A slight rebound in oil. A pretty significant rebound in copper. The treasurycross curve. Had two backtoback be a equities sitive it will be interesting to see what the sentiment is when we come into work in the morning on wednesday. Still with us, scott rendon. Cohosts joey weisenthal and scarlet fu. Appetitealk about risk , when you look across the globe and you may be look at emerging markets, do you see anything attractive given how far we have seen the dollar move higher and the issues in funding markets . Think there will be some problems. We are also underweight developed International Markets and u. S. Small caps. Right now, we are very focused on u. S. Large caps, u. S. Midcaps. While our targets show positive returns for all of those asset classes, far and away the two best opportunities, at least in capspinion, our u. S. Large and midcaps. We do not want to get overly aggressive in these International Markets. Right now, we are underweight those markets. Well, i did not hear that question. Part of the working from home situation. I could not clearly hear that question. Scarlet i will pick it up from here and we will figure out joe s audio in a second. We are getting closer to the end of the first quarter. I think five more days before march 31, then 13 days before jp morgan and wells fargo kickoff earnings season. Should we be looking at the same volume of preannouncements, or that or will that be compromised . If it is compromised, what kind of signpost do they look for . I will use the term scapegoat even though it is clearly the coronavirus is going to affect. After earnings season, you do a search on how many times that was used as a reason earnings fell short. It is going to be a lot. Almost everyone of these Big Companies and even Small Companies will be mentioning that. Goingk what the market is to do, we know that firstquarter earnings season will probably be better than Second Quarter. May, a couple of months from now, the market will be more focused on what is the 12 month forward earnings or what will happen in 2021 . The Economic Data, the earnings, basically lots of Economic Data will be really affected by the coronavirus and by everybody staying at home. I think the market is willing to look the on that. We knew the markets are not going to be great in the first quarter. We know they are going to be terrible in the Second Quarter and probably the third as well. We will see some daytoday reactions to these earnings but we already know what the story is generally going to be, and that is that the virus has hurt revenue, hurt sales, and that is likely to continue over the next few quarters. Clearly, no one is going to go out on a limb. They are going to issue very conservative guidance. For the s p 500, coming into the year, we were at 175. We are down below 160 now. Clearly, people are adjusting down. Trying to get a better handle on just what the e is going to be. Joe i will try asking what i could not before. Investor, you love that, biggest a since 1933. But, what will it take to actually ease volatility so maybe we can have a 2 move instead of a five or 7 . Someu just had stabilization. Update. T need 11 the vix came off a bit today. But if you get a couple of days where you have some minor upside. 1 , 2 , things like that which, a year ago, those would be pretty good moves. I think in all that likelihood, the vix would drop like a rock. I can see where the vix closed now at about 61. It was lower earlier today. Thesep, down, up, down, 5 , 10 days, that is a lot of volatility. These option prices, the volatility version is going to be big when you are seeing these kind of daily moves. Romaine i want to go back to the 1933 market. Theously, in march of 1933, biggest gain on the dow in history. It came after we finally heard from fdr. He had that first big fireside chat and really set the tone for washington setting the equation for the economy, for the market. Wondering, going forward, how much faith do you have in washington, not necessarily the politicians themselves, but the overall policy environment, that we will do the right thing here and get this economy back on track . Say i i would like to have a high degree of confidence. I do have some confidence. It is very likely still, at least in my opinion, that there will be too many goodies probably on both sides of the aisle that have nothing to do with coronavirus. Going to be inis this for a while. Betweenink that congress and between the federal reserve, we have got a good base here. We need to efficiently deploy the stimulus and then we need just a little bit of good news and clarity on this virus and i think we will be ok and we will be in good shape going into the Fourth Quarter and 2021. Joe really appreciate your perspective. Our thanks to wells fargo senior strategist scott wren. That does it for the closing bell. I will be joining with a guest who says medicare for all would be a great financial stimulus. This is bloomberg. Romaine live from bloombergs world news World Headquarters in new york, i am Romaine Bostick, joined by my cohost, scarlet fu. Joe weisenthal will join us a little bit later in this hour. U. S. Et a look at how stocks closed, the dow staging its best oneday rally since 1933. The question is, whatd you miss . Lets take a look at the world health organization. It warns that the u. S. Could become a new hub of the coronavirus outbreak. There has been a recent Bloomberg Opinion column that compares the coronavirus to fending off a surprise attack because meantime to make sure the virus does not spread. But you also need to lay the groundwork eventually to waging a sustained war, making sure you can get the economy back on track. What President Trump was saying today, that he wants to get the u. S. Economy going again by easter. I want to bring in richard danzig, a senior fellow at Johns Hopkins laboratory. He served as secretary of the navy under bill clinton. Thank you for taking the time to speak with us. When it comes to fending off the coronavirus, we need to treat it has both an emergency and a longterm challenge. You look at some of the longterm challenges we will have to address. If President Trump wants to make good on this idea that we can restart the economy by of a lets say, easter, how do you go about identifying who can go back to work, who is safe enough to do that. We do not have the of the structure to figure out who is sick at this moment. Richard that is an essential question. Ultimately, either because people have been infected by the vaccine and recovered, perhaps they were never seriously ill but they built up immunity because of it, or we develop a vaccine. To tell whether people have been ill and recovered, you either need to have taken them through a hospital period, or give them some side some type of blood test. That equipment is further behind than the testing was for determining whether people were subject to falling ill. That is a significant problem. The other thing i think we need to focus on longterm is vaccines. That will take a while, maybe a year to eight months at the current estimate. But either because we have developed vaccines or so many people have been effected and recovered that we have effectively a large portion of the population that is immune. Romaine what do we know about the infection rate in the u. S. . I am not clear how many tests have been done. I am not clear if the tests are proportional with what other countries have done. Are we ready to send the all clear, send everyone back to work come on public transit. Have we done enough testing to reassure the American People that they are safe . Richard i think we have not done enough testing. I think we dont have enough resources at the moment for doing that testing. As we roll out more tests, we will find there are more complications with supplies that , whichd in those tests are not necessarily in adequate supply. I think it is a long process. I think the problem is that we are like a patient that is on some medication. Butmedication is doing good we do not have quite enough of that medicine available. Givingsident is not enough time to use it. We just dont have any assurance that we have repressed the fundamental pathogen well enough, the virus, so as to keep it out of our society. There is a fundamental problem, i think, and it is in my opinion too soon to make an attempt to go back to normal life. I would add, even if you value the economy above all else, the practical effect is if the virus is still very present and people are falling sick, that will cripple the economy as well. You cannot even make the choice that i will just value the economy more because it is unrealistic i think to say that you will change things in those circumstances. Beating nike earnings pretty much across the major metrics. Three q revenue, the estimate was for 9. 57. We should also been out that Gross Margins also beating estimates. The company not giving a forecast, saying that it will update investors as to what is going on on its conference call, which will start at the top of the hour. Alreadybe clear, nike prewarned in february that they would have an impact year. A lot of folks want to see what the company is rejecting going forward. Scarlet it follows on a strong day overall for u. S. Equities. I want to get back to our guest, richard danzig. When we look at the different problems that you have identified, longterm problems and how to solve them, flattening the curve is something we have all heard many times but how do you do that when our Health Care System has been our Health Care System will be overloaded . We are not china. We cannot build two hospitals in the span of 10 days. Had we reduce demand for hospitalization based on what we have now . Richard i think we can flatten the curve. I agree that we are not china and we also do not have the intervention as early as china and when there were only hundreds of cases instead of thousands or tens of thousands of cases. We are handicapped in that respect. Socalled distancing does certainly flatten the curve by reducing the amount of interactions people have. That i think is a valuable tool. We can augment the capacity we have got. Outitals are moving people who could be sent home. There could be various rooms we use for other passes into purposes that are relevant for the virus. Rebuild additional facilities, on green fields or some of the mark just conversions of previously used Nursing Homes people have moved. Ut, or conversion of hotels facilitiesent our some with things like military supplies. Unfortunately, i dont think we can do as much as we need to do and who will have a very overburdened Health Care System as a result. Danzig, formerd Navy Secretary and now a fellow at Johns Hopkins. We should point out that the Bloomberg School of Public Health at Johns Hopkins is supported by michael bloomberg, the founder of this network coming up, making the case for medicare for all a researcher who says universal health care would be a fiscal stabilizer. This is bloomberg. I am Joe Weisenthal and this is whatd you miss . Take a look at this tweet from researcher Nathan Tankus last summer about how medicare for all would make u. S. Fiscal policy more countercyclical. He is sticking with his guns, saying medicare for all would be the great economic stabilizer. He joins me from new york to explain. We are in this situation where we are waiting for congress to deliver some bill to deliver relief, but we dont have any automatic relief on the scale that we clearly need to stop this economy from spiraling downward. Why would Something Like medico for all, in your view, help stabilize this economy so much . Nathan thank you for having me. I think what is critical about the care for all and what gets under discussed, it is not just about the cost of medicare for all versus the cost of the current system, but how these costs move over the business cycle. Happens, one of our major forms of Health Care Subsidy is providing subsidies to employerbased health care. Wentmeans, when employee when employment collapses, Government Spending falls, and it falls in the area we need it most, health care. It also falls because state and local government cap too much of the tab of our Health Care Spending. They suddenly have this bigger burden. This is much worse in a pandemicinduced depression because Health Care Spending is exactly what we need to increase and increase quickly. Right at that moment, you have even more of a burden on state and local governments than you normally would because of the health care and nature of this. Municipal bond rates rise. State and local governments feel like they have no choice but to cut back. Especiallyastrous, in a health care induced crisis like right now. Medicare for all would make that system much more responsive, especially during a pandemic, and adjust the system much faster. I think you can see that across a range of automatic fiscal stabilizers that we could create, which we dont have right now. Joe talk to us about that more generally. I think people intuitively get the idea of countercyclical policy, that when the economy is in a downturn, something needs to be done in washington. What are other tools that could be automatic so we are not all just looking to congress and hoping they will hammer out a deal big enough and timely enough to make a difference . Nathan one is a job guarantee. The job guarantee gets talked about as if it is a social democratic, fluffy thing, but providing everyone with a legally enforceable right to a job means that Government Spending rises when it needs to and we dont have a crisis where suddenly millions of people are out of work and that is causing collapsing tax revenues across the board, mass unemployment, and people losing their health care at the same time. You like to see from the current package that would make you feel this is enough to stabilize the economy . Is being discussed right now is essentially making emergency patchwork medicare for all system. Quoted talkings about recently, that you would still be on your employers payroll, still get your full salary, and you have access to employerprovided health care. It is in fact disconnecting our Health Care Subsidies from employers. They are still technically employed but effectively, we are providing them Health Insurance while they are unemployed. Far tooy are doing, late, is designing a every version of medicare for all right now where health care is disconnected from being employed and working 40 hours per week or whatever it is. I think that is a start but we will need much more. Spending is just not forthcoming because of our automatic fiscal stabilizers. Congress is having difficulty to do this all at once. Which is why you need a system that can do this automatically. Joe got to run. Nathan tankus, everyone can follow your writing on this. Thank you. This is bloomberg. Isaine facebook saying it seeing the beginning and its ad business. Last night, pulling this guidance, saying it is seeing a weaker add environment. Facebook has not actually attached any numbers to it or given any real guidance but it did say that it has seen usage go up. Despite that, it is seeing some weakening in that business. We want to go to washington now for we are still waiting for senators to apparently work out the details of this 2 trillion stimulus bill. In the house, nancy pelosi has introduced her own measure. It would push the package up to about 2. 5 trillion. Joining us on the phone, the head of Public Policy at pimco. I dont think it is an understatement to say that everyone in the market is probably watching this to see. Chuck schumer early today said they are on the two yard line. I guess the question is whether they and up settling for Something Like a field goal they said they are definitely in the red zone. At this point, this is a question of when, not if. Understandcongress that they need to act and they need to act quickly. Anyone who is familiar with Congress Knows that congress is not designed to act quickly. In some ways, the fact that there has been some back and forth, some brinksmanship, is to be expected. Economicne, from an perspective, we will see large fiscal stimulus and it will largely it will likely be passed in the next 24 hours. It is safe to say that this bill will get to the president s desk probably in the next day or so. Scarlet one thing the democrats was lack ofng to oversight. They wanted to avoid the possibility of stimulus being used to bailout President Trumps hotel. . Ow do they get around that libby it is a great point. It has vestiges back in the financial crisis, the tarp bill passed right after that. I think there was a sense among the Democratic Caucus that they did not necessarily hold industry accountable the way they wanted to they are trying not to repeat those mistakes of the past. I think from a statutory perspective, it is not that difficult. They can appropriate specifically what that money is for. With that said, a big chunk of that appropriation will be going federalkstop for a reserve credit facility. The fed as sort of expansive authority around what they can do with that. That is really to help provide liquidity in the Financial Markets across all sectors. The fed has quite a bit of flexibility, it seems. We might expect to have some more restraints around that but i think the bottomline is that everybody on the hill understands that this needs to get done. They are trying to put their fingerprints on it both from a policy perspective but also a political perspective going into an election year. Bottom line, it will get done. Just going through the normal machination process of congress. Give credit to congress in some ways. They are moving very quickly for a body that is usually very deliberative. Even though it might not be quick enough from a market perspective, it is pretty much lightning speed for congress. Romaine they definitely are moving with a certain speed we would not normally get out of what is normally a glacial process. We need to be clear here, even once they pass this, there is obviously still the implementation. A lot of this of course is going to be done by the treasury, by the fed, to a certain extent the Small Business administration. When we talk about deploying this money, do you have confidence that we will get it there in a quick enough time to blunt the potential damage that so many economists seem to be talking about . Libby it is a great point. Definitely some of the language around the loans, some of that appropriation that we were just talking about going towards treasury, that will be funneled through the feds credit facilities. That will take time. I can tell you that those folks are moving also at kind of a lightning pace. They realize that the urgency. May market and economy perspective, we probably cannot move quickly enough. There are some things in that will that will likely hit the economy very directly. The unemployment insurance, some of the snap benefits, medicaid provisions. Those will be direct transfers into the economy immediately. Should help stabilize things. The longer this goes on, obviously the much worse it gets. I think there is already an appreciation that there will probably have to be another bite at the apple here. This is phase three with likely face four coming. Scarlet troy libby cantrill, thank you so much. Lets check in with Mark Crumpton for our first word headlines. Mark President Trump said today that he is hoping the United States will be reopened by easter as he considers how to relax nationwide social distancing guidelines to put some workers back on the job. Many Public Health officials call for stricter, not looser restrictions on public interactions. The president told a fox news town hall that he is already looking toward easing advisories. Health officials warned it was too soon to call it a trend and unfortunately they were correct. Deathss reporting 743 from coronavirus today after two days of a slowdown that had offered hope. Topirmed cases in italy now 69,000. The Italian Government says it may impose fine of as much as 4000 for those who violate the nationwide lockdown. In india, Prime Minister Narendra Modi has imposed a three week long nationwide lockdown to prevent the spread of coronavirus infections. In a televised address, the Prime Minister said, for a few days, forget what it means to go out. So far, the outbreak in india has been mild. 519 people have been infected, nine have died. The tokyo summer olympics have been put on hold. They have agreed to delay the games by a year because of the coronavirus outbreak. They were scheduled to begin july the fourth. July 24. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Romaine apollo telling investors the headline coming across the wires. The Investment Firm Apollo Global apparently briefed limited partners on tuesday. The Investment Company apparently tracking more than 250 potential opportunities to scoop up distressed assets. Program, on this Gilead Sciences stock rose today. The treatment for covid19 getting a coveted regulatory designation but it has one Advocacy Group up in arms. This is bloomberg. Scarlet we saw shares of Gilead Sciences rise today after its forrimental treatment the coronavirus got preferential treatment from regulators, which could result in a tax break. We are talking about the fda giving that drug the orphan drug designation. What exactly does that mean . Orphan status is usually reserved for drugs for Rare Diseases that only affect 200,000 people or less. Along with tax credits you mentioned, it comes with seven years of exclusivity, meaning that gilead would be the only one to make or sell this drug for the next seven years. There are over 400,000 cases of the new coronavirus around the world. These numbers are changing by the minute. Technically, you could still consider this an orphan disease in the u. S. Groupe consumer advocacy Public Citizen is criticizing them for seeking this status, saying they should not profit from the epidemic. Romaine just to be clear, so they get this designated status. Is the idea that you cannot have any other sort of competing drug in the process, or are there provisions were the government can make sure that whatever is supplied by gilead is done so in a way that is either market or price competitive . X as far as the price, we dont really know what it would be priced at. This does not really impact the price. But it does mean that gilead could have a higher price on it. The analysts that i have been talking to say that if this drug is approved, it could generate over 1 billion in sales per year. Tamiflu,imilar to which has been used in the past against epidemics. Scarlet so clearly, there is a lot of potential. Before we get all excited about how much this could cost, is there any evidence right now that this treatment is having any effect as treatment for coronavirus . Right now, we only have individual cases of people getting it. In ebolaously tested but they later shelved the treatment. It is among a host of other drugs being tested including the antimalarial drugs and drugs from regeneron. Everyone is looking for a cure. Gilead is not the only one. But they are further along. They are in phase three testing, the last stage of testing for a potential fda approval. Romaine our thanks to cristin flanagan. Lets get a check of the latest business flash headlines. Bankers and traders in new york are likely to see bonus payments fall sharply this year. The coronavirus outbreak affected the earnings of the finance industry, and that could have an impact on municipal budgets. The industry is 1 5 of private sector wages in new york city. The hotel chain is cutting well the coronavirus pandemic decimates revenues. The furloughs are scheduled to run from april 1 through the end of may. Hyatt will fund Health Insurance premiums for the new workers. Hardumbers show just how the Airline Industry has been hit. A Major Airline in the u. S. Has scrapped several thousand daily flights. That is your business flash update. Lets turn to some of the measures being taken to fight the economic downturn. Cuomos governor andrew executive order giving your homeowners more time to make mortgage payments has major consequences for hundreds of millions of dollars of contracts. Explain to me exactly what the objection is to this provision by cuomo. Two has to do with the applicability. It falls under the jurisdiction of the department of financial services, which regulates all new york registered banks. There is nothing wrong in course, with andrew cuomo trying to do everything he can to provide relief for homeowners and Small Businesses. This provides 90 days of forbearance, meaning people can pull back on mortgage payments for nine days. There is no explicit exemption in the order for what are called qualified financial contracts. Those also fall under the umbrella of the department of financial services. They are things like hedging loans, bondin repurchase agreements. It is fairly safe to say that Governor Cuomo did not mean for this order to apply to those, but you can imagine, all of a sudden, a person on the wrong side of a hedging trade saying, i am not paying for 90 days. Imagine what that means for the counterparty banks on the others. Scarlet what does that mean in terms of which firms are affected. There are companies that are registered in new york. Have we seen any damage from this so far . Applies to any state registered bank, including the foreign branches of firms such as barclays, b. N. P. Paribas , the list goes on. They are active participants in the markets that i described for the securities and the kind of transactions i described. That, in some cases, yesterday, lawyers representing hedge funds would otherwise have received margin calls were on the phone threatening to file litigation if the banks exist of the banks executed orders to close out trades or demand collateral. Even one business day after this went into effect, it is already roiling the Financial Markets. Romaine Erik Schatzker breaking the news and giving us an update. Thanks. The fed is going to expand that by enough mbs and corporate credit. It has hired blackrock to help carry out those programs. From new york, this is bloomberg. Romaine i am Romaine Bostick in our new york studios. Scarlet fu has been hosting from her basement, waynes world style. We want to bring back Joe Weisenthal, who is live in texas. Thise doing the dont miss segment a little bit differently. What are you watching . The huge rally, but the thing that really struck me was that first down day for the dollar in 10 days. One of the first in a long time. If there is one way you would characterize what we have seen in the market, it has been this incredible flight to liquidity, this incredible desire to hoard liquidity. Today, for the first time, it is not just the stock rally, but a little bit of easing. That is what we would hopefully like to see as evidence that all these fed measures and hopefully soon all of these fiscal measures are actually easing some of the strain. Scarlet when you talk about the dollar, this is something everyone has been focused on. You have been reading the research. To any comments in particular stand out to you . Joe there was one today talking about the tsunami of liquidity. To hase i have talked said that basically this is the defining characteristic of this crisis from a Financial Market perspective. Obviously we are not talking about the real economy crisis. We are obviously not talking about the horrific health crisis. But from the financial perspective, it is that desire to hold liquidity at any cost, hold down on those credit lines, delay payment as much as you can. Of course, everything that the fed can do getting money into the real economy hopefully should ease this. Not surprising to see, the first if you look at a chart, it is a Straight Line up in the dollar index. Not surprising to see that easing coincide with a massive rally in the equity markets. Gold has been selling off even lately. If you have gold, you need cash, you sell it. Huge rally in gold today. Signk that as a positive because, although gold is a flight to safety, it at least is a sign that there are some players out there who dont need at the moment to hold as many dollars. Scarlet we are all looking signs of all looking for signs of bottoming and that may be one of those. Joe weisenthal joining us from austin. That does it for whatd you miss . Our markets coverage continues next. This is bloomberg. Emily welcome to bloomberg technology. Shelterinplace in san francisco. Congress could reach a deal on the stimulus we are waiting for the Daily White House briefing. We are joined by romaine
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