Increase the budget gap by 1. 6 trillion this fiscal year. We knew it would be expensive. We now have a number. Act, to makeres sure we get relief to individuals and businesses affected. Romaine obviously, a lot of folks are looking at what is happening with the budget. We did close higher again. How much you want to read into these numbers, that is up to you on a personal level. The nasdaq 100 did close higher on a yeartoyear basis. Losses itll of the had i believe going back to march 20. Of buyinging a lot here. David, when you take a look at not only the earnings season but some of the rallies we have gotten out of some of these things. Names like tesla, amazon. I can sort of understand why some investors would look for a little bit of safety and growth. We may be getting a little too far ahead of ourselves. How these companies are going to perform in an environment where business spending might look a lot different than what we are used to seeing. David those are two very different names and stories. The ecommerce sorry. If you think about a trend that will accelerate now. Ecommerce replacing retail. Next 1224 months will accelerate that trend. Fundamentally, you can say, i understand why we will see other ecommerce retailers do well. Other story is less obvious. Not based onntum fundamentals other than the electrification of cars. At a time when oil is lowpriced, the economic benefit is not as obvious. These are very different stories. Point, you, to your have to discern what is taking place in the markets. When we think about client portfolios, we think first about safety. Posted strong market positions, able to take advantage, these are the themes you will want early on in what will be a difficult economic time. Later in that cycle, when you see the end of the impact, do you want to be putting money into extremely cyclical areas of the market which will then have a Real Recovery . To follow on that, what does safety look like in fixed income and credit, especially with backstopping of muni bonds and fallen angels . David that to me is something we will be writing about over the next couple of months. If you have cash, which will become worth less and less over time, and you are a private bank or other client you want to have less cash and loan more of these muni bonds, more preferred stocks. Fed is coming in and saying, we want to make sure markets are efficient, but the credit will be among the strongest when we are all said and done. We have seen what the fed can do. The amount of issuance of highyield debt, the ability for to access the credit markets. All of this suggests to me that, when we look back, you will want to have bought these bonds now or near now, and put them in your portfolio. Romaine im curious what your thoughts are on this inflation outlook right now. There is obviously some disinflationary effects based on what the fed is doing. You expect that to go to work the more inflationary environment down the road . David not necessarily. Ofre really is no sign inflation. You need to have something to create that inflation. So, inflation does not look to us to be a major issue over the course of the next five years. So, from an investment standpoint, we are less concerned about that than using client positions to get a real return on their investments. That speaks to owning more equity in the fixed income we just spoke about. Cio of david bailin, citi private bank. We want to recap some of the headlines that crossed. It may have given the equity market a little bit of a lift in the final minutes of trading. Guidelines, a phase reopening of the nation in these guidelines for different states. They still recommend distancing in the first phase but states can proceed into three phases including developing a diplomatic social distancing practices, temperature checks at work laces, texting testing for the virus, which has not been as easy as it should be. He will not be immediate, it will be gradual and it will be a process. More details on it as we get more. That does it for the closing bell. Whatd you miss . Is next where we will be looking at up the quarantine affects how people spend their time and money. This is bloomberg. Live fromroadcasting new york to our viewers worldwide, this is whatd you miss . Scarlet lets get a snapshot of how stocks closed on the day. Nasdaq closing higher after he pretty volatile session. President trump mapped out a phased reopening for different states across the country. The discussion continues and of course leads to debate over what this means for the recession. We have some headlines coming out of apple in which tim cook tells apple staff that they will continue investing in any significant way. Also some housekeeping issues, saying that offices will likely have temperature checks and distancing. When it comes again to the companys ambitions overall, they will keep investing and health and visions will be something they focus on. Beyond the apple watch presumably. We will keep you posted on any further headlines here from apple. Lets turn to our next guest. As the government tries to shield the big company from the fallout, our next guest believes that they will increase the sectors fragility. Catherine judd, professor at columbia law school. Im curious as to why you think this will lead to moral hazard. Everyone points out that we had a government mandated shutdown, there was no one at fault, no one did anything wrong, prompt action was needed, and no one should be punished for all of that. Why would this be something that would lead to moral hazard . At a certain point, it is certainly true that we are facing a crisis of epic proportions. Massive intervention was necessary to address the Public Health crisis. Going along that, we do need very significant Government Support to make sure that Productive Enterprises managed to keep paying employees and remain wellpositioned once the economy comes back online. The challenge is in how we go about providing support. In particular, we are relying andtoo heavily on the fed it is going to the wrong companies. Going to Large Companies, small and Midsized Enterprises mostly in need of help. The wrong companies. Second, pretty Large Companies, as you pointed out, they have taken on record amounts of debt. Is make sureto do the business keeps going, employees keep getting paid, but that shareholders and creditors absorb the risk, including tail risk. The big concern is that longerterm, companies will have take on incentive to too much debt. Romaine im a little curious as to how you sort of move in the manner that is maybe a little bit more responsible, wind speed was so necessary at least in this instance. We relied on the fed largely because there was no physical response, at least immediately. Response andfiscal up being imperfect, probably because of the speed at which we needed to do it. Had do we make sure we do this in a way that the next time, we do not have to rely on these types of backstops . Kathryn speed was the most important thing and aggressive action was the right thing to prioritize. We needed to get money out there quickly. It made sense that the fed came in in a big way. Exactlyy are doing are the type of policies. But once we shifted to that fiscal support, congress had a choice to make. One of the challenges is acquiring the 454 million in aid, to go through fed facilities. They were making a choice,hether they realized it or not in ways that are suboptimal. They did not fully trust treasury. They wanted the fed there is a test. Aboutl have to care credit risk, more money will go to Big Companies. And what you might want, Large Companies to force the creditors to keep the business alive. Speed here was the priority. Longerterm, we need to think about what infrastructure we have in place. I think more can be done. This crisis is not over yet. We are looking at another 12, 18, 24 months. We are trying to find out how we can keep his businesses alive but restructure the financing. Out, it as you point could be another 1218 months. The fed has been the lender of first resort, the one that we go to first when there is a problem. You said that the various measures basically amount to a big bet that the economy will have a vshaped recovery. If it does not, that is where couldesidents programs have bad consequences. Kathryn i think the concern is really about the longterm independence of the Federal Reserve. Thatve a Federal Reserve was able to use powers so quickly because it has built up its credibility over decades as an institution we trust. They are not making political decisions. Right now, because they are forced to be doing so much more than a central bank should be asked to do, they are having to make these very difficult judgment calls. Again, they are institutionally designed to help out Big Companies more than small and Mediumsized Enterprises that need help. These are the types of decisions that political actors have to make and should be accountable reservese federal longterm political independence will be threatened if they have to keep making these decisions. Romaine appreciate you coming on this program. We will be back. This is bloomberg. More than 2 Million Deaths related to the coronavirus so far, but underneath that number, there is a lot of interesting data. Not only the number of deaths, but the number of recoveries. Johns hopkins has been tracking it. Jason farley spoke with news about what to watch in all this data. We are still looking at approximately 20 of people hospitalized needing some form of acute care. Of that group, approximately half will need some form of mechanical ventilation. It tends to skew toward our older population and we are still seeing that data in the united states. Response team in the u. S. And other parts of the world have enough equipment and personal protection to deal with the virus . The administration has finally started to offer support to the state in trying to get more ppe. There have been herculean efforts by various governors to bring in more n95 masks, more gallons and gloves, more face shields for our frontline medical workers. That has been different across the state. Different governors have had to barter for lack of a better word including going overseas to obtain masks from china, masks from other countries. It is also, in my home state of maryland, the governor has launched an n95 reprocessing center, one of the largest in the country, to facilitate the reuse and cleaning of n95 masks. Reuseld never typically those types of masks. We are being very resilient in our efforts. Theou are expert in epidemiology of Infectious Diseases. Johns hopkins has flat out done the best job of a regional, city, almost nationwide epidemiological study and statistics. The Second Derivative for some of these regions, california, florida, they are really not very good. New jersey. The virus from hotspots, which get all the media attention, out into the Greater Public what is the experience you have of Infectious Disease from a hotspot out broader geographies . Jason when we talk about hotspots, where we have ongoing replication of the virus and transmission of the virus. When we know what the infectivity potential of the virus is, in this case, it is between two and three. That means, for every person you infect, that person will in fact approximately 2. 5three people with the virus. Hotspots allow that transmissibility to occur on an ongoing basis. The trickle effect, bleeding out into other locations. Statesmple in the united is rhode island. Cases coming in from new york state as well as connecticut. Of migration, contacts,. Eoples movement scarlet that is jason farley from the Johns Hopkins university. Johns Hopkins School of Public Health this funded by michael bloomberg. Guidelines for stayathome orders across the u. S. Giving us some perspective is our Bloomberg White house editor josh gallo. Explain to us what the president announced. I know there are changes at 6 00, but what has he told us so far about what they are envisioning . Josh not very much yet. Bloomberg obtained the plan that ,e is going to release later on or details of it. Essentially, what he is going to release is a threephase plan to getting states and their economies back to some semblance of normal. Theyuld start as soon as first when some of the federal social distancing guidelines are set to expire. Essentiallys thinking about this in two week implements. People should show a downward trajectory in coronavirus cases for two weeks. The that happens, enter first phase. Social distancing so that some people can return to work. School,ike sports, daycares, restaurants, bars, places where people tend to congregate in larger numbers, that would remain closed under the current guidelines until at least the second phase of the program . Romaine these guidelines being released, are these done in consultation with the states ahead of time . Josh yes and no. This obviously has been a point of contention this week in particular. , famously, several days ago, said that he had total authority to reopen the country for business. He quickly walked that back, only some states are in very different situations. Has reached out to lawmakers, governors, people from across industries, and solicited feedback and also tried to build in a little bit. F ownership of these ideas we dont know how much has been incorporated. Romaine of course, that press conference will be coming up at 6 00 p. M. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Onrlet some breaking news gilead sciences. The stock is up in after hours trading following a report on the website that gives some positive order encouraging ,etails from the drug treatment what it is using as a drug to treat coronavirus. Some favorable results in clinical trial. We will keep you posted on any further developments. If you look at the bloomberg u. S. Consumer comfort index, as fallen to the lowest since before the 2016 election. That is evidence of how the Virus Outbreak is affecting both the psyche and while it of the u. S. Consumer. How are they spending . For insight, lets bring in maurice singer. Surveyrm conducted a with another firm which covers midtolate march. What was the biggest take away for you from that survey . First of all, there is a lot of takeaways that i to be obvious to some, but i thought we would dig into it a little bit to some of the areas that saw the shift come to life. To shift away from commerce content, people were spending a huge amount more time either buying or consuming content of various forms. The second piece has been the wallet share moving completely necessitiesce to needs. The surprising one, i think, is the subscription market. There were a bunch of Subscription Companies doing quite well before this. The proliferation across the board, actually diving into various subscription boxes, subscriptions of all kinds, has really been something of note. Romaine i guess the question, is this just going to be temporary, then we all shift back, or will this be much more lasting and the way we spend our money and consume products . A good question. A multimillion dollar question a b. Ultimately, right now, the hunkering down, which is still the psyche of the American Consumer and perhaps the global consumer, will cause people to maintain these issues. Content,onsumption of not just from the media world, but also from brands themselves that are pivoting to create their own content, will cause these companies to emerge, we fashionn a more robust than those who just set tight and did not communicate at all. Scarlet how brand conscious are consumers right now . When the crisis started, clearly people are focusing on need and just needed to get to the Grocery Store and stock up their pantry. How brand conscious are we now and what does that mean for the companies out there trying to hang on to the customers and building on the goodwill that they have developed. Morty that is a very good question. One thing that is interesting to ask. You may have heard of the expression, digitally native brand. The crop of businesses started online that came to life in the past years selling to a young consumer. One of the things now, the flight back to traditional incumbent names and brands that have an element of trust and stability. I think that shift is something we will continue to see going forward. Certain categories. Fashion and luxury is not top of mind. Beauty is. Obviously, the loyal followings that some of these large behemoths have will continue to benefit from this. Romaine i was looking at some of the brands in your report that have seen a significant spike in purchasing. Names inhose familiar america that we would gravitate to in times of crisis. I wonder if these brands benefit from this channels, ability to get their product direct to consumer through whatever shipping mechanisms they may have already had in place. You are absolutely right. The brands that are winning the most right now are the ones that are effectively considered essential. If you look at any list in any state, food products, cleaning, personal Care Products are considered essential. There manufacturing base, distribution base, and retailers are also considered essential. Which means those businesses are alive and well. Across the board, those businesses that are grocery band grocery brands, drugstore brands, are up doubledigit. Brand that featured prominently was peloton, a big winner across generations. Forquestion is, certainly investors, is this infatuation with peloton going to last . Morty people will discover things they may not have realized before. Youtube is up significantly in gen y and boomers, for example. Gen x and boomers. Peloton, i think of it as a cost per use purchase. When i think of canada goose comedy fashion luxury goat businesses, you spend money on something expensive but get a lot of use out of it. I think peloton, many people will discover the value may be over a gym membership and ultimately, i believe, will tell their friends and family about it. A big moment for peloton and other businesses like mirror that offer similar services. Romaine so great to have you. Great data out of that company today. Definitely get your hands on it directly from them if you can. Lets go over to the bloomberg first word news where Mark Crumpton is standing by. Guidelines issued to states today recommend they document a downward trajectory in cases of coronavirus before relaxing stayathome orders. States could then proceed into a threephase reopening process. The president is expected to give specifics at a News Conference today. Brazils president , jair bolsonaro, has fired his Health Minister. The Health Minister had refused to give into demands to ease social distancing in order to reopen a quickly collapsing economy. The change in leadership comes at a critical moment for brazil as the number of virus deaths surges and experts caution the peak of the pandemic is still weeks away. Extending kingdom is its lockdown for another three weeks in an attempt to contain the spread of the coronavirus. The announcement was made by foreign secretary dominic raab, who is standing in for Boris Johnson while the Prime Minister recovers from the virus. The u. K. Is the sixth country to have more than 100,000 confirmed coronavirus cases. Many americans are wondering if it is safe to open mail and packages during the pandemic. According to the cdc, there is no evidence that covid19 is spreading through mail or parcels. Very low that covid19 would remain on envelopes and packages. Still, it is a good idea to wash your hands thoroughly and regularly, and avoid touching your face after handling deliveries. 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. This is bloomberg. Aarlet germany has unveiled 30 billion euro plan to backstop losses for credit issuers. He fears the Insurance Industry is still set for massive losses. Has hit ouravirus industry like a metro like a meteoroid impact. Effect really systemic on the economy. The Business Model normally would suggest we cut our credit lines, 400 billion for the industry alone, and would actually create a domino effect that could lead to increases in insolvency. The government has clearly learned from the 2008 and 2009 crisis and has worked to set up a program that prohibits these behaviors from occurring. It is a very important measure that the government has taken. It will help us stabilize particularly small and mediumsized companies. Able to do you be that even without this . Dont you have the resources . Or is the scale of default so big that allianz needs the government to step in and backstop losses . Absolutely we dont need that. It is very important to understand that the way the credit industry works is allowing us to manage risk the way we really want. Particularly allie ons. We are extremely stable. We can absorb all of the losses. , that people will then behave in a very procyclical way. For example, if we cut exposure lines, then people will further reduce trade and that may lead to insolvencies. The effect would be highly detrimental but i leonce would be safe. That is unfortunately an outcome of the Business Model. I told the government, if you dont want this domino effect, there needs to be a publicprivate partnership. It is because we do not need the protection. We are extending lines of credit that we would normally not hold. That, so this makes sure any decisions that are made around trade financing then dont make things worse than they already are. Does the insurance sector need support that goes further than this . Is there an area of the Insurance Industry or perhaps another geography where you would like to see something similar to what is happening in germany . I believe we would need a solution like this on the european level. The french government has enacted something but it is much more limited. Massivesuch a earthquake again, i would like to compare that to a meteoroid impact. There are certain covers, like terrorism we have today, a Nuclear Power plant blowing up, which cannot be insured with normal policy wordings. I think going forward, we need to look across the number of sectors and say, how can we make sure we better cover the needs of society . Remember, Systemic Risk is not something that the Insurance Industry can ensure. Just imagine that we would not have one in every 10 cars having an accident every year, but everybody having an accident. Diversification in any large pandemic, a systemic event that does not have diversification. The Industry Economic model cannot really work. Haveur question, we do not as a Company Large exposures. For the industry, in my personal opinion, are going to be massive. There is a lot of debate. I can tell you, across sectors, whether that is health care of a business interruption, media and entertainment coverages, they will be huge losses for the industry coming 2020 will not e. A. Record year for the insurances. Romaine you were speaking to the allianz ceo speaking earlier. We want to talk about what is happening any cruise line industry, particularly with carnival cruise. The cover of bloomberg businessweek. It is a fascinating look, not only about what carnival did once the outbreak started to happen but more importantly, what it didnt do. The byline onhas the story. One of the things that came away for me in reading that story was how much carnival continued to persist in getting its crew ships out there, getting customers out there, despite the fact that there were a lot of concerns at that time about the spread of the coronavirus. In a lot of ways, it is what we all felt as things started to get that. Why carnival does not get a pass is because it did happen to them there. Our reporting discovered that they actually had a parts supplier from wuhan who let them know how bad it was, when they were shutting down in january. In early february, a ship that was parked off the coast of japan with 706 people on it. They continued to sail. They continued to fight washingtons restrictions on them sailing. Scarlet they even still have some passengers and crew members at sea. There are a couple of carnival ships still floating around. Chris right. It is sort of a massive failure of planning. I hope one of the takeaways will be that they figure out a way to get people off of the ships as soon as there is a risk of infection spreading. Ofot of countries, in a lot ports would not accept their ships with the sick people on them. They have to figure out a way to get people off through helicopter in the future. Board. Ve to get gear on so that this doesnt spread. There were images of carnival employees with masks that they made out of napkins. It is just horrifying. We put a lot of criticism toward carnival and the executives, but your story highlighted the fact that there were quite a few passengers happy to be out there sailing. Quite a few passengers who said they would happily get back on that cruise ship. There are diehard cruise fanatics that, in spite of it all, they will cruise. There are a lot people who will just never cruise for these reasons. There are a lot of people sort of in between who think about it, but there is always somebody who vetoes it. That is the problem for carnival going forward. They are just losing so much trust. They will be very difficult for people who have not experienced cruises to see the point of it all. Scarlet some headlines from the ceo of carnival saying that china may be among the first markets to resume cruising, but we know that the damage has been done in the brand for now. Fantastic story. In can read all about it bloomberg businessweek. Coming up, we will check in with joe weisenthal. It is amazon versus everyone else. His take on what lies ahead. This is bloomberg. Romaine welcome back. Just want to bring you some headlines. More on amazons labor issues. The group there calling for workers to call in sick, saying they should call in sick to protest working conditions. We want to bring into this conversation joe weisenthal, of course the cohost here of whatd you miss . Because of technical difficulties, he cant be here for the whole show, but he always wants to close it out. Amazon, another record high, up hitting that low mid march. Joe not only is amazon on an it, along tear, but with basically just a couple of other tech mega caps are really giving a sort of disordered picture of this market. We talk every day, like why does the stock good overall not seem to reflect the economic damage we are seeing . Part of the reason is the influence of a handful of companies that people perceive as doing really well in this environment. When you look at broader measures of the market, it is not nearly as good. Today, we saw a fairly decent gain of the s p 500. If you look at the equal weight index, so it does not skew towards the tech companies, that ended slightly lower. 0. 8 ll 2000, that ended lower on the day. Part of the head scratching isut the seeming disconnect really just the story about the dominance of amazon and a few other companies because, overall, Many Companies in many parts of the market have not seen anywhere near the recovery or are not holding up nearly as well. Scarlet i am looking at amazon and something stunning jumped out. A trailing pe of 104. Estimated pe multiple of 88 times, which is just mind iswing given the s p 500s 18. 4. We know that the e is really under question. I think the biggest risk for amazon out there is that president is just so against jeff bezos and is trying to find a way to get back at him. Joe of course, there are the concerns about the postal service, the degree to which they rely on the postal service. I have not seen a poll of this lately but i imagine if you were to hold a public right now about institutions they feel good amazon wouldica, come through extremely high in this moment of crisis. We have seen so many levels of what i would perceive to be institutional failures, whether it is public companies, particular agencies. Meanwhile, although there are ,any issues, by and large people are able to safely get, they perceive, goods that they need from amazon. Scarlet we have to leave it there. That does it for whatd you miss . This is bloomberg. Emily welcome to bloomberg technology. I am emily chang. President mb as the announces a plan to reopen the economy, telling governors it is their choice. We will take you live to the White House Daily briefing when that begins. This as we received the guidelines the president plans to lay out today. I want to bring