Within the s p 500 on a points basis. Goes back to the idea that the mega cap tech stocks continue to hold their own even with the cautious commentary. With more market analysis, lets bring back Credit Suisse chief equity derivatives strategist, mandy hsu. We are hearing from these different executives about the lack of guidance, lack of visibility. What is the take away for someone like you . What are you hearing from the commentary . Mandy i think the biggest take away from earnings is how little they matter for this earnings season. A lot of ceos are unable to give clarity, unable to give going forward. Much was from last quarter, which as you know, was very different. The most dislocated metric is still correlation, how high correlation is. Extremelyast week, an busy period of earnings, correlation increased back to the march levels, a sign that investors are still pricing this to be a macro environment rather than single stock focus. Romaine do you think there is anything that could break that focus at the moment that we could see out of earnings or Economic Data . Mandy in the near term, my expectation is for correlation to remain, focused on the headlines, the macro Economic Data. As we come out of a locked, get a better sense of what the shape of the recovery will be, that is when you will see more sector dispersion, more single stock fundamentals mattering more. Scarlet just a clarification. I was mentioning, two hundred 54 decliners. 250 gainers. Entrieson there are 505 in the s p 500, you have multiclass shares and Companies Like alphabet and fox. Thank you to the viewer who just wrote to clarify that. I want to get your thoughts on the u. S. China trade rhetoric, concern about worsening relations between the two. A lot of people attributed the early losses in todays trading to that. Etfs orwing up on indexes like the hang seng index or any of the chinese stock indexes . I would say the most clear way is with relative volatility spread between fx i which, as you mentioned, the largecap, versus the s p. That spread typically is positive as chinese equities trade a higher risk premium. It went negative in march as the focus on the virus shifted from to the u. S. Now we are seeing that go positive sharply as a result of the trade tensions. The absolute levels of spread still remain low. The increase going ahead as we get more negative headlines. You look at the current one month spread, currently around 2. 5. The trade is between eight and 13 for most of last year. Romaine if we do start to see a reescalation of some of those geopolitical issues, obviously there was a concern over the weekend that the Trump Administration might be ratcheting up in rhetoric against china. Of to you then start to sort reorient your investing strategy with reescalation in those geopolitical tensions . Mandy the biggest risks to that would be chinese equities. I think that is the biggest risk. I would be looking at downside protection, for example, if you are worried about that risk. Gold is actually one area we have seen a lot of call buying. I would add geopolitical risks on top of the Monetary Policy we have seen as fundamental drivers of higher gold prices. That is another area this is a risk i would look to upside in gold. In terms of the rest of the week, what kind of catalyst do you expect . We have the big jobs report on friday. It will be backwards looking but there are putting of important things to glean from the data. Theey, a lot of communications and Media Companies will be reporting. Mandy you touched on a lot of the key ones. I would still put macro Economic Data on top of that list. Reports from some of these states that have started to reopen as we get a better picture of what kind of pickup in Economic Activity we might expect. I think that would be a big driver for markets going forward. Romaine great to have you on and talk to you. Hope we can see you in person at some point soon in the future. Suisse mandy xu, credit chief equity derivatives strategist. That does it for the closing bell. Next,d you miss . Is where we will be taking a look at Warren Buffetts moves. This is bloomberg. Live fromroadcasting new york to our viewers worldwide, i am Romaine Bostick alongside scarlet fu. This is whatd you miss . ,carlet u. S. Stocks open lower quickly paired their losses and by the close, erased them completely. Crude oil gaining for a fourth straight day. Also turning000 positive in late trading. Biggestthe collateralized Loan Obligations just a fraction of the likely wave of defaults caused by coronavirus. This is according to ubs, the firms head of credit strategy. He joins us to explain. There is a disconnect here. I suppose the easy answer would be to point to the fed and say that it is providing a backstop. Could you give us a little more insight into why there is a big disconnect between what the market is pricing in versus what looks like some pretty dismal data on the ground . Matthew i think there are a few things we see from clients. The first is that volatility will ultimately rebound next year. If you look at the loan space and sectors most affected, we think the ratings downgrades are in the third or fourth inning. A lot the sectors face more structural headwinds. Clos,gest structures, they include sectors like casinos, lodging, leisure, retail, and energy. We think that the market is too optimistic and pricing in a vshaped or w shape recovery. I think the second thing we hear andbviously that the fed the loan programs are very aggressive. That is certainly the case. There are a number of winners and losers. The biggest loser we would say on the back of the main Street Lending szilagyi is really private equity or sponsor firms. That is because facilities are going to bes going to be restricted due to the extension of affiliation rules. The same rules that applied for the ppp loan program that were disappointing because it excluded a lot of those firms. And cashof cash looking for a home on the sidelines given the rally we have had, the loan market continues to be relatively disappointing. If you look at retail flows, 485 million out. The prior week, 391 million in outflows. If you take a broader barometer of demand, it is the clo market and issuance. Issuance is down over 2020. It has been relatively weak even though the fed has tried to step in. Romaine i am curious about the temptation for some investors to maybe do a little bit of bottom fishing. Investors are still hungry for yields. I am wondering, what is the balance you would look for in terms of spreads and other metrics, where you would say, ok , maybe this is worth taking a chance on. Or is it too mottled of an environment . Matthew the underlying for clos traded about 7 above libor rates. , inou decompose that spread our research, we have essentially run different scenarios on earnings. I think the existential question is really, even if the fed and ultimately ishat the solvency or sustainability of the capital structure . The bottom line, we find, for over benign scenario half ofars, roughly those, the more severe scenario is normalization of Economic Activity. If activity rebounds by the summer, that is the more benign scenario. If we are pushed back into the back half of the year or early a greater amount that you will see in the marketplace and about half of those defaults. Andou take those over libor decompose that, we think that in ofse scenarios, two thirds the spread in losses. , investors tend 400 basis points of spread. Even in a more benign loss scenario, we think that investors are not being compensated fully. It is in the downside case, if activity does not normalize, in the sectors. Normalizeet does not for the summer. We think that three quarters or more of the spread will normalize losses. 1100 basis points as opposed to the 700 basis points today. Scarlet you mentioned some of those troubled industries. What kind of demand do you see for credit default swaps on casinos, retail, Energy Sectors . Matthew it is still most aggressive in the energy sector. That doubled the spread. In general,wer, retail is underage substantial amount of pressure. I would say the category that has performed best, and probably , is reallyve basis casinos and gaming. Energy at the top, leisure leisure, then gaming, worst to best in the way credit is pricing the sectors. Romaine fantastic inside. Ubs head of credit strategy. Coming up, Warren Buffett bails on the airlines. What that means for the Airline Industry going forward. This is bloomberg. But it isossible, going to be extraordinarily ambitious and challenging. President trump is right that it typically takes many years to produce a vaccine. I would say, for many, it has taken 10, 15 years or longer. To compress that to a 1218 month goal stated by the u. S. Is in and of itself extraordinary. To set a target of having meaningful quantities of vaccine by the end of this calendar year is extremely ambitious. I dont think anyone can guarantee that this will happen. What i can say is that the industry is doing its very best, as well as the regulatory authorities, to make that happen. That takeda is trying to develop a vaccine, also a plasma business you are trying to direct toward covid19 treatment explain why you would do that given that there are some of the efforts of vaccines out there and they are not all guaranteed to make money. Wes is the reason why decided not to start our own Vaccine Development program. There are well over 100 companies, as we understand it, and entities. We feel that our role is to best partner with one of these companies that shows its vaccine is safe and works, and to bring the manufacturing into our japan manufacturing facility where we have a lot of experience in making vaccines for the population. That is our vaccine effort. On plasma, it is a very different story. We are one of the largest plasma product manufacturers in the world what we decided to do early on was to take this capability to produce a plasma formulation that has very high antibodies against the sarsc ove2 virus, which is the one that causes covid. What we want to do is give people who have covid illness access to the antibodies that their bodies will develop for two weeks or longer. It is essentially taking a loan on the antibodies to use to treat the illness today in hopes that it will be less severe, will last as long, and you will go home more quickly. This is still in development. We hope we will have the necessary data to show efficacy on an ambitious timeline. How scalable is that, given the fact that it relies on people with the antibodies effectively to harvest those from them, then concentrate them into substances that you can give people. On what kind of scale can this be done . Rajeev great question. This is complete depended on having access to enough people who recovered successfully from covid illness. You need to have large numbers of people donating in order to treat large numbers of patients. The unfortunate circumstance with a pandemic is that every day, more and more people are getting infected now it is a matter of letting those people who have recovered know that they have an opportunity to help other people. I would be remiss if i did not mention what tom hanks said just a few days ago after he donated his plasma to others. He said, it was as easy as taking a nap. If you can do that and save someones life, i think that is a good thing. Romaine we were speaking to the head of Global Business at Takeda Pharmaceuticals speaking a little bit earlier. The Airline Industry has been one of the sectors hit hardest. The latest knock was that news that Berkshire Hathaway had sold off its main stake in four of the main carriers in the u. S. Justin bachman covers airlines for bloomberg news. An idea that you remove investor like profit out of this industry, you remove a level of support that people thought would be there for a while and could be the potential saving grace of this industry. Is the industry on enough solid footing . Moment, thehe answer is yes. They have lined up as of dollars in liquidity from the government and private sources. They will get just fine in the next few months. I think the question becomes, how long does this revenue downturn last . A lot of analysts are worried about, if this is the current state at the end of the year, then things start to change. Then you see some airlines get into financial trouble as far as their cash position. When passenger traffic returns is really the trillion dollar question for this industry. Scarlet all of that depends on how the virus behaves and how we respond to it. When it comes to Warren Buffett and his comments, we know he exited four carriers, but he is still very much exposed to the industry from the last acquisition he made it he made it that acquisition was tied to airbus. It is not like buffett is out of the industry completely. Justin not at all. He will still feel some financial pain in terms of this Aerospace Parts business. It is really not just boeing and airbus. When you think about all of the various suppliers, smaller business jet producers, the potential for governments to cut back on defense spending, which is also part of the business, it could be several years of a position where that business is down and buffett is hurting in that as well. As far as the Airlines Getting back up and running. Its the idea that it will have to by default be at a lower capacity and presumably at what might lower prices . Initially, yes, it will be at lower capacity. The jets parked around the world, they are not all going to come back. We are going to see newer airplanes that do come back. The older ones probably will not. You have to remember that airlines will get their capacity in line with demand. Whenever that happens, that is when you see pricing sort of become stable and rise. That is what we probably are going to see. Scarlet Justin Bachman joining us from dallas. Thank you very much. Coming up, investors are preparing for a renewal in u. S. China trade tensions with President Trump criticizing beijing in its coronavirus response. Hope this mean for the phase one trade deal what will this mean for the phase one trade deal . This is bloomberg. Scarlet President Trump sharpening criticism of beijing demanding answers over the origins of covid19 and reigniting trade fears on wall street. We want to welcome in wendy cutler, a former senior u. S. Trade official who is now at the asia society. It is great to speak with you. We know that the president has on occasion pointed his finger at trying to deflect criticism of his administration. Goode same to making reminding everyone that beijing very much covered up everything, at least initially, when it comes to covid19. When it comes to the administrations and goal, what do you think this will mean for trade tensions between the u. S. And china, and in particular the implementation of the phase one trade deal . Know, theyou president is very concerned about the covid response, or actually lack of response. The administration is considering a lot of options. What concerns me is that the phase one trade deal is somehow being brought into that narrative. China seems to be on track in thes of implementing agreements it had agreed to. If the administration, and trump himself, is interested in escalating or reescalating this the peak sort of a sub sleeve was he had a relatively Strong Economy that could sort of whether any disruptions. Now, that is not necessarily the case. Wendy i think the talk of imposing more tariffs is going u. S. Are u. S. Companies, workers, u. S. Consumers. Workers, theages, notion that we are going to charge them more money kind of goes against everything we are trying to do with respect to getting our economy back on track scarlet if the u. S. Decides to impose more tariffs on china, will it find the rest of the world in agreement . We know there has been increased tensions with the way china has tried to handle covid19. Wendy i think a lot of other countries are starting to side with the United States in terms of wanting an answer. So, yes, they share concerns, but then we get to the issue of tactics. When it comes to tariffs, we have seen time and time again that other tariff partners dont support hikes from countries that go against the rules of the world trade organization. That has comehing up amid all the covid19 disruption is this idea that maybe there is wisdom in trying to move more manufacturing back to within your own borders. A lot of even some of the services we were sort of importing from china and other countries to get think that is a trend that the administration itself has been pushing, that industries will embrace more than they had, say, a couple of years ago . Wendy i definitely think, as a result of covid, for a lot of countries and companies, it has been a wake up call. A lot of sectors were over reliant on china. I think you will see a reassessment of supply chain, of paying so much emphasis on lowercost, efficiencies, and trying to achieve that allens with achieving resiliency and diversification. I think you will see a move to either regionalized supply , and also encourage the formation of supply chains with other countries, with other allies and partners. Trusted trading partners. Think we are going to see those trends. Romaine always great to get your insights. Wendy cutler with the Asia Society Policy institute. Lets get over to mr. Crumpton. Mark President Trump has raised the number of americans he expects to die from the coronavirus. He told fox news that the number could be as high as 100,000. At the beginning of april, he told the press he hoped the deaths would total less than 60,000. More than 67,000 americans have died so far. Congress is squaring off over more stimulus funds. Pushing for a trillion dollars in new spending, adding to the 3 trillion already allocated. It comes amid objections from republicans and demands from President Trump. Republican lawmakers are finding to that idea. Thawing to that idea. Israels top court is challenging Benjamin Netanyahus bid. It is argued that a new unity government would conceal the Prime Minister in a corruption trial. Mr. Netanyahu was indicted in november. If the court rules against him, it would likely trigger a snap election, the fourth in his rule since 2019. The winningest coach in the National Football league is dead. 23 seasonspent coaching. He won backtoback super bowls with the dolphins. Only972 dolphins are the nfl team to go through the entire season unbeaten. Hall of fame football coach don shula was 90. 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. I am mark crumpton. This is bloomberg. I dont really know what i am doing. I am trying to figure this out as i go. We have done everything we can to make sure that our hospitals are wellequipped. That is also why we have built this software, because we believe that this is important going forward. That is why we will have a chief Health Officer at salesforce. Adont know how we can manage Large Corporation around the World Without end. Are we in a recessionary environment . Are we in a depression area environment . To makeaking actions sure that we can be successful but also that our customers can also be successful. What is your assessment of how the Trump Administration has handled the crisis and what needs to be done . It is hard for me to opine on government response. I have a lot of empathy for the situation. This is my first pandemic. Not only for our government but a lot of governments around the world, it is their first pandemic. For those who have been through pandemics before, like south korea, taiwan, japan, they have done a much better job because this is not their first time at this. , we havekorea employees going back and making sales calls with customers. Reopenh korea, we will it they are modeling for us here. N the United States as we have our second or third pandemic, i hope we will do a much better job than with our first one. You have called another companies to make a 90 day no layoff pledge, which you have made yourself. What happens after 90 days . Can you reup that commitment or do you think that salesforce may . Ave some layoffs of their own the first phase, this 90 day crisis, we really called out and said, lets not layoff anyone in the first 90 days. That is difficult for a lot of companies to do but a lot of companies followed us and have made their own 90 day pledges. Now, we have the ability to come back to our offices fully intact as an organization. Us and important for others. For those who have let go of people or are experiencing a need to rehire, ill that the government in the second phase gives companies incentives to rehire aggressively. Emily going into this, you have been very outspoken about big tech, facebook in particular, very critical about facebook. Obviously, washington has had its eyes on big tech. There has been discussion about whether this will make some of stronger. Ch companies i wonder if that is something you are concerned about . It is very important that every company is doing what they can to improve the state of the world with their organization. You have to ask, what am i doing to improve the world for my customers, both commercially and philanthropic lee. Philanthropically. With the spread of misinformation, giving People Health information, it is unacceptable. I was encouraged when i saw you organizations cannot be giving people the wrong health information. You have to step in, regulate these social Media Companies, hold them accountable. They should be accountable for saying what is true. Theine we were speaking to salesforce ceo marc benioff. And sycamore have agreed to mutually part ways. The deal in february to buy a controlling interest in the tory is secret. The company is in victorious secret. Will stillying it pursue a strategy of making victorias secret a standalone business. Also saying that bath and body works will become a pure play public company. We want to talk a little bit more about the recovery and about a lot of folks trying to get back to work. As parts of the u. S. Economy start to reopen, many businesses are facing the challenges of how to reopen their offices. sts and the ceo of jll business, thanks for being here. The big question a lot of us want to go, particularly people like me and scarlett who normally would work in an open office environment, open floor plan, how to this types of businesses who have open floor plans, where scarlett can just reach over my desk, grabbed my gummy bears and i can stick my hand in her bowl of popcorn, what is the future of my relationship with scarlett . Its great being with you guys. Those kind of questions are on the minds of our clients. The way we are approaching this is that it is about the next normal. As you and scarlett sit next to each other, and we have started talking about this as a new normal. The newness will wear out. As a continuums between reentry and we imagination of work laces. Reentry, we have to address as a community, as Business Partners with our clients. Everything from making sure the space is safe, to health and wellness, and also making sure workplace operations, simple things that sound simple but require a lot of attention around air quality, around making sure that elevators have grids marked out so that people are standing away from each other. To answer the question, where we are going in this continuum, initially, it will be blocking off spaces so that you are able to ensure social distancing between you and scarlett, as an example. Dong forward, how organizations invest into into designing spaces that are safe . Scarlet i will put the popcorn on the empty desk between romaine and myself. Bloomberg had a story last week due to the challenges between new york. When we get to the lobby, we cant take the elevator at the same time, can we . Sanjay initially, from a reentry standpoint, we are is ang our clients with Strategic Plan to make sure that reentry is phased, that there is staggering of people, so who arrives at 7 00 versus 8 00 versus 9 00, that the floors are marked for passage of people on one side of the aisle, for example, and that the elevators have grids marked in them for is really critical is making sure that there is a strategy and everything is planned and communicated. Communication will be so important. There will be a lot of anxiety and nervousness to coming to work. The last thing people want is lines around the block trying to get to the elevators. One of the interesting things we have seen companies talk about is doing temperature screenings and other monitoring of health data. Particularly, we have seen this in some of the factories in the manufacturing sector. I am wondering, does this raise any issues with regards to Health Privacy and just the willingness of employees to share what could be Sensitive Health information. Sanjay we hear these requirements around the globe and they manifest themselves slightly differently. The way we are approaching i should speak for my clients. Many of them are approaching this by allowing a voluntary screening, even if it is as limited as filling out a survey before they leave home, or asking them to voluntarily report and actually not show up to work. A lot of this in our environment is skewing towards more voluntary rather than mandated by organizations or corporations. Scarlet i know that you are looking at commercial property, but i wonder how much of this can be applied to schools, to be education sector, whether it is preschools, daycare, universities. I think this idea of social distancing has applicable applicabilitys with regards to classrooms. I have not touched it much around that part of the business, so i see some applicable he, but i will stop there. Rishi, ceo ofay jll corporate solutions. This is bloomberg. Romaine welcome back. Joining us at this time is joe weisenthal. Normally, he is here for the all show, but because of social ustancing, yes to only join he has to only join us at the end of the show. I was looking online and i found that a lot of nations are starting to push for this idea of digital taxation, or at least expanding that to potentially make up for the whole that has been dug because of the covid19 recession. Joe it makes sense. Already, this has been an issue anan extraordinarily extraordinary amount of commerce and profit is generated online taxes make it harder for the government to get their slice. Now you have this situation where there has been such a rapid acceleration of the trend from physical online covers, plus other things like online advertising, other forms where people make money online, and at a time when suddenly government is finding a huge hole in their budget. Around the world, you would expect to see more companies figure out how Digital Commerce can be taxed. Scarlet of course, each country wants to do it right away. Normally, you would have the countries sit down, figuring out , and come up with some global framework. You can do that nowadays. Trump had a great quote from if they are going thee taxed, we want to be ones collecting it, not other countries. Bluegreat story on the work about how indonesia is looking at other ways to tax Popular OnlineServices Like zoom or netflix. This creates a real political issues because both zoom and netflix are created by the United States, or were born in the United States, so to speak. On tax that would be imposed another country by their activity what essentially coming out of the share owning of the Shareholder Base that was heavily in the United States. With the sortes of transnational taxation of commerce. Which is why, these types of things in theory would be ideal if the countries can sit together and agree. But they cant sit together and even if they could, they probably would not agree. Romaine before we go, you have been camping out on your ranch down there. This is the first weekend that texas has started to reopen gradually. What if any changes have you noticed . Ride toent for a bike see if i could see some signs of freedom and other types of people coming out of their caves and so forth but, through this, i did not see much. It seems that people at least around where i am remain pretty locked down. Scarlet stay safe when you do go out there. That does it for whatd you miss . Have a great evening. This is bloomberg. Welcome to bloomberg technology. Tech the only gainer in a sea of red today. D aunt s pand 500 in slightly positive territory but the nasdaq positive. Dismalmore and more Economic Data. President trump meantime