Even pharma is down. One thing you have pointed out is the volume and how it has picked up as we sold off today and extended yesterdays weakness as well. Yesterday volume had dried out and people were sitting and waiting. You are seeing a pickup in activities this week. What do you think that signals . Brent i will go back to my opening comments from the standpoint of people who are shortterm market participants, thinking of the next couple of weeks what is volatile given the reopening has started and we will get realtime feedback of how that goes. There will be spots where it will not go as well. If you have those setbacks in those areas, that would be a nearterm market detractor. We will find ways to deal with this. Treatment,ccine or these have become political statements, but i do think america will find a way. That is what capitalism and democracy does. It adapts to problems historically. We have this big blanket of the economy which was a thing we needed to do and now we are finding ways to be more targeted and thinking about how different parts of the economy can reopen, different states, and how we manage that in the future which to me means Economic Growth rate we were almost all the way closed a couple of weeks ago, now having some part three open, it is better but there is risk involved. Nothing political at all about talking about the resiliency of the u. S. And americans. When you look at the potential opportunities that could arise out of this crisis, can you give me a sense of what you are looking to towards the potential industry and general economic changes investors maybe the benefit from once we get to the other side of this crisis . One thing historically, recessions have consequences and cause leadership changes. That is it was hard to figure out why tech and health care would not lead, and they did. , around china we are in a time where sectors i have much and not worked so well otherew years as well as parts of the Global Economy which have lagged behind. Those economies have problems with valuation being cheap. All it takes to have some spark and incremental positive. On the fixed income side, tips are an alternative to nominal treasuries, given the fact people believe inflation will be low forever, which if you are laying even a more fertile environment, you will get did and the issuance through all of the monetary policy. Not seeing it is coming soon but the opportunities longerterm that end up being the bigger winners are the ones you dont think of now, which dont appear obvious. I am looking for one of those. Wont our reporter wrote a few days ago that options are higher for six months out than a year out because of the election which is under a half a year from now. What different risks do you see for different asset classes, not just equities but fixed income . Think the election, we will start ticking about that in the coming months. It is certainly going to drive part of what happens in the next expansion. The areas we are watching, it is united. It has modern monetary theory , one party was thinking more about, not sure of the fiscal prudence in washington anymore. Buybacks not being as prevalent as in the past and how that might change. Virus is front and center, but you will switch to thinking about elections. The biggest thing driving the markets is the virus and that once we get the election and get closer what happens after that. Scarlet cisco has reported results, thirdquarter revenue of almost 12 billion, just shy, when analysts were looking for 11. 7 billion. With thirdquarter adjusted, leading the consensus estimate by a dime. Cisco is giving an outlook saying it sees fourthquarter 11. 5 , down from 8. 5 to better than anticipated. Aalysts were expecting around drop of 12 . Season adjusted eps better of what analysts were looking for. And finally cisco said 90 of its Global Workforce is working from home. That is fairly consistent across the tech companies. Romaine more earnings coming out, Smaller Companies and less consequential. This one went public last year. Revenue one quarter 197 million. They did have a loss, the shares moving lower in afterhours trading. I want t to brent. We have been talking about the u. S. Market and economy. When you look beyond our borders at the other markets europe, emerging markets, the you see any reason investors should be paying more attention to those areas with regards to potential Investment Opportunities . Brent they are cheaper. I hate to bring up the valuation but they are cheaper. They have not done well, reflective of the fact their economies have not. I think about you merging markets in general, some of those, if we are to believe the numbers, they are back open and youre seeing Economic Activity pickup. So right now that appears to be a decent place to have allocation just because they are open and they have been able to, korea,uth korea south taiwan, they have been able to adapt and to deal with the virus which means they are producing Economic Growth. Brent sxhutte, thank you for taking the time to speak with us today. That does it for the closing bell. We will continue the conversation on emerging markets where we look at the policy response to covid19 and what does it mean for the assets. This is bloomberg. Romaine broadcasting live to our viewers worldwide, i am Romaine Bostick alongside scarlet fu. Scarlet lets get you a snapshot on how u. S. Stocks closed on the day. Another day of decline. At one point the s p fell for a second straight day. We did pare losses into the close. This on the heels of some disappointing guidance from fed chief jay powell who talk about the uncertain Economic Outlook and the economic ramifications of covid19. Of cisco you a recap systems which reported earnings after the battle. They reported thirdquarter revenue and profit that beat analyst estimates and the Quarterly Outlook also comes in higher than what analysts were looking for. Analysts were looking for a drop somewhere around 12 . Onwe are keeping an eye cisco as its shares rise in after hour trades. Back to the big picture. It was the fed that stole the spotlight. Jay powell painting a gloomy picture for the economy saying he sees significant Downside Risks but also emphasized the central bank is not considering negative Interest Rates. It is an unsettled area i would call it. There are fans of the lessee but for now it is not something that we are considering. We have a good toolkit and that is what we will be using. Scarlet lets bring in market data. Mark cabana. You are the perfect person to discuss the prospect of negative rates with. Jay powell pushed back against it but did not rule it out either. Market extent can the push him or pressure him into negative Interest Rates . We have seen them pricing in that prospect. Mark it is a great question. I think the chairman was very clear that negative Interest Rates are not attractive at present. There have been a number of fed speakers that have said some ung from thee s same songbook. It is unusual. Negative Interest Rates are not something we will see in the near term and we think this is something the fed might be considering. That is not the case. Powellntly what chair said is the fed would prefer to focus on other policy tools like asset purchases, some of these didntsual, but the fed say they would ever would never consider negative Interest Rates. We will not see them as you have this composition of fed officials. A this safe to say it is not something we will see in the next few years. The market is pricing possibility of negative Interest Rates deeper into 2021. That seems fair recognizing you could have different leadership at that time and you could have a shift in thinking at the fed around negative Interest Rates but in the near term it will not happen. The fed was clear and there is operational challenges the market would face if they wanted to take rates negative right now. Not something in the cards for the next few months and quarters. Brings up the question for investors in sovereign debt in the u. S. Are you still comfortable being when bouncing near zero in terms of phenomenal rates and you have the delusion of treasury issuance coming down the pike this year and next . Mark yeah. If the fed is not going to go negative, what will they do . Why would a fixed Income Investor want to have a long bias . We have been recommending this within the 50 to 80 basis points range because the fed is not raising Interest Rates at any point in the near future. We think they will take more overt measures to signal that rates are going to be low for a very long time. They will focus on their asset purchase pace in the coming months. One thing the chair and others have suggested is we need fiscal policy in order to help address what ails the economy now. What the fed can do is lower rates so far are we are not in a recession because Interest Rates are too high. It is because people dont feel safe and cant go out. You need aggressive fiscal policy to fill that aggregate demand gap. What the fed is telling us is they will be supportive of fiscal policies. Seems like the fed will be rather aggressive in the pace of asset purchases to facilitate easing fiscal policy in the near term. Chair powell didnt say that but recognizing that is the lever that needs to be pulled right now, it would seem counterproductive if the fed would allow the upcoming treasury supplies to push Interest Rates higher and tighten financial conditions. We expect the fed will stay on the other side of that and remain low for the for seeable du jour. Future. Eeable scarlet how else do they address fiscal policy . Mark they could use some form of enhanced Forward Guidance that might suggest they will not raise rates until prices reach a certain level or the Unemployment Rate reaches a certain level or nominal and real gdp reaches a certain level. That would give confidence, pricing a low trajectory of the federal funds target for the foreseeable future. The fed can ease conditions by buying mortgages, limiting the rise in Mortgage Rates and to preserve the flow of credit which a lot of the nontraditional programs are really aimed to address. The fed could ease the terms on the programs they have put in place. What we hear from investors is becausewill be limited of the onerous requirements to disclose names and certify certain elements of the program. If the fed were to think about easing conditions, that would better support the flow of credit and support risk assets. We only have about 45 seconds left. I want to get your thoughts on money markets. I wondering if you think they will continue to slow and maybe even reverse with outflows . One great great question. As long as risky assets remain around current levels we were likely that we will likely see the pace dissipate. Some analysis has shown three months to six months after a sharp risk asset direction, you see outflows from the money fund community. We are not there yet, but it is a risk to watch in the near term. If you see them, the fed will have to be aggressive in the pace of purchases so Interest Rates dont rise to much. Romaine great to have you. Always love to get your insights. Mark cabana. We will talk about cisco earnings, they did drop, the shares kind of fluctuating in afterhours trading. This is bloomberg. We want to get you up to date on what happened with cisco. Reporting thirdquarter profit and beat analyst estimates and gave an outlook for revenue that topped the consensus estimate. We are seeing the shares slide in afterhours trade. Romaine they are sort of rising. We want to bring in a Bloomberg IntelligenceSenior Technology analyst who covers this company and does more about it than we do. I know the results just came out, but what jumped out about the results . I will tell you one thing. They were better than feared. The one thing is [indiscernible] the results i which is driving the eps for the quarter. Which is driving the eps for the quarter. 10 drop on the year on year basis. They were looking at 12 drop. All things considered, given the environment and enterprise exposure, i would have thought it would have been lower than consensus. It was more resilient than i would have thought. Perhaps that is because of internet and Video Conferencing use, that part of the business, which is up during the pandemic. What guidance did the company say that could move the stock in a meaningful way during the Conference Call . I think they will talk about the Enterprise Spending environment more than anything else. They dont guide to a segment level. It seems as if some of the bookings they may be getting, the efforts they have done the last several years in terms of software and revenue services, that may be providing a bigger question than what the consensus may have been factoring in two expectations. To expectations. Romaine the dividends on buybacks, is that safe still . Yeah. Cash was actually up on a sequential basis. I dont have the Share Buyback number for the quarter, but if i 2008, 2009he financial crisis, even with a big downturn for these guys, they were cash flow positive in this quarter. They have a boat load of cash. I would not be surprised if they continued to buy back shares. The dividend is safe. I would not be surprised if they will be active on m a in this environment, to look for companies, capital squeezed companies to fill in technology gaps. Scarlet what do they need to address . The things they have been going after the last couple of years has been on the software side. They want to bolster their through the networking business, where everything is going. They want to be less hardware dependent. The other thing is to buy chips as well. Ast he covers cisco part of his coverage at Bloomberg Intelligence. Cisco shares are higher and afterhours trading. Americans getting coronavirus testing before the rest of the world. This is after if the french drugmaker can deliver. The ceo said the u. S. Was first in line to fund the companies research. The companys research. Europe risks falling behind. Royal caribbean cruises selling me . 3 billion of secure bonds. They will have coupons selling 3. 3 billion of secure bonds. Selling the bonds allows the cruise line operator to shift the one year majority maturity into longerterm debt. U. S. Inflation at the wholesale level, prices falling the most since 2015. The ppi was down 1. 2 from a year ago. That reflected the drop in Energy Prices and the demand. That is your business flash updates. We discussed emerging markets earlier. We will dig into it more because em is making a relative come back. Some investors think we will see selloffs later this year. We will jump into this with this is bloomberg. Romaine after the worst rout since the financial crisis, financial groups recouped 3 trillion in market value. Seeing a technical bull market, record lows in dollar debt, but there are some folks on the other side of this trade here. Perhaps valuations are not up to speed with Economic Outlook. For more on what is going on in emerging markets, we want to bring in denise simon, cohead of emergingmarket debt lazard asset management. Fore is a case to be here being in em assets, perhaps even turning your back on them. Can you give us a sense of how much clarity there is right now for em investors . That looking at emergingmarket debt in creditlar, hard currency for sovereigns and corporate, when you look at the Balance Sheets coming into this crisis, they were in good shape. Debt to gdp around 50 . Even with the big shock where we will see a big drop in growth, seeing fiscal deficits expanding, they can afford to have some expansion on their Balance Sheet. This selloff that we saw where you see the higher grade names have access to the market, very resilient Balance Sheets, prudent macro policy, policymakers have been able to respond to the crisis to support domestically, it has been, the selloff has gone beyond andamentals and then been opportunity. Scarlet are you separating this by sector, industry, or country . The way each industry reacts to the pandemic and the fiscal assistance it is able to offer could override concerns about the industry. Think i would look at asset class, credit. These countries and companies are in a good position to whether the shock. Then i would look at countries coming into this with not overly macroged, that have good solid management and can have react toace to this, then look at countries like russia which, despite the oil shock and then also having they have not seen the Inflection Point on the infection yet, their Balance Sheet is strong and resilient. They have less than 15 debt to gdp, 550 billion worth of reserves. Upthere bonds are actually this year their bonds are actually up this year. There is room to go. So for Investment Grade credit 200,that, they spread over looks attractive. What has been interesting in this selloff is i think sorry. I want you to expand on that. The russia thing is very interesting. A lot of folks have not paid attention to the Balance Sheet issues or rather benefits that they have. We have seen this with other em nations, that a lot of them, low inflation environment for a lot of these countries, others with low levels of dollar denominated debt. I wonder if this puts them in a better position to weather whatever downturn we are in and the length and severity. Denise i think it does. It puts them in a good position and with core yields at low levels and likely to stay that way, investors are searching for yelled. Emergingmarket debt makes sense, the hard currency side, in that environment. I have been doing this for 25 years. We are seeing a lot of interest this anestors to, is opportunity, the selloff gone beyond the deterioration we might see in fundamentals . There has been a lot of interest, people not selling into this, they are looking at this as an opportunity. It is a big universe and there are countries that will have issues. You have to be selective. There are things you want to avoid. By want to look on a country country basis and be selective. Scarlet do you have a call on em . U. S. Dollar to invest in can you be ambivalent on the dollar and still do so . Denise you can in general. They dont have a lot of color genomic dollar denominated debt. Stronger dollar should not hurt. What does add pressure is a stronger dollar means tighter Global Financial conditions. That hits growth. There the assets that would be more vulnerable would be local currencies. I dont think a firm dollar would put those at risk. One last question. I am curious about the room the Central Banks in the em nations have to maneuver. There has been a lot of talk about the u. S. Bumping up against negative rates or lower bound of positive rates. Have less roomm to maneuver, whether you see any issues we should be flagging. Beene what has interesting is countries do have room to lower rates because inflation has continued, continues to come in on the low side. You have got highyielding countries like brazil where inflation is going to be 2 this year and in countries like south africa where inflation will be a low three. Below three. There is still room. To lower rates. Yes. Scarlet thank you so much for joining us. She is the cohead of emergingmarket debt, appreciate you joining us and sharing your thoughts. Lets go to mark crumpton. Mark House Speaker nancy pelosi trillion price pandemice democrats relief package. She said it is needed to combat the villainous virus and economic collapse, saying the American People are worth it. She ignored the proposal is a starting point in negotiations with President Trump and republicans, who have dismissed this relief bill heading for households. Instead of doing something they want to pause. There is no pause in hunger or joblessness or not being able to pay the rent. American people are in pain. It is heartbreaking the number of people who are dying and infected. We have to address it and do so in a big way. Mark the package provides , twoy 1 trillion in aid essential workers and a new round of Cash Payments to individuals. In new york state four out of 10 regions are ready to open this friday. New york city is not among the areas set to reopen. New york state has had 340,000 cases of coronavirus, 22,000 new yorkers have died but that does not include 5000 deaths in new york city that were attributed to the virus on death certificates but not confirmed by a lab test. Germany is reopening borders. Angela merkels government hopes to return to normal operations at land boundaries in maine in june. Your travel will remain restricted. Germanys huge economy and location, bordering nine countries, gives them a crucial role in reviving travel in the region. The u. S. Supreme court wrapped up two weeks of argument by telephone because of the pandemic. They heard cases about President Trumps tax records, religiousives and text disputes. The decisions are expected by early summer. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Scarlet the u. S. Economy remains unpredictable. It depends on the course of the disease. That makes economist jobs even harder. We got some projections. Is q2 sees aation steep decline. Strong centrale growth in the second half was 29 q4. 3 and 11 in from that perspective it is a fairly rapid recovery. If you look at the year on year rates which might give you a better sense of the underlying trend, we are at almost 13 in the Second Quarter and a decline of more than 5 year on year in the Fourth Quarter. 5. 4 s important because in the Fourth Quarter would be the weakest number in postal history on a year on year basis. It is a partial recovery, faster in some sectors than others. Industrial and construction will recover more quickly than Consumer Services that involves facetoface interaction. That will be a disrupted sector until basically we have found better medical options, and that seems like it is a ways off. Model inch do you terms of what we need to see from the government to help support the economy and get to your forecast . I think we need additional fiscal support the building in phase four which would deliver another 500 to 600 alien dollars of 500 billion to 600 billion in 2020 and additional numbers beyond that for 2021 1t are above that, another trillion. That is our expectation, that we will get in particular a significant amount of support for state and local governments very we are not assuming what was in the Health Package passed yesterday. They had 1 trillion. Dont think it will be as big as that with will be more. We think the expanded Unemployment Benefits are going to be partially extended and we are expecting another round of rebates to households. Substantial amount of additional help to build on the effort that has been made which has been substantial. We have seen a large amount of fiscal support, in absolute terms and relative to other countries that have been hit by the same shocks. That is one of the ways in which placed. Is maybe better than other places for economic recovery. There are also ways the u. S. Has bigger problems. The virus situation, the confirmed numbers, active numbers, while improving, it is not improving as quickly as in other countries. On the fiscal side u. S. Has done more. Romaine we were listening to the chief economist at goldman sachs. We will start now with tesla. Californias Alameda County said yesterday tesla could prepare for a possible reopening next week. But operations appear to be up and running, raising questions whether they are in violation of a local lockdown. Tesla said it would defy county officials who ordered it keep the factory closed. Deutsche bank is the first major bank to say it will resume job cuts after the outbreak what the plans on hold. The ceo says transformation is essential. They are restructuring efforts. And the human cost of reducing producing cheap meat is pushing people to look at changes that will make American Meat more costly. Social distancing, now with the measures taking place including trying to automate lines fully thich could lead to higher mea prices. That is your business flash update. If you have been in a grocery store, prices on a lot of Meat Products have started to creep up. Absolutely. But it is interesting. Chicken prices have stayed relatively stable and have not risen. Part of that is because chickens are pretty uniform in size. Most of the Assembly Line process is automated so you dont need as many workers to do the work those who work on the Assembly Lines for beef processing or pork have to do. When in doubt, get more chicken. Easy for you to say. They are in your fixed freezers. For those of us who live in the city, we dont have any way to store that. Scarlet that is why you get chicken. You can stuff it in the corners of your freezer. I only have two fridges, for what it is worth. Romaine fancy. Scarlet i have three boys i have to feed. Romaine you do. I am looking forward to when this is all over, you can invite the other me over and we can have dinner out of your fridges. We have Serious Business to get to. Smart charts with abigail doolittle. I believe abigail is standing by with that. By for smartnding charts. Before we bring in our guest, Walter Zimmerman, we had choppy action recently, two down days. Thet 2 drop in each of days. Folks are wondering if it is the beginning of some test of this years lows. Here is a relatively nearterm chart of the s p 500. What we are seeing is the choppy trade we have had the best two days even though it is to the withide, it is consistent the range the s p 500 has been in or about a month. Couple of weeks ago, the range presented more bearish late because it was starting to reverse the uptrend shown. With a test of the support around 2800, if it holds, the range is becoming bullish because of the equidistant highs. This is called a sending triangle, consolidation before the next leg up. The target is not just the old highs, 3000 or 3100, but closer to 3150 430 200. If it is below, we will see that range to the downside. Right now it is bullish. To talk about this range and someone who wants to offer a bearish view on the longterm, i would like to bring in Walter Zimmerman from i cap technical analysis. Thank you for joining us. There is some chance we could move. Side before a huge can you talk to us about the possibility . My key level is slightly below yours, 2775. Has been ranged down for a month but it has been below the 618 retracement of the drop from 3393 to 2191. That is consistent with the bear market correction. The picture i am looking at this chart is extraordinary. I saw your target and almost fell out my seat. Wave, going tot 3393 works very well. It is a completed five wave move. If that is a completed five wave move, the entire advance needs to be corrected and the entire advance will be corrected, then i think at minimum we are ifking at 1710 first 7 you look at the decline off of the 3393 high as adc, where we , one pointhe a leg c at 1750. 1710. 1750, theree that is a high probability target. This skill, probably for only the initial leg down of a multiyear abc correction. That reminded me of algebra class and in the longterm chart you are projecting a massive megaphone area, if it were to break to the downside it would target the 1710 you are talking about. The thing on your chart that was stunning was 1210, 1250. That would match the folks out there from a fundamental perspective calling for a great depression. You have the bearish call on the s p 500 but on oil you think we have bottomed. Both are risk assets. Crude, 147. 50, my fervent my perfect target. The cycle low of 18 is not until 2023. We know covid19 in the market is a powerful accelerant. It sped up the last leg down. It looks like we are really Holding Support there, and perhaps we will see brent crude climbed higher. Thank you for joining us from for smart charts. This is bloomberg. Oomberg. Romaine welcome back. Joining us right now is joe weisenthal. We ate up a lot of time earlier so we only have a minute to spend with you. I have one question. How many refrigerators do you have . Joe i have been packing up extra refrigerators and freezers because i am in this for the long haul like you are. I am maxing out that, planning on being in lockdown for a while. Got to max out the appliances. Lesson is you need to get a generator in case the power turns out and you need to make sure your meat doesnt go bad. Absolutely right. All of the Contingency Planning is key and maybe we should eat dried pasta anyway. One thing that caught my eye in the market is how ugly [indiscernible] energy, financials. Scarlet Bloomberg Technology is next. Have a great evening. This is bloomberg. Emily welcome to Bloomberg Technology. I am emily chang. Fed chair Jerome Powell warrant the threat warrant the threat of longterm economic downturn could be severe. The fed chair pushing back on the idea of negative rates but shop top and short of ruling them out stopping short of ruling amount