Google ceo eric schmidt. He was recently asked to join a committee to restart new york city. Cuomo has been doing a great job as a governor, especially compared to other governors. He has created a reimagined new York State Task force. The idea initially is to focus on three areas of issues. Telehealth basically, how do you deal with the medical system . Broadband, how do you participate in all of this if you dont have access to broadband . The third one is reimagining how we are going to work. How do people feel about going to those skyscrapers and taking the subway to do so. All of that will be addressed by our commission. David you expect to complete that work in a year or so . Eric we expect to have initial results in 36 months. The state needs help, as do all the states. This pandemic will go on for quite a long time. We had better get used to dealing with it, making adjustments. David youre also chairing a commission for the pentagon on artificial intelligence. You have managed to work with democrats and republicans, it seems. What is that commission doing . Eric there is a pentagon commission called the Defense Innovation board and then a commission called the National Security commission on ei on ai does thepentagon, how government use technology . It comes down to the fact that they are not very good at software, certainly not very good at ai. We have gotten a lot of good results. The second one, the ai commission, came out of legislation a year ago in the ndaa, to see how we will keep up with other countries and make sure the ai is a strength of ours. Now we have the new york state condition. Many people are in trouble, different kinds of trouble. There is no single story. How do we make sure we get a diverse solution that will work for the whole state as well as the city. The city of new york is an incredible economic engine. I am concerned that without the graphic and changes, people will not be able to work efficiently, will not be able to go back to work, to school. We have to find ways to get through the covid crisis until a vaccine is available. David youre a native of virginia. He went to princeton, got your phd at berkeley, you were for 10 years the ceo of google, then executive chair for seven years, now you are independent but youre obviously involved in a lot of philanthropy, a lot of advice. First, the technology world, it was thought before covid19 that may be First Technology companies were becoming too big, too too powerful. Do you think that maybe the effort indiminish the our economy will continue, or do you think that Technology Companies have proven themselves so valuable that they will continue to be very strong . Eric whether it is from developers, intrinsic clinical interests, the press, i understand that. I want to thank amazon for hiring another hundred thousand my packages to my home. A lot of us should be grateful that these Tech Companies are working so hard. I imagine the pandemic without facebook,ogle, apple, etc. How would you be spending your time without netflix or youtube . 1918. K to you would be operating under great fear. It is interesting reading the books about 1918. We only had three tools at the time. ,ear a mask, social distancing and trying to remember the third one. Anyway, we have exactly the same tools now. Have infinite information that you did not before. David lets talk about Technology Companies and help solve the crisis in terms of coming up with a vaccine perhaps. Does ai help technology what mightigure out work. Hey nontechnical about what we do, they have a series of proteins, they mix it in the lab, at. Ight, they have a new idea they are trying to find out what combination of proteins and antigens. You can systematize that with ai. Ai systemve an predict what his or her intuition is, then get orders of magnitude faster scenarios. That is part of the key to why we have made so much progress in the biology of the disease. When the chinese outbreak occurred, the chinese published basically a map of the virus. Very quickly in america, people were able to identify where the receptors were. With that information, you can then go find a combination of the proteins that will basically stop and start this process. That forms the basis of the mod erna vaccine, in phase one trials, and is some of the basis of phase two trials in china. Congress, last year, did well in creating something called barda, an advanced Research Agency for this sort of thing. Philanthropy groups like bill gates have done prebuying to get ready for this vaccine. With vaccines, you have to make sure they dont hurt the host, second, you have to make sure and third, youg, have to make sure they have an impact. It normally takes five or 10 years to produce a vaccine. We are trying to do it in 1218 months. Come if someone were to up with a vaccine, do we have enough manufacturing capability . Eric most people who have looked at this conclude that eventually, yes, but not in the short term. There is universal agreement that the vaccine should first be available to healthcare workers, people who are most at risk, and people like those in Nursing Homes, people working in meatpacking facilities where there is a high probability of transmission. My guess is that there will be a vaccine within 12 months or so, then there will be a big fight over who gets it. I have funded ideas and projects to try to think about how to do that ethically. Right now, we need to work on the vaccine. David many of the companies stocks have gone up. Will the u. S. Government own it or will the world own it . Eric i think most people believe that the Companies Run nonprofit for the first period. I think the government could actually pass a law to force the intellectual property to be published. Notuse it is likely it will go away, it makes sense to allow these firms to own the government property. It is not obvious to me that the government should just take the vaccine from the inventor in some sort of root way. In some sort of brute way. The scenario you are describing is more than 12 months, maybe 18 months away. If we cant get things restarted, there is an enormous amount of pain. Bankruptcies, job loss, the damage done to our job to our travel industry and airlines is horrendous. It will take a decade to recover if we dont do this carefully. David do you fault the chinese in anything related to the technology, when they discovered they had this problem, should they have done anything differently . Eric as i understand it, there is a lot of false going around everywhere. The chinese should a lot of fault going around everywhere. The chinese should have alerted people more quickly. Let me explain it this way. If something is doubling every three days, how do you get ahead of it . If you look at the countries that have done well compared to the countries that are in trouble, which would include the United States, they all acted very quickly once that wave was coming. America did not. A delay butafter that the layered. Lets look at new york shutting down restaurants and so on. If you delay a week, that is a factor of four more times infections. Nowadays, it is in much better shape. In some scenarios, it is doubling every 24 days. Attack,ave an acute like in january and february, i think there is plenty of blame to go around. David you said the other day on an interview that i read about that you were saying it was important not to rush people back to work who do not want to go back to work. At google and other Tech Companies, people are working remotely. Do you think that people want to come back generally to their employer . And do you think we should force them back in some way or let it the decision of the employee . Eric because we fail to have a universal testing machine and do not have good Monitoring Systems , the core problem we have now is we have trained all our citizens that they cant be sure if they meet someone on the street that they are not infected. Because on the order of half of transmissions are not asymptomatic, that person you may know vaguely may give you the disease anyway that you do not expect. Thatd, there is evidence you are most contagious right at the beginning of the disease come around day five or six, and there is lots of viral shedding. You have to think about, how do we deal with the legitimate and illegitimate fear that people will have. My guess is you will see people organize themselves into roughly three buckets. A set of people who cant go to work because their kids are home and they have to take care of the kids because the schools are open. That has to get fixed or we have a national tragedy. You have people who have a low tolerance of getting this disease, because they are a cancer survivor, immuno depressed, they have to stay home. Then you have people like myself who are dying to go to the office. For example, if i am working in of us willoup, some be at the office, some at home, some in a satellite office. For whitecollar workers, you will see the organization where some people will be in headquarters, some in satellites, some at home. The harder part will be people who have to be physically present to work. It will have to increase physical distancing, people will have to wear masks, and people will have to be careful. David lets talk about testing. Are you surprised that we have not been able to get everyone in the United States a test, and do you think it is essential for everyone to get want to feel safe when they go back to work . Eric lets go back to what the government should have done. One of the first things the government should have done is get people masks and get them to wear it. I am shocked that it is not a requirement by the government that you fly with a mask on, get in Public Transportation with a mask on. Wearing a mask is the easiest way to say, i care about humans. The mask, although it may not protect you, it certainly protects others. You can imagine relatively simple things like that that can materially improve confidence and so forth. I think some combination like that is what we will have to do. I wish we had a better answer. I also believe that you dont have to test everyone. You have to test a statistically significant amount of people. If you had to test 1 of the population and in a statistically correct way, you would get enough information that you could build a sentinel system that could alert you to outbreaks. It appears now that the majority occurringnsmission is from particular kinds of groups. I have also mentioned nursing choirs,eatpacking, things like that. There is a great deal of exhala tion, literally volume in the air. It appears that infection is largely related to the quantity and amount you are exposed to. If that is true, you should be able to detect outbreaks statistically and do outbreaks tracing without having to imprison everybody or leave everybody to their own devices. I am trying to figure out a way to build such a system. There are components of this being built now. I think a combination on the order of 1 testing every day which is sort of achievable, we can probably do this. In thet the moment United States, the disease the contagion, if you will, is flat to slightly negative. It is crucial that we get it down in the summer because people are outside. One estimate from japan was that being outdoors was 19 times safer than being indoors. If i was in charge, i would tell people, wear a mask, spend your time outdoors. For example, outdoor restaurants, construction sites, and so forth. David tell us what you are doing to stay healthy. Are you wearing a mask to go out, are you traveling as much or not traveling . Eric like most people, traveling has pretty much stops. That handshakes are over, and we will learn to bow like testing japanese pick to bow like fantastic japanese people. As i mentioned earlier, these are the same tools we had in 1918 and they did work. 1918 you mentioned the influenza, that i think in this country killed 700,000 people. For we still dont have a vaccine for that virus after all these years. Why are you convinced we will get a vaccine for this particular virus . Eric there are several reasons, starting with need, funding. Again, i am not an epidemiologist. They also cant tell you how long the vaccine will go for. I prefer not to focus on vaccine. I think we need to focus on thriving in the covid era. This is a fantastic entry. Again, think about what we had accomplished up to february. Business confidence was very strong, people getting hired left and right. Lets get back to that. We have to get back to that with the presence of the virus at a low level. We need a monitoring system, fully to change in routine ways, and we can move on. I worry that Industries Like retail, restaurants will be harmed from this. It is extremely difficult to restart these things and i worry a lot about that. Why the epidemiologists seem to have numbers about who will die. They have changed numbers about having a lot more people die or not. Use most of these models extremely different parameters. Many of the models are proprietary. It is hard to have an opinion about them. The white house chose one with very favorable numbers. I think it is important to take an average of the models to get a better prediction. At the moment, the real answer is that we know so little about both the rate of transition, when you are most how much meeting has to occur, how much volume has to occur. We just dont know yet. We will know the answers, we just i just hope we know it soon. David are you faulting the Infectious Disease people who say to stayathome, selfisolate, because there has been criticism that they have shut down the economy. Both you have to solve problems. You have to solve a horrific health care problem. Healthcare workers in our country have done a fantastic job. This all started because we were worried that the hospitals could be overloaded. People terrified that could not get to the hospitals with heart attacks. Someave to come up with economic system. The level of unemployment that we now have is on the order approaching the depression. A good joby has done getting money into the system. That we have a bankruptcy problem. When i look at the actions of the people, my primary criticism is the speed with which action occurred. Much of the deaths could have been avoided now had we acted a month earlier in every decision. Major you are a philanthropist. However you changed if at all your philanthropy as a result of the crisis . Eric we decided to work on this. Once it became clear this was not a one or two month scenario, we formed a task force and started to look at things that could act quickly. We have now given tens of millions of dollars in that area. The initial focus was on things that could happen very quickly. The most interesting one was ventilator training. At the time one without we would need an infinite amount of ventilators, nobody knew how to operate them. Thank goodness we have not needed them as much. Ventilators are not a good thing to be on david be on. David you have also been a venture investor. What are you saying to somebody who might be a venture investor and wants to follow eric schmidt . What are you investing in . Eric venture is a long game and it is really about these key entrepreneurs who have these ideas. Find the entrepreneur, give them some money, help them recruit talent, and hope and pray, and help them. I dont think that is any different than when i was in a small startup. I have always believed biology business. N enormous i think the pandemic has emphasized the enormous scale. Telehealth, in two months, you have changed the economics of health care. You now have reimbursements for telehealth. Devices. Ut connected why are you not wearing a smart healthwatch which is communicating to a system with your permission and under hipaa ,aws, that calls you and says you need to have a video appointment with the doctor. Do an analysis with my permission and say, eric looks pretty good, ask questions, then we will decide what kind of health care he needs to be routed to. We can do this now. How will Silicon Valley this . As a result of will people change what they do and how they operate these companies . Eric in my career, Silicon Valley has changed dramatically. Large Tech Companies have whole institutions of governments that have embedded competitors, opponents, political strategies. Certainly, big tech will be bigger. They are doing more fundamental work. Platforms. Think about a while way think wei, the 5g platform has turned out to something that we cant control, and we dont like that as a country. The Digital Future that we have has arrived much quicker than i thought. Promote learning, dont you think that online and offline will get a lot more blended together . Makes sense to me. You an optimist about the future of this country, or are you more pessimistic now that we have an economic crisis and a recession or maybe worse than a recession . Various you look at the policy failures, governance, so on, the thing that has been extraordinary about america has been the ability to innovate. That is ahead of us. I am personally frustrated right now that we cannot seem to get our strategy straight in the short term. I repeated mine. Wash your hands, wear a mask, social distancing, be outside. Other governors have done different things. The governor of florida banned Nursing Homes very early. There is a set of things. If we could just agree on these basic rules, or testing is good, more data is good, building the surveillance systems, we can get through this more quickly than we think we are. Through this crisis, what have you learned about yourself . Eric on a personal basis, i, like people, enjoy the social life of dinners scarlet you have been watching leadership live with David Rubenstein and his guest, eric schmidt. This is bloomberg. Romaine welcome back you are watching whatd you miss . Lets get you a quick check of the latest business flash headlines. We will start with mastercard, which is starting to see signs of improvement in u. S. Consumer spending. From a year ago. In the first week of april, those payments were down about 22 . American airline bonds have fallen to new lows, following reports that demand for air travel will fall behind forecasts. They seest says americans as a potential candidate for bankruptcy. An automaker dropping dividends they promised to pay as part of their merger. Throughysler burned 5. 5 billion in the first quarter. First Quarter Sales plunged 16 . Scarlet lets check in with mark crumpton, who has our first word headlines. Bright,istleblower rick what allegedly was removed from a highlevel post after warning the Trump Administration to prepare for a pandemic, warned today that the United States lacks a plan to produce and fairly distribute a Coronavirus Vaccine when it becomes available. Thatright told the panel the u. S. Could face what he calls the darkest winter in u. S. History unless leaders act decisively. We are facing a virus that disrupts the very foundations of our society. Our economy is spiraling downward and our population is being paralyzed by fear, stemming from a lack of a coordinated response and a dearth of Accurate Information about the path forward. President trump took to twitter today and dismissed the doctor as a disgruntled employee who, with his attitude, should no longer be working for the quote. Ent, end republican richard burr of North Carolina is stepping down as cochair of the Senate Intelligence committee. Senate Majority Leader Mitch Mcconnell announced in a statement, and said he agreed it was in the best interest of the intelligence committee. The Los Angeles Times reported that the fbi served senator berger with a search warrant and seized his cell phone. The head of the wto is stepping down a year before his term expires. It is unprecedented and he called it a personal decision. Acevedo has faced intense pressure from president trump. A bleak prediction for the restaurant industry. Opentable is forecasting that one in every four u. S. Restaurants will go out of business permanently due to the coronavirus pandemic. And walkin customers from the network were down 90 from the same day a year ago. It is estimated that restaurants salesearly 30 billion in since march and 50 billion since april. 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. Im mark crumpton. This is bloomberg. Romaine we want to go back and talk a little bit about the economy and markets. We had the unemployment claim numbers in the u. S. More filed for Unemployment Insurance in the last couple of months then the entire recession we had in 20082009. Our next guest says that a lot of the economic pain we are feeling right now could be relatively shortlived. Void she is Voya Management ceo. There are some signs here that the recession we are in could potentially be just a technical recession and some of the longerterm dislocations that we would typically see to the drop in gdp potential for manufacturing output, productivity gains a general, that we may be able to escape, i guess, the worst of that downturn. I am wondering if you can give me a case as to why that might be how this plays out. Certainly. The optimistic case really is the u. S. Story. When you think about it, our Federal Reserve and Treasury Department acted so quickly, so immediately taking out those learnings from 2008 to provide 34 times the stimulus from other Central Banks to the u. S. That is certainly helping limit the downside to the damage we could potentially see. I dont want to short u. S. Or global ingenuity. When you think about the a betterto find vaccine, a treatment regime. Oxford university has a Clinical Trial going. There are approximately 90 firms around the world working hard in putting money to this. Those would be the reasons for optimism in certainly a dark time for the World Economy as well as the u. S. Scarlet i like what you say about how it limits the downside. But how much upside does all that aid, whether it is from the central bank ready government itself provide, especially given how far we have, from the bottom . Aboutine when you think the aid that the Federal Reserve economy,yed into the and there are so many programs that i have to carry around a cheat sheet to keep everything straight. They have touched a lot of parts of the economy. They have only deployed about 50 of what they are intending to do. They are just beginning some of the Corporate Bond purchases. Doing to support u. S. Homeowners, auto loans, those types of things. Those things are just going to be moving into the first part of june. So, again, there is more to come. Withining said, different pockets of the market, the fed is supporting high quality Business Models so that we can get all through this is really important. About whoim a it is should survive. There is a tale within every single market. There are winners and there are losers. So you cant just look at the overall spread averages or equity averages. You have to peel back and look very carefully because it is a different story in all the different sectors out there. Romaine i would like to put out for our customers that we do have a cheat sheet on our terminal if you want to know what the fed is doing on a daytoday basis. Of the comes to sort next steps here with regards to trying to bolster the economy, whether it is physical or monetary policy, how effective do you think the current tosures will be so far bridge us until we get some kind of agreement on what the next steps might be . Certainly the steps with ppp and other programs have been important. I think the stock organ is looking up on anxiety that fiscal stimulus is not enough. It is not enough to get people with payroll support through a full month or two weeks. It looks like we need about a half a trillion more. Willa that nervousness of, Congress Pass this . When you look back to the volatility we saw in march, the stock market had some pretty bad days when people were worried that congress would not actually land on passing this legislation. I would say that is a dark cloud hovering over consumers and the economy right now. Scarlet a potential risk we have to be mindful of. Thank you, christine hurtsellers. We have much more coming up on Bloomberg Television including discussing the state of retail with robert burck. This is bloomberg. Scarlet we have a lot to discuss here. First things first, we want to look at what mike mayo, wells fargo banking analyst, had to say earlier today. Banks are treated as if it is 2008 in the middle of the Global Financial crisis. Today is night and day different for the banks. We do see a contradiction. Today, banks have double the amount of equity, they have gotten out of the most risky activities, they have had regulators. Banks are more resilient than they have been in a generation but they are still treated like it is 2008. That is just a mistake that the market is making even while we go through record unemployment. We are seeing bankruptcies. Earningsng to remain hell for the banks. These are sobering times, but the Balance Sheets are poised to avoid the battles to come. It really depends on your outlook as to whether you see this recession lasting a while or being short, sharp, and swift. The secondinly, quarter should be a repeat of the first quarter. This whole year might wind up being a washout for the banks when it comes to the earnings. When we say it is an income statement recession for banks, absolutely, we have reduced our estimates five times and depending how long this lasts, that may be enough, it might not be. What is interesting, even with all the reductions, banks should still have enough earnings to earn their dividends. They should still have Strong Capital ratios. And we still have the largest banks growing their book value even with all these earnings problems. That is a big difference versus 2008. You have the stock and bond markets treating banks differently. What about the banks is either market getting right or wrong . Mike contradiction number one is today versus the past. Contradiction number two, bank stock valuations versus evaluations of Corporate America generally. On the one hand, banks are treated like it is the end of the world. On the other hand, the company that the banks are supporting are traded at much higher valuations. If you look at the value of bank stock, you are at the lowest level in history, a level lower than the Global Financial crisis. So, something is wrong. Either the market needs to come down to the banks because this is a much worse recession than anyone expects, or banks are likely to catch up to the market. Frankly, we think it is the latter because of stimulus by the government. This is a 100 year event, a pandemic, really tough times. On the other hand, look how fast congress, the fed, the treasury have acted with the counterpunch. The stimulus, you have not even felt the impact of the stimulus yet. You are talking about increasing Government Debt by maybe 5 trillion, the Balance Sheet by maybe 5 trillion. It is a 10 trillion stimulus. Gdp is 10 trillion over six months. Enormousn counterpunch. Therefore, we think the government is helping to bridge between the preand post virus economies. Scarlet that was mike mayo from wells fargo securities. We do have a headline. The cdc setting some advice to reopen u. S. Bars, restaurants, and workplaces. Ofically outlining a series steps that they should take to keep employees and customers safe before they reopened. They include encouraging handwashing, social distancing, and how to check for symptoms of covid19 cases. That is all available on the cdc website. As we talk about the return to normal, some retailers are preparing to reopen stores and adopt some of these new safety measures. Closetores will steam after being tried on. Others will do so outside the changing area. I want to talk broadly about retail and bring in robert burke , ceo at robert burke associates, which consults for a lot of these Luxury Brands and retailers. When you look at how stores and companies are addressing challenges going forward, there. Ill be a lot of best practices i am curious what you think about brand this and will pick and learn about how brands are performing in china and how much that will be extrapolated to what they can do once the rest of the world gets back to some sense of normalcy . Have been watching closely what has been happening in asia and china. The malls have been reopened about 5, 6 weeks. When they first opened, they were down about 40 in sales last year. As of last week, they were down about 10 , sales. The high Luxury Brands have been the ones that have bounced back strongest and had the most customer interest. So, we dont want to be too optimistic that the same thing would happen here but we like to think that at least part of it would here in the u. S. As you know, paris opened yesterday and there were lines at the luxury stores. They saw swift sales. A little bit of a different situation. Ers are all exchanging information about what best practices would be once they reopened. Romaine will be the individual stores, like the boutiques of these brands that do well, or will we start to see a resurgence in the Department Store model . You will see Specialty Stores and brands opening. The only thing we really have to judge on right now saks fifth avenue opened in houston. In san antonio, they had a good turnout of business. The brands are starting to open. They Specialty Store retailers like a webster of miami has a store. So we are watching what is happening in texas very closely. Theink, what will be longterm effect, for the big Luxury Brands, they will probably be reducing their wholesale business with Department Stores over time. That was already a trend we were seeing, that the bigger Luxury Brands wanted to control the direct to consumer experience, either on their own website or in their stores. I believe this will only speed up. Scarlet we know that we are no longer spending money on traveling, dining out. We buy groceries, home office equipment, and furniture for our homes. Do you think that luxury goods theanies start to rethink consumers they target, thinking of traditional goods when it comes to m a . Robert i think at the end of the day, they will go to where they are comfortable. We have not been able to have a real barometer on what luxury apparel and accessories will do once they do real i am sure there is going to be interest in all goods, entertaining at home, furniture, things of that nature. But, i think what we have seen says, iy the customer did not go on that spring vacation, i am canceling my summer plans, i am not going to travel, i am not buying airline tickets, i will not be spending the money on hotels, and so they say, you know what, i am going to treat myself. That is what we are really see a, whether it is in asia i was on a call this morning with colleagues in china. We are seeing it also in paris now. We tend to think the same mindset for that luxury customer will prevail here. Scarlet we will check in with you again to see if that is the case down the road. Coming up, we will be checking in with Joe Weisenthal on his Desert Island indicator, the most jobless claims. This is bloomberg. Romaine welcome back. You are watching whatd you miss . Joining us right now from his soybean farm in texas is Joe Weisenthal. What have you been keeping your eye on . Joe we got more ecodata today and i continue to be struck by the claims number. It is like we are getting used to this and really should not be. Claims, million jobless well ahead of expectations of 2. 5 million. Scarlet it doesnt strike me as incredible that we are used to a number like this. It has now been eight straight weeks since we had more than a million claims. For that, looking at tens of thousands to hundreds of thousands at the most. The disturbing thing, in the first couple of weeks, you can sort of play rationalize them as saying, there are these businesses that, due to the coronavirus crisis, cannot legally operate due to the lockdowns, the shelterinplaces , restaurants, nail salons, other retail facing things, so you could think of these as de facto furloughs and when the Health Crisis wraps up, we can have people back. At this point, these are not restaurants, bartenders, people who will necessarily immediately be able to find work again. It is not that those jobs are any less important, but they are not the kind of things that you would expect to come back once the lockdown lifts. Hearde one thing we have is this idea that some of these jobs, because they are Service Industry jobs, they can bounce back faster than may be what we saw during the Great Recession when we saw function capacity really kind of breakdown. Joe if the Health Crisis fears fade, we can turn the lights on again, that would be fantastic. The question, how much further can they spread beyond the Service Sector to jobs not coming back anytime soon . Scarlet no one knows that, it depends on how the disease progresses. Joe, thank you for calling in. Joe will be heading back to his field to tend to his soybean farm. Bloomberghnology islogy is up next tom up next. This is bloomberg. Emily welcome to bloomberg technology. I am emily chang in san francisco. Stocks rebound despite another round of dismal jobs numbers. 3 million more people filing for unemployment, bringing the total number of jobless claims filed in eight weeks to 36 point million 3. 6 million. On a climate could be around 25 ,