Its lows and the s p is higher again thanks to banks. Up about one quarter of 1 , theater and on the 3000 level. As he can see, we were watching for the last few hours with the offshore one trading just below 719. A big fiscal stimulus package proposed as well and that spreads, narrowing the italian german tenyear spread. Lets get a deeper dive in the s p 500. Mentionedthree stocks on the call to investors a short time ago. Effect ond quite an how they have been trading. 2 . Hotels, still up quite substantially after that announcement. I look at the nasdaq and it is the second day in a row it has fallen. Facebook and microsoft, sectors of the market, sensitive stocks are the ones outperforming today. Is shifting the dynamics of the broader market. Make a caps on what contributed to the u. S. Market dominance. Youre looking at the s p 500 relative performance, were seeing the relative outperformance to small caps. The s p 500 although it back in may of 2018. Small caps were reflecting optimism about the reopening of the economy, and you are seeing that reflected in Department Stores today. Take a look at the s p super composite department store. Higher by 12 , higher level in more than two months. All around 10 . Saul sawtores sales fall last week. Optimism that the retail environment may start to improve a bit. I want to know what were seeing in bonds. Look at the u. S. Fiveyear treasury. We just got a 45 billion option of those notes. That. On those sizesto see get bigger as we see more and more treasury issuance. Vonnie thank you. Now back to one of the top stories. Hong kong is no longer politically autonomous from china. Likely has farreaching consequences on the professional trading status. Mike pompeo said in a statement today, on top hong kong does not warrant treatment u. S. Lows were before july of 1997. No reasonable person can assert that hong kong maintains a high degree from china. Ahn, will the shock happen . Theeally to have this, state department has certified annually the hong kongs independent. Of 1992,the act differently from the mainland. The questions are, it opens the door for a range of actions from asset freezes, even more tariffs on goods. We have seen u. S. Check tariffs on home goods. More than 30 billion of trade between the United States and hong kong that could be affected. Effectively, hong kong is now going to be treated by any city in the United States. Those in hong kong will feel betrayed. Especially the business community. We have seen more than 1300 american businesses with some sort of operation hong kong. It means more than 85,000 u. S. Citizens living in hong kong. Theesters have taken to themselves and now we have this with washington now. It is no longer politically independent. Question on a promised countermeasures. Contrary to what you might think, this is not appear appeal to china either. There are so many ways. On u. S. Seen the tariffs goods. One more more american businesses are really working in china, could they be impacted . Could working in china become harder . We have seen the Foreign Ministry saying, this is internal affairs, interference by external forces. National Peoples Congress ongoing in china. This is a huge parliamentary event for china, the biggest annual setting of targets for the chinese economy. We are expecting security loss. O be enacted terrorism and foreign interference in hong kong, which is the basis of the state department announcement that they would no longer independent. I see you spoke with a lot of people. Is what we were talking about for some time. Not a good situation. It creates more for the markets. As soon as we heard from beijing they were planning to pass the security law last thursday, we saw hong kong stocks plunging. At the same time, im getting other guests saying this is potentially good because it could bring stability to hong kong. Others say hong kong was never meant to be a democracy and it was all about the strength of the rule of the law. Will those rules be strengthened, perhaps taking away what we have seen in the markets. Quenneville little bit of a reaction in the markets. Thank you. Bloomberg asia and u. S. Anchor. On thes get an update business world. Here is mark crumpton. Mark german german said alor Angela Merkel meeting of the United States depends on the state of the coronavirus pandemic at the time. President trump recently said a meeting recently scheduled june 10, canceled and might be rescheduled soon. His spokesperson said to not say whether her decision will be based on the number of cases in germany in the United States or among potential participants. Japanese Prime Minister shinzo abe is open to deliver on his promise to keep businesses and households afloat with the world a guest virus response package. The 1. 1 trillion plan will be funded by a second parliamentary budget that breaks the record only last month. Officials say the coronavirus outbreak is slowing. Russian president Vladimir Putin today was told plans to begin lockdown on june 1. Or the 171,000 confirmed coronavirus cases, nearly half of all of the infections in the country. President trumps earning to regulate or shutdown social media companies. Twitter,is aimed at which began Fact Checking his tweets. The president tweeted that social media sites are trying to silence conservative voices. There is no evidence he has the ability to shut them down. 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. We bring you special coverage here at bloomberg television. Vonnie new york has one of the largest pension systems in america. They have to figure out how to finance in the coronavirus lockdowns. Our bloomberg correspondent is here with is now. Thank you for joining us today. I think you forget how much you have on wall street with one of the biggest Pension Funds in america under your oversight here, with more than 200 billion. In thesion fund now Interest Rate environment is under pressure. Wonder how you think about allocation especially for much more expensive assets like five it equity and hedge funds, which i know you have been down on white a bit in the last couple of years. It is interesting. A year ago, we did a dive into the asset allocation. Over longterm investor, a very patient investor, we learn from experience not to make quick judgments in the face of a crisis. In terms of our overall allocation, we are not icipating any big swiss it switches or changes. Within the asset allocations, we will be looking for opportunities, even in a crisis and even in a time of challenge, there will be an opportunity. , two problems to think about and in the problem, shortterm, another major problem is revenue at a steep incline. You set a most 70 in april alone. How do you think about it . That is several questions. First on the pension fund, we go as one of the best funded plans in the country. Im confident we will weather this challenge and time and retirees and future retirees do not have anything to worry about. Certainly in immediate concern. Dramatic loss, a hold on the economy, delaying, july 15, trying to make it easy for those suffering right now. The month of april, massive shortfall in terms of expected revenue. For now, we will wait to see whether or not there will be more help coming out of washington in the form of direct aid not only for the state but the local government as well in terms of their revenue losses. We do not get significant and unrestricted aid from washington directly for our state and local budgets, we will be faced with budget cuts. The governor outlined an array of cuts, 1. 6 billion, possibly, in our state agencies. The challenge there is the budget to do with the shortfall, it really affects the aid that goes to school districts, transfers the budget problem. The frontline on of covid19, they have their own issue. We have extended the opportunity for more our way to help with cash flow. Shortterm follow borrowing is certainly one option. You do not want to see that turn into longterm deficit financing. And some tax increases, though right now, that might be the least likely option. It really gets back to, we meet need more help in washington. With the whitemo house, what do you need from the federal government . At this point, Governor Cuomo has outlined 61 billion over theiple years, a package of National Government association had asked for. Is a multiyear request because we are anticipating out year budget gaps as well and high on the agenda for discussion. Today, maybe President Trump has talked about this in the past as well, to stimulate the economy again and get people back to working and investing in infrastructure. We have an aging infrastructure with tremendous needs, the roads, the bridges, the airports. Down the list. It is hopefully part of whatever bipartisanship we can see in washington in a very political year. Certainly more support for Infrastructure Investment that would be good for the economy. It be for one year or a multiyear, as part of the relief product package, direct aid not just for the state but for localities as well. A cost. Thing comes at new jersey is voting to raise highway tolls to finance some expansions here. What can you see from new york as you see spending go underway . Are we going to see increases in what consumers have to pay . It is possible. See whatis waiting to will come out of washington before the final determination fees, so iincreasing think some of those options are on hold for now but we will run out of time. The reality is, this quarter of our fiscal year, certainly the economic damage continues. We see record numbers of unemployment. Affect local governments, particularly property taxes. You will see the Ripple Effect of all of this and ultimately, if there are going to be certain cuts, that will impact those people. People will have to figure out how to make up for that. We are in a position, i had to keep going back to it but it is true, we need more help from washington to avoid the more onerous that should cuts and impact in terms of consumers in residence in terms of increased fees. Seeking to get through this time. Back to you. Vonnie excellent interview. Still ahead, luxury home sales, taking a look at the markets for new york city next. This is bloomberg. Bloombergis is markets. 50 day in the last couple of hours, we have seen a lot of movement. 4 , and easing off the gears. The s p 500 is off 3003 with. 4 . On trading now just above 17. The german tenyear spread with italy 10 year, basis points more at 192. Lets get to the real estate market, specifically the luxury state real am real estate market. You might anticipate year on year, in long island, at the hamptons, ultimately, due to inflated numbers from last year, and the pandemic. We are joined by beth freeman. , jews do due to inflation prices and how much is due to people not being able to get around . Thats freeman. Is due to inflation prices and how much is due to people not being able to get around . It has been a real problem for real estate professionals. Up to this point, though we were in a correction market, we even from 2020 higher than we did in march of 2019. Market,being a buyers we had a lot of fluid this in the market. Fluidness in the market. Vonnie are your customers the type of customers that do not lose their jobs, they are just on pause for the time being . You will see a further correction. We all impacted by this. You will see some people who decide they do not want to live in vertical living any longer because they want health issues. Up some change. But we are known for our highend luxury. We also work with a lot of people who are just buying one bedroom studios. People are trying to figure out what is means for them. Closing, that is impacting everyone and no one is protected from this storm. We are managing that. Thinkhings open up, i there will be a lot of opportunities but it will probably be slow and steady at the beginning. When it comes to manhattan, were talking about a highly populated area. Many left the inner city to move out to the suburbs. Now,that trend continue outside the cities, or world will we see a resurgence . I think what we have seen is a lot of people who have second there, or they are going to or some people, a lot of people who live in new york city have city have this in other places. The question is will there be people who decide they will not live here any longer . That is something people are asking themselves and i think they will have people who make the decision and some people who and figure itere out as you navigate this and keep harmonization in the front of your mind and doing everything cautiously. I think new york city is undergoing a transition right now stop now. Vonnie we hope to hear more about this in the surrounding areas. Thank you. Take care of yourself. A final look at the market in this half hour. The s p manages to climb up with 4 . By nasdaq is still lower. 4 . We will talk about the federal reserves recent policies and the effects on the fixed and market next. This is bloomberg. Mark dr. Anthony fauci tells cnn that recent is is a social party inuch as a pool missouri are, in his words, very troubling. He says u. S. Testing capability is Getting Better and a second wave of coronavirus is not inevitable if people are prudent. The u. S. Has certified hong kong is no longer pollute the eponymous from china. The secretary of state mike pompeo says it is a move that could have farreaching consequences on the special trading status of a british colony has with the United States. China is preparing to pass a security lawgiving more controller hong kong. Thats part in protests. India is boosting its level along the northern border as it pares for an extended con confident with china. President trump said in a tweet today that he had an offer to remediate. 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. Live from toronto, i am amanda. Vonnie i am vonnie quinn. We are joined by her bloomberg audiences. We aree top stories following from around the world. In various0 minutes regions, and outlooks for jobs. The Supreme Court of British Columbia is expected to rule on whether the cfo case needs to test canadas extradition law is that the latest on that law on that story. Finally, the majors annual meetings. With for her outlook. The energy group not helping overall stocks today across the board, a mixed picture. The s p 500 is managing a positive here. That market is positive on the day. Not a massive move and that is despite positive comments from Anthony Fauci about this potential for a vaccine. On theng we are seeing markets is a bit of a rotation and we are seeing some key groups. Look no further. Jpmorgan, bank of america, we see the stocks move four or 5 . Check out macys. His one is coming to market , eightwn 1. 3 billion point 375, that is 200 million more than expected and speaks to the willingness of investors, and we have seen a number of investors on both sides of the , anr issuing both stocks interesting sign of the times. The chief Investment Officer at fragment appleton investments, i want to start just in terms of the market appetite, we are obviously talking about a notes for on the 2025 now. What does it say for the health of the market at the moment . Classify look at the markets in general, i cannot say im positive on retail particularly. We look at the asset price for any highyield sectors, i think we have to be cautious. Seenightening we have after a widening, we think it is overdone. Opportunities. E the speed at which highyield markets came back. Lotel it is being driven a by record inflows and, in particular, there is a general belief the fed is going to continue to directly support portions of this, which we think is somewhat overdone. We do not like retail and that is a concern. You may not want to get in on retail, lower grade bonds. What about other sectors . I think there will be sectors factors,l remain it isnly Retail Energy not finding no value, but you have to be careful where you go looking for it. If you look at other sectors ,ncluding pharmaceuticals certainly in the technology space, there will be opportunity. If i was thinking about what is least attractive, certainly everything donated to hospitality and read well, is are areas where you have to be careful right now. [cross talk] , butsee its consensus this is one time where the consensus has it exactly right. There will be certain sectors which will be damaged for a longer time than others. I want to play a clip ahead of that what we will get a 2 00 p. M. We are seeing policymakers revealing potential at their disposal. Listen. We have a lot of options in terms of our two it. We used asset purchases to protect the past. The yield control, now used in a few other countries, is a tool that can complement, potentially, other policy action. This is something we are thinking very hard about. You hear a talk about yield curve control, how does that shape your thinking about how to be invested . A think it anchors the idea that because i do not see the fed control in the long game. How short is the short end . Two years or stars five years . Anticipated, i would increased deepening on the back of this. I think the fed has more tools in the toolkit, already managed to survive surprises many times by the extent it is willing to be flexible. Debate one current whether the fed will move to negative rates, i do not think that will happen. It is probably something where it is not clear at all that it is effective. It does have negative consequences. For example, the financial sector, which is relatively healthy. I think the fed is likely to tread very carefully in that direction. To do everything he you would see John Williams talking about yield control . The fed does go into negative territory, and he does not think they will either, it would not just be barely. It would be 1500 basis points. Would there be any argument for doing this and getting it out of the way and pulling off the bandage . I do not think so. I really do not. The Central Banks that have gone into negative territory, it is difficult to come out of this. It has an appreciable impact increasing bank lending or credit to the economy. In many cases because Bank Profitability dropped so particular sulli precipitously. So i do not see it, actually. What they have done with the support of various asset markets. Space, i see them going further before see them going negative. We have to leave it there. Thank you for your contributions. Chief Investment Officer at Franklin Templeton fixed income. Coming up, we will speak with the huawei cfo. An unprecedented diplomatic fight between the u. S. , china, and canada next. This is bloomberg. His is bloomberg. From a judge the fate of quality ceo. Judge could determine whether the executive is released today. Editor ofanaging bloomberg canada. Hoping this is ruled in her favor and she is released today. Give an overview of what we could hear a 2 00 p. M. . Test is really an examination of how canadian law stacks up against u. S. Law, with the thing accused of in the u. S. To cover up the fact that huawei transactions with iran, with that also be a crime in canada, so it is based on a is,points, one of which this is not a crime in canada because it dropped it sanctions against iran years ago, so what we really talking about and also trying to paint this as a somewhat political, politically up inted case, wrapped the trump administrations beef with china and everything what happens if he stays cfo . What happens if she wins . Classic shoeing if she wins, one thinks she would make a an escape for chinas quick yet she has been held up in a home for basically a year and a half and she will to normal life. I do not think huawei will want to back down by sidelining her. Figure and annt internationally renowned case. She want to have a return to the job if she is released today. If it goes against her and she continues to be held, how much longer could the process drag on . For sure, many months and possibly years. Extradition cases in canada do not normally get dealt with quickly. You might see a ruling next year but there are a number of legal steps between now and then. And she will still remain under house arrest in vancouver. Tensions between canada and the u. S. On one side, china on the other, just get higher and higher. Lit with the decision, that is derek. Thank you for joining us. Biotech companies are persistent in the Coronavirus Vaccine trials. After they started testing on people, the company saw an 18 jump in shares. We spoke earlier with the ceo and his timeline on the markets. Figure listen. Going as fast as we possibly can, this is as the u. S. Government works at warp speed, we are usually at warp speed. Our expectation is to go into phase two trial phase two trial will be designed to be phase three, so we actually see exodus and the expectation is we will do it in multiple countries, australia and the u. S. , and likely couple other countries by somewhere in the october and november timeframe, we would expect to be able to see and that would be the fda and europe to include the vaccine might be deployable at least under emergency you authorization. If that is the case, the vaccine should start being distributed at least to the first on Frontline Health care were there is an tour people at most risk. That would be the fastest time on. You are using this approach as opposed to other manufacturers that are using other approaches. What is the advantage of this approach . The approach has been a proven for some time. It is not our first Coronavirus Vaccine. It is our third. That it iswe showed the production of a protein found on surface of a pathogen such as coronavirus or ebola, and our Production System is the same for all vaccines and it has been shown to be effective at preventing disease when you take and protect the animal and challenge it with the actual virus and show protection. In a bowl of for instance, we the challenges and showed that very low dosage, you have 100 protection. Get very low doses and large quantities. Billions ofng about doses. Just announced that probably an hour or two ago, you probably see the acquisition of a manufacturing facility in the that is being, finished up the summer that has the capacity to produce over one billion doses affect seen. This platform allows us to make a lot of vaccines, it has been and o be safe , it 170 million acquisition manufacturing is a Sticking Point for a lot of companies that are supposed to have a vaccine. Market ns if your for thethen in trouble future for other research . No. Not at all. Their first of all will not be one coronavirus fact team. There is not one company that has the ability to make enough vaccine that is required. There will be multiple approaches, there will be a few vaccines deployed globally. So it is needed. Even if we are not first, everyone has to be safe because you are giving vaccines to healthy people. Show it will be anderent levels of efficacy third, it has to be scalable. Ours is scalable and now we have the physical capacity to make it scalable into the billions. Was stan, ceo. A preview ahead to an opecplus meeting. That is coming up next. This is bloomberg. This is Bloomberg Markets. Outlook starting in july as he was oil makers holder htns today. For more, were joined by chief will energy this, anegin with instance to come out of, if any . I do not know that we were expecting anything drastic focus the focus has focus has to be on so much uncertainty so i think the focus is particularly full as u. S. Producers whichue to shareholders, they failed to do over the past 10 years or so. On the u. S. Side, we have begun to see the pain from low oil prices across shale producers in the estimates of a number of bankruptcies. What is your expectation for what will happen to this sector . That is the fundamental question. Like you said, it has been staggering. About 1. 5 million of production that has been voluntarily shut in over may, the number cool down a bit in june. Its declines quickly if you do not drill. You can lose millions of dollars from production just from decline rates. That is the key thing over here. That or the negative prices we had a month ago, and the levels, at these price really, will money pour back into the sector . We do not think that will be the case so again, production will continue to decline. 22 private equity or just general anyone lending, shale growth will never go back to 1 million again. You have to look at 200,000 per growth. It is a paradigm shift. Russia. If russia throws this in the works, what does it do to these agreements and relations going forward, never mind the price . I think there is confusion around the russia headlines you have put out. It is not quite accurate. The current deal is in place already. It is a twoyear deal. It is the deepest following h2 2020 as a whole. 7. 8 million, then that is further next year. I think as an increase in production, if you see what i mean. What were hearing from russia is different in the sense that it has not been agreed that they will speak to the deal, an increase in production. There are companies talking about potentially continuing with june cuts into into q3. 70 of their exports go to europe. Demandis very much in and russia does not necessarily want to increase production. Some companies do want to. Not all of them. Yes. Asis almost like as soon these are priced in, it is a wakeup call that on july 1, the deal does actually change in the fact and the fact that much debt russia might defend these cuts. Thank you for joining us today. Energy aspect chief oil analyst. Up the markets. As you can see, crude oil has been above 13 per barrel for some time now. Just under 33 down. You can see brent is that 3484. This is bloomberg. Scarlet it is 2 00 in new york, 7 00 p. M. In london. I am scarlet fu. Romaine i am Romaine Bostick and this is Bloomberg Markets the close. It has been a mixed bag a good portion of the day. Yesterday, we broke above the 3000 mark on the s p 500. We could not hold it. The 3000 mark is the 200day moving average. We have been trading above it a good portion of the day. We have also been trading below it a good portion of the day. The only thing keeping the market up at this point is a rally in financials. A lot of the big names up about 5 or more. As far as lower market cap waited companies, department alles, nordstrom, dillards, having a monster day upwards for the second straight day. The index up about 15 on the day. Nymex