The tech index on the s p 500, you can see that reflected in the nasdaq losing at another record high. Not only do we have amazon and apple and nvidia higher, but tesla, people had turned their back on it a year ago, impressing all the way. Taylor i should have been the buyer at take private share price is where i shouldve been. One other comment about this market, financials. Citigroup is up 6 , wells fargo off 2 or so. 9 area really getting a lot of financials, particularly consumer facing stocks off 5 . A bank off something up to 9 certainly catches my attention, as we have been talking about this rotation into the valley naturals the financials. A reversal today. Caroline it really is when you are seeing the bond crescendo across the board. 10year yield down almost nine basis points. This is feeling into the pain today. Citigroup private Bank Investment officer, going to see so much continued bond buying from the fed . If you think about it, you have got two contradictory forces. One is the fed is driving rates lower. That is bad for net interest income. What is good for the banks in this circumstance, 12 to 24 months, is the fact you will have a short cycle. Whatever credit losses are taking place will take place over the course of a year rather than three or four years. The banks are healthy in terms of balance sheets. Even though they will be whipsawed for good reasons, my view is they will be one of the cyclical areas that when we look back in a year or two will do very well. It will be something clients should have in their portfolios, one of the areas we are recommending our clients by. Buy. Romaine what are the major risks you are guarding against . Risks in terms of the big you were speaking about, things we are worried about . The virus is number one on the list and we are watching and monitoring the data ourselves. Anything that would cause an economic slowdown or shutdown would be number one. And then closer to the election, the issue of china and china trade and whether or not everything anything goes from words to something that materializes, dont think it is lately, but it is on likely, but it is on our radar. Keep well and keep reminding us of chinau. S. David baylor of city private. We will be looking at how hollywood has reacted to the protests. We have the professor of media studies at the university of virginia. This is bloomberg. Caroline i am Caroline Hyde. Taylor im taylor riggs. Romaine i am Romaine Bostick. Caroline the only major benchmarks to post in the green are the nasdaq, another record high. The dow jones falls on the back of the fed. Minutes and then it is mass19, having stopped gatherings in their tracks, bad news for athletes, musicians and insurers. We have got the financial repercussions. For two years the Federal Reserve makes no recalls, and bringing asset purchases to at least present pace. All of that and so much more coming up. Lets get more on the fed decision. Taylor come inside this chart. There are two things that stood out. 2022 through 22 into and the 0 yield curve, they can do this on the front end rates, they are keeping the threemonth close to the fed Fund Target Rate but on the longer end it is trickier to do. The 10 year, we were talking about 1 falling all the way back down to 73 basis points. Most economists have agreed that doese yield control curve come, it could be two to five years and maybe at the september meeting. Joining us from our reaction is the ubs chief u. S. Economist. Did you get enough . Did you hear enough about keeping rates low and yield curve control . Quite honestly i did not because i was out of consensus thinking powell and colleagues would have the courage of convictions to actually commit to holding the funds they stepped right up to the line and then stoke us took a step back. Expected all but two of them for 2022. It would have shown a little bit more conviction. They got the Market Reaction they were looking for, telling the market to undo the selloff in rates. We are here and we will support the economy for as long as needed. Romaine that was the headline moments. I am wondering about your thoughts on commentary about what is effectively them putting a floor beneath asset purchases that is pretty high. It is high, but what they did not do that they could have done is commit to doing asset purchases for some much extended period. They kept a high floor, the level where they are now, no more tapering down on purchases but they only said they would do it for the next several months and then reassess. They are trying to strengthen the balance. You could take the last fridays jobs report as a real shocker. Nobody forecast that correctly and it made them realize the range of outcomes is a. Keep the foot on the gas but is big. Keep the foot on the gas but not overcommit. Caroline what about to try to get inflation back to any level where they usually set . The market is pricing in for the next 10 years. Is that where you see it set . Seth maybe not all the way at 1 but low. They could have got more courage to commit to more. If you think about the last expansion with 10 years of expansion, the unemployment down to 3. 5 they almost hit their inflation target. Then you have this committee before the covid crisis trying to engineer and overshoot. They dont see inflation falling notably short of the inflation target. It is confusing why they believe everything they say they would not be willing to be that much more forward leaning. Taylor we have scott minerd on the program before the fed announcement and talked about the fed achieving its goals and driving the credit spreads further lower. Do you see financial conditions, credit spreads where the threat the fed wants them to be to make sure those markets are working . Is where theythat should get lots of credit. All of their action so far post covid has eased financial conditions a lot. Lending facilities could tighten credit spreads, asset purchases made sure the treasury market and Mortgage Markets came back into a liquid state. They had been doing exactly what they need to do. I think they have asymmetric risks. We learned inflation is stubborn and it is unlikely you will do too much in the way of stimulus and end up with runaway inflation. They could have done more inside of coming up short. That did comehing up briefly one the idea of inequalities we are seeing, that we saw prior to covid19 in the economy with regard to unemployment and wage is an been that how that has exacerbated now. In regards to what the fed can do about that and the idea of keeping their foot on the gas, letting the economy run hot, do you see any short or mediumterm risk to the fed continuing that approach, or is this the new normal investors and the rest of the market should get used to . And this is a new normal the market will have to get used to it. It will take a while to dig out. You mentioned the inequality. I remember back in the early 2000s, i publish an academic paper published academic paper saying they were disparate effects on racial groups and jay powell echoed this, the black Unemployment Rate is higher on average. But when the fed slows down the economy on purpose, the black Unemployment Rate goes up more than the aggregate Unemployment Rate. What heconsensus with was saying earlier, when the fed can engineer expansion that goes on for a long time, on implement comes down unemployment comes down, but you get bigger gains in minority groups that have higher than average unemployment. This is a new normal in terms of being low for long. The fed is supporting the economy. The lessons of the last expansion, jay powell can take into effect the fed cant do a lot of the finetuning in terms of the quality and equity but the best thing they can do is to have the economy expand for as long as possible and to let fiscal policy and the market try to do other work. Romaine how will even said that in jay powell said that in may. The first six or seven years of the economic recovery did not provide the gains. But the latter years to see the equality gap narrow para narrow. Coming up next we will discuss hollywood and some of the biggest streaming services and how they are reacting to the protests. This is bloomberg. Or atil we have a vaccine medicine, we are in danger. So obviously the focus has to be on accelerating the research in theo get the madison medicine or the vaccine as soon as possible. When you look at the economy, do you worry about deflationary pressures . No, not the time to worry about inflation. Right now you through everything you got at the virus. You hit it. You kill it, you win the war against the virus. You throw everything in terms of finance, budget, resources, health resources. Because the sooner you beat the virus, the less expensive the recovery will be and also you will be able to queue are to cure the virus in terms of unemployment and sequels it will leave us. Good morning from new york. I am fascinated what various about the at oecd amount of fiscal stimulus as compared to gdp. Extraordinary are. Who is getting fiscal stimulus right . In many of these cases, what is call government stimulus to a great extent guarantees or liquidity of loans. Those who will not become what i would call deficit numbers or they will not become fiscal officially until there is some kind of payback or in some cases the facilities are built to become deficit to the extent that for example the Companies Maintain the employment, those are meant to become basically taken up by the government. In most of the cases these large 30 of the gdp are meant to be paid back to the banks or to the development banks, and they are only guaranteed by the government. The numbers are not comparable in that sense. If you would take the hard expenditure measures, that changes all over the place from little large. You are one of the experts you are one of the experts in the world on mexico and latin america and south america. Ew statistics from mexico horrific are followed by chile. What does oecd think needs to happen in terms of turning around this crisis . Be aware. Ed to that means the leadership has to share these views. They have to act accordingly. And within the constraints that i have. Within the constraints. The constraints that they have. Within the constraints. Confinement, social distancing, etc. The question will not be solved until we have a medicine where we have a vaccine. The problem in latin america, the problem in africa and asia it ist you have difficult to find these people. Theseive in to confine people. They live in close quarters. They have to go out to make a living. That makes it more difficult. Oecdne listening to the secretarygeneral. Lets get a quick check of the latest business flash headlines. Simon property has withdrawn a 3. 6 billion offer to buy its rival taliban centers. The deal was announced back in february after months of negotiations. Will contest the deal. Starbucks is warning it will take a big hit with the coronavirus pandemic. The have seen fiscal thirdquarter sales hurt by as much as 2 million. They did say at the end of may, 90 of its stores could reopen. What is your business flash headlines. Caroline hollywood has joined the protests against Police Brutality with the biggest steaming streaming services reexamining their content. Hbo max removed gone with the wind. From more on hollywood reaction dave,versity shilpa from the university of virginia. Where do we draw the line and who should be drawing the line . Launchedus, when it its streaming, it actually stopped some films like song of the south getting onto the wall network and with others onto the network. Others had messages talking about inappropriate means of generalizing peoples ethnicity in certain films. How do we view gone with the wind, and is it appropriate for hbo max to be making those calls . Shilpa thank you. I think we are at a moment where we are contesting the idea of what is American History and how are we depicting our stories across the media . What is at issue is for the stories we have told and the stories that are coming up we have not told. I think the call for hbo to remove gone with the wind came from the director of 12 years a slave. He asked for removal temporarily so you could bring it back he so peoplering it back can have a context when they watch the film. It is not so much an issue he is not asking for censorship, but what he is asking for is the idea of lets come to this film multiple academy awards, that is taught, one of ever, sopopular films many 100 top hollywood films. Lets put it in a context. It does romanticize the reconstruction era. It does romanticize slavery. Romaine one of the most popular movies ever, the highest grossing film of ever of all time if you adjust for inflation. You have other movies out there. I am a lover of old films. The films may not be problematic, but they contain certain scenes that were reflective of the mores of the time. You talk about holiday inn, breakfast at tiffanys, silence of the lambs and others. , am playing devils advocate but is it necessary to remove wese from the cannon, or can hold them up and say this is what people thought at the time, how society depicted people and it is ok to have them out there as long as people understand things are different from how it was then . Shilpa i dont think we should pull them. I wish song of the south would be available for me to watch. I have never seen it. Ive only heard about it. It is important to not very old old narratives. For so long we have seen them buried. Notconversation needs to be censoring but instead adding different kinds of stories. Is gone with the wind there, but now we have 12 years a slave. For a long time birth of the nation and , with the wind and gone with the wind were the only ones that addressed reconstruction. We dont have a lot of films that do that. The way they do it is problematic. And it endorses a certain sense of superiority and white supremacy. Andink jango unchained 12 years a slave are films you can watch in concert with the other two. I have students watch both of them and together and comment on what one does and what others do. There is a lot of other things to talk about with those films. Important to put it in historical context. We cant bury our history. The issue of what we are dealing confronty, we need to the ways in which we have looked at Racial Discrimination in our country and the way we have looked at genocide of indigenous people, as many have talked about, what the United States is founded on. Caroline context. Shilpa there is a lot of different caroline we will have to leave it there. What i wish we could have you on longer. We will watch these movies and understand and take the learnings. Shilpa dave, professor of media studies from the university of virginia. Insurers pulling into the epicenter of the virus. How events have been canceled. This is bloomberg. This is bloomberg. Romaine welcome back. I am Romaine Bostick alongside Caroline Hyde and taylor riggs. Taylor i want to look at the Insurance Industry because not all is well in some of those stocks. Look at this chart, highprofile events around the world canceled because of the pandemic, Insurance Companies are facing some of the highest costs on record. The share price reflects that massive underperformance in countries like aig, allianz and others. For more on this i want to bring in Warren Harper of the marsh managing director there. A lot of these Insurance Companies i keep hearing are saying this pandemic is not included in their claims. A lot of these organizations have been left out on their own. What are you hearing . Truly unprecedented times. In the traditional market, Communicable Disease coverage is optional. It has to be specifically chosen by the client and the insured. It is correct a number of insured around the world, a number of clients around the world did not choose to purchase Communicable Disease cover especially in those areas that had not had primer prior epidemics or pandemics. Caroline you are leading over at marsh and you are advocating on behalf of clients on how to make this future coverage affordable and to meet the appropriate rival as a product. Talk about the Publicprivate Partnership you are trying to work on. Warren marsh started back in march having discussions about trying to find a solution for the pandemic, a solution that would be similar to the terrorism concerns act put in place after 9 11 because there needs to be some type of solution that would be in the best interest of our clients. We have to establish a viable Insurance Market, divide workers and investors and have the resiliency of economies around the world provide workers and investors and have the resiliency of economies around the world. We would talk about a stopgap backed by the government. The program would entail insurers having some type of deductible and then there would be a level of cover with the private Insurance Market that could provide coverage for the pandemic situations. Above a designated threshold, you would have a government that could ride provide a backstop. Those seem like great solutions, and also that they will take time to work out the details, several sports leagues not only in the u. S. But also oversees itching to get back up and running as soon as next month, including fans in the stands. I am wondering what would you say to a client that is ready to to once to get its wants get its players and teams out. What is the advice you give if they dont have that coverage in place . Will they felt comfortable taking that risk something can go wrong and they could get sued . They will have to closely monitor this with medical authorities for the cdc, the World Health Organization and local medical authorities. We have certain areas of the world where the virus seems to be more under control, but there is the concern it moves from region to region, so there are that risk mitigations could be put in place, testing, streaming, sanitation, social distancing. A number of measures could be taken to reduce and minimize the risk. When you look at this, you are looking at the athletes themselves, the traveling entourage, the trainers and , coaches andpists refreeze as well as event workers. Referees as well as event workers. In terms of the venues it would have to be closely considered and definitely in line with the local government authorities and medical authorities taking all of those things into consideration. Caroline there was Communicable Disease coverage, but many have not got it. Is the Insurance Market hurting, or is it where does the pain focus itself for the time being . Warren there were a lot of insurers that had the cover so the cancellation Insurance Market as you said earlier in your presentation has been hit substantially, completely unprecedented. Until the losses go into the billions of dollars, from a global perspective, regional championships, the olympics and paralympics and other global sporting events. The calendar becomes compressed. You have to look at situations such as athletes training, the time difference between one event and another event. The example would be the trench until october this year. You have the same athletes completed competing. Caroline you have to keep peeling back the onion and seeing how wide it is. Thank you for that breakdown. News, zerong 19, trump says he will hold a rally. The First Campaign rally since early march will be held by President Trump in oklahoma, june 19. Here is mark. Mark the Minneapolis Police chief today announced his department will withdraw from Police Union Contract negotiations. The announcement comes in the wake of nationwide protests and unrest following the death of george floyd. I plan to bring in subject matter experience and advisors to conduct a thorough review of how the contract can be restructured to provide Greater Community transparency and more flexibility for true reform. The chief said we will have a Police Department our. Ommunities view as legitimate of races aheades on. George floyds brother told the house panel he is tired of the pain. He testified before the House Judiciary Committee as lawmakers consider legislation to change policing practices in the United States. He called on lawmakers to make it stop and to ensure his brothers killing leads to brothers killing leads to positive change. I want to put on record that black lives matter, but we must listen to those communities that face discrimination and solve the unconscious biases which in justiceustice and loss potential. When talking about the qualities of President Trump, Prime Minister johnson said he is president of the United States, our most important ally in the world, and whatever those on the left say about it, the United States is a bastion of peace and freedom and has been for most of my lifetime. The World Health Organization said the increase of cases of coronavirus in latin america is of deep concern. Health services are coming under strain. The w. H. O. Said Health Officials in russia should review how they are reporting coronavirus deaths, saying the reported death rate is unusually low. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Our customers rose to the challenge and contributed to this research. 750,000 customers took the survey, 12,000 said they had covid19. 2000 said they were hospitalized. We were able to analyze this data and found the o blood type looks like it is protected. It is not a huge increase but 9 to 18 less likely to be infected and be severe. It is an important step. There is more research to be found here which is one of the reason why we are enrolling people in the study, giving away 10,000 kits for anybody who has been hospitalized, who had covid19. We have the potential to find genetics associations that will help us know who is the most vulnerable and to do more to protect those people. It is good news if you are type o. Have you found any clues showcasing any trends for other blood types, anything elementary . Preliminary . , o you have a decreased risk and the others look similar. The important thing with science is trying to understand why that o looks like it is protective, or you have less of a risk. Understanding that biology and all that translate into genetics test that would be able to identify people to say, you should be more protected, or help in vaccine discovery or Drug Discovery . To spreadid tends very fast, people get sick and many dont get sick at all. The question is why . Your Research Indicates genes can play a role. Thethere other clues about role euro genetics can play . Your own genetics can play . That is what we are researching. That is why we are giving away kits because those people are hard to find. Anyone can participate in this research. I want to add a lot of infectious diseases, norovirus, which is the cruise ship virus, there are genetic mutations that think these individuals are less likely to get the disease. Even hiv, there is mutations to say people are less likely to be. Ffected with hiv who have this we are looking for that kind of mutation that would help people understand whether or not they are potentially significantly less risk. Emily a few studies have had a few thousand participants. Yours involved hundreds of thousands and still there is more work to do. How do you go from a hunch to actionable information . I am really proud. My customers stepped up and rallied. The hundreds of thousands, 750,000 took the survey. It shows the power of having a Community Like 23 and me. Need more customers who have been hospitalized. There is some time, we need to make more discoveries. The Scientific Committee needs to vet it, understand the biology and this will start to get integrated into how we are managing covid19. Of 23 and meceo speaking with emily chang. Lets get a quick check of the latest business flash headlines. The worlds second richest person got more rich. He invested in a used car platform. It lifted the value of bill as 175 million. He is worth 115 billion. Deutsche bank is warning provisions for bad loans will rise in the Second Quarter to the highest level in more than a decade. The German Company said the money set aside will reach 908 million. Rising loan provisions are a threat to their Restructuring Plan as they try to restore profits after five years of losses. U. S. Trade group for restaurants said its proposal for a Stabilization Fund could be paying for itself. They say the fund could generate 270 billion in economic activity. The senate has signaled the next fiscal response to the crisis will be more limited than that. That is your business flash update. Taylor it is time for smart charts. We look at timely topics through charts. We are going to focus on treasuries for smart charts. Im looking at the appetite of the longer end of the curve. After an initial spike when the fed said it would buy bonds the same pace, the 30year yield dragging lower for a Third Straight day. I have got a lot of commerce because of how the fed is supporting Financial Markets and asset prices, Everything Else we could be worried about is put on the back burner. There are a large number of risks that are looming. What are the biggest . Thank you for having me on. There are plenty of potential macro risks out there. We have to acknowledge them. We cant know some how bad they will be. We have the u. S. China trade tensions picking up, virus tensions with china, and e. U. Trade tensions. If history is any guide with things like the president and the administration, they like to pick up on International Policy with the stock market at alltime highs. It is not a call but something to be aware of. Coronavirus, talking about this for months, the market starting to price that in. If they have not, maybe they will. It would have to be worse than expected the same goes for q2 earnings. E and then other things like the taiwan straits, china on the aroundorder, movement the asiapacific, there is a lot there but we dont know. He mentioned the fed. They are presenting this ultra bullish policy wrapped around macro narratives creating a very bearish sentiment and positioning. What we have seen is this bearish positioning falling like dominoes. We saw the peso, the euro, the yen, the riyal rally back strongly. Recently the bond market. Shouldnt yields be lower than they are . We are still above 1. 5 . What do the charts tell you . Charts arewhat the telling you, yields should not be low here. Over theourse of april and may , the 30 year u. S. Treasury yield on the very head and shoulders base pattern, we saw the selloff happen right into friday better than expected. , recent target and how it has cooled off again. You often test the breakout level which we are coming into at 1. 5 . Another opportunity to trade in the direction of the base, in this case, a base in yields, but resumption higher in the yield space. We have to talk about the curve. No control from the fed but we did see one person with the fives in the 30s today. And the 30s today. Steep. Re slightly too we were looking for a great trend line are on the chart. It was over steep or overbooked. As we come down and flattened, more to a neutral point, closer to 50, that is the time to reengage steepeners. We are getting close. After today, the fed curve started steepening up. Should we come up another 10 points . We shall see. Thank you so much. I will toss it back to you. Taylor a programming note, tune in tomorrow 12 30 new york time to hear david westin speak with nancy pelosi. This is bloomberg. Romaine welcome back, time for that part of the program where we check in with Joe Weisenthal who is outside of a starbucks somewhere. There is a lot of focus on jay powell in the fed today. When you look at the markets today and yesterday, there was weakness that does nothing have anything to do with the fed. Does not have anything to do with the fed. Joe the last several days have had this euphoric, Mission Accomplished feel to them. We will get a vshaped recovery by everything. It is a matter of time before we go back to normal. I think it got overdone but the market. Concrete warnings and it is not going to be that simple. The linear return to normal may be rockier than people thought. Starbucks, one of the most straightforward place on the old way of living, coming out and saying losses are going to be more than expected, but they will have to make a lot of changes to their business. That was a warning. Wells fargo saying loanloss revisions are going to be higher than q1. That is higher than other banks. By and large, people feel ok but this is a reality check. I remember being on the banking calls when bank of america, jp morgan, wells fargo would talk about how much they were setting aside for bad loans and how much people were drawing down on revolving loans. Worse in this quarter than last . We were hearing it would be rough even in march. Joe that is right. It speaks to the fact a lot of businesses are out of the woods and you go back to jay powell. It was striking. He was consistent about where the risks are, unemployment business failure, Everything Else is a distraction, not worried about inflation or critics, the stock market bubble, the fed is laser mark laser focused on these things. The struggles of the economy explains why. Romaine when we talk about the idea of green shoots, you have to put it up against the backdrop of the rally that did not seem to be tethered to fundamentals. Why would the sentiment shift on the fundamental aspects of the economy when the rally did not seem based on that to begin with . Ralliedthe market further and further, the bar gets higher for what the economy has to show. Initially all it took was a little improvement to get the balls interchanged balls energized. Deal property canceling it is a warning sign. Taylor thank you to Joe Weisenthal joining us from that starbucks in austin, texas. Romaine Bloomberg Technology is coming up in the u. S. Have a great evening. This is bloomberg. Emily welcome. Stocks whipsawed, digesting new comments from the fed. Jerome powell saying the pandemic could damage the economy permanently. Stephen mnuchin also saying the United States needs more fiscal stimulus. The u. S. Now nearing 2 Million People infected by covid19. Ci sayingny fau
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