Democrats and republicans. It turns out the two yard line is a place you can be for two years two days. Rosalind you are the resident sports fan so you are the best position to talk about how frustrating that is. Bob. T to bring in how many times in your career have you seen this make or break legislation and of course at the last second everyone remembers the tarp. How much of this is what you come to expect when so much is riding on a vote when there is a pickup or wrench . This is the way washington works. You have all kinds of backandforth, lastminute stalls, somebody tries to put something in that was not in before. Somebody objects. This is the political process. The Biggest Surprise would be we dont get legislation in the next couple of days. Romaine we are getting earnings from micron, the Semi Conductor maker. They are beating estimates as is the two q revenue. 4. 8 billion. The estimate was 4. 47 billion. 32 revenue they are anticipating thirdquarter revenue they are anticipating numbers,n the headline the shares moving higher after hours. We are going to get a lot of numbers over the next few weeks from these companies. What happened in the most recent quarter and even the forecast for the current order not going to be as relevant as what the outlook is the full year picture. Im wondering why talk about these industries that were kind of the Growth Drivers for the market like semi cab doctors, software, like the big tech companies, do you think the rebound we could see with regards to growth, meaning Earnings Growth or revenue growth, we could see a significant enough rebound in the growth metrics by time we get to the Fourth Quarter of this year . I would suspect so. We will have some stuff in between. 2, and 3,k at qe1, Technology Stocks led after the legislation was passed. We expect the same thing here in Semi Conductors that should be a part of the story. Is scarlet it is qe infinity. We know Congress Want to put restrictions on companies that get federal loans. Saying they cannot buy back their shares for the loan plus another year. Does it mean we are saying goodbye to buybacks as a source of consistent demand for u. S. Equities . We have heard from at t, chevron and intel they are suspending. We know that 2019 saw drop off from 2018. Is this something where we will never return to previous levels . It was already a political nono in a lot of peoples minds going into this decline. Now with the loans from the government, a lot of companies will walk away and say lets not do it for now. From a fundamental standpoint the cash flow in many cases is strong so they dont have the firepower to do that even if it nono. Ocietal for now it will be much less of an issue. Most people didnt have it as a huge element in their earnings or 2021. 2020 so it wont be a disaster. Joe setting aside the question of buybacks, we were a sudden a study stop to the economy no one has ever seen and mix the 2008, 2009 decline look like a walk in the park. Would you expect buybacks aside if corporations, even investors for a long time forward will be less inclined to be levered and in higher debt piles the actions of corporate managers and investors . For some time. After 2008 and 2009 we saw that. Companies healed and we saw cash come back and asserted buying stock back. A lot of them had under leveraged balance sheets. I dont want to say it is never going to come back. My guess is if i have access cash access cash, i will raise dividends rather than buy back stock. The chief equity strategist bob doll. That does it for the closing bell. We will be guest joined by one guest who thinks the market moves are not a decision of severity of the virus crisis. Next. Romaine live from bloomberg world headquarters, this is what did you miss. We saw u. S. Stocks pare some of their gains in the final minutes of trading as Bernie Sanders put up a roadblock to the coronavirus legislation. This is the first backtoback mid for the s p 500 since february. The nasdaq erased gains and closed down on the day. No two advance for the nasdaq. Washington, larry kudlow is weighing in on the pending legislation. He says the house will pass stimulus despite squabbling across the aisle. Bernie sanders says they are prepared to stay the course. He took to twitter saying he is ready to put a hold on the bill until stronger conditions are imposed. For more on what that means. Lets bring in anna edgerton. She leads our coverage of congress. Masks for the republicans is different now you have senators in quarantine. Republican senators. How is it senators can hold of the legislation or does he have support from other democrats . It is not just sanders. I got objections last week from republican senators who said they didnt like the way the structurent was because it would provide more incentive to leave jobs and seek unemployment if they earned a certain level of income. First we got this objection and then sanders said if you are going to object to this, i will object to the oversight of this slush fund as he called it. The legislators are still trying to work this out, which hopefully if they can do that would resolve sanders concerns. We dont have to legislative text yet. This is being worked out in the final version as senators themselves wait to see how the final text is going to be worded. Romaine so what is next . We are waiting on this legislation. We have heard the senators when they get this past are going to check out of town until next month. Is there some concern even with this bill passed, there is other work that might need to get done that will not . Anna that is a concern. The fastest way for this to happen is for it to pass by unanimous consent which would mean they would pass this to the senate with no senators objecting. If they have to go to a voice vote because of the republicans and Bernie Sanders, they could pass the bill. This is not enough opposition to shoot down the bill but it could slow the process. We expect once this senate has passed, for senators to leave town until april 20. They had the twoweek recess scheduled for easter. This would get them through to the end of their previously scheduled recess. Tore could be things we need come back to washington to do. If the epidemic is still spreading, you have people traveling back from their states, their districts, many of whom are in the High Risk Group for the worst effects of the coronavirus. Either it is kind of a procedural concern and a Health Concern for the lawmakers and their staff members. Stimulus bill has gotten bigger and bigger. Started off as 1. 2 trillion, now it is almost 2 trillion. Does it make sense for everyone to load these different measures into one bill or could they pass them these meal piecemeal . Anna right now the package we have is the one we have. It will be quicker. When you start breaking things off, it starts unraveling. There is sausage making that went into this. Republicans got their provision, democrats got theirs. If you take it apart, it could be harder to get across the finish line. We expect this to pass as the massive 2 trillion rescue plan. Mitch mcconnell said this should not be viewed as a stimulus will. It is not intended to grow the economy. It is intended to question economic blow from the pandemic to be a massive bridge loan for the whole u. S. Economy to get us through this time of crisis. Before all of this unfolded, we were in a primary election season for the Democratic Party at least. There was a lot of concern about who was going to lead the party. We know that joe biden had gained a lead in the delegate count. Have we heard from joe biden at all in all of this and do we have any sort of sense what the status of his campaign is . For joe has been hard biden to break through this news about the pandemic. He has been giving tv appearances. He had an appearance on the view. He set up us a tv studio in his house in delaware. It is hard for him to get the airtime and the eyeballs when there is so much else going on here this has been a huge advantage for President Trump even if he has had an uneven message about the way the United States should respond. President trump has been in front of the cameras every day. He is getting the free airtime. It is hard for joe biden to break through and he doesnt have the opportunities to do what he did he does best, meeting people, shaking hands, hearing stories. That is where joe biden excels. This is a tough time of social distancing and campaigning from a distance for him to get through. Democrats side you have andrew cuomo stealing the limelight because of his Daily Press Briefings from new york, winning praise for how he is leading the state and framing the conversation. I want to ask about the next round of stimulus. We are not done with the 2 trillion round but there is talks about how this will not be the last one. There will be more government aid forthcoming. We have any sense what is likely to be pushed off into the next round of legislation . Hoyer, the second Ranking Member in the house of representatives, said the fourth or fifth round in response to the crisis. It will depend on what the economy needs. It is hard to see now what the impact of this is going to be and how long we are going to be in this lockdown. President trump started saying heterday i think it was wants the economy to open by easter. Will be hard to do. But maybe in some areas of the country that have been less hardhit, they could get Economic Activity up and running more quickly. There could be more targeted approach for areas that have been more effective Like Washington state in new york state but it will have to be a wait and see game until we get some secondquarter numbers and on a claimant numbers by the end of the week. Great to get your great to get your insight. Anna edgerton in washington. We will stay in washington now. Some traders, forced to abandon their desks and this has regulators grappling scrambling to figure out how to grapple with all of this. Thank you for joining us today. Mr. Chairman. Can you give us insight into the liquidity concerns and issues we have been hearing from traders and analysts, the idea that getting folks on the phone whether it is a futures broker or swaps dealer, do we have a sense that people who need to be in contact, the people you oversee, they are able to get in contact . Yes. Thank you for having me on. Swapsulate the futures market. The last couple of weeks we have pivoted our resources to take this challenge head on. We are focusing on two things. The first is understanding what is going on in our markets. The issue you have raised, are people able to talk to brokers, that is something we have approached with a series of targeted temporary no action all of thoseow interactions which are normally over recorded lines, time and occur. O go ahead we are hearing everyone is able to reach and get in contact with their brokers but we are continuing to do anything we can to facilitate that. The interesting thing is right now our derivatives markets are more important than ever because Everyone Needs to go to them to hedge risks which have been brought on by the virus. Hearet i would like to more about that. My understanding is traders cant talk to clients or customers directly on mobile phones or home phones. They are left in limbo to communicate through email or electronically. Are you saying they can do that through rule suspension or workaround . We have granted no action relief that allows them to no longer have to speak on recorded lines. They can go ahead and contact and take customer information. We have asked them to make sure they have notes and they are documenting it but anything to continue the markets to be orderly and liquid, to keep the trading going, that is what we have done. If you visit our website, all of the no action letters we have done are listed there and andains to whom they apply what are the rules we have lifted during this time where there is social distancing taking place. You said you provided relief because these are extraordinary situations where the normal rules may not apply. . At about functioning you mentioned being able to access liquidities and at a time when so many instruments are not liquid. Do you feel comfortable the roof work from home relationships many places have implemented are not impeding that liquidity . Our people able to make connections with brokers and dealers . Heath we are not hearing that they are not. We are trying to maintain Constant Contact with the Market Participants. If people are having issues we event invite you to reach out and we encourage Market Participants to do the same. Right now we are seeing unparalleled trading volumes. There is trading going on in the markets. The other big thing we are focused on apart from keeping the markets open and allowing americans to access them is making sure the markets have stability. The markets are function very well read the infrastructure, margin calls are being made, margin being collected. Even though we are having unprecedented historical times of volatility we are not having the instability we have in 2008. The system itself remains strong so far. Romaine we appreciate you taking time to talk to us today. That is heath tarbert. This is bloomberg. Their. S. Stocks closing first backtoback games since the Coronavirus Crisis began and investors await unprecedented Government Spending packages. Our next guest leaves the market moves are not necessarily an indication of the severity of the pandemic. Joining us by phone now is chief strategist and Portfolio Manager michael grief. Great to have you. In an environment like this, what drives traders . Trade is always being driven by someone who is buying and someone who is selling. One factor, what does the market do and the second is what are the incentive structures and information that is received by the different players . The point i have raise with you before and discussed on the broadcast, the underlying dynamic that there is change associated with passive flows, money flows into passive, money , wes into passive strategy see almost no evidence of any sensitivity to information. Money comes in on peoples paychecks on base weekly basis. There was no increase in the underlying demand associate with securities as prices began to fall and managers moved to reduce positions. That is the evidence of the crash we experienced. Joe you still have this wall of money that comes in to the stock market to essentially with every paycheck because people passively allocate part of their paychecks to stocks. What is the change in perception regarding the coronavirus in active management other than the strategy to create an extraordinary dislocation in a short time . Sources of two capital that flow in. There is new money like 401 k s or investment accounts people are taking out of their current income or employers contributing on their behalf and pension plans. The second source of allocation of capital is the allocation within discretionary vehicles. Yout [please stand by] your active manager. Bullish. Be very one of the things that happened over the past six months is going from give or take october 2019 when the fears were high because of the inversion of the yield curve that was discussed 2020. January 2019, we saw significant increase in bullishness. There was a reallocation of class of cash. That reversed in february. We saw that there was no increase in buying activity of the other Market Participants. So that type of imbalance. You have a type of imbalance. Prices can correct very sharply. We often think of the speed of the selloff telling us something about the way our life will change. Should we interpret Market Movement that way . Can in an think you environment where 90 of the activity no longer represents fundamental information. Im sourcing from jpmorgan for that al analysis that analysis great when the information is not contained in the trading activity and people are not making a judgment about the prospects of companies, but instead of reacting to the biweekly payroll checks or reacting to a model joe fascinating stuff. Like a green of logic capital. This is bloomberg. [ one more time by daft punk ] woo [ laughing ] woo play pop music no way dude, play rock music yeah woah no matter what music you like, stream it now on pandora with xfinity. And dont forget to catch trolls world tour. Lets party people one more time joe covid19 cases in new york continues to rise. Governor cuomo singh restrictions on daily life put in place here in the state is actually slowing the rate of hospitalization. We want to bring in dr. Nancy bennett, director of the university of Rochester Center for Committee Health and prevention. She also previously chaired the cdc advisor committee. She joins us now on the phone. Thank you for joining us. Lets start off with the idea of what we should expect from the number of cases that not only are we seeing in new york, but in other states, given that we have still not seen i think what could be called a significant amount of testing. Dr. Bennett yeah. I think we have to recognize that we are really at the very beginning of this thing. We would like to think we were further along and that some of our mitigation practices are having an effect, but i think we really cannot see that yet. We do have limitations on testing, that is a problem. Theres been a let more testing in new york state and city in the last week or so, so we are getting a little more they sent, but it is very more of a sense, but it is still hard to tell where this will go. Scarlet we are still not at peak cases in the u. S. There have been distances with the way the virus has unfolded in the u. S. And how it unfolded in china. We heard early on that younger people are less vulnerable to coronavirus than those who are elderly, yet we are seeing a lot of instances of millennials getting sick. What are we learning about that . Dr. Bennett that is a really important point and it is the difference between getting sick with coronavirus and getting severely ill with coronavirus. We do not think that young people are any less likely to get coronavirus. The question is whether or not they might not get as severe a case. So someone might have a mild cough, a little bit of fever, maybe not even enough fever to notice. If they are healthy. But if they have underlying conditions or older, and thus likely to have underlying conditions, they could become much more severely ill. What we are seeing with this virus is it is a worse case in area, because it probably can be spread when people are minimally symptomatic, but it has a high death rate, especially among those who are elderly and with chronic diseases. Romaine what is the endgame . Right now we are being told to keep our physical distance from people, particularly strangers, anyone to interact with unless we absolute we have to enclose quarters. At homee already people going stir crazy and we have only been in this lockdown for a week. I am wondering how long we have to keep doing this . Is there an in game here . Is it a vaccination an endg ame here . Is it a vaccination . When might we be able to get back to our normal lives . Dr. Bennett this is really hard for everyone. There are two things that make it hard. One, it is just hard for people to be alone and isolated in their houses and have a lot of fear about going out in public, and difficulties maintaining that six feet away from people. The other thing that is difficult is there is a whole part of our population who cannot remain at home. They may have jobs that are essential to maintaining safety in our communities, they may be health care workers, they may be working in the gig economy who cannot really survive unless they keep working. So, we have a really complicated situation we are trying to deal with. Clearly we are all aware of the Economic Impact of this as well. However, i think from a Public Health standpoint, and a purely medical standpoint, we have to stay separated. It is the only way that we can flatten this curve and make sure that we do not overwhelm our health care system. When we do that, it does not mean that it makes the epidemic any worse, necessarily. It just prolongs it. And by prolonging it we can deal with it a lot better than if we have a huge spike. So the endgame yet is not clear. If we have a vaccine that would be terrific. Sorry. Scarlet no, i was going to say at what point will we know whether the virus can mutate . Even those who have gotten it and have been exposed and have not gotten that sick, it is safer for them to go out into public and perhaps do some essential work everyone else needs. But we are always told that viruses mutate as well. Do we know whether that is the case with this yet . Dr. Bennett we have not seen any evidence of that yet. We think once someone has had the virus they will develop antibody and will be immune. But again, that is not known yet because we do not have the tests. That is a different test than the one we are currently using. But it will test whether someone has previously had the virus. But if someone has had it and you are immune, you are right, they will be able to perform some of these critical tasks. Scarlet first things first, we need to get people tested to see whether they have the virus first. Thank you sonett, much for joining us today. To Mark Crumpton who is in a new york studio with our first word headlines. Republican senators say there is a massive drafting fixedand that must be before a vote is taken. In a statement, senators tim scott, ben sasse, and Lindsey Graham says the bill includes quote, strong incentive for employees to be laid off instead of going to work. The senators say if the language is left in, it could have quote, devastating consequences. A congressional aide says the lawmakers are working on an amendment to fix this by ensuring the maximum unemployment benefit is 100 of someones salary. The director general of the World Health Organization said today that locking down entire countries will not be enough to win the battle against the coronavirus pandemic. He said peak keeping people indoors will buy time and reduce pressure on hospitals, but quote, on their own these measures will not extinguish pandemics. He said more precise and targeted measures are needed to stop the virus from spreading, but in terms of live lost, quoting here, the question is how large a price we pay. In india, they have begun the gargantuan task of keeping more than a billion people indoors. The Prime Minister announced a three week countrywide lockdown cover nearly 1 5 of the world population. It triggered panic buying, leading people to risk fines and other penalties by going out to shop. Russia has reported his first deaths from the Coronavirus Infection. Two elderly patients who had underlying conditions with the first reported. Cases of the8 Coronavirus Infection nationwide. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Scarlet credit markets are looking to extend gains and companies are looking to tap the market as well. Smith, r bloomberg credit reporter. We know there has been positive movement and you have companies from mcdonalds to 3m issuing bonds in the u. S. And europe. Of these companies being opportunistic or do they need the cash . Molly it is a little bit of both. It is a mixed bag across the board today but i will say that definitely it is helping that we are seeing the third continued day of credit risk easing. It is so interesting how quickly things can change. You look at mcdonalds, just three weeks ago they borrowed fiveyear bonds at a time of 75 basis points. Today it is nearly three times as expensive. Goes to show how much of the front end has really sold off. But compared to even two days ago, it has been drastically better for a lot of companies in executing these deals. Romaine definitely an encouraging sign that some companies are able to go out and raise debt and some investors are willing to take that risk. At the same time we are seeing the number downgrade continue to increase. About 560 out of s p this quarter alone. I am just wondering when you consider the pace of downgrades and the idea that they could increase, how much of a risk do you think is out there that we could see actually default . No doubt well, theres the default risk is increasing. It already increased to 10 by the end of the year. We are really closer to the beginning then the end of this. That is not really something that you can take away from the new issue market right now, because it is really only open to Investment Grade borrowers. Even within that, only the highest grade companies. We have seen a ton of issuance from utilities and banks, the more defensive quality protectors. Highyield we have seen deals basically all month. It has been very bifurcated in terms of who the access is available to. Scarlet romaine mentioned downgrades. You also have companies who are seeing warnings that their credit warning may be downgraded. Im thinking of general motors. They may downgrade. When that happens, when Companies Get warnings, is there a rush to buy them before the downgrade happens . Molly i think it is a little tough if you are a company like gm or ford similarly on the edge, since the sentiment is already out there. Credit raters tend to be a bit behind in their actions, so these companies have already been trading at more stressed levels well before the raters took action. So for either of them i would say it is probably more likely that they would go directly to banks to take out financing, will rely on Asset Finance companies that are much Higher Quality issuance. But that is definitely tough if you are a borrower on the edge, without question. Romaine our thanks to molly smith. Right now lets get a quick check of the latest headlines right now. Work in u. S. Oil fields has plunged to the lowest in over four years. Its latest survey of Energy Companies found Business Activity levels plunged, and outlooks are becoming extremely pessimistic. Ton and otherle smart bike makers are experiencing a spike in sales because much of america cannot get to the gym. And Mortgage Applications in the u. S. Launched last week by the most since the financial crisis. It fell more than 29 percent. The coronavirus shut down and other turmoil pushing borrowing costs higher. That is your business flash update. All right. Time now for our smart chart segment with Abigail Doolittle where we look at topics with all the charts so far this week. Abigail joining us on the phone. Abigail and joining me today for smart charts is john kolovos. Great to have you with us. The last time we chatted about a month or so ago you were calling for oil to drop down towards or to 20 a barrel. At that point i think it had been above 40. So great call there. I want to turn our attention to another big call you are making on the s p 500. When we going to the bloomberg terminal and look at a longterm monthly chart, you and i last year on a couple of occasions talked about the possibility of a bearish broadening formation. There it is in yellow with the s p 500 in support of the 100 month moving average for looks like a pretty serious pattern we are holding support. What do you think happens from here . John i member that from last time. It reminded me of the 1970s. I am calling it the bell bottom blues chart. It looked like the 1970s where you had the higher highs but you also have the lower lows. Heightened volatility, but there was also the possibility of a bear market where we had to undercut the january 19 load. Now we have got it. As we are testing this moving average and is 2170 area, it concerns what we know confirms what we know, that we are in a bear market and the trend is negative for the s p 500. It heightens the downside risk. For a while i have been looking at 2200 on the s p. That would have been an average bear market. But this has not been average in my opinion. I have kinda been looking at this 1900 level, even as low as 1820, a potential new equilibrium for the s p. Me if we goseems to to that 100 month moving average, history suggests there is a strong case for the 200 month moving average which is close to 1700. But lets not get too bearing, too quickly. Our second chart, which i briefly jumped the gun on but im coming back to, the rsi on the s p 500, you are making the point that at looks similar to other market bottom points. Talk to us about this chart. John absolutely. There are technical green sheets out there. One thing we have to keep in mind is there is the potential for a weekly signal gather rated if you get the rsi under 25, it is hard to do. It can only really happen in a bear market. It has only happened 15 times since the 1940s. The numbers i crunched suggests over the next four to eight weeks, we should be flattening down, but then looking at one year there is a greater than 80 chance it will be higher. When i zoom in on the chart, these happened in 1957, 1962, it happened at the beginning of the bottoming process. Note wenish in the high could be in the early stages of the bottoming process. Abigail finally lets bring volume into the conversation as we turn to our third chart. If you could talk to us about this chart and 20 to 30 seconds. Russell 3000. And what youd like here. Evolve wehe markets have to evolve ourselves as well. I think were going to move lower and maybe we get to 1900. Accumulation will be key to get us out of this and maybe shorten the probability we have to make a dollar bottom. Ok,et these volume thrusts, somewhere upwards of. 68 on a 10 day basis, that would say there is real buying demand out there and it will speed up the bottoming process. Keep an eye on the volume, that is accumulation. Fromil great commentary the kolovos, making both possible case for continued onside downside but offsetting it with technical green shoots. Thank you for joining us for smart charts. Romaine, back to you. Scarlet actually i will pick it up. We are so glad we can keep smart charts. It is amazing what you can do with technology. We are staring down a massive surge in weekly jobless claims. Next we are going to discuss joes Desert Island indicator. This is bloomberg. His is bloomberg. Romaine breaking news on ford. S p, which was widely expected. We also heard from s p earlier that gms general ratings were being placed on ratings watch. Ford now being cut to junk. You are back here in the new york studio with me. Only a few minute left in our show. Scarlet fu broadcasting from her keep doing her place to the show going from her ergonomic chair. Joe weisenthal out on his Desert Island somewhere in austin. We tease you about your Desert Island economic indicator. I think we are going to get that tomorrow. Joe i really wish we were going to get it in a happier scenario, because i have always said if there is one data point that i would like to get while living on a Desert Island, it would beat weekly initial jobless claims. They are frequent, they are about the labor market, they are a clean set of data. Unfortunately what i think we are going to see tomorrow is going to be one of the most devastating economic numbers that any of us have seen in our lives. These weekly about initial claims, following for unemployment, 220,000. Estimates for tomorrow, 2 million, 3 million or higher. The great financial crisis does not even show up on a blip when you have to have a y axis on that chart. It will goes that high, be absolute devastating. Thisll show just how fast entire economy has essentially come screeching to a halt. Scarlet the chart on jobless claims has been so smooth in how it has projected. Down, down, down. You talk about the wide range in terms of estimates, anywhere from 400,000 to 4 million. That is just a random mathematical number you put together. When it comes to the extreme, you are hearing 4 million. What are people saying about how high it could get in the weeks ahead . Joe the devastating thing too is that we do not even know how clean the number will be. There was a great story on bloomberg earlier about websites crashing from the overload of people filing to get their unemployment benefits. So we are going to get this number tomorrow that is off all historical charts, is incomprehensible. And it may not even be big enough, since there are people who could not get through to aid because of crushing demand on these websites. So i do not know where it will go. But the true scope of the crisis, the real hard economic data, we will get tomorrow at 8 30 a. M. Eastern. Scarlet keep in mind, this number only goes through saturday. So it does not include this week. So certainly the pain will be forthcoming as well. Joe weisenthal joining us from austin. Bloomberg technology is off next in the United States is up next in the United States. We will continue to have market coverage as well. This is bloomberg. This is bloomberg. Emily welcome to bloomberg technology. Another day of gains on wall street. Investors waiting on the 2 trillion stimulus package to pass through the senate. Meantime, the White House Task force on the coronavirus scheduled to deliver a briefing minutes from now. We will take you to washington as soon as that begins. First i want to bring in Romaine Bostick to talk about the move today