this direction, so what would cause them to change their path right now . Karl you need to see some carl you need to see some deterioration in the marketplace. If inflation continues to move lower, that could potentially impact them. Rather, i think they would just clear the deck on the rate hike schedule. Growth is not bouncing back to a 2 sustained basis, then they could potentially pull back on the Balance Sheet as well. They want the Balance Sheet to be on autopilot. They may be able to successfully execute that, but even if it is on autopilot, that does not mean they are not going to hover over the controls and grabbed them as soon as things deteriorate. It is data dependent to a much lesser degree, but it is certainly sensitive to those develop its. David Carl Riccadonna from bloomberg, thank you and also thank you to Stephen Englander for joining us. We just saw the ford secondquarter results. Fords cfojoined by in the next hour. Also, we will be talking about another companys earnings right here on this program. Live from new york, this is bloomberg. David this is bloomberg. I am david westin. We are looking live in washington, d. C. Where the senate is considering several approaches to health care. Kevin has a guest within who knows a Little Something about how the senate works. Kevin we are being joined by jim demint. You have just formed a new group. Tell us about what they do. The question i hear about the country most often is what happens to conservatives when they get to washington or any other politician. I can tell you that once you get there, you are in your flat sole and everything about washington pushes against conservativism and dallas budgets. Balanced budgets. What we are doing is creating a support group for members of congress and their staff. We will have a job bank and constantly train staff. Washington is very staff driven, because congressman it so busy. We want to make sure that the interns and chief of staff are ready to run it office, no the parliamentary procedures, how does the house and senate work together, and that these people together. We have already been doing that on the health care issue. What im going to do is going to do some of what i did in the senate is get house conservatives and house house and Senate Conservative members together to develop some camaraderie. One thing i think we can do to help the country the most is for conservatives to come together and have a consensus on what needs to be done. Kevin lets talk about health care. Esther day the vote to proceed, we saw several senators, your guys, voting to advance on a motion to succeed. The house an aide on from caucus that says if that city version of repeal advances to the house, then it is dead on arrival. I do not think it will advance unless democrats vote on it, and i do not think they will. Kevin do you support a skinny version . Sense it makes no kind of at all. The only way it does if it gets to the house and they can hold a real kind of repeal bill. The mistake they made with obamacare is just not repealing it. They need to go on to reform the Health Care System in a way that we now know needs to be done. As long as there is a repeal in the bill, you cannot get democrats to help you. But you can get democrats to help you expand medicaid, get more subsidies, bailouts for insurance companies. These are things that moderate conservatives want. The way this has been done is pretty disappointing. Kevin i want to talk to you about attorney general Jeff Sessions. The president and his top advisers have been publicly putting distance between Jeff Sessions and themselves. They are saying hes not going after democrats enough, not investigating Hillary Clinton enough. Should the president force him to resign . Absolutely not. I can understand why the president is frustrated with the recusal. However, we do not really know what they are investigating right now. It would not be smart of them to tell us what they are. What i hope will happen, and i know what is going on there is a lot of pressure on the white house right now, and they are starting to turn their guns on each other. Jeff sessions is one of the most honorable people i know. He is more passionate about the trump agenda than anyone else i know. If you stays there for the next four years or eight years, then the president will be very proud of the justice department. I hope is that they can get together to solve this. Getting rid of Jeff Sessions does not help the recusal problem right now. Again, Jeff Sessions has had my back a lot when i went out on a limb in the senate, and he will have the president s back, too. So, the president needs to know who his friends are. Kevin they do for joining us. We will have you back on when it comes to tax reform. Back to you. Jonathan coming up, bob shanks will join us to talk about the ford earnings report. We are seeing equities being taken to an alltime high. We are coming into the session with a record on the s p 500 for the 28th time in 17. City, for our viewers worldwide, you are watching bloomberg tv. Jonathan this is bloomberg. You are watching bloomberg daybreak. Two hours away from the open. Getting to an alltime high once again in 2017. 28 times we said on the s p 500, going into the market opened. The polls are not getting bored of it. And in the bond market, the yield lower by three basis points. Going into more supply today, this time in a fiveyear segment of the treasury curve. Later we will get the fed decision as well. The euro and dollar is unchanged. Mario draghince said he would do whatever it takes. 13057, and the pound not really reacting to the gop 0. 3 but the office of National Statistics calling it a notable slowdown in the first half. Cable rate, 130. 57. Alix boeing a bit of a conundrum. They beat earnings by a s