Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20240713

Hard to make anything of any positions being taken into the weekend, were something good or bad can end up happening. Time for todays market moving news from brussels, as well as our new york teams. Europe, approving a shortterm deal. Ombergs part two bloomberg spoke to germany z for president to spoke to germanys you for germanys ifo president. If things shut down again because there is a second wave, that is catastrophic for them, so that is something that needs to be avoided. Maria tadeo joins us now. Maria european leaders met yesterday. They came up with a shortterm aid package, but the question is what we are going to do over the long term. Get any clarity yesterday. That is being reflected in the Market Action today. Any specifics on the amounts. Theres suggested that it could be one trillion euro up to 1. 5 trillion euro. Some argue this should be done through transfers. The countries that are on the weakest right now would say they want to see the bulk of it being done in transfers. They dont what their debt to gdp ratios skyrocket. The idea is that this is not imminent, this is something that traders didnt want to see. Having said that, it is really the European Central bank hinting that it needs to do more. Alix thank you very much. In the markets, American Express earnings coming out. On adjusted earnings, they beat, but revenue did come in a bit light. Amex is looking at looking at total provisions for losses for the quarter. For more on the markets, futures edging higher this morning, investors assessing these kind of earnings come up bloombergs more. Ie hordern has on u. S. lower across futures. It was quite a big week for earnings. Next week is another slew of earnings coming your way. Some of the stayathome companies are doing well, like netflix. They reported a Record Number of subscribers. At the same time, their bond was oversubscribed. They brought in record low yield. Next week, amazon, twitter, and facebook. A recordrade reported number of new accounts this week area they said january, february, march markets three highest individual trading months ever. Quite a lot of volatility in the markets. People wanted to get in on that. Moving on to big oil, we heard from equinor yesterday. They cut their dividend, one of the First Big Oil majors to do so. Next week is a huge week for the oil majors. Totale alll, reporting. Wti trading at 17 a barrel. Hit 40. 32. We were already seeing the impact on this. About 20 of u. S. Production on its own may have to be cut just because of the supply and demand issues. We are already seeing force majeures as well. The opec deal finally comes into action on may 1. Kuwait and nigeria are moving ahead with their cuts earlier, given how bad the market is. Alix great round up. Really appreciate that. For more on sectors hurting from the pandemic, treasury secretary Steve Mnuchin is now considering a government Lending Program for struggling Oil Companies. Some drillers might be asked to cut production, and government may take stakes in exchange for some loans. Another virus related package from the treasury, Public Companies have to give an equity stake to the government. Companies that qualify are those deemed national security, and must have priority level contracts with the government. The government might also look into taking unsecured debt for private companies. Coming up, much more of your morning trade, news and analysis on the markets in todays first take. Happy friday, everybody. This is bloomberg. Time now for first take. Joining me from our inhouse team of wall street veterans and insiders is michael mckee, Bloomberg International economics and policy correspondent, and damian sassower, Bloomberg Intelligence chief emergingmarket credit strategist. On a relatively slower newsday, what are the standouts for you right now . Michael its funny you mention that because one of our columnists this morning saying beware of slow news days. How fast do we start getting the sba money out to people . That will be important. We have Central Bank Meetings theyre going to be important, although at this point we are putting floors underneath economies rather than stimulating, so it will not have the same kind of effect on financial markets. We are going to keep them from falling rather than finding ways to goose them higher. The overlay of everything is how are we doing with the disease . Actione saw the whippy in markets yesterday on my gilead report. Damian, what are you watching . If you look at some of the price action, specifically in the brazilian real, we are now at 5. 54. The rand, the ruble, the mexican peso all our plumbing to new. Ows friday is look like going to provide any assurance for em investors looking to invest offshore. I hear feel like when Something Like lebanon defaulting on debt and having a really hard time versus brazil, i would say brazil would have more tools with which to whether this versus lebanon. What is the why behind that . Damian just to get specific on it, they are definitely trying to pass some legislation which will allow them to take a novel approach, such as buying local bonds in the secondary market. If you look at the rand, the lira approaching seven, capital controls by the Turkish Central Bank are not sufficient to defend the fall in these currencies. If you look at russia, they are going to cut 50 basis points. Central banks are doing all they can come up at the currency weakness is evident. Alix wheres the trickle down for Something Like this . Why arent we seeing that spread into other areas of the market . Michael it is hard to say. In some areas, we are seeing the currencies that have effect on bond yields, on the overall outlook for the european countries, the periphery countries. But the equity markets are what is sort of decoupled at this point. There seems to be a feeling that since we have no idea how this is going to shake out, markets are just sort of drifting at this point. That is why we were writing this morning on Bloomberg Opinion that this is a dangerous kind of day because you dont know where things are going to go. A news story could send the markets in either direction. You mentioned iliad yesterday mentioned gilead yesterday. It is a little more nuance than the headlines initially had, but it something markets in reverse. That is the kind of risk we are facing at this point because there doesnt seem to be any particular galvanizing reason for anything except currency has outlinedamian the problems there. Alix and that leads us to next week and all of the bank developednd the world. Terrifyingly high unemployment, they should at least take rates next week a quarter percentage point below zero. Is that a real conversation starter for next week . Michael no. I hate to disagree with someone a lot smarter than me, but he said basically the fed is trying to protect banks. The fed is trying to protect the money markets. The money markets at this point, if you go negative, you basically collapse all of the money market funds because they cant pay negative rates on their deposits. They cant get any money that way. That is a major impediment to the u. S. Doing this, plus the fact that the fed has studied what is going on in europe and other countries, and their conclusion is that it isnt worth the effort at this point. It doesnt really add that much stimulus. I can understand where he is coming from, but the fed is not going to be talking about negative rates. We are also not at a point where you need to at this point. We are putting a floor under things. We are not trying to stimulate spendings. You can have negative rates, and it is not going to get alix steel out to the mall tomorrow to go shopping. Plus, do you really want to take away peoples savings at a time like this . Alix especially when deposits are actually increasing at banks at the same time. Lets play the what if game to get an idea of the relationship between the fed and emerging markets next week. Lets say the fed did that. Does that we can the dollar does that we can does that weaken the dollar at all . Does it help emerging markets . Damian damian its terrible, dont get me wrong, but there are pockets of opportunities. It basically lowered their input and labor cost. , theiran steel producers labor costs are going to go down. Their input costs are going to go down. Yet, they are producing something priced in dollars. One would think that would be e of the som corporates. When you go local, these currency losses are just huge. What you need to see our capital inflows into these markets to really stem the bleeding, and with currencies falling out of bed, youre just not going to see that area i dont really believe the fed is focused on rectifying the situation in fx. Would welso wonder, come out of this in a recovery sense, if we are going to see a new kind of world where the developed world shifts more supply chains locally, or diversify to have less exposure to some emerging markets, for example, and what the longerterm growth implications are for countries that dont have the fiscal ability to not only put a floor, but then recover like the rest of the world does. Damian thats a great point. Interconnected, lowcost supply chains have come under real pressure due to the pandemic. The tech sector is looking to away 25 to 40 of production from china into other countries like vietnam, mexico, and the philippines, which look more competitive today than they did postgfc. Are labor costs rising, you absolutely right. We are going to see supply chains shift to other countries, and there are going to be some winners there. Wonder the have to broader implications. I feel like we are starting to have that conversation. The shift in supply chains, Henry Paulson had an article in the ft saying dont go protectionist because that is not the way we are going to recover from this virus, versus the idea that you want your supply chains local to avoid disruption. Michael this is a situation that calls for some very nuanced and careful thinking about what you want to do Going Forward, which im sure a lot of ceos and boards are going to be doing. Of bringhe trump view everything back to the united states, and the old view of it is cheaper to build things overseas, so we will keep doing that because it is good for people. Some industries we are probably better off having here. We have seen the medical supply industry, that would be very good to have headquartered in the united states, as we just found out. But other things, you dont one everything concentrated in china. The japanese are paying companies to move out of china. We may see Something Like that. But the question is, where they go . Do they come back to the united states, where costs are higher . We dont hire more people. We use more machines. Do we go to mexico because they are close by . They are friends, they will put up tariffs. Questions about where things will go. This is a five or six year process to move things on a longterm basis. I think that is something that is going to be a real story going out over the next year or so. Especially as companies have to consider things like how do i staff my factory now. Lets also do a look ahead for next week when it comes to treasury issuance. We got a huge issuance schedule from the treasury, so i want to get your quick take on that. Can you pin perspective how much they are issuing . At what point do we run out of buyers . Michael at this point it doesnt look like we are running out of buyers. The question is how much does the treasury want to keep issuing in bills. Theyve issued an enormous number at this point, which keep getting absorbed. One effective that is the reverse repo operation is almost ground to a halt because people dont need to put cash back at the fed. They are getting enough securities and spending the money that way. You can see the effect. The question is, do you want to term some of that out . Do you want to start going longer with rates as low as they are . Probably what we end up seeing is a flattening in the yield curve Going Forward, which will have some implications for other investments. It is going to be an ongoing issue now as we try to fund this. We just added another 484 billion weve got to fund over the next year or so. Alix it almost feels like we need investors to stop wanting to buy treasuries in order to go buy emerging markets. At what point of saturation are they forced out into other areas because they want the yield . Damian now we go back to the cross currency basis swap spread, especially the dollaryen. Youre seeing japanese Life Insurance companies in here buying the heck out of u. S. Investment grade debt this month. I expect more of that. That is a 3. 4 trillion buyer coming into the u. S. , and on a hedged basis, find a lot of value in owning u. S. Securities, and i imagine treasuries as well, to some extent. Alix exactly. How is liquidity right now in emerging markets . Paying a lot of attention to the funding costs in europe squeezing higher this week. What about nem . What about in e. M. . Damian it is definitely a problem locally. We are going to talk about this in just under an hour, wawrinka pleton froze redemptions just under an hour, but Franklin Templeton froze with them since nore because there is liquidity. Theres a lack of liquidity in emergingmarket debt across the whole of the asset class. Alix in developed markets, like europe, for example, has that been fixed . That was the topic over the last four days, the funding costs continue to go higher. Michael it hasnt been solved. It actually got a little bit worse overnight. We are seeing spreads widened in italy as the package the kicks down the road again isnt going to be enough to satisfy the markets. They are going to create this pot of money, but the details are unclear. Instead of going ahead and doing some sort of debt mutualization, which is what everyone in the market seems to want. Theres an argument that wouldnt happen that quickly, but at this point, we are still seeing issues the ecb may address next thursday. Off except we see the euro the lows of the session, the same with peripheral bonds. Guys, thanks for rounding us out with us this friday. Sassower much, damian and michael mckee. You can find all of the charts we used and more if you go to gtv on your terminal. You can browse the features, check it out. This is bloomberg. S bloomberg. Viviana youre watching bloomberg daybreak. The number of u. S. Homeowners seeking to delay mortgage payments now over 3. 4 million. From a week ago, that is up 70 . Since last that is up 17 . Congress passing legislation allowing them to defer payments for initial periods of up to 180 days. More cutbacks on the way at boeing. The company is set to slash production of the 787 by about half. Plus, it will announce job cuts. All of that is expected next week when boeing announces firstquarter earnings. The coronavirus outbreak crushing demand for new jetliners. Nestle posting firstquarter sales that were better than expected. Worldwide lockdown is good for business. Consumers loading up on nestle frozen foods. That boosted brands that have recently faltered. That includes hot pockets and stouffers. Alix thanks so much. The lockdown may have been good for nestles business, but if you love bacon, here is something you definitely want to Pay Attention to. The u. S. Is one step closer to a meat shortage. American production has been shuttered. Yesterday, tysons food said it was shutting a beef facility in washington state. It already closed two port plants. Workers are coming down with the virus, and so our employees that inspect the facilities. Not surprisingly, meat prices are surging. , ass also regionally emerging Market Companies retrench and keep the supplies at home. Some investors really looking at food inflation is the next big problem. Coming up, we are looking at how to allocate assets with sebastien page, t. Rowe price head of multiasset strategy. This is bloomberg. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] alix welcome to bloomberg daybreak. The story a few hours ago was stronger u. S. Equity futures. That has not turned around within the last hour. You are seeing european stocks wanting to inch higher, almost flat here, as well as s p futures continued to claw their way higher. In the currency market, it is now a story of a weaker dollar, mostly in the g10 space. Euro climbing higher, the cable rate higher as well. We saw higher yields at a selloff of the bond market in europe. Now we are seeing flows reversing as there is still confusion as to what the eu can and cannot deliver, leaving a lot on the ecb doorstep for next week. Verizon now cutting its adjusted Earnings Growth forecast. No real surprise there. We have seen that for multiple companies, cutting their forecast suspending altogether because they just dont know what the visibility is. Negative four cents for the impact for firstquarter earnings. Sebastien page, t. Rowe price head of global multiasset, joins me now. Just to pivot off of verizon for a second as it is looking at a loss for the First Quarter, growth forecasts getting cut, this is very common now through all industries and companies. How do you look at that as an investor . Sebastien at this point, we are moderately overweight stocks. I think what we need to do is really understand expectations and what is priced in the markets. Everyone is saying it will take longer than expected to reopen the economy. We might start relatively soon, but it will take longer than expected. In fact, i cant find anybody who says we will reopen italy like a light switch, or even as expected. Consensus is fairly pessimistic. The consensus is probably we will start to reopen the economy may be midmay or later, and then it will take at least a year to get back to normal, or , if you will. Say, to get baseball stadiums back to filled up, about a year from now. One of our Portfolio Managers used a great analogy. He said if i am deprived of oxygen for 60 seconds and then i am given 30 oxygen for the next 60 seconds, i actually feel worse in the next 60 seconds. At 30 businesses operate to 50 capacity without going into bankruptcy over that time period, the stimulus will have an impact. Overall, the key take away is it will take a while to get to the new normal, and that is not particularly insightful at this point if you are an investor because that has become the consensus. Alix on the one hand, implied correlations are very high because you have macro leading way, but dispersion within sectors and even between sectors is still picking up. In theory, that could create an interesting stock opportunity. How do you take advantage of that . It has been how thele about dispersion has been remarkably wide. Value has underperformed growth by 17 year to date. Going into the crisis, it was already cheap and underperforming growth. Small has underperformed large by 14 year to date. If you look at this and say what is going on here, this rally has been described as a pseudobullish rally because the new trade seems to be the same large old trade, where Growth Companies in the u. S. Outperform. We are looking at a scenario where we will continue to be coming out of this in a low rate , low growth, low inflation environment, and theres room again for the new trade to be a same as the old trade. With actually moved money from outside the u. S. Back to the make a moderate overweight in Growth Stocks in this low rate, low growth, low inflation scenario. Theres also a probability within 12 to 18 months that you see a reflationary impulse given pentup demand and the impact of the stimulus. There are ways to build optionality in your portfolio. Example, overweight u. S. Small caps because those stocks tend to do best during recovery, and they are just quite cheap right now. They have underperformed large by 20 over the last 12 months. We are building some optionality , as well as just moving money from outside the u. S. To the u. S. Theres a bazooka type of measure stimulus environment in the u. S. That you dont see outside the u. S. Alix just to add on to the earnings conversation, freeport revising their operating plan. They planted 800 million reduction in capex, also cutting about 15 of copper volume sales this year in the americas. The continued story of cutting capex, retrenching, etc. We have seen companies suspend their buyback altogether or cut their dividend. Even big oil is getting into that with equinor. At what point do u. S. Equities look less appealing if the buyback dividend story continues to roll over . Sebastien right. That is part of the valuation question. The valuation question, if you look at p e ratios and so forth, is very difficult right now. What we know is that earnings expectations have dropped like a stone and will continue to drop like a stone. When people look at this recent rally, we have a 25 rally in basically two weeks. The conclusion is that the market is pricing in a vshaped recovery. The market is being optimistic about how we get out of this pandemic. I think markets have rallied from the bottom on liquidity and money supply. 10 trillion in stimulus in four weeks, reducing the initial panic on the virus in the quiddity, and fixing the plumbing of the financial system. To me, there is a fair amount of that is actually priced in. It is just hard to find safety in this environment. 17 similarack at selloffs for the last 90 years, where the s p sold off by 15 or more, you could have been one month early or one month late. 17 out of 17 times, you would have made money 12 months forward. Alix really good to get your perspective. Thanks very much. Dont miss our exclusive interview today with carl icahn, coming up at 3 00 p. M. New york, 8 00 p. M. London time. We want to give you an update on headlines outside the business world. Viviana hurtado is here with first word news. Viviana President Trump will sign today the latest coronavirus aid package. The u. S. House overwhelmingly passing the measure. It adds money to the loan program for Small Businesses. It also provides money for testing in hospitals. Lawmakers are already at odds over the next round of risky legislation. Over to the u. K. And british Prime Minister boris johnson. He will reportedly return to work as early as monday, according to the telegraph. Mr. Johnson has been recovering from the virus. At one point he was in intensive care. Now that the economy is struggling, the Prime Minister is under pressure to ease the lockdown. Oil rising for a fourth day in. Round after the dramatic fall u. S. Producers are shutting oil wells, halting producing. Kuwait and nigeria reducing production earlier than required under the opec agreement. 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. Im viviana hurtado. This is bloomberg. Alix thanks so much. Coming up, it is when big ones to be small. Several companies face\over availing face\over availing over availingsh funds meant for momandpop. To interact with us, check out anything you may have missed, tv on your terminal. This is bloomberg. Viviana this is bloomberg daybreak. Lufthansa is running out of cash. It now depends on a multibillion dollar bailout from multiple countries. Germany,rs from switzerland, austria, and belgium are taking part. Talks are hung up on what would be involved in. The deal jcpenney in the deal. Jcpenney has started preparing for potential bankruptcy filing. A loan would keep it operating during a chapter 11 restructuring. Intel. End with shares of they are lower. The are withdrawing fullyear sales forecast, citing significant uncertainty. In the first court revenue, a 23 jump, but Second Quarter profit outlook falling short of estimates. That is your Bloomberg Business flash. Alix thanks so much. It is main street versus wall street. Big banks and Big Companies are facing backlash over funds meant for Small Businesses. Both shake shack and ruths chris steakhouse are among those who will be returning loans after catching some flak. Joining is neil barofsky, jenner and block partner, plus former tarp inspector general. Really great to chat with you. My biggest question is, these Bigger Companies accessing Small Business funds, is that the fault of the Small Business loan program and execution, or Just Companies trying to be up opportunistic . Neil it is a little bit of both, but the way this program was set up, it really intensifies the banks making loans on behalf of the government to steer this money towards their biggest, most wellconnected and most established customers. The whole design of the Program Provides in some ways financial incentives for banks based on its fee structure, its underwriting approach, so what youre seeing isnt all that surprising given the way the program was wired. Companies appeared to be following the rules as they understood them to get in line to get this money, but now the political backlash has occurred. Unfortunately, rather than dealing with the fundamental flaws of the program that resulted in this, it is sort of a political reaction pressuring a small handful of companies to give the money back, but that does not affect what we see Going Forward. Alix so where do you fix it . Such, ancentives are bank will operate like a bank. So how do you fix it . Neil theres a couple of things you could have done when Congress Passed this. New legislation will be going into law today, and theres things the treasury and sba can still do within regulation. Things like requiring the banks to set aside a certain amount for businesses under 100 employees or under 50 employees, and therefore you are going to make sure that the smallest of the smaller businesses are going to get the money. You can address the fee structure, which gives banks more money if they get out bigger loans. Theres a lot of tools in the toolkit, but there has to be a willingness to provide those types of incentives. Instead, the secretary of the treasury pushes out this new rule that is going to put a lot of pressure on big publicly traded companies. Lets be clear, that is a small drop in the ocean. 6 million went to publicly traded companies out of the 350 billion out the door, so this is a political bandaid that doesnt really address the inequities that are baked into this program by the treasury and the sba. Alix weve already gotten from the house that President Trump will sign it, the increase to the Small Business Lending Program. Someonelly, i spoke to who goes to their bank and they say, sorry, youre are never going to get a loan. How much bigger does the program need to be . Will some people say it have to be passed 1 trillion before it can meet all of the demand. Muchng as the demand so outstrips available funds, youre going to see a lot of what happened in the first round happening again, which is the most wellestablished customers are going to go to the front of the line. Less important customers will be at the back of the line. Unfortunately, your friend is going to have a really hard time finding a line to stand on if she doesnt have an established relationship with the bank. All of those others are going to come first. That is just the unfortunate reality as the program is set up. It doesnt have to be that way come but that is the way it is right now that way, but that is the way it is right now. Alix do you get the sense that there is a will to change that . Neil i dont come at to be honest. I think there really was i dont, to be honest. I think there really was an opportunity when the treasury and the sba pushed out new guidance. We were hopeful we would see something that. Instead, it was a very political statement that large, publicly Held Companies need to give money back or they will be prosecuted, which is never going to happen. The standards set forth in the initial program are very loose, and i think they would be very hardpressed to say these companies actually acted in bad faith as opposed to, within the rules as defined. Alix that is a good point. We are already seeing individual filings from lawsuits against some banks, like wells fargo, jp morgan. If this doesnt get worked out, is that what we get mired in, lawsuits against banks for not giving them the money they feel like they need . Neil i think those lawsuits are long shots. A decision from bank of america already came down that said, you know what . This is wrong. Bank of america should not have prioritized its own customers. It did not apply the spirit of the program, not just the letter. But banks, theres nothing in the law that says banks cant do exactly what theyve been doing. Theres nothing that prevents them from putting their own conditions and restrictions on the loans. It seems like a pretty well reasoned opinion, so i dont really think that these litigations are likely to go too far, for better or for worse. Alix does the feds announcement that they will of the the names assistants in these facilities affect anything . That if you are published, you may not want to apply for the loan . Neil transparency is always better than lack of transparency. , applaud the Federal Reserve learning from the past crisis when they asked for too much opacity and suffered greatly politically for it. So everyone going into the program knows, understands it is going to be disclosed, and that is going to potentially discourage Certain Companies that dont need the money, but want to take advantage of the government largess, they may be dissuaded, although probably not. What is really interesting if you have the Federal Reserve doing that on the other side with the ppp, the sba program, they are still not disclosing the names of the recipients. It doesnt take Rocket Science to figure out why. They know their program doesnt look so good when sunlight is shined on it, and they are keeping that hidden from the public. So it is a contrast when the fed is the most transparent player in the room. This out toaden other sectors under pain, the next thing being talked about is the oil industry. If you were still working in government, what would you be seeking about in terms of helping to support bailout rescue Oil Companies . Neil i think when it comes to expanding to other industries within the existing program, i think there really has to be, as a former inspector general, i get very hung up on process. To me, when you are citing the allocation of these funds, it has to be based on objective criteria. Valuation of what your programs goal is, and whether or not the toipient are best situated fulfill that on objective criteria. What you dont want, and what it sounds like it means with these is because of it political influence, where they may be located in the country. You dont want money just going to the best lobbyist or who ceo plays golf with the most highly connected government official. That is where it becomes wasteful, and you dont get the best bang for your buck for your taxpayer dollars. Alix really good to get your perspective. Very much appreciated. Neil barofsky, former tarp inspector general. Great to chat with you. In todays wall street beat, we will talk about how corporate loans binge and how banks are using this to dictate new terms. Banks have been flooded with requests for loans from bluechip companies. Now the banks are using that leverage in demanding that provisions not usually found in junk rated transactions. This chart gives you an idea of that kind of demand. Soared over that the month of march. Templeton franklin freezing debt in indian companies. We will take a look at that next. This is bloomberg. Alix time now for traders take. Joining me is Bloomberg Intelligences damian sassower. We are looking at liquidity for emerging markets. Damian we all know Franklin Templeton is a big fan of emerging markets, going back to the days of mark mobius. Franklin templeton had to freeze redemptions last night on em debt funds, totaling 4. 1 billion in assets under management. That is 1. 4 of the entire Indian Mutual Fund industry. These were pretty good performers. If you look at the indian credit risk fund, we are talking annualized return for the past five years. Youre seeing in this chart the india threeyear Corporate Bond spread blowing out. It is obviously following the weakness in the dollar rupee rate. This speaks to the weakness in emerging markets, and we could see more of this Going Forward if things dont improve. Alix my daughter was really excited about that. I dont know if you heard her cheering in the background, but shes really excited about talking about liquidity. Where is going to be the next freeze . Damian im not going to even go there. But what i will say is liquidity is definitely drying up. We are definitely seeing some tightness in places like brazil, even mexico, with his even mexico, which is historically a very liquid market. I dont know where it is going to crop up next, but if you look that funds had previously this year and place is like argentina and the frontier markets, it is going to be funds like that that have a lot of illiquid debt on their books that are going to be at risk here. Alix really good to catch up with you on this friday. Damian sassower of Bloomberg Intelligence. Coming up next, Samantha Azzarello my jp morgan Investment Management Global Market strategist, will be joining us. This is bloomberg. Nowadays you do more from home than ever before. The xfinity my account app puts you in control with Digital Tools to give you the help you need when you need it. Get fast and easy answers with personalized help 24 hours a day, 7 days a week. Change your wifi password to a phrase thats easy to remember. Even troubleshoot your services on your own. Were working to make things a little easier for everyone. Download the xfinity my account app today. Alix welcome to bloomberg on this americas friday, april 24. Im alix steel. Lets take it from the top. German chancellor Angela Merkel says the Economic Contraction could be as much as 15 in europe and acknowledges it requires a huge package. The big Sticking Point is how to spread the financial strain. Specificst get any on the amounts. Ofre have been suggestions one trillion to 1. 5 trillion euro. Alix french president Emmanuel Macron is still pushing for transfers, not loans. Passesis still pushingthe housy the next 484 billion aid package. The white house as President Trump will sign the legislation at noon. This is the fourth coronavirus laded coronavirus related spending measure since march, taking the government to almost 15 of gdp. Alix reaching a most 3 trillion as Lawmakers Debate the next round. The treasury may accept senior debt instruments or other financial sermons for private companies. The first pick in the 2020 draft come the Cincinnati Bengals select joe burrow. Alix the and fell draft kicking off thursday, with the Cincinnati Bengals selecting lsu quarterback joe burrow is the first overall pick. It is crazy to me, but a dream come true. Alix the second round of the draft begins friday night. In the markets, we are turning to what looks like a more risk on day. We have u. S. Equity futures pushing higher. European equities trying to get , partly because of any eu rescue package. Also taking a look at the currency market. The euro moving higher, the cable rate moving higher, and flowing into the european bond market within the u. S. Now ise, joining me Samantha Azzarello, jp morgan Investment Management Global Market strategist. In the midst of this, we still get earnings. Verizon having to cut its Earnings Growth forecast. How do you model your price to equity valuation, price to earnings when we dont know what earnings are going to be . Samantha that is the key question right now. The street is expecting 15 , 16 Earnings Growth for the quarter. I think it really comes down to how do we reopen the economy so that corporate earnings can then go up. That is the order of operations. If you are looking at the valuation like you mentioned, it is not really telling us anything because that is quite skewed. Even though the market might be a little more risk on and has definitely recovered quite a bit since the bottom, which looks like that might be the market bottom that we reach, we would say we are still quite risk off and quite cautious Going Forward. Alix we have seen that was in the equity market, even if we are pushing higher. Is that the safest place to then be . Samantha it works really well as an index over the last 10, 11 years. Right now, tech and health care are about 40 of the index. As yourself and many others have been alluding to, theres going to be a lot of changes in a post covid world. We dont even quite know what that looks like. , we letight now. Onsumer staples it doesnt look like it will necessarily be an energy or some is where weve got income, and no is more of a defensive, we went to buffer the portfolio with income. A little bit indestructible at this point, just given how well tech held up , and the margins are still quite attractive. Does make a case for technology and the big cap tech stocks. Alix i love that you brought up Consumer Staples because i also want to tie that into some earnings, nestle in particular. The nestle ceo on the call is saying dont get carried away by the ceoales growth, so saying dont get carried away about that. What is your time horizon for this kind of call . You need to have a quick rotation set up, or are there indicators for when you want to rotate into more cyclical stocks and manufacturing stocks . Samantha it is really hard to quantify the fear factor we are experiencing around this. Sweden tried to go with herd immunity. It kept things open and took a very different tact, except if you look at some of the mobility Data Available online, which is super interesting, showing what people are doing in stores, parks, and retail, people are not moving around people moving around. If you can work from home, you do. I am taking my cues from sweden to say that even if we reopen the economy tomorrow, next week, nothing is going back to normal. Down toeally comes having better treatment and ultimately a vaccine. Theres fog between where we are now in how we get there. It is weird that markets have to be tethered to that, but i think the only way the market and earnings go back on an upward trajectory in a Sustainable Way is you have to have a vaccine, and that is likely a year out. Also want to play defense with things like gold, treasuries . Where along the curve . Samantha yes, we are going to be playing defensive and putting more buffer in our portfolio. It does mean holding more cash, and i would say holding more short fixed income over gold. I know it has had quite a rally, but we would say short duration fixed income, and around treasuries, we dont want to be too long duration, but i think. Omewhere five to seven years maybe that is investment grade, but given that weakness in equities could ricochet and ripple into highyield and into investment grade, i would say treasuries is what we are going to consider really good while to be fixed income for the portfolio right now. Alix we have a huge issuance coming, welcome all the time, but raised next week for shorter and longer duration. Not able tot are we absorb all of the issuance coming . Obviously ais is raging debate about the sustainability of our debt levels in the u. S. I would say it isnt necessarily that the treasury and the Federal Reserve are in cahoots, but the fed is a buyer, and the fed is absorbing that, and we know that. That income a nation with this idea that theres always been demand for u. S. Treasury puts the u. S. And a very special perch. I am not saying it is sustainable or something we should be doing, but we can apparently continue to issue debt, and it doesnt seem to impact perception around the safety and liquidity of treasuries and portfolios. Even though we issue a lot all the time, i think it can continue to be absorbed by the market or in particular by the fed. Alix so i guess the question as we move forward is as we recover , which country is better positioned . Support for bigger unemployment because it is hard to fire people, for example, versus the u. S. The u. S. May be has better fiscal centralbank coordination , not official. Wheres the best bet . Samantha if you want to take a quality tilt and portfolios, the u. S. Is considered a Higher Quality market than international. I think we have to build out the mosaic of the view because theres all these different variables. I would add in health care systems. But if we think the u. S. Has been the hardest hit outside of china, it might suggest that our recession is the longest and the deepest. That actually implies a slight overweight to international. The whole world is in the same boat. Been the one impacted the most. You kind of weigh those things against each other. I would prefer a barbell. Like emerging markets. Emerging market tech is going to be another winner of this whole dynamic after we move through this. Reallyamantha, appreciate it. Thank you for catching up with us. Stay tuned with Bloomberg Television for a deeper dive into markets with bob swan, intel ceo, at 11 30 a. M. Eastern time here in new york. Coming up after the break, defying odds. Sports betting Company Draftkings goes public. We speak to the ceo jason robins , next. This is bloomberg. Alix welcome to bloomberg daybreak. Im alix steel. U. S. Equity futures continue to rally, helped in part by names like roku. Even Royal Caribbean is higher, and beyond meat higher as well. I want to focus on American Express. The highlight is that they are aggressively reducing cost in response to the pandemic. They are also setting aside a bunch of money for bad loans in the firstexpress. Quarter as well. I am trying to find the exact that i hear. Billion. S rose to 2. 6 verizon cutting their adjusted Earnings Growth forecast and missed their sales estimate for the First Quarter. All of that continuing to trickle out. Aseport cutting their capex they try to stem any losses. Yet, in the market, youre still seeing relative risk on in u. S. Equity futures as the european bond market catches a bid. I now want to turn it over to sally bencic, two sonali basak, who has an interview with the draftkings ceo. Sonali sports have been indefinitely suspended as fans are practicing social distancing, but now we have a Sports Company defying the odds and going public today after a number of hurdles. Joining me is jason robins, ceo of draftkings. You chose a really interesting way to go public. You merged with diamond eagle and sp tech, and going public today on nasdaq. How do you feel about going public in such a volatile market . Think one ofow, i the reasons we chose this wascture for going public we thought there might be a bit of choppiness in the markets this time of year. None of us predicted or knew there would be a Global Pandemic , but we did think that with the ofction coming on the heels rally, you year would see some volatility in the market. This is really mechanically an m a transaction. Fortunateut to be that we chose this structure because it would be much harder to go with a traditional ipo right now. Sonali the other aspect of this is that live sports is on hold for the foreseeable future. How are you planning your company around that . What is your expectation about a return to any kind of normalcy, and how your business will be affected by this . Obviously we are all hopeful that traditional sports come back soon. In the meantime, first and foremost we were focused on the health and safety of our employees. Early on, we acted a workathome policy that has been effective. I think a lot of the work that we do, a lot of our employees are engineers, product people. A lot of the work we are doing really are things that were plans to launch months or years out. A lot of that really doesnt change, and what we have tried to do in addition to that is really figuring out ways to engage customers. Theres very few sports going on. Esports has been a big growth category for us. And then we are managing content around things like the democratic debate, survivor, a king thee on tiger other day. Theres always the opportunity to win real cash prizes. We hope that sports find a safe and healthy way to return soon. Sonali do you think the crisis will fundamentally change the way that people consume entertainment . Jason in some ways, yes. I think sports itself has still got a huge amount of demand. Last night was the nfl draft, and we had Record Numbers for betting. I know i was paying more attention then i think i ever have in recent memory. Whether it is through digital streaming and television versus stadiums, where betting occurs more online versus and brickandmortar settings, those whats, we will have to see the ultimate effect is. That that is so ingrained in who we are, there will always be a desire for sports, and how they get delivered and how people engage with them absolutely will change, but the core content will not. Sonali late last year, you told my colleague that the combined company would have about 540 million in revenue, 740 million next year. How do your revenue projections perhaps change now that we are going through this crisis . Its really too early to say exactly how they are going to change. Obviously, not having traditional Sports Impacts us, but really, it is anyones guess at this point how long that will occur and what the impact will be. , hope is that this year certainly we see a return to traditional sports. If that is the case, i wouldnt expect too much of an impact on 2021. But it is really tough to say until we get more information on what the plan is for sports to courts,o the field, the and the ice. Underneath that, there is still some uncertainty around what exactly the trajectory of the virus is. Health officials are having that, so iticting is difficult for the rest of us, too. Sonali as of today, you are going to have a whole set of new public shareholders. To deal with diamond eagle was valued at 3. 3 billion. Where can you see this company being valued a year from now, and what kind of investor interest to you expect outside of the ones you already have . Jason we dont get too caught up be valued over any period of time. The important part is that we continue to grow as a business and create as much shareholder value as possible. It is incredible having our word be our bond, having investors be wee to take two what say. We will focus on how investors should value the stock. Sonali you have big name investors as well. Do you expect them to be longerterm shareholders as well . Jason like all of our investors, we hope that they see that we are doing things to create longterm shareholder value. It is hard to know the personal and individual circumstances that drive how people decide what to buy and when to sell, all of that. I think what we do is focus on creating value over the long investors see that, we will continue to hold the stock. Sonali thank you so much for your time. We will be watching for your shares listing later today on nasdaq. Alix, back over to you. Alix thanks a lot, sonali. Staying with sports, roger goodell, the end of l commissioner, is coming up at 12 30 p. M. Eastern with david westin on balance of power. This is bloomberg. Viviana this is bloomberg daybreak. The number of u. S. Homeowners seeking to delay mortgage payments are now over 3. 4 million. More than 6 of mortgage borrowers have entered forbearance plans since last month. Congress passing legislation allowing them to defer payments for initial periods of up to 180 days. Market backs on the way at boeing. The company is set to slash production of the 787 by about half. Plus, it will announce job cuts. All of that is expected to happen next week, when boeing announces firstquarter earnings. The coronavirus outbreak is crushing demand for new jetliners. Nestle posting firstquarter sales that were better than expected. Worldwide lockdowns were good for business. Considers loaded up on nestle frozen foods. That boosted brands that have recently faltered. And ancludes stouffers alix steel favorite, hot pockets. Im viviana hurtado. That is your Bloomberg Business flash. Alix ive got to say, hot pockets were definitely a staple. Says dont get carried away by First Quarter sales growth. Presto theyss in see nespresso growth march. That is not a surprise. We all need our coffee. Jp morgans chief european economists Research Suggests that restrictions could be eased on those under 60, as this chart shows what we have seen so far. The younger groups have a lower death rate from coronavirus. Economists onciti top of the younger groups are less likely to have health insurance, and all of that is really playing out in the markets as well. Coming up, the covid19 and housing shocks. Bank of america experts expected pandemic to deliver a decline to the Housing Market. Michelle meyer, bank of America Securities head of u. S. Economics, will be joining me next, as we also wait for durable goods. U. S. Markets grind their way higher here. S p futures up by about 19 points on this friday. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Alix welcome to bloomberg markets. I am alix steel. I want to give you an update on the markets. S p futures grind higher. European equities trying to pair their losses. If you switch up the board, you can see what is happening in the currency market. The euro is climbing higher. The cable rate, a rally in peripheral debt in europe. We have seen a selloff on the euro earlier on the fact the eu summit could deliver anything substantial. Now higher. Lets take a look at these numbers. Durable goods for march, the preliminary read at 14. 4. If you backout transportation, the losses better than we thought, just down. 2 . Capital good shipment if you backout nondefense and air also better than we thought, just down. 2 as well. Nonetheless, it will be a string of confusing if not bad data until we find that drop. Michael mckee joints me now. What you make of the not as bad durable goods numbers if you backout transportation . Michael waiting for the breakdown. The interesting thing is that two months in a row exaircraft has come in strongerthanexpected which is a good sign at this point. Hard to know why in march that would have been the case. Certainly the headline figure has to reflect the fact that boeing shut down entirely and nobody is buying cars. As soon as we get some of the details, and im trying to parse through this, exactly what it was that caused that to go up. The other number that was pretty good was shipments were down only. 2 , they were forecast to be down 7 . For the last month of the First Quarter, the business spending numbers seem to be better than we had anticipated. S p up 22 point on the futures market, which highlights what we saw yesterday with 4. 4 million initial jobless claims and stocks rallied because it was not 5 million which raises the question of how much is baked into the market and have we seen a bottom . Michael we have not seen a bottoming of the data because april be will be worse in every respect. We have shut the economy down. We are not at the bottom of the market. The debate is are we at the and wenow on april 24, start going up from here . I think we will see a little bit as state start to reopen. Becausebe hard to tell while a store may be open, are you going to go in and start buying . It will be hard to make comparisons. Interesting story out of going. Them as a big factor in the decline for durable goods. They called everybody back to work this week. 27,000 employees. Them as a big factor in thethen analysts are puttingt the idea boeing will cut its wants to buy airplanes. You see openings, what if the demand is not there, companies will not keep up. It will be hard to get a real picture of how the economy is doing. It is a good point. Thanks a to michael mckee. Joining fee joining me for more is michelle meyers, bank of americas u. S. Head of economics. Bank of america released an updated forecast for housing. To pivot off of what mike was talking about, how sharp and went we reach that bottom of how bad it will get . Michelle the housing data will be sporadic in terms of weakness. Early indicators like mortgage purchase applications are already down at precovid levels. Be akin to what initial jobless claims will show. Survey data is another one to keep a close eye on and we saw big drops in the Homebuilder Confidence survey. If you look at any university of michigan survey, they are planning to purchase a home has fallen sharply. Those planning to sell a home has also declined. The early indications clearly so clearly show the second half of march was a decisive turn for housing along with the broader economy. As mike suggested, the data for april across the board is where you will see the bulk of that weakness. That is where we look for new home sales and existing home sales to be that much weaker along with housing starts. Housing starts a new home sales already started to fall sharply, with the last week of march playing a role. Overall, we think we think well see new home sales fall by about half to about 400,000. Housing starts a bit more than that and home sale slightly less. These are big adjustments. Does all alix how of that feed into gdp . Michelle investments will be down 30 annualized decline in q2 and q3. It is interesting in that housing tends to be a lot more cyclical than the broader economy. It is not unusual to see doubledigit decline of large magnitude in residential investment. Are seeing that across a variety of categories. Housing is not the main push of weakness this time around. It is more a consequence, a reaction to the broader economic decline and the recession. Session while reacting to it. That is different from the last recession warehousing pushed the economy into a recession and made the shock that much more magnified. Alix when we look at the stimulus, how much more do we need . Michelle for housing specific, quite targeted and helpful for two reasons. The fact that personal income will be supported in the next two months, we are already seeing evidence of that. The stimulus payment started to do that in the last week. They will continue to roll in in terms of the stimulus checks. Financial risks, it is painful to see the high initial jobless claims numbers but it does mean people are receiving benefits. Income should help people be able to make their payments fast. The other point is the forbearance program, where people could to later mortgage payments rather than have fannie and freddie, which is a large share of the market. As of last week, 6 of the market has gotten into forbearance. It also relieves some of the strain and means we are unlikely to see the wave of foreclosures we saw during the last crisis or anything close to that because we will not have a payment shock. Alix from a broader perspective, for the whole economy, what kind of stimulus do you think we will wind up with . It feels Like Congress is round, ithe fourth feels more contentious this time. How much do we need . Michelle of course. I think we will see more. We would say the focus would be round, it feels more contentious this time. On prolonging the program. Right now a lot of the stimulus is concentrated at getting the economy through the next two months. Coming through april and may and it seems like the policy is suggesting the economy can reopen and return to more normal in a june. If it ends up being a more partial and sporadic reopening, which i suspect it will, the stimulus will have to be prolonged. The focuses on how you extended the payroll protection program, how do you extend Unemployment Insurance and other stimulus checks into the summer, and very importantly, it will be important to support state and local governments. Those will be the three main focus points of the cares 2. 0 act. And done,is all said you could see 4 trillion of stimulus out of washington, which is 20 of gdp, clearly significant. Alix wow. How to pay for it is the next question. Michelle meyer, great to see you. Coming up, we will take a look at the fed liquidy program in the Real Estate Market. Our exclusive interview with tom barrack of Colony Capital is coming up next. Interact with the charts we use throughout the show at gtv. This is bloomberg. Erik welcome back to bloomberg daybreak americas. a month ago our next guest word the commercial real estate was on the verge of collapse. I am talking about tom barrack, the ceo of Colony Capital, back with us. Good morning to you in california. Tom good morning, great to be with you. Month ago you warned of the commercial Real Estate Market was on the verge of collapse and called for Government Intervention and Bank Intervention to prevent economic catastrophe. That was a month ago. Where are we now. Tom it is a continuum of groundhog day. I think the government has done a great job. Mnuchin,nse of steven jay powell, congress, the administration in addressing the of tapestries that need to be connected was amazing. We did in 18 days what took is 18 months in 2008. Erik does that mean the market is no longer on the verge of collapse . Tom not at all. I think when we talk about know we areu talking about three separate things. It is shadow Banking Systems and individual investors all over the world buying bonds. That system is delicate and frayed and relies on cash flow. If cash flow stops, you have a problem. America of law in north has been if cash flow stops in your eight debtor you are a debtor, there is a system to protect. If your landlord and lenders do not pay, theres a legal system to protect the landlord. All of those options are out the window. We are embedded in chaos, and supporting the liquidity growth in the cessation of revenue is the quest. We have not had a crisis like this. Have one where we just have a government taking revenue. Erik how would you describe the situation . How bad is it now and how bad is it likely to get . Tom it depends on the answer the question how soon do we get to work, which is far beyond my job description. If america can go back to work in waves, responsibly, and start creating income in some of these tranches, tranches being everything. Thehe real estate world, best today being technology and digital. Cell towers, data storage, fiber optics, storage does not require people and stuff, the worst being retail and hospitality. If consumers do not start buying, a big problem we have is this, the separation between the haves and the havenots gets worse the longer this goes on as we approach 30 Million People out of employment. It could get drastic. Erik what does drastic mean . Continue that thought. Tom if we look at the past crisis, and you are 2pac and you are too young to remember, i used to have blue hair i used to have blonde hair and blue making 90. Real estate does not go anywhere. The holders of equity in the holders of debt and occupants of places just rotate. The capital structure gets realigned. Who is the beneficiary of the disaster it ends up being the Little People, not the big people. The big people just restructure, whether it is debt, whether it is equity, they restructure. ,risis is in the Housing Market which is supported by fannie and freddie and a fluid commercial mortgage system, banks do not want to hold residential mortgages. They package those mortgages in trenton as of securities and sell them as bonds all over the world and that is what keeps the Mortgage Market going. Most of the 33 trillion in north American Residential is in a goldilocks era for 10 years. It is gone. To have newsire home starts in municipalities and states on the verge of bankruptcy themselves. It takes time for this tale to catch up. Commercial Mortgage Market and the commercial Real Estate Market sank. Give us of labor. Your absolute right, give us a flavor. It will take time to play out. Give us your best sense of what will happen on may 1 . Tenants. Any has what percentage of those tenets will make their rent payments . Tom less. April it was in amazing to all of us. If you take residential to office, retail and hospitality being the worst, probably down of that from normalcy period of time. The problem is it is a hope certificate. People looking at what is happening and saying ive reserves for a period of time where i can keep going, and what they need is a timeout. It is what we talked about before. When everybody is saying is why cant i just take a timeout . I need a timeout from rent, from interest, i need a forbearance. When the government allows me to go back to work, when things go back to normal, that allow me to pay. That is not happening because of the complexity of the regulatory system. Erik that is not happening to them or to you either. Is there anyway some of those people can avail themselves of some of the Government Support that is available . Can you . Are there any federal programs that colony can take advantage of, and if you could, would you . That is a great question. The federal programs that have been instituted are sensational and a great first step. The answer is ppp and main street are great programs. They are difficult to utilize for companies such as ours and it is a bandage on the wound. It is support and employment based. No, we are not using those. We are encouraging many of our borrowers and users to rely on whatever subsidies they can get to continue to make their payments. We are trying to provide workouts and forbearances to the people who need them. The system is intricate. On top of that, we have shareholders, we have bondholders, we have things like every other company. What i had hoped and what most businesses had hoped, which is an impossible task, is that timeout. It is a broad forbearance. You see it happening in the residential market. , thenish the Little People Big Companies will survive ptolemy has plenty of liquidity. It can manage through the process, it can help its renters , it can help its occupants. The people who get crushed are the people who own equity, who own bonds and debt, who own most of the securitized debt across markets, most of the debt is owned by mutual funds, by for plans. Day, thed of the government will have to step in and subsidize that all if people cannot go back to work. To 10 do a stimulus up trillion. If people start looking at the ramifications business by business, which is dangerous. Big brother and government ending into the middle of all of these businesses and everybody wants it when they want this is the consequence of what we will have to deal with. Congress is doing a good job of trying to look at each other, both democrats and republicans, from saying lets put partisan politics aside. Right now we have to save the patient. It will be complicated. Therell be a lot of turmoil, a lot of agony, and it will be fits and starts. The market will not recover fast. It will recover, but not fast. Erik tom, i will have to make that your final thought. Great to see you this morning. The sun rising behind him in los angeles. That is Colony Capital ceo tom barrack. This is bloomberg. Alix time for technically speaking. Mike mcglone joints me now. We get the durable goods number if you backup transportation, not as bad. As in p futures higher, equities trying to rally in europe. A stronger bond market in europe. What are you looking at . Mike i am looking at optimism versus realism. Fourirst chart is the month, four quarter averages of s p 500. That has not moved much. Overlaid with the Bloomberg Economics team measure of gdp. It looks like we will have a bottom. We are up 2 . To me that is an optimistic view of the stock market and the economy despite the global heart stop that you have to bet on for higher stocks. Alix which i am assuming if you look at gold it is telling you and opposite story. Mike that is the thing. I think there is a much higher probability you will have gold that will continue to appreciate with the whole World Printing a lot of money. The key difference from the last time is gold is basically unchanged. It has a lot of room to move higher. If you look at the s p 500, it was up to hundred percent and that is a big difference from the last crisis, which was basically flat. The mean reversion risk is very reverted gold has just to the alltime high as another 10 and then it starts the bull market. Gold has not even started the bull market, it is just catching up. Alix such a good point, and the optimist in the equity market versus everything else. Mike mcglone, thank you very much. That wraps it up for me. Coming up on the open with jonathan ferro, mike wilson will be joining him. This friday we try to eat out some gains. This is bloomberg. Jonathan from new york city for audience worldwide, good morning. The countdown to the open starts right now. Buting for a week of losses said to take a chunk out of the losses at the open with equity futures positive on the s p 500. We see the bond market treasuries as follows. Yields up a single basis point. 61 is your yield on the u. S. 10 year. A tale of two half this week. Aggressively lower at the start of the week. On the back end we firm up 17 a barrel on wti crude. Lets begin with the big issue. Controversywhere and division is always easy to find. I want to begin by talking about unity. If you told me six weeks ago that this administration, this congress could come