Concerns about a second wave of covid19 with cases surging past 2 million in the United States. Texas numbers have been hitting new highs and houston is reconsidering reimposing its stayathome order. We will continue to follow that. I want to welcome in kailey leinz. Is drivingabout what stocks down. Between 5 es ranging and 7 . In terms of what is driving it, probably eight multitude of factors. The grim outlook from the Federal Reserve yesterday. Layered on top of that, concerns about a possible second wave of the coronavirus and the fact that we have run very far, very fast. There may have been a little profit taking involved in this equation as well. You had small caps really underperforming. They have kind of been a proxy for that recovery trade. They were down 7. 6 today. Yields on the long and with the 10 year yield down about six basis points. On the day, out of the 505 stocks in the s p 500, only one closed up, kroger, one of the classic kind of coronavirus safety plays. Did in504 of the stocks the day in the red. Where do we see the hardest hit areas . Areas that had been outperforming in recent weeks. Cheaper areas of the market where people had been flooding too. Totally reversed, a 180 yet again. The energy sector, which was down 9. 5 . Energy, financials, industrials all leading the losses lower. Names. Those tropical airlines down about 16 in todays session. A lot of those recent trades unwinding today. Facebook shares down. We will talk a little bit more about pressure coming from Vice President joe biden. The nasdaq was able to close up on the previous two days of selloffs. That was not the case today. Some of that is the broader risk off sentiment. But you have court you have sort of Regulatory Risk coming back into the picture. Antitrust complaint from over there. By 5 . K down it is kind of reminding us that big tech is a bipartisan issue. It is not just President Trump targeting these media companies. Coming from Vice President joe biden. Was a story in which he had seen a lot of the markets playing out before him in a single stock. Tesla is back below 1000 per share. Emily thanks so much for that update. Appreciate it. I want to move on now to that facebook story. Vice President Joe Biden on the public to sign an open letter joe biden calling on the public to sign an open letter to facebook, saying this upcoming president ial election is at risk. I want to bring in david kirkpatrick. Obviously, we have been covering now for almost two weeks this particular post by President Trump in which he suggested that looters be shot. Mark zuckerberg took the stance that that should remain untouched. Employees,n facebook former facebook employees not happy with it now, the Vice President himself. What is your take . David there is no question that facebook is not done a lot to stop this information from spreading. They have really failed in that department. What is interesting is to see Vice President biden, democratic president ial candidate, coming out and basically pointing his guns at facebook, blaming it for, to some degree, what we have seen with the empowerment of donald trump. Facebook is really vulnerable to this because even though, as you pointed out earlier President Trump has been critical of social media. In reality, facebook has done literally nothing he could complain about. They have tended to really favor his messaging over any other messaging and really bent over backwards to enable him to do whatever he wants. The most notable thing about what facebook is doing right now is it has an explicit policy that an advertising, politicians are allowed to live. Allowed to lie. In this letter, calling on facebook to remove viral misinformation. , few tweets rolling this out saying, we know what happens when social media is unchecked. We simply cannot let it happen again. Responding,ntime saying, the people who elected representatives should sell the rule the peoples elected representatives should set the rules and we will follow them. Facebooks make of argument. I think it is disingenuous because, of course we need better rules, we need legislation in the United States and elsewhere that establishes what should and should not be allowed on this platform. Facebook already makes a tremendous number of such subjective judgments about what kind of speech should be permitted. They have excluded paid political speech from those rules. That is a choice they made. It has nothing to do with the law. It is one of those statements you make just because it sounds good, you dont want to engage with the critique coming publicly. I dont think it carries a lot of weight. It is just another example of the kind of mealy mouth facebook statements that more or less try to justify doing nothing in the face of particularly president s incendiary label. Incendiary language. Emily chris coxe, one of Mark Zuckerbergs most trusted lieutenants who left last year, now coming back to the company as chief product officer. He had left because of the direction facebook was taking, Mark Zuckerberg taken the company toward more private messaging. Chris coxe coming back in the middle of this controversy, why do you think that is . David from the standpoint of facebook, it is a much more important development, in my opinion. Chris coxe was from fate was with facebook from the earlier days. s history, facebook s closest partner in almost everything. Inleft in early 2019 disagreement over the policies about encrypted messaging, which facebook is headed towards doing. His return to me is indicative of zuckerberg personally realizing he needs help navigating these recent crises, particularly things like employee results employee revolts he has been experiencing, unprecedented for facebook the kind of criticism he has been getting in the last two weeks. Chris coxe has enormous good judgment, a big picture view, and is deeply well respected on issues that zuckerberg frankly is not as well respected on. They are both respected as ishnologists, but cox respected for his humanity. For all of zuckerbergs virtues, that is not the way many people think about him. When they are being challenged from right and left for their behavior and have to make ethical and moral judgments, he is a perfect person to come in there and help. I really am glad to see that. Emily we will continue to follow this, as i know you will. David kirkpatrick, offer author of the facebook effect. Always good to have you on the show. Coming up, we will be talking about tesla, nearing an historic milestone as the worlds most valuable carmaker. This is bloomberg. Nearing ana is historic milestone, getting closer to displacing toyota as the worlds most valuable carmaker. Shares rising since june, giving them a market cap of more than 190 billion. Toyota, 212 billion. We are joined by colin rush of oppenheimer who has an outperform rating on the stock. Is this warranted . Colin what is at stake is the Technology Future for passenger vehicles. At this point, tesla has key advantages that they have been able to demonstrate in the market. The first is Battery Technology. We do believe they have meaningfully differentiated Battery Technology in advance of their competitors. Their understanding of that technology to the powertrain is incredibly important for the efficiency of the system. Drug, themous advantage on that front. Set,rms of their center the things they had gone for, test mode where they are collecting data. At this point, looking at really the last 1 of cases where you are collecting data on how to navigate those scenarios. Important advantage that we think is getting priced into the stock as well. Emily meantime, elon musk himself has said that he thinks teslas stock price is too high. He later followed up to that tweet, saying that he always believed in teslas longterm future. Now that this all is happening, he tweeted lol, laugh out this about the time story broke, then tweeted stonks, a finance term related to an elevated stock price. Is he pushing the boundaries of what he should be doing here . I think he certainly is, talking about stock price in a way that some might frown upon. The bigger question is more about what is going on in the Broader Market with the prospect of persistently low interest rate. It investorsading pressing Technology Winners in the market. At a place where some inflationary pressures from low Interest Rates are beginning to be seen in equities. People are looking for returns in a very fluid and dynamic theet, even more flow into equity market. Although i am not a strategist, we are seeing those dynamics play out. A lot are really struggling around evaluation questions right now and concerns on a number of major question marks given the broader economy with the last quarter plus with the coronavirus. Emily elon musk is the ceo of tesla and knows more about the country about the company that literally anyone. Shouldnt it concern investors that he thinks the company is overvalued . And a he made one tweet second tweet. We are not really focusing on his commentary around that. That the Investor Base is really looking at what is going on in terms of on the ground activity, reduction levels, gross margin activity. The china factory is a really important benchmark, if they get it to full ramp on that, to look at what teslas manufacturing future will look like. I think that is the thing that we are most concerned with. At this point, the ability to ramp the factories and really begin to take more substantial market share, less than singledigit share. Anothereantime, electric vehicle company, nikola, which makes an electric truck, has been getting a lot of buzz. We then heard news about their semiambitions. Teslasa a threat to Truck Division . Colin we try not to comment on something that we dont have in our coverage. I will say that the heavy duty space, we are seeing a lot of companies go after that space in terms of diversifying fuel base. We are seeing test vehicles on the road. There is ae lot of different fuel types. Hydrogen, natural gas that are also in the mix. Thats investors understand that part of the market will get disrupted at some point, more likely who they are. The broader dynamics are unusual right now given the Interest Rates and industry information. ,mily all right, colin rusch oppenheimer, thank you so much. Coming up, is 25 billion enough to strengthen the u. S. Chip industry . We will talk with the ceo of global foundries next. This is bloomberg. Lawmakers proposed an estimate of 25 billion in funding and tax credits to support domestic chip production in the United States and counter rising competition from china. Joining me now is the ceo of thomasfoundries, caulfield. 25 billion, is enough . I think it is a great start. The u. S. Has done a good job in rnd, and now starting with a 25 billion investment to accelerate manufacturing back into the u. S. Is a great beginning for us. It is a great day for the Semiconductor Industry. Emily could this provide your company with a path to becoming a leading edge manufacturer . We are there already. The key here is to do more of it. If you look at the Worldwide Semiconductor manufacturing, only 12 of the capacity is in the u. S. That has been a dwindling number over time. It is important for supply chain mitigation to get manufacturing back in the u. S. , that investments are made that put the u. S. On a competitive Playing Field with other countries that have made this a National Priority for them for both security reasons and economic reasons. Emily meantime, you have Taiwan Semiconductors saying they plan to build a plant in the u. S. What does that mean for globalfoundries . The Semiconductor Industry is pretty wideranging. It addresses a segment of the market that may be is 25 of the need. The market has a broad range of technology needs. Thomas globalfoundries participates in 75 of that market. We have three major manufacturing facilities. We have invested over 13 billion over the past few years. The projects that we would be applying for would accelerate this and turbocharge expanding in manufacturing footprint the u. S. We have shovel ready facilities and we can begin getting the economic benefit, building on the footprint that is already here. Something that is going to be built in the future and probably will not have job creation for a number of years out. These are highpaying Manufacturing Technology jobs. We can expand on that and accelerate the topline growth of our business in partnership with these kind of other men investments. Emily do you see the possibility of an alliance among u. S. Chipmakers . Thomas this is an industry that has found a way to partner partnerships have been a way of life. Mergers and acquisitions have been a way of life because scale is so important. I would not rule that out. They are just not naturally forming at this point in time. The industry is down to just five foundry players worldwide. Globalfoundries is number two. Those last remaining foundries are Greater China based. And we are the really u. S. Based company. Emily last quick question. What are your biggest concerns about the china threat . Thomas i think it is not about the china threat to the Semiconductor Industry. It is important for us all to be successful semiconductor companies, we have to participate in a global company. Global market. I to be win this game by continuing to invest i think we win this game by continuing to invest in rnd and have coinvestments so we can play on a level Playing Field. The way we win this game is by staying ahead, making sure the industry continues to invest, governments invest at competitive levels. Right, thomas caulfield, thank you for joining us. Coming up, as many as 25,000 Retail Stores put close in the wake of the covid19 pandemic. What does that mean for Online Retail . We will speak with stitch fix founder and ceo katrina lake, next. This is bloomberg. Emily welcome back to Bloomberg Technology. Im emily chang into every disco. Stitch fix reporting quarterly results, seeing a smalls dale ll sales decline as as the trend to ecommerce accelerates, there is a lot of hope for Online Retail disruptors like stitch fix. Joining us now, founder and ceo of stitch fix, katrina lake. Good to have you back on the show. Clothing sales dropped 80 across the board in the pandemic, but stitch fix sales fell 9 . Talk to us about what was driving that and what it shows about how the pandemic is impacting your business. Katrina this has been an incredibly challenging time for many businesses. For us, the primary challenge is around the warehouse element of our supply chain. We have six Distribution Centers in the u. S. Figuring out how to reopen, how to close, how to get those warehouses to full capacity has been a challenge. We felt like the right thing to do was give people the flexibility. We gave everyone in our warehouses for weeks of paid time off, which is the right thing to do. As a result, we have less capacity than we normally would. Decline. An 80 we are happy to have just the 9 decline. What is most exciting is what we have seen at the end of our last quarter and weeks coming out of this new quarter, that we have seen a lot of positive growth and great momentum. Not just our existing business, our fix business, the claims getting those on a regular basis being incredibly strong. Speaks to the strength of a business right now, having styles delivered to your home to try on in the comfort of your home, that Value Proposition has never been more resident than more resonant than now. Latestbuy, our innovation which allows people to shop their recommended picks straight from us and have them shipped separately the success of that even with all the uncertainty that has been exciting for us. That has been a big area of investment for us for the future. That is a great lightweight way for people to engage with us in times of uncertainty. Emily lets talk about demand. My kids dont seem to mind if i wear the same thing five days in a row. Many of us will be working from home and social distancing for potentially the next few months. What does that mean for demand as we come out of this for stitch fix . Katrina there is no question people are going to buy less clothes this year than last year. People will not be going on vacations. Unquestionably this market that creates a big opportunity. When the market was down 80 , we were down only 9 . We will capture share. Precovid, 80 of apparel was bought in stores. That is amazing in this day and age that stores had such a big piece of that pie. People will be hesitant to go back into stores. People like me are excited to get a haircut, but i dont know that many people are excited to go back into a Department Store and try things on in a fitting room. For us, that is an opportunity. We see tens of billions of dollars that used to be online coming online. We have a model to find genes tot jeans that fit, unlock the hardest things to do online with apparel. That is what we are good at. We are excited about our positioning. Months will12 or 24 be a difficult time for apparel. People will be buying less clothes, but we can take advantage of a time when people are excited to try a model like ours. Emily you mentioned it has been a hard time for the industry. You did lay off 18 of the company, 1400 people. This has been heartbreaking for leaders of companies, for the people that this affects. Do you expect any more layoffs as we are now officially in a recession and there are a lot of people that dont have disposable income right now . Katrina this is an incredibly difficult decision. It is hard for all the stylists impacted. It is hard for our team in general. The parttime stylists in california were a talented group of people. We couldnt have built the business without them. Our intention is to relocate as many stylists as we can. For a few hundred stylists, that decision was immediate. The majority of stylists are with us until september. That gives people the chance to think about relocation or what is next for themwe couldnt have business without them. And give people as much time as possible. Knowing this was a challenging time is an important part of what we did. The reason we had to make this decision was the cost of operating in california. Stylistsny talented outside of california. We know there is an opportunity to create 1400 jobs and then some. We were planning to hire 2000 stylists outside the region. Really difficult decision to make. At the end of the day, this was the decision we had to make when we think about how to create the opportunity in the longterm to create a company that can create as much jobs we want to create in the longterm. Emily we are in the middle of a social crisis. You and i talked about diversity. You have focused on gender diversity. We are looking at a very huge racial divide in this country. Some very deep wounds that need to heal. What are you doing at the company to address this . What do you think needs to change . Think the distressing, horrifying events that have come to light in the last few weeks have been top of mind at the company. I am deeply concerned. I think we have a long, hard road ahead. We have to create the equal and just society that we purport to be. At stitch fix, i found some hope in that we have strong values to our team and employees are coming together to stand up for what is right. What is important to me in this moment is this is a time to create change. I really felt like we could do more than contributions, which of course are important, but trying to figure out the ways in which we can have a meaningful impact. Ist we have committed to do committed 500,000 over the next five years to social justice organizations. We want to think about our own supply chain and how we can with our economic power create more equality. We realized we werent working with enough vendors of color, certainly not enough black vendors. Figuring out how we can help that pipeline support diverse entrepreneurs in fashion is something we are focused on. Another area we have always been focused on is how we can use our data to create change. We talked a lot about gender equality. That has been an area of focus for us. We have a diverse board across gender dynamics, but we have some work to do when we think about representation in other dimensions. We want to share the data around representation, where we are strong, where we can do better, and also around pay equity. At the end of the day, that is important. Are you paying people the same amount for the same job regardless of their skin color or gender . These are things i believe are really important. I think data can create change. I think this is a hard moment for us in the country. I am getting more hope it can also be a moment where we can look back and realize it catalyzed real change. Emily you are also on the board of grubhub. Buyearned jeff eat plans to grubhub in a takeaway deal. They have been talking to uber. Can you share your take on this outcome . Katrina i obviously cant comment on that specific situation. I am on the board of grubhub. It has been an exciting time for a lot of companies, an especially exciting time for Digital First Companies Like ours. As we have said, been talking about diversity, there has been a trend in some critical stories of Women Founder ceos in the tech just lookingi was back at some of those stories. Ene of the headlines was ar these female founder takedowns fair . What is your take is one of the most prominent female founders in Silicon Valley . Katrina im not close to any of the details of those stories, but i deeply believe that representation is important for women. It is incredibly important. Without knowing any context, it is distressing to see there is a lot of challenge in women in those positions. I think all of us Business Leaders should be held accountable. I think this is a time when people are asking Business Leaders to stand up and talk about our values. I think that needs to be held accountable across the full business community. Female ceos are a small percentage of the broader business community. Ist is happening right now many people are being held more accountable. I would challenge us to make sure we are Holding Everyone equally accountable. This is a time well need to do better. When we all need to do better. Emily stitch fix ceo and founder katrina lake. Thank you so much for joining us. Katrina thank you for having me. Emily coming up, our exclusive interview with House Speaker nancy pelosi, talking about police reform. That is next. This is bloomberg. Emily as people across u. S. Cities continue to protest Police Brutality against the africanamerican community, democrats on capitol hill introduced sweeping reform that could make it easier to prosecute and sue Law Enforcement officers. House Speaker Nancy Pelosi spoke earlier with my colleague david westin. Take a listen to that conversation. We can be so much stronger if we work in a bipartisan way. A recognition there has to be some change. I will leave that up to the distinguished chair of the congressional black caucus, as well as the chair of the crime subcommittee of the Judiciary Committee working with jerry nadler. I will leave it up to them to have their actions with republicans in the house and senate, and hopefully with the white house. We do have an issue that relates to a qualified immunity doctrine that protects some police engaged inund to be misconduct from any exposure from families that are affected or lawsuits. Area where perhaps we will have differences. Hopefully on the others we will not and be able to find common ground. The American People deserve that. The American People expect it. The American People are watching. Learnedheard you, we how important this is to you, and we are going to do something about it. That is the question i was asked of George Floyds brother when he came to testify before the Judiciary Committee in the capital. Question,have one will this become law . What makes you think so . What is different now . Different is the complete Public Awareness of the injustice of it all, and the complete public outcry for change. David any of us who have seen the video, not just george floyd, but other instances of Police Misconduct know there are some police we have to correct. We have to get rid of them. We have to amend their behavior. You have to agree the vast majority of Police Officers are doing a hard job to the best of their ability. Handifficult is it to one rep. Pelosi most of the Police Officers are conducting themselves in a way that could be viewed publicly as responsible do not want to be painted with a brush of some bad apples that might be in the mix. Policing the police is a responsibility that they have. I also think we have to recognize there is some racism that has to be addressed in our society and our Law Enforcement community. When we can rid ourselves of that, we will go a long way to having justice in our policing. David are the Police Unions a help or a hindrance . Rep. Pelosi i had a conversation with the president of one of the Police Unions. They put out a positive statement about our legislation. We did not know what they might say, but it was very open to proposing, ready to have the discussion. Overwhelmingly Police Officers are there to protect us. I think they see their role as guardians, not warriors. We have to hope for the best in that regard and invite them to the table. Some places, it is different. Some of the Union Officials have protectivee then they need to be of bad conduct. We have to make those distinctions. Emily House Speaker nancy pelosi with david westin. We will have more of Bloomberg Technology after this quick break. This is bloomberg. Emily the travel industry has come to a standstill as a result of the pandemic. What does that mean for airlines . Earlier we spoke with the president and coo of jetblue. Take a listen to what she had to say. What we have learned is the only thing certain is there is a lot of uncertainty. As you see things unfolding in the news media regarding inreasing cases of cases parts of the United States, how do we build confidence in customer flying again . We have seen small glimmers of hope in the leisure sector. Jetblue is a largely domestic carrier. We think it will come back sooner than international travel. Leisure coming back sooner than business travel. In terms of how the business will evolve, there is key data coming out. One of those comes at the end of september when the cares act money and the restrictions that it brings start to expire. You will then have the freedom to start to change this airline. What is jetblue going to look like in that environment . First we have been lucky to be a recipient of cares act payroll dollars. It covers 76 of our payroll. After september 30, when the payroll dollars cease, we are looking at what the shape and size of jetblue will look like. We will be a smaller airline. It is so difficult to predict that far out. Every week we learn more about the impact of the coronavirus. We look to june and july as signals to demand recovery and what the coming months are going to look like. Now, terms of that demand the leisure market is where the primary area is. Is it people going to see friends and family, or is it genuine Leisure Travel . We are seeing a pentup demand for Leisure Travel, but we are seeing customers going back and seeing family and friends. We have seen this whether there is political unrest or hurricanes. The segment of customers going to visit their friends and relatives tends to come back earlier than the business sector. In terms of the concerns passengers have, what are you seeing, what feedback are you getting from passengers that you are taking on board . You referenced safety. Joanna we are measuring closely every week what is important for customers to rebuild their competence in traveling again. One is cleanliness of the aircraft, social and physical distancing also very high on the list. We built a program that will continue to evolve around those very things our customers are telling us will make it competent for them to travel again. They want our crewmembers to be healthy. A focus on air and clean surfaces. Reduced touch points. We are no longer hiring higher touch surface. Focused onre very the success of jetblue. Everyone is focused on trying to ensure we are doing everything we can so that customers start feeling comfortable flying again, whether that is how we serve them, whether it is cleaning products and procedures we have in place. We have a unique culture here. It is very much a family. Everyone is trying to make sure as when itas strong entered this storm. I want to talk about london. Within the United States, you are likely a domestically focused carrier. How does the Network Change . How does the offering change . How are you going to reconfigure . Joanna i will speak to networks first. We are largely a domestic carrier. 70 of the seats are in the domestic market. 80 of the customers we carry are leisure. We feel we are set up for a recovery sooner than other airlines. We think domestic will return quicker. We think shorthaul international will return quicker than longer whole International Haul international. Right international is a patchwork of different openings. From jetblues perspective, as customers get confident traveling again, we think we are wellpositioned to take advantage of that. Emily joanna geraghty, president and coo of jetblue. That does it for this edition of Bloomberg Technology. Bloomberg daybreak australia is next. Im emily chang. This is bloomberg. Good evening from bloombergs world headquarters. We are counting down to asias major market open. I am shery ahn in new york. Haidi welcome to bloomberg daybreak australia. Here are your top stories this hour. Wall street sees its biggest rout since the height of the virus pandemic. Investors sour on reopening. Feds gloomythe forecast for the u. S. Recovery. Opec restrictions are overshadowed by weak
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