Market. Stocks,ed to the value financials, small caps. Still with us, george perks of bespoke embedded spoke investment group. The rotation that faded today, today, justifiable optimism that will eventually be outected in the data months . I think the biggest question is whether banks can get their acts together for me trading perspective. They have lagged to the markets so badly. Beta than ther economy overall thanks to higher capital levels, regulatory approaches. So it makes sense it would not necessarily fly right to alltime highs over the past couple of weeks. So fact that there has been little participation of the banks is of concern. Kb, i put together a chart yesterday that showed i think no and than four 20 rallies and fourines since 15 declines since march. A strongern see series of higher highs and lower lows for banks, it is hard to imagine how firm the economys footing can be as opposed to flows and sentiment. The stock market is not the economy. Hesitant, looking at bank stocks or other industrial names and saying, while they are up one day or the next day without any sort of larger trend higher, that is a problem for where the overall economy will go. We have some really good improvements in breadth in the s p 500. The percentage of stocks trading above the upper Bollinger Band. A large share of stocks doing stocksans a lot of ripping higher. It is almost as high as it has been in the past year. That is a really good sign that the market is moving up broadly. How much the economy can fall through is largely dependent on bank stocks. Romaine that Bollinger Band comment is interesting. A lot of folks have been pointing to that. A lot of folks also pointing to the breakthrough yesterday and the retracement. How much stock do you put into those Technical Levels . George i think most of this rally has been dictated by flows in sentiment. People getting too pessimistic back in march. I think people could argue that i was one of those folks. Getting too pessimistic about the equity market, a very shock and all policy response. Think, as the equity rally can continue a lot longer than people think it can based on flows alone. Of course, if those dry up, that is a recipe for another big shock. As people manage their risk within those technical parameters. That said, if you already fundamental investor, the pain in value is going to continue. Value has gotten crushed for a long time. You have to feel for somebody looking at a discounted cash flow analysis of stocks. Where i sit, the theme of the months is that you can throw that out the window and if it goes higher, it goes higher. I am not here to say that the market is broken or is wrong or Something Like that. But there definitely has been a technical uptrend and it is hard from a Risk Management perspective to say that aggressively rather than look past valuation. Romaine we want to thank george pearkes. Some breaking news crossing the wire. St up, alto beauty, the ulta beauty, the big cosmetic retailer, down comp sales for the three months ending in april. This is slightly worse than expectations. The q1 loss per share coming in at 1. 39. Board, things lower for ulta. Company,loud computing pretty much in line with estimates with estimates. 4. 8 billion to 4. 9 in. The estimate on average, 5. 3. Previous forecast, 21 billion. Estimate, 20. 6 7 billion. Pretty much up and down the line. Those numbers are pretty much in line with expectations. Scarlet we are still waiting for nordstrom to come out with results as well as cosco. President trump, signing the executive order, did say that the administration will regulate , as the230 shield president seeks to narrow good faith in terms of how companies are protected from liability. Nordstrom First Quarter net sales dropping 40 in the first period. Loss per share was much wider than anticipated. 40 in net sales for nordstrom. This is bloomberg. Romaine broadcasting live from new york to our viewers worldwide, this is whatd you miss . Scarlet we saw u. S. Stock indexes erase earlier gains and all close in the red, led by the russell, off by 2 . Nasdaq closing off after President Trump said he would hold a News Conference tomorrow and discuss china. That raises all kinds of concerns about rising chinau. S. Tensions. Romaine salesforce shares down in afterhours trading. Q1 numbers largely in line with estimates. They did revise the forecast for q2, fiscal q2, and full year numbers. The Digital Transformation coming out of the pandemic. It appears that some of the sales at least in the short term. Scarlet thanks for that. Lets get to what is going on between china and the u. S. This National Security law on hong kong, now the president of the United States plans to hold a News Conference tomorrow to discuss china. Lets get the market perspective from Brown Brothers harriman head of equity strategy. What did the markets fear in terms of what President Trump could say tomorrow . What is the worst Case Scenario and best Case Scenario . I think the worst Case Scenario, trade restrictions. 2019, a socalled trade war between the two largest countries and economies in the world. Obviously, the last time we had tariffs, back in the Great Depression with the smoothawley act. Another round of trade tensions, tariffs, restrictions. That is the worst case. The best case, some sort of limited action. You probably saw overnight, the u. S. Is talking about expelling Chinese Students with ties to pla. The problem with these sort of tensions is that tempers can happen, and i can fear this can turn into a much titfortat thing. Ok in 2019 when the Global Economy was relatively strong but in a recession, this is the last thing you need. Romaine for those people out there trying to prepare for this, tradeoff this, how much can this action on a political level translate into some pain on an economic or financial level given that tariffs are already in place and relatively high . I think the key factor is that this is coming at a time when we are already in a global recession. We just really have no margin for error. We saw how markets have been impacted by these kinds of measures. Headlinedriven stock rallies and selloffs. To me, this is almost a replay of that, coming at a much worse time. China has been quiet, not responding back and forth. I think part of that was the fact that the chinese leadership was going into the National PeoplesCongress Last weekend and did not want to roil the market. I think the gloves were off. But i think there will be a much more direct confrontation going forward. This can easily spill from the political realm into the economic realm. Scarlet and the Financial Markets realm as well. We have seen offshore yen at new lows. Markets repairs likely offshore yen . It is funny should ask, i think this is the only way you can see it. Myself and other investment specialists are bewildered that the market is shrugging this off. ,f you look at hong kong dollar you would not think there are any tensions between china and hong kong deal the way it is being affected is the yuan. It is puzzling. To me, that is like canary in the coal mine. I would say those are the two pairs to watch. I do think they are the leaders. If these tensions ratchet up, i think some of the other markets will sort of revert to form. Soften, japanese yen, swiss franc would probably gain in this scenario, and the dollar as well. Romaine how much of a defense do you think we will see the pboc make on the yuan . Policymakers have really been trying to tamp down on turmoil. Yuan is weakening, but they are not feeding into the weakness. They are kind of leaning against it. See,he markets, as you can believe otherwise, and they have been taking it much higher on the expectation that they are going to worsen. Win thin, appreciate your perspective here. Will be on the lookout for other currency pairs. Was speaking, the white house said that President Trump at sign date social Media Executive order. He was of course upset without social media had slapped some factcheck links to his tweets. The administration will regulate the section 203 shield. Romaine revenue, 37 two 7 billion versus an estimate of 37. 05. This should not be much of a surprise given that the company does provide those comp sales. Fx. , that includes gas and this is bloomberg. We dont want to see consumers, small business, big business come out of this in an indebtedness position that is unsustainable. That is why i think you have seen a number of these programs, that they have been structured in a way that they have grants or aspects of forgiveness in them. The government is thinking about the same thing. We dont want to end up with an economy where our consumers and business are saddled with untenable levels of debt. We have to be mindful that going into this, the u. S. , from a position of strength in terms of rates,nomy, growth employment, from a monetary and fiscal perspective, not without some challenges. Low rates, negative rates in some places. Not a lot of things on the monetary front that could be used with highimpact today. Fiscal programs being put in place in terms of main Street Lending programs that are out there. The level that some folks would say balloon the feds Balance Sheet. We have to be mindful that we do not want our government or other governments to come out in a position where the debt at the federal level is untenable because, again, we are likely to be in this Slower Growth environment for an extended period of time and we have to make sure we have created that allans for people to continue to have confidence. Mind, how does the government exit . There are some people who say the government does not need to. Embrace the debt, modern monetary theory. There are others who say, as soon as it is practical, we will have to raise taxes, start to chip away at the mountain of withthat we have created regards to doing the right things to fight this crisis. As you look at this, we have period this extended policy,acks monetary not just in the u. S. But around the world. If you look at the fed Balance Sheet coming out of the last financial crisis, they were on a trajectory of getting that back down to levels people would be more comfortable with. As we try to get to the other side of this, it is going to be back on the table. Is a couple of things, one that the u. S. Does continue to be the worlds preeminent reserve currency. A very Strong International borrowing base, and therefore has capacity. I think the second piece of it, lulledont want to be into a false sense of complacency, but the low Interest Rates impose a cost. I think weve got to be prudent, we have got to be mindful in levels of our indebtedness and we have to have a trajectory to get it back to a sustainable level over time. But i still think we are in a reasonable place right now. It depends how long this goes on for, what needs they will be in the future, what kind of commitments it will take. Citigrouphe ceo of speaking a little bit earlier there on bloomberg television. Just a few moments ago, President Trump did sign that executive order on social Media Companies that he had been talking about. We want to bring in and brody, our bloomberg lobbying reporter, to kind of break down what exactly this is. The president sort of bills this as a means to i guess remove a liability shield that has kept these Companies Free from certain lawsuits if they allow things on their website to remain up even if that information is false. How much legal standing does this executive order order have with regards to overriding any existing laws on the books . Trump is kind of going out there, but i think the truth is a little bit more delicate. Thelaw is section 230 of Communications Decency act. Protects online platforms, Communication Companies from liability from lawsuits for users posts that they leave up and users posts that they take down in good faith. What trump wants to do, at least according to a draft we saw last night, he wants to charge the federal Communications Division with defining that good faith. He said, maybe it is not good faith if you dont offer people long enough to respond to your charges that something is wrong. In legalrt of Uncharted Waters here but it does seem like there are probably significant problems with that approach as well. The fcc is an independent agency. It does not have to take the white houses orders. And it does not under the statute have very much rulemaking power here. A very it does send powerful signal, especially to the president s base. Talk a little bit about the political context for this, especially when President Trump threatens twitter on twitter. That i cant get over it. Ben it bears mentioning that twitter is trumps communication strategy as a politician and has been from the very beginning. It is probably a huge part of why he is as successful as he is. I think the issue here is really , what we are going to be doing with section 230, there has been pressure to change it from all over. I think he wants to come down on it now because conservatives feel that they are being silenced online. They constantly are alleging that their views are being silenced. He wants to feed into that. I thick it is important to say also that we are dealing with a massive coronavirus pandemic. It is fresh in the economy, potentially making it much more difficult for him to get reelected, so in some ways it feels like he is changing the topic. Scarlet thank you for providing some muchneeded context there. Coming up, we have leadership live with David Rubenstein. He will be featuring his special guest, the youtube ceo. This is bloomberg. [ sigh ] not gonna happen. Thats it. Im calling kohler about their walkin bath. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] hmm. The kohler walkin bath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. Kohler is an expert in bathing, so you can count on a deep soaking experience. Are you seeing this . The kohler walkin bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. Everything is installed in as little as a day by a kohlercertified installer. And its made by kohler americas leading plumbing brand. We need this bath. Yes. Yes you do. A kohler walkin bath provides independence with peace of mind. Scarlet lets give you a recap of some of the earnings in the past 30 minutes or so. Nordstrom reporting a drop of 30 in First Quarter net sales. Many of its stores shut down and it had to rely on online sales. Analysts were looking for a loss per share of 1. 34. A pretty massive deficit and a devastating drop in terms of percentage decline in sales. Romaine salesforce shares moving lower on the day, 3. 3 after hours. The company did revise its forecast for the fiscal Second Quarter as well as the full year. It had seen 21 billion as the number. Analysts were expecting 21. 1 billion. That seemed to be enough. Scarlet really good perspective. Inco shares are moving lower after our trade after it reported fiscal thirdquarter Sales Revenue came in at 37. 2 billion, higher than what analysts were looking for. Turn er share analysts were looking for 1. 92. The previous years number was two dollars, five cents. It had to reduce the number of shoppers in its stores and reduce the operating hours because of the pandemic to keep people and employees safe. All of that taking a hit on its bottom line. Romaine they did report revenue of about 21. 9 dollars, little change from a year earlier but enough to give shares a little bit of a boost. The company did say they generated profits of 1. 34 per share. A big beat at least on that metric. Vmwareto point out that is up about 6. 4 . Dell, the largest shareholder. You tend to see those Companies Move in tandem together. Costco, wee thing on were talking about how orders were driving up the shares earlier in the quarter. Once people got their fill, bought all the toilet paper they needed, paper towels, canned soup, it turns out they did not need to go to cosco as much. Lets turn to leadership live with David Rubenstein, featuring conversations with Business Leaders navigated the unprecedented challenges of coronavirus. How is the online video giant policing misinformation . Leadership live starts now. If this isme ask you the best of times or the worst of times for Companies Like youtube. The best of times, a captive audience. Times because advertisers are not advertising as much. Which is it for you . Susan probably both. It is a difficult time for everyone. The other hand, we have seen that youtube has a different role to play, delivering the right information to People Associated with covid19, connecting them to their communities. Youtube has really been able to connect people, whether it is religious, social, or information. How did they fix things in their house . We see so many kids out of school so youtube has been an important resource in homeschooling. We are seeing challenges across the board. That would provide a valuable service for our users. David today is a day that social media is in the news because President Trump has signed i guess an executive order saying in effect the government would do more to regulate social Media Companies. Do you have any comments . Susan we have heard this executive order is coming out soon, probably any minute now, so we have not had a chance to see it. We take all concerns very seriously and want to make sure we understand what the concerns are. But we have worked extraordinarily hard to make sure that our policies and systems are in a fair, neutral, consistent way. We are a global company. All of our policies are done at a global level. They are enforced at a global level. If someone has an issue, they can always appeal. Youtube and the social platforms have enabled a broad set of new voices to join the conversation. We have been proud that across the spectrum we see a lot of new voices and opinions. David youtube has had its own challenges in this area. I think the social Media Executive order is probably due to the fact that twitter made some comments about President Trumps statements yesterday. You have been in the news about something that happened in china. Taking some words down for me Youtube Video that was related to china. Susan we had an issue, an error on our side, where we made aware and understood what was happening, we pushed change to address that and we did issue a statement saying it had been a mistake and we were fixing it, addressing it. David there has recently been a doctor who got attention for his youtube. At one point, i think you took down some of the videos. Something, to verify the accuracy of what someone is saying . Susan i am not sure what dr. That was. Thereve definitely been a few videos that have been in the news. First of all, we have enabled a large amount of debate and discussion. But we have also had some really clear policies. The policies have been that if someone is recommending any kind of treatment that would be , that woulde bleach be a violation of our policy. Anything that would have people a medically unreliable treatment, that would be a violation. That would violate those two policies and that is what we have taken them down. Ifas just going to say that, a News Organization is covering reinstated. Could be that is something we know is medically unsubstantiated. Many experts, all types of local Health Authorities around the world, that would be a violation and we would take it down. David as someone who is not an expert in some and how youtube works can you explain this . You have how many hours of video going per day . Susan we have 500 hours uploaded every minute to youtube. We have over 2 billion users coming to our site every month. We have an incredible amount of video and incredible amount of users. We see a lot of responsibility with that, making sure we are enabling both a broad set of views but also having all the policy in place. David how do you get people to watch what is going on . Does someone have to complain . How do you do that . Then that is part of solutions that we have. I will summarize it by saying that we use a combination of humans and machines. Basically, you can think about at that we use the humans to come up with the policies. We consult a broad set of people on those policies. And we train our machine to go out and look for videos that could be violations of that policy. They cast a net, bring back all these videos, then we have the humans review the videos. We do a lot of training to make sure there is consistency in terms of how our policy works. David lets talk for a moment about how you have been operating this company from home. How many total employees does youtube have . Susan we cannot release that exact number but we do have thousands of employees. And we do work with google so there are some shared resources. David i assume you have more are they working mostly from home now . Susan everyone is at home. We are a global company. We have operations around the globe. There were certainly some countries where they might have slightly more people in the office. But for the most part, almost everyone is working from home. A Technology Company like yours, people would presume, i assume, that you are able to operate from home better than a nonTechnology Company. Is that a fair statement . Susan it definitely took some adjustment, but there is truth and the fact that because we are an online company, it is easier for us to work from home. But there will be Tech Companies that produce hardware, that people will need to come into the office. For us, for the most part, our employees have been able to successfully work from home. David a couple other Companies Like yours, not quite like yours but companies that are social Media Companies, have said, in the future we might have all our employees working from home. On whether a policy it might be better to bring everybody back or keep everybody home . We have not made a policy on that we have said that we will definitely be looking at more flexibility in what we learn from this situation. We definitely have seen that we can continue to operate very effectively. We can do all hands across the entire company, so it finally pushed the limits of what we can do. It definitelyy pushed the limits of what we can do. David i assume you talk to your senior reports every day or every few days. How has it changed from home . Susan it is the same. The difference is that there are not those casual bumpy into eac other in the hallway bump into each other in the hallway kind of conversations. So i have to make sure i am being deliberate. For the most part, i would say there is actually a lot fewer talks to give and a lot less trouble. But, internally, we are able to operate a lot of our regular meetings in the same way as we were in the past. We always had people that were on videoconference calling in. David how have you personally been taking care of your health . Are you wearing a mask when you go out . Do you go visit anybody . You have five children. Are they all at home with you and your husband . Susan personally, it is hard to be at home. I think we are seeing that across the board. I personally have done a few things. I need to get outside of the house, whether it is walks or exercise, i find that essential for me. Actually, youtube has really great exercise and yoga routines for anyone. No matter where they are in the world or what kind of exercise they want, we have that. I am also just trying to ,emember that this will end that we will get through it. Crises we go through crises and we know they will end. We need to just manage as a society and do our best to do that. We have a mandate in the county i live in that whenever we go to the store or anything, we have to wear a mask. David you grew up around the palo alto. Stanford, your father was a professor in physics. Went to harvard and majored in english along with other subjects. Susan history and literature. David you got a masters at university of california santa cruz. Then you got your mba at ucla. Your mba at ucla, masters in economics, literature degree. What were you deciding that you wanted to do . Susan i was not sure. That was part of the beauty of the journey. The internet did not exist when i went to college or even when i graduated from college or even when i graduated from my first graduate degree. It certainly was not as we know it today. I saw apened was startup because i was from palo alto, i saw start ups, i saw what they were doing. I wouldo do important, call up Kelly Services and say, please be anywhere for a day or two days. I was placed at a startup. I went this is amazing back and did Computer Science at harvard, just two classes. That changed my point of view. I ended up working intact. Is, an urbanory legend, two ways two guys came along, wanted to rent a garage. For 1300 it to them per month. 1700 per month. Did you think they were good bets . This of course became google. Did you know these guys before . How did you happen to come to them . Or did they come to you . Sociallyknew sergei before that. He was not working on google at the time. He was just a student. They said, they were going to build this search engine. They were already all these other search engines. You have these two students saying, can i rent your house . I want to build a service. I said, you can do whatever you want as long as you pay the rent and it is legal. I did not take them seriously. But what happened is, i started using their service. I did not really realize that i had completely switched to google. There was one moment when i was trying to do my job and it actually was down. I realized, it is so much better , i cant get my work done. That is when the light bulb went off, that if the service is helping me do my job better, that is something that will be really valuable. Maybe i should work there. David did they pay their rent on time . Susan they did. They paid their rent, they took out the recycling. The challenge was that they stayed up really late and they were there a lot of times, sometimes all night. My bedroom was above their headquarters. So that caused a few issues. Susan hewlettpackard was allegedly started in a garage in palo alto as well. What is it about garages . Why not just rent an Office Building . Susan they could not rent an Office Building. It was during the first dotcom boom, it was really crowded. And there were just three of them when you are really small and you are working all the time, a house is a better work environment. Iey could move in right away, said, i am not going to charge you a one year lease. Shower, my refrigerator was in the garage. They thought it was great. David at one point, you said, maybe i should join this company. Will you the 16th employee or Something Like that . Susan yes. If i had joined a day earlier, i would have been the 12th or something. David do they say, we won a discount on the rent now or two they stop renting from you . They moved out when they had seven or eight employees. It is residential. And there is no parking at night, so we had a lot of parking issues. After eight employees, we agreed, you need to find real office space. David you joined the company, presumably they did not on youtube then, so what were you doing in the early days . My title was marketing manager. They said, we want you to build a global brand for google. No one knew what it was. They said, we want you to build this global brand and you have no budget to do that. I was foolish enough and young enough to say, ok, i will do that. That is how i started out. I realized i could not by marketing or anything, so i had to build products to make google known by other people. We had a bunch of products and strategies and that is how i ended up creating products for google. David the story is that you saw youtube, you said to sergei and larry, we should buy it, and you paid a price that many people thought was ridiculously high at 1. 65ime one points billion dollars. Were you worried that you overpaid for something that some people today would say is worth 200 billion . Susan i was working in online video. Google had its own product, google video. I was starting to understand the dynamics. There were a few things i saw. The first was that people were uploading their video to share their story. At first we said, upload your video if you want. Thousands of people around the world uploaded video of their families, of them, whatever they thought was interesting. That was not that surprising but the second part really surprised me, that other people wanted to see regular peoples uploads. At the time, User Generated Content did not exist. Really, a lot of people want to see it. We realized this was a new type of video and it would be successful. I thought it was really important that we work in that market. That is why in the end we acquired youtube. It seemed expensive at the time but it was clear to me that this would be a huge market for us. David eventually, they said to you that you should be the ceo of youtube. That was how many years ago now . Susan six or seven. David the company has grown a lot. Explain to people who might not be that familiar with youtube, you can upload your videos but pay an also subscribe and monthly fee. Is that right . Youtube is free for everyone to watch the videos. We have 2 billion people who come to our site every month and they can see videos on all kinds of topics, whether it is learning, how to, something funny, traditional media, who uploads all of their lips for latenight shows all of their clips, whether it is for latenight shows or music. That is available to everyone for free. Our creators are really like the people who created on youtube started out uploading videos of cats or dogs. But now they are professional. They are Small Businesses that create content. A lot of them are doing extremely well, generating millions of dollars and millions of years. So it is free for everybody but then we have a music service, called youtube music, and a Premium Service which is all of youtube without ads plus the Premium Service. David how do people make money on it . You charge advertisers, i presume. Do you charge the people that go on your service . How do people get wealthy being on youtube . Susan it is free for all of our users. No matter who you are, you can watch youtube for free. It is paid for by advertisers who advertise for the video. For a video, there could be an ad that would run just like on tv, or we might have videos advertising on our search results, for example. Then we share the majority of that revenue with our youtube creators. If you create videos about cooking and generating a lot of page views, we would pay you the majority of the revenue that we generate on the videos we are serving for you. David whenever you go to a restaurant or anywhere, people come up to you and say, i have a perfect thing for youtube, you should get me on. Susan the good thing about youtube is people can just upload. They dont even need to talk to me. Algorithm that promotes certain ones more than others . How do you get in the business of being high on the algorithms . Susan you get people to watch your content. David we have machine learn susan we have Machine Learning that looks at who watched the video, what other people they watched it with. If we know you are interested in sailing and a new creator has a lot of sailing videos, we would likely recommend that to you. I just mean our machine detect that. David suppose somebody is afraid that you might know all the things they have been watching. Is that a risk people have to worry about. What is joe blow watching . We know more about him than anybody. Is that a problem . Susan no. We work incredibly hard to make sure we have privacy for our users. We work to make sure all of that information is encrypted and stored, and give users the right to remove any kind of information or watch history they would not feel comfortable with us having as well. David your company has done very well by all analyst reports. Have you ever thought of going to sergei or larry, why dont you spin this off scarlet that was David Rubenstein and his leadership live special with youtube ceo susan wojcicki. That does it for whatd you miss . Bloomberg technology is next. This is bloomberg. Welcome to bloomberg technology. Im emily chang in san francisco. President trump assigns an executive order and directly at curbing the power of social media after twitter added Fact Checking labels to a couple of the president s tweets about mailin ballots. More on that in a moment. Meantime, markets following the rising tension between the United States and china. The president saying he plans to hold a press conference on china tomorrow