Book the world. Francine lacqua in london. Extraordinary markets yesterday. Francine extraordinary yesterday but today they are taking a breather. On folks yesterday was moderna. Say if we haveto better news on the early trial of this vaccine. There is a huge fund being put in place by Emmanuel Macron and Angela Merkel. Again now, a bit more temperament or a little bit slower as we expect some countries to go against it. More subdued markets than yesterday. Tom interesting. Markets pulling back in the last few hours. With over a world news in new york city. Federal reserve chairman says the central bank is prepared to use its full range lendingd plans on rate neil zero than rate to near zero. Ritika President Trump is taking the antimalaria drugs he has promoted as a treatment for coronavirus. That is despite government warnings that hydroxychloroquine can have serious side effects. The president says he has been on the drug for about a week and a half. Mike pences press secretary tested positive. President trump stepped up against the world health organization. He vowed to permanently cut off usaid. He said a fullpage list of grievances to the who, repeated that thes demand organization demonstrate its independence from china. 540 6 billion to help the eu recover from coronavirus. Toward major step Angela Merkel and Emmanuel Macron discussed the plan by videoconference. Will get hit hardest financed by additional borrowing. 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. This is bloomberg. Tom thanks so much. Toant to say good morning ken. Home depot out with earnings. Pop,lly nice organic sales i should say. Revenue pop that no one expected. Depot, aith home really extraordinary moment to see a dividend paid. That was for q1. Can leon will join us in a bid to give us perspective. Will join us in a moment. Iquickly, the truth dont know if the swiss bank for safe haven weakness. Francine i would note that when you look at the european bonds, gold reversing. It is clear european government bonds are climbing with quickly, sterling strengthening after the u. K. Announced plans for a 30 billion pound tariff cuts. It is important to regroup after the extraordinary day we saw yesterday. We can do that with christopher marangi. He is with mario cappelli. Value butoking for not sacrificing growth opportunity. That has been a hallmark for decades. Chris, where are you positioned right now with stock enthusiasm, or are you waiting for the next pullback . Christopher good morning. In industries where we had accumulated content and knowledge, Many Industries have been out of favor of late. Malone companies have been exposed to travel and entertainment. The is where we think opportunity is as we solve this crisis medically and socially and consumers start consuming again. And traveling again. Concerts in sports and like Madison Square garden, comcast, disney, we think there are a lot of opportunity there. Hallmark of gabelli going back decades is to not be afraid of growth. Ownership the iconic of comcast when they were burning cash. Stockss gabelli treat like amazon that burn cash quarter after quarter waiting for comcast like Profit Growth down the road . Chris that is a great question. Our growth team does own amazon. Our value team has not of yet. Like recurring businesses and businesses with high visibility. Amazon has been tricky. We shy away from retail. Obviously, amazon is more than retail. We are looking industry by industry. Francine if you look at industry by industry, are you expecting industries to just not recover for three or four years . Are you doing a best case and worstcase scenario . Chris we are always running scenario analysis. There are subsectors that will be trouble for a long time. We have not really been investors in the airline industry. We raised our eyebrows when Warren Buffett got in. Obviously, he has exited for reasons that are understandable. We look at all of those things. Been a challenge because it is subject to the fickle consumer and is capitalintensive. There are going to be winners and losers. One of those winters this morning was home depot. Also aost walmart is longterm winner. We selectively look at those industries. Francine francine when are we expecting some kind of recovery phase to start . Chris i think the recovery is already starting. The market is telling you that. There is increasing conviction that the bottom is in both in terms of stocks and economic contraction. About plotting this crisis socially, getting people out, not just restrictions but getting people to get on airplanes and go to restaurants. By nonessential goods answer is. It is going to be a long process. Given the damage that has taken place. [indiscernible] tom tell us about the ability to merge. One of the great things that Mario Gabelli is finding companies knowing sunday they are going to have to blink and merge. Money is dirt cheap. Mergeathon . A chris i have been talking about the fifth the wave for a long time. We have seen that stalled. There have been a few deals announced, but yes. The underpinnings of that remain inmerger waves place. And the lack money of organic growth opportunities. Whole theme about the strong getting stronger. There are companies out there that are going to need to sell themselves to survive because they dont have the scale. Winners outlot of a there who are happy to pick them up. Opened,t as markets we will see more mergers. Tom can you overweight the financials . Financials the banking particular general, local and regional banking has been commoditized. Youre going to see a lot of mergers in that space. Pnc last week raise capital, probably to acquire additional banks. That is the attraction. It does not look like we have a 20082009 blackhole where larger banks are dirt cheap. Is there part of the market you are worried about . Chris i dont know if theres any particular part. We have stayed away from energy. Energy is facing a rebound. There are longterm structural issues in the Energy Sector as we transform the way we commute. That is an area we will probably avoid. Has been driven by a small handful of stocks. It is understandable why they have gone up. In the ofationstates themselves and are the true safe havens. Companies with great prospects, we are seeing less opportunities in making cap companies. Mega cap companies. Whatnice update there on gabelli and their team is doing across value. Would be a timely interview with michael mckee. He can really change his tone quarter to quarter. This will be an update with the Federal Reserve bank of boston. This is bloomberg. Tom good morning everyone. Much news for the world health organization. The president going after them. I read the letter, it is an extraordinary document including the president s mention of taiwan. The president says he is taking hcq, i am not going to pronounce the whole name. Thatrapped around a market was extraordinary yesterday. There can be time to look at an individual stock which is home depot. Ken lyon with his ability across different sectors. I want to get to banks in a minute. Mr. Moynahan with bloomberg later this morning. Home depot, i thought it was an exceptional first quarter. 6 statistic gets my attention. How do they carry that into the second and Third Quarter given this depression we are in . Ken they are moving into the strongest quarter. Is the economy just beginning to recover. Households are beginning to spend on their homes. March travel. The projects they were doing the last two years are going into home improvement. The quarter had good results as it relates. Low customer volume transactions, but the average spend protected the average spend per ticket was up 11 . Pretax result, they had 850 million of expense that was extraordinary. Employee paid time off and additional bonuses given covid19. Numbers,k through the this was a strong quarter. Us has annk each of understanding of how we evaluate amazon, the relative valuation of apple, etc. Where does home depot fit in its history . Is it a cheap stock . Is it rich . Ken good question. Its historical valuation response has always been that a premium busy market trading anywhere from 21 to 24 times next year earnings. That is where we are now. The premium has always been for a strong franchise, cash flow generation and return of capital with dividend and buyback. You look at home depot, when do people start real spending again . I know it is difficult because you are trying to gain recovery and consumer behavior, could it be three months . That is a good question. With the spring selling season. The answer is it happens now in the Current Quarter for july. That is the largest quarter for revenues. Think of the psychology, a household which has low debt consumer obligations versus the financial crisis is making household decisions to improve the backyard, a new deck, new kitchen or bathroom and they dont have to wait by appointment to go as you were to buy a house. There is less obstacles in terms of making larger budget decisions. While many people are suffering, there are households sitting with savings they are working to put into their house because they dont plan to travel. How difficult is it to see when we go back to the normal of six months ago . Ken the adjustment we are seeing we just spoke about the household. Percent ofo 25 revenues comes from contractors. Thescribe the household is doityourselfers put contractors, once they are able to have more traction with the household is going to add to sales from the Current Quarter. I think the home depot story is unusual to the Consumer Sector because they have already had a strong business model. We are seeing it in the results today. Youre going to hear about this on the conference call. David westin will speak with Brian Moynihan later on bank of america, give us an update on bank of america . Buy . T a nu . Buy ken the stock is trading at 22 to book value. A new bookraded value that shows opportunity. The risk is whether there is going to be greater stress for bank of america in terms of loan provisions and credit reserves. I think that is going to be manageable and we will probably take our biggest shock in the Current Quarter ending in june. It may not be as bad as what the stocks have done. Not only bank of america but other large banks. There are the analyst out looking at bank of america for the last 810 quarters, this bank was either number one or two in execution. Conundrum in terms of the value of the stock, nearterm concern on credit risk and management stress on execution. Aspect here wer want to speak of because we are always about a month away. What does the Federal Reserve do in terms of annual stress tests . Synodnate resisted the reviews the doom scenarios the synod reviews the doom scenarios. Tom this has been generous. Thank you so much. This morning, david westin in an interview with mr. Moynahan of bank of america. This is bloomberg. [inaudible] this is bloomberg. Francine hello. This is what your markets are telling us. European stocks lower with equity futures. A lot of focus was on the positive news that we had moderna but also this fund presented with germanfrench flavor. Today the focus is on the risk on. It seems to be fading. A lot of european government bonds are climbing with peripheral yields falling the most. Sterling something we can watch out for. The u. K. Did say they would have some 30 billion pounds in tariff cuts. Coming up, a conversation on china and the u. S. With a cancel on Foreign Relations the council on Foreign Relations director. Ichard haass this is Bloomberg Tom good morning everyone. , fromerg surveilence london and new york. This will easily be one of the required books of the summer to drive forward to your knowledge of International Relations on the place of america within that world. It is from Richard Haass. Not only is expertise, service to the nation, but his commitment to the council on Foreign Relations over the many years. And best of haass ambassador haass joins us now. How did you get it all into 400 pages . Did you have to cut away 300 other pages . Richard there was already one encyclopedia britannica, we did need a second. As a writer it was a challenge to shrink it. I thought, what do you really need to know . The whole idea was to write a primer. Essentially give people a foundation so they could understand the world and hopefully be more informed. Tom you see it in the photographs at your council on Foreign Relations, the photographs on the wall, there is always the theory of the moment. Whether it is washington consensus or something westphalian. What is the theory throughout the world . The wholee have got set of International Challenges and great power arrived great power rivalries. We have a new, set of International Challenges. Pandemics, Climate Change, the lack of regulation in cyberspace, terrorism. We got old challenges, new challenges and now at a time when we are understandably preoccupied with internal problems. Brew. S a dangerous all problems, new problems, distracted countries. Atncine when you look Foreign Relations and the way that covid19 will change the world, if you look at who will come up the winner, is it to china . How would lets change our world forever. Richard i am not sure it does. A lot of the transfers we have seen before the crisis are going to be more visible now. One is a worsening u. S. China relationship. The second is a loss of momentum whatsoever. Producers have had certain a lot of weak and failed states growing. Every one of those things you and i would have pointed to before the crisis, they are more pronounced. China is a winner and a loser. Its reputation has taken a hit. They are held responsible for their poor initial behavior. You could possibly have a situation where both china and the United States, the two most powerful countries of this year, both, having lost altitude. Took 10 it may be years, but it seems the legacy of the previous crisis in 2008, we realize it was it has slowed populism. It probably spurred backlash against the gap between rich and poor we were left with. What will be the legacy of covid19 . Is it less globalization . Is it more inward looking . Therei think this is probably less globalization. Hostility to a immigration, this will reinforce that. I think you will see more talk about selfsufficiency. Need to hedge against supply chain uncertainties. That will be a challenge to global trade. Every country says we have to start domestic manufacturing and stockpile in the name of National Security. What will become the limits to that . How does one nation pause National Security not become a euphemism for protectionism . The pendulum will swing towards national. Whether that can be managed is up to governments. Early,read this morning the extraordinary document from the president of the United States with bullet points, the world health organization. I dont want you to go over the entire note. I dont know if you have had time to read that entire letter, but buried in the middle, the president eludes alludes to taiwan. Give us an update on the tensions we have between beijing and washington in the view on taipei . Richard taiwan has been a but am not to be solved, condition to be managed for 40 years. U. S. ,s something the china and taiwan have done ever since the u. S. And china reestablished relations in the 1970s. Taiwan has flourished. It is politically a democracy. It is economically robust. Look at how well they handled this pandemic. , areuestion moving forward the diplomats up to it . Will china get so ambitious and loose patience . That,he u. S. Encourage will china believe the u. S. Will come to taiwans defensive china put pressure on them . You have to be an optimist to say for the next 40 years we are going to continue to manage. Can i say one thing about the who letter . Who did not recover itself in glory. Like any other institution, it works at the behest of the major powers. It does not protect money. It does not print money. If the u. S. Has problems with the who, then we have got to solve it or come up with a substitute and others have to come with us. Simply to send off a unilateral screed, this is another one of those repeal without replace initiatives. That some would say has been a theory for 30 or 40 years. The world a brief introduction, quote tom please stay with us. This is bloomberg. Berg. Ritika lets get the world news. President trump is dismissing safety concerns about a drug he is taking to protect against coronavirus. The president says he has been taking hydroxychloroquine for about a week and a half. There is a lack of evidence it prevents people from getting the virus and physicians have warned it could have deadly side effects. President trump says mike pompeo asked him to fire the state departments Inspector General. The president says he was happy to do it. Democrats say the Inspector General was looking into an emergency deck relation settled allowed the u. S. To speed up arms sales to saudi arabia. Are also concerns whether pompeo used an age to perform personal errands. Johnson to beris more open about his coronavirus strategy. Teachers are demanding clarity over plans to reopen schools next month. Itdaq is going to make difficult for Chinese Companies to lift. News expect to release rules on ipos that includes tougher standards. The new rules do not mention chinese firms specifically. 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. This is bloomberg. Francine, tom. Francine thank you so much. Lets talk more about foreign ,elations with Richard Haass author of the world a brief introduction. If we start with china, for the First Time Ever there was a delay in the National Peoples congress which starts this friday. There are questions coming from the u. S. About whether this was a manmade virus. How will the chinese leadership be changed forever . Richard i do not think it has changed forever. If it turns out there has been a massive coverup and the state come out of a lab, leadership will have to answer to that. Otherwise, it can probably muddle through. It has lost prestige through their handling of this. It comes against the backdrop of an already dramatically slowing economy. It comes against the backdrop of environmental damage and aging population. Jinping has xi essentially become president for life, but he is also building a case against himself. In the moment, he survives if the economy improves and it turns out there was not a massive coverup of this virus having emerged from a virus in wuhan. Emerge from a lab in wuhan. Francine relationships between u. S. And china seem to be Getting Better and worse. How damaging will that be to president xi . Richard so long as the economy is ok. There is considerable antiamericanism in china. Documents have come out suggesting they understand this was an era of increased tension between themselves and the outside world. The United States is increasingly seen as hostile just as china is seen by many as hostile. A new coldity of argued it would be a mistake if it were to happen. It would be a mistake to place hostility toward china at the center of foreign policy. Andxaggerates chinas aims limits their weaknesses. Even if we were to successfully push back, it would not provide answers. To Climate Change or pandemics or any of the other major challenges. It seems to me it is a misplaced emphasis in the 21st century. You remember the realization, that morning where theathered intelligence on soviet union was off the mark. Do we have good intelligence on beijing . Do we know who we are dealing with . Do we have a measurement of their place in society . Achard i think we have decent take because of how large the party is. China is an institutionalized society. What we do not know is to what extent there is pushback. We read a in a while document, i am no longer in government so i do not have access to intelligence and more sensitive intercepts, but there have been enough reports of criticism of the xi jinping over the last few months you have to assume it is reflective of reality. Leadership he which is the hardest chapter to write . There has to be one chapter whether you aged . The chaptersughter] on economics, trade. I was kicking myself for not having taken more undergraduate economics courses. [indiscernible] i needed your help, tom. Do you deal with europe . If you think economics is hard, i dont know how you navigate this mess. What happens to europe . Are we going to see more countries break away . Richard it is interesting. Five years ago, the big debate was essentially whether to move forward. Calculated nt the way it was encapsulated was a United States of europe. Now the pendulum has swung in the other direction. The question is how much less integrated should you become . Rather than thinking of moving forward, is going to move backwards. I would say the challenge for diplomats is whether they can put a floor under the eu. [indiscernible] in europe, this is a time not to lose. I would say, do not be ambitious. Maybe come up with a new compact between capitals and brussels. Where the to be one importance of National Capitals goes up and some of the importance of the collective entity goes down. You may have become more modest and what it is who are trying to preserve. Francine thank you as always. Richard haass. Up next, we speak with Johns Hopkins medicine. We also learn about vaccination trials. This is bloomberg. Ritika this is bloomberg surveillance. Has lost its top streaming executive to an app that is exploding in popularity. Kevin mayer is leaving to be ceo of tiktok. Chief also wrote the the chinese parent of tiktok. His departure is not a shock. Three months ago he lost out on the race to become disneys ceo. Delta airlines providing a hinge there may be an increase in travel demand. Among them, flights from new york to paris. This quarter,s Passenger Capacity will be 85 below last years. One third of Small Businesses in the u. S. Have stopped operating. Fail in11 expect to the next three months according to a survey from facebook. Shepoke with facebook plus c. O. O. One of the numbers that jumps out at me is more than half of Small Business centers do not expect they will be able to rehire employees they have laid off within a reasonable period of time. That means the challenges cut out for us. The majority of facebooks advertisers are Small Businesses. Tom thank you. People been talking with across the medical community with a focus on the Johns HopkinsUniversity School of nursing. Joins us now. What i noticed is less of an emergency. Somehow inside the hospitals, i would guess that is not true. 34ain the distinction from weeks ago when the streets were screaming with sirens, ambulances were lined up outside Emergency Rooms versus what you are doing now . Have the adrenaline rush of the adrenaline of the diminished. Ave what has not changed is the demand for icu beds. [no audio] the demand for icu beds and the ability to go into intensive care, what does that signal to you . Is it still a large body of older people more vulnerable . The majority of the age group we are seeing at hopkins thected his in 3050yearold range. It is spread across all ranges, but that was surprising to see it wasnt just the elderly populations. You make a point in saying reopening is not relaxing, but how do you change perception . A lot of people will say we are over the worst. Good question. One of the things you have to do is you have to have a good message about the balance between science and economics. And not have it as simply political all the time. If you notice, that is what we see quite frequently. Arethings that have worked the masking, social distancing. That part needs to stay. Are people understanding . [no audio] the perception and what could are people understanding . The perception and what could be done better. Neysa people are [no audio] bele i do not want this to an acceleration of doom and gloom, i want people to understand that in order for us to stay ahead of this curve we have been working so hard on, we need to keep the mask on. , we need to keep the mask on. I saw your segment about uganda where they [no audio] keep those messages going. Masking, social distancing are all important. We are at a different place, but we are not out of the woods yet. Francine thank you so much. On soon to you back understand how nursing has changed. Of easyjetws out saying it has been the target of a cybersecurity attack. Easyjet,he latest from they have around 9 million customers and are trying to figure out exactly what that cyberattack actually means. Have plenty more on your markets as well. This is what they are doing and what they are saying. Treasuries are climbing. U. S. Equity futures are dropping with european stocks. This is the risk on mood that kicked off this week is fading. West texas oil rising for a fourth straight day. European bonds also advancing while gold reserves drop. Bonds,look at periphery we are having a conversation, treasuries but also european governments climbing with peripheral yields. Italian, spanish yields stalling the most. Some news between Emmanuel Macron and Angela Merkel. The u. K. Announced plans for a 30 billion pound tariff cut after brexit. We will have a full roundup of market news and have great conversations coming up including the chief executive valve the chief executive of bank of america. Tom spent a lot of time looking at gold. Emerging market shares are rallying. Your organic attached, 0. 4 higher. This is bloomberg. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Alix the day after the rally, equities take a pause after mondays monster move. European leaders stunned the market with a breakthrough deal. Fed chair and treasury secretary will speak before the Senate Banking committee today on dependent programs, while pressure for additional stimulus looms in the background. And it is the retail pain or gain. Home depot withdraws guidance. Walmart withdraws its outlook for fiscal 2021. Welcome to bloomberg daybreak on this tuesday, may 19. Walmart coming in strong. We are also waiting for kohls. They are looking at adjusted loss of about 3. 20 a share. Last year this quarter, they