Technical has laid a big role. We were talking about the 200 day moving average, 3000 on the s p 500 and it was a resistance level until it wasnt. I was looking at the etfs that track hong kong stocks. About up twot point 1 . So relief that the president did not announce any new tariffs. He is not going to touch the phase one trade deal. All the other movements and announcements he made are largely priced in and as far as the measure is concerned does not change the big picture. Romaine lets bring back the chief Investment Officer at Deutsche Bank wealth management. Idea of thebout the fed support here and the idea that a big part of this rally, a huge leg of it, is resting on that fed support whether what is done already or what it said its going to do. Is there a risk that should the fed start to pull back and say enough is enough, do we have enough confidence the markets can continue higher on its own without that support . So, romaine. Bt the feel the fed has been essential really everything started on march 15 with the fed cutting theeeting, rates and the array of alphabet , qed, and i think the fiscal stimulus was not lacking this time around. It was a great combination of monetary and fiscal policy that created that and allowed investors to gain confidence in the market. From fed i am hearing the onus is now on the fiscal policy, on congress to come up with a new set of plans, moneye up with additional for the society. I think there are still concerns with the longterm damage covid can do and for that reason alone, the fed speak has started toward fiscal stimulus. The ford guidance in my mind is going to be the next stage where gets more inclination in terms of what the rates trajectory is going to be. We are entering this time before the june 10 meeting, i do think the Forward Guidance is going to be critical on june 10 because wets where the fed can say might be languishing the 2 inflation target and we dont feel completely out of sync if it were to go above 2 . A whole host of other things the fed can do on the front end. A lot of talk of negative interest rates, but i dont see that coming anytime soon. They dont really need to announce any kind of yield curve control until there is reason too. What do you think about investments in Corporate Bonds . We were talking with molly smith about investmentgrade issuance and how we hit the one trillion dollar mark for Investment Grade issuance yesterday. Theres a lot of supply out there. What offers the best value right now . Grade isnvestment right up there with highyield. Fedstment grade, the ballooned in march and they commercial Credit Facility and the fact the fed is now purchasing etfs and investmentgrade credit, the lender of last resort has become the purchaser. That gives a lot more confidence that the market is not going to stress out. I feel there is still some room there. Overall, i think investors should look at their fixed income exposure, especially if you are sitting in treasury because we are in this decade of financial depression were treasuries no longer going to yield you much and it might not move much. The volatility might not be there but its not going to give you anything. I think you have to look at it you cangrade if do so. Scarlet great to speak with you. That does it for the closing bell. Whatd you miss . Lowering the stakes for standardized testing no sats, no acts, so what do you rely on . This is bloomberg. Broadcasting live into our viewers, this is whatd you miss . Snapshot ofs get a how u. S. Stocks closed on the day and indeed on the month. We closed near session highs, the dow finishing in the red. The nasdaq outperforming as big theirch reasserted dominance. We see stocks closing out the month of may with sizable gains as well. The second straight month of gains for the u. S. Stock market, relief perhaps that President Trump didnt say anything unexpected when it came to china. President f china, the stopped short of implementing measures against the country. In hong kong, they are going to launch a National Security law. Lets bring in director of the china power project. You heard the president speak. Investors were relieved there was no mention of extra tariffs toany further interruption the phase one trade deal. But from where you stand, how damaging are the measures the president announced to the chinau. S. Relationship . Certainly usedt sweeping rhetoric and condemned chinas National Security laws that are going to be written and enacted against hong kong. But he was unclear about what measures will be taken by the United States against china and potentially against hong kong. Be someay there will special privileges that hong kong has that are likely to be illuminated. He specifically mentioned the extradition treaty. He talked about potential limits on technology but said there would be exceptions. He said the state department at the travel advisory for citizens going to hong kong. But he was not concrete about when these actions would take place and how comprehensive they will be. He did not mention removing hong kongs special trading status. The lack of detail is concerning. I wonder if you see it as an issue for folks doing business with hong kong in some manner whether they just stick around and wait this out and wait those details or whether they pack up and move on . Bonnie i thing its going to depend. There will be some people who may see the handwriting on the wall and companies could decide now its time to leave. My expectation is people will wait for a while and see exactly what the United States is going to do. Our other countries going to follow . China will probably enact this law over the next couple of months and then we move into a phase of implementation. What are the chinese actually going to do . My guess is a large number of companies will want to wait it out. Scarlet the problem now between china and the u. S. And the rhetoric we have is we are in a cycle where every action or announcement demands a response. Quickly ratchet up very to something that is hard to back down from. Do you see a path to a grateful graceful offramp, using the chinese phrase get off the stage and still stay safe . After the is possible president ial elections. I dont see it happening sooner. I think for President Trump, china is a useful target to blame, a punching bag he can use as he runs for reelection and tries to distract attention away from his own performance in stopping the spread of the covid19 pandemic in the United States. For xi jinping, he has a domestic audience and he has to be tough on the United States. So there will be actions that will be taken against the United States if the u. S. Imposes sanctions on chinese officials and entities, which was also mentioned by President Trump today. Romaine we talk a lot about the u. S. China relationship from the perspective of the u. S. For obvious reasons. Aside from what the u. S. Wants and what trump wants, do we have a real sense of what xi jinping wants out of this relationship with the u. S. . For many years, the United States has been a top priority for china. Even before xi jinping. But continuing from his presidency, china has had a stable unpredictable relationship with the United States and President Trump has pulled out the rug from under xi jinping on that score. The chinese are questioning whether or not it is possible to have a stable relationship with the United States going forward. There are some people in china who are saying this may be impossible and when it comes to core interests, and hong kong is one of those, taiwan is. Attach much not weight to u. S. Statement and policies going forward. It just has to do with what serves china own interests. Scarlet so it disregards whatever the u. S. Has to say about these core interests. What people get wrong the most when it comes to china intent with taiwan . I ask this because one country to systems President Trump announced as one country, one system is something china has been trying to pitch to taiwan with limited success, of course. There has been a lot of statements over the course of this week with the National Peoples congress in aging and some fears china was revising its policy toward taiwan and dropping its goal of peaceful unification. At the end of the day, what is clear is xi jinping is not in a phase now, its not in his interest to change that strategy. China still hopes to implement some version of one country, to systems in taiwan. It still wants to rely on its relationship with the kmt and the consensus reached in 1992 that both sides of the straight are part of one china. People believe china is poised to use military weapons to attack taiwan. I just dont think thats going to happen in the near term. Its on the table, its an option, absolutely. But an attack on taiwan would be extraordinarily detrimental to prc interests at this point in time, so i dont see a change in china process strategy. Romaine always great to get your thoughts. Shes the director of the china power project. Coming up, we are going to talk about the violation note between twitter and the president one of his tweets cited as a violation of the companiess rules. We will talk about what that means for the company, next. This is bloomberg. The judicial system in canada for extraditions takes a long time. We have confidence in the judicial system in canada and if she is extradited to the u. S. , we believe she will be treated fairly and will be exonerated. If that is your case, why not just come to the u. S. And face the charges here . Thats a decision charged with the individual and she has her individual attorney. I was a federal prosecutor for a long time and im not going to secondguess those. This is coming at a time when we see fresh sanctions out of suppliesagainst huawei and sourcing microchips made with u. S. Technology. How prepared is while way to face this . How much inventory buildup have you prepared for this . Effort to crush while way. 12ad an impact of about billion because of limitations to u. S. Customers. This new escalation the company is studying closely to see what the impact is. We are basically buttressing up for our survival. That is what this is really about. In the meantime, there is a likely Significant Impact on the Semi Conductor industry in the United States and a significant loss of jobs. Is this an existential threat when it comes to other isdictions where compromises like the u. K. , does this prevent while way from doing business with these carriers . This is part of several factors standing in the way that the u. S. Government is interposing that prevents the u. S. Government from being willing to talk to us. The geopolitical situation and now the president ial campaign, the absence of a Strong Technology and industrial strategy in the u. S. And these need to be addressed before they will talk about the kinds of activities done in the u. K. And around the world to try and address what is risky. We hope we can have those conversations and hope there does not have to be a great loss of u. S. Jobs. Is thesepectation strategic competitive concerns and tensions will continue and thats just a fact of the time we are living in right now and the dynamic between these two superpowers. Ensures huawei try to its survival . Whats your strategy across markets you have access to . We are doing more of what we before the imposition of the restrictions, but now we have to dig even deeper, prioritizing the products most important to our customers. We are ramping up as we did last year our research and development, we are about fifth in the world with a 20 billion dollar investment. We are trying to go forward with products that may not require these components and trying to come up with alternatives and doing research and development to come up with this on our own. It is a multi pronged effort and we are not sure how big the impact is going to be but its going to be a big impact on american jobs. Way keeps stating its independence from the Chinese Government. Why do you feel the Chinese Government feels the need to intervene on the side of while way with rhetoric or actions . The recent escalation from the u. S. , i hope china doesnt in turn escalate and block the ability to do business. If the china government was doing to apple what its doing to while way, dont you think President Trump would be all over the place criticizing china and defending apple, absolutely. You are listening to the chief Security Officer at while way speaking with shery ahn on bloomberg. Lets turn to twitter. Shares have taken a beating after the president of the United States signed an executive order to cut protection for social media platforms. Some of this send stems from a message put up on one of his tweets on tuesday. Then today, they put up a note saying the president s tweet violated the companys terms of service with regard to glorifying violence. Twitter did say it determined it may be in the publics interest to remain accessible and that tweet is still up there. Joining us that was kurt wagner. What is the issue here . Out to different labels. One from yesterday and one from early this morning, late last night. On tuesday, twitter was saying these tweets do not violate our policy, but we find the misleading or confusing. Basically Fact Checking the president. They added a label to say heres more information. We dont think what this tweet says is true. What we saw last night was different. What we saw last night was them saying this actually violates our rule but because its coming from the president , we are going to leave the tweet up but we are going to put a flag in front of it so you know that it violates its rules. Even though twitter took action twice, one was for misinformation and the other was for a call to violence that did violate the companys rules. Fact checking the president and checking the president for following the rules. This is something they could have done a long time ago. Why not . Kurt the timing is interesting. We are five months out from the election and its a tough time for the company to say we are going to start enforcing this again. The president is running for reelection. When it comes to the misinformation, that policy is relatively new. The company didnt have it until just last couple of months, so they would say we have not done that because we didnt have a policy earlier. When it comes to enforcing this other thing, trump has been pushing boundaries on twitter for years so it is interesting they would finally start to do this. There were some strawman arguments saying you have to look at what other people are saying, but there were legitimate arguments made were people were able to point to instances of high profile people, highprofile leaders making what could be considered incendiary comments that did not have this flag on it. On the flipside, you have facebook which is taking the approach that its too hard to police and its better to just let the market sort itself out, as we would say here. Is this a tactic, the one facebook is taking, is that maybe a little more wise for the company to do . Tot i think if you talk people who work at twitter, they would tell you principle is more principled and facebook is more businessfocused. If you talk to facebook, you would say twitter is not looking at longterm relationships here and Business Impacts of their decision where facebook is. I do think there is obviously a strategy to both and these companies are not willynilly making these decisions. I think jack dorsey, probably more so than zuckerberg, doesnt necessarily care as much what his decisions mean for the world of politics and twitter. Obviously, everything coming out of facebook is very calculated. Thats probably why you see these two different directions. Scarlet thank you so much. Kurt wagner twitter falling for three straight days, now trading below 31 a share. The last time it had been there was back on may 19. From new york, this is bloomberg. Romaine welcome back. The covid19 crisis is changing a lot about how we work and live. Companies forced to shift to remote set ups, like me. Scarlet is still away. Many are allowing their employees to stay remote for the future. Together aest put report that investigates the longterm impacts this remote Work Experience could have. Joining us right now. This is an interesting report. I worked from home for about nine weeks. Scarlet has been working from home longer than me. It was an interesting experiment. I was glad to get back into the office, but your study seems to suggest there are a lot of folks not only happy working from home but some of their employers are happy with the productivity they are getting out of them . Thats right. Its not really surprising that a lot of workers enjoy working from home. Less commute, they dont have to get up as early in the morning, they dont have to wear a suit. What makes our survey interesting is we asked the whate who are deciding remote hiring looks like, how the experience has gone for them. 56 said its going better than expected, so that was the most important message, that we have undergone a gigantic labor market experiment and for more than half, its working better than expected and only about one out of 10 it has been working less well than they expected. Maybe expectations were really low. Why do you think there is so much suspicion working from home would lead to a huge drop in productivity . Was there evidence people were relying on her was of the oldschool conviction that put a premium on face time first into the office, last out of the office . Adam i think when you are talking about working in a totally different way, people are hesitant to make the jump sometimes and if what they are doing works for them, you dont want to be the one who suggests they change and that it doesnt work and youve got big on your face. What we hear from a lot of is there is a lot of status quo in companies and thats true with companies comfortable working the way they are. Smaller companies have always been more comfortable taking the risk and finding new ways of doing things. This is something we have been seeing with clients for 20 years. Remote a hesitancy to go when the status quo is working, but once you do it, you see a lot of big, important benefits. Whatd you miss . Have you seen any sort of commentary with regard to cost, whether employers think remote work for a long time might be more costeffective or expensive . Adam that is what is interesting about this is that we have had such a positive response from hiring managers, even though a lot of managers for remote work tend to accumulate in the long run. When you go remote, it means you are no longer limited to just hiring in the local labor market. You can hire anywhere you want. U. S. Markets all over that , that is a benefit they are not seeing yet when they are short term transitioning their team. Can continue to work remote you can hire Remote Workers all over the u. S. And you are not just tied to costofliving labor markets. Are doesnt mean workers necessarily anywhere, but you than a person in cleveland, but a lot of that is eaten up by high housing costs. If you look at the u. S. Is one giant labor market and they can hire workers wherever they are, i think workers and businesses, costs will go down. Scarlet that is a good point. On of our Bloomberg Opinion columnists wrote that facebook is proremote work, but a big reason is eventually it can hire more people from outside Silicon Valley and pay them lower wages because the cost of living is so much lower. Do you think thats why these Technology Companies are so eager to jump on the work from home bandwagon because the goal overall is to bring down their expenses when it comes to compensation . Adam i think that is part of the story, but it ignores a lot of really important benefits we saw in our survey. The number one benefit we saw was we had fewer unnecessary meetings, reduce distractions , productivityird went up. Wherehen you talk about the cost of living is more expensive, you have these direct benefits. It doesnt have to be for all companies. It could mean an increase in remote work. A significant percent is seeing direct benefits in how they Work Together now. A really fascinating study there on the work from home phenomenon and its effect on productivity. Thank you so much. We might be more productive working from home, or at least i am. You were clearly not productive. One thing that is interesting to come out of all of this is employers are worrying about what you do when you are not working in your off hours. Specifically, companies are trying to figure out whether people are going out on their own. They are probably saying to you make sure you dont break any social distancing rules over the weekend because you will be coming back into the office where we make sure you are appropriately distance from everyone else. Romaine i didnt think of that. I guess we should cancel that pool party we were going to have at scarlet scarlet your house this weekend. That definitely not happening. The idea that the innocent, what are you going to do this weekend now becomes a trick question, a loaded question. You have to think twice before you answer that in the future. Lets turn to Mark Crumpton and find out what hes doing this weekend before he gets to the first word news. Mark clearly not hanging with either one of you. President trump is ending the United States relationship with the world health organization. Speaking at the president said the world needs answers from china on the virus. Mr. Trump said the world is now suffering because of chinas coverup of the virus at the beginning of the outbreak. He said the u. S. Would move to revoke hong kongs preferential treatment status. In minneapolis, a Police Officer has been charged with murder and manslaughter in the death of george floyd. He was seen on video kneeling on the neck of floyd, handcuffed black man. The arrest comes after three days of protest which escalated into violence. The citys mayor has instituted curfews for 8 p. M. Local time friday and saturday night in hopes of stemming the unrest. Nso deposit attorney, keith ellison, addressed the violence, fires and looting. Martin luther king said many is the wayhat riot the unheard get heard. He did not condone it, but he a personhe nation, as who always protested peacefully, dont just dismiss that and ignore it and relegate it to bad criminality and behavior. Actually ask yourself what is going on there . Attorney general ellison quoting dr. Martin luther king jr. President trump threatened to take action to bring the city of minneapolis under control, calling the violent protesters thugs. Twitter slept a violation notice on a trump tweet warning protesters when the looting starts, the shooting starts. New york city may begin getting back to business soon. Mayor bill de blasio did not give a specific date for the first phase of the citys opening but said he expected it to be in the first two weeks of june. He said keeping the subways clean and safe is the most important part of the equation. New york city is the only region in new york state still on lockdown. Mobile news 24 hours a day on air and on quicktake by thanberg, powered by more 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. I hope that we can offer the basic things, which is Public Health creates economic health. As much as we are all chomping at the bit to get everything open again, if we transpose this steps or jump the gun, i think we throw gasoline on the fire and we have been very deliberate and hand in glove with that, we dates. A determines as much as we dont want this to be abstract, in fact we eulogize a handful of people every day. I call families every day to make sure it stays personal. Having said that, this is moneyball. What does the data allow us to do . I hope we get that right. So far, so good. Everyone one of those briefings, you give credit to people in new jersey complying with restrictions that are not easy. You mentioned chomping at the bit its not just an onoff switch comments by measures. How do you ensure compliance . Its going to get harder and harder. It probably is but individuals in terms of staying at home and staying away from each other and wearing face businessesas well as big and small, compliance has been overwhelming relative to any expectation. The weather has gotten warmer and the clock continues to tick, as folks see things that have not been as hardhit, its all human nature and i get that. Are there more folks today than there were a month ago saying im going to open on june something . There are more but by the way, the other point i would make is we have started to open up. We recognize we need to take steps over the next few days to announce a lot more steps. But for the most part, folks have done the right thing. What about the politics of it . We have seen a fair amount of politics involved or people are not just clamoring to get back but demonstrating. What has been the politics in new jersey . Do you have the politicians backing you here . For the most part we do, we have had some demonstrations. Nothing on the scale of what we have seen in michigan, for instance, but there have been regular demonstrations. I dont begrudge that. I would prefer folks did it virtually and dont congregate, but that bothers me more than the demonstrations. There is always exceptions with any just later but we have had a good across the aisle give and take him a generally strong support, and we have needed them. To borrowe ability money to fill up the enormous budget hole that we have, as an example, but so far, so good. Some folks, naturally in any democratic reality, are going to go off and say and do their own things, but we have for the most part been in a good place. One of the tricky things is the reopening of the schools. With summer, most of us are not going to school but you have the fall coming up and theres a lot of uncertainty. As you approach that question, what are the things you are considering about how and when to open your schools . Mid junemised folks by that we would give them guidance , at least on prek through 12. We are clearly talking to the universities and Higher Education community constantly as well. Get back tos is we school. We have done the virtual stuff as well as any american state, but for a whole host of reasons, including mental health, the richness of the experience, i want to see us back in school, but it has to be a new normal. New Jersey Governor Phil Murphy speaking there. We will followup later on about those Public Sector layoffs. Coronavirus has shattered the spring rituals of college admissions. S growing list of school dropping the requirements for standardized and dropping their tours. Schools are dropping the sat and act left and right. Prepupends the entire test industry and knocks out private tutoring as well. What does your reporting show whether this is temporary or permanent . About 1200 colleges across the u. S. Have said we are not going to be doing this. More recently, since the coronavirus, about 200 have said we are going to drop it at least temporarily. Some say one year, some say three years because its not fair to this class who had their testing canceled and it becomes a stressful situation. In some of the most selective colleges, they said we are going to put a pause on this, including williams, amherst, and your alma mater, cornell. Its very interesting because it is usually a very long process led by the faculty, studied for a long time. Weve seen colleges, more recently, Indiana University had a processed determined by its factor that by its faculty. They have dropped almost 100,000 kids. The university of california system, which is almost 300,000 kids, said we are not going to do this anymore, at least until 2020 four, and then we may want to develop our own test. So theres a lot of resistance for immediate reasons. But even before that, colleges were saying it does not favor lower income students who may not be able to afford tutoring and testing as wealthier kids can. Romaine there have been a lot of criticism over the standardize tests. But admission by default becomes more subjective. With the standardized test have some sort of modicum of objectivity. True, but if you talk to schools that have been test optional for a while. One school has been test optional for 51 years and have learned to figure out a system how to evaluate kids. They are looking at their grades, but they are also looking at what kind of courses are kids taking . Are they taking the most rigorous that they can . That are very important. A place like bowdoin, they do submit the score. But it is going to be an interesting year, since many doing that this semester, it gives them one less tool to evaluate students. Scarlet my son is a junior because and they are taking the test because it is optional. All these High School Juniors will be applying to college next fall. Help me save some money. Whats the number one thing to have to watch out for . Good grades and showing grit this is a good time to demonstrate what kind of kid you are in very adverse circumstances. Be easy forng to this years juniors and your said has my sympathy along with all the other juniors that are struggling out there. Romaine im sure everything will work out. Really appreciate it. We will be back in a moment. This is bloomberg. Scarlet a quick mention of some breaking news germany and the European Union have reached an agreement on a ale out on lufthansa. Lets check in with Joe Weisenthal down in austin, texas. With the state budget in crisis budgets because it is certainly plural you have been tracking how Public Workers faced a risk of layoffs. This is something that governor murphy was telling david westin earlier on. What does your Research Show you . Joe this is a really important topic because one of the things we have been discussing is the two layers to the economic crisis. One is the first order impact, lots of people, particularly in the Service Industry losing their job. In theory, we hope, those jobs come back as the Health Crisis fades and people are willing to go out and do things again. The other half is what happens with the slower moving layoffs . One of the big ones will be state and local employment because a lot of that depends on tax revenue and states feel like they have to develop their budget. Governor phil murphy is telling bloomberg that up to half of the states 400,000 employees could lose their jobs. Depends on what we get out of d. C. And d. C. Provides a standard aid package and some of that could be ameliorated. But we know how much is going to come and in the meantime, once they are cut, as we saw during the last crisis in 2009, it took years for the cities and states to regain the employment labels they employment levels they saw precrisis. Romaine in the short to mediumterm, you end up putting government workers out of a job. They end up going on unemployment or medicaid and other public assistance programs and end up taxing the system even more. And states are caught in a real catch 22 here. City or state cuts a worker, those workers will be eligible for unemployment benefits. They may go on a Public Health care plan in which the state is compelled to chip in for some of that. Thats lost tax revenue for the state because the state collects income taxes from its own employees. It further makes it difficult for the states to get out of this budgetary crisis because its not 100 . A worker that loses their job, that may only amount to 33 savings and that further puts the squeeze on the public. Getlet we are going to jobless claims next weekend the trend has been improving. Even though there are millions filing for benefits, has been going in the right direction. Then we get the may jobs report on friday and its going to be a whopper. Thats going to be ugly. Joe thats exactly right. The Unemployment Rate, we get that jobs report friday. The Unemployment Rate is expected to hit 19. 6 . Theres some hope that maybe may will be the peak of the unemployment as we see openings, reopenings of the state. Joblesscontinuing claims fall for the first time, so theres some hope there is a peak. Have to see about the percentage of these newly if unemployment will be more than just a temporary layoff. Romaine Joe Weisenthal, still hiding out in texas. Before scarlett and i gas up our winnebagos for the weekend, just a reminder to subscribe to our podcast. Thiscalled what you miss week. Enjoy your weekend. Scarlet there is your answer for what are you doing you are listening to the podcast and you will be in safe hands. Romaine you will be the hit of the party. Scarlet there is no party. That does it for whatd you miss . Up next. Technology is this is bloomberg. Emily welcome to bloomberg knology. Im emily chang from san francisco. President trumpesque lighting a of words with twitter, with china. Takeresident said he would a look at revoking hong kong plus special status and cut off the United States from the world health organization. The president waging another kind of war on ttt