The dollar index just below 97. Crude oil rallying 2 today on stocks going higher. 87. Arrel of wti 37. Lets get more on the markets. Scarlet fu is with us. Scarlet jay powell testifying before congress for two days of discussion, stuck with his message that the economys path is uncertain. We have seen indexes come off of line isghs but the positive. You look at the industry groups, 20 groups are higher. Within the dow, 29 out of the 30 names are up. In terms of leaders, caterpillar, boeing. The white house is preparing a 1 trillion infrastructure proposal. Up 4 frastructure etf right now reflecting higher demand. Retail is up after a record gain in sales. A lot of retail names are heavily shorted, so you could be seeing a short squeeze as investors rushed to cover their bets. All of it comes back to fundamentals, like earnings. Morgan stanley talked about the disconnect between the optimism out there and the bottom line. Andgap between the s p 500 as aftertax profits has soared to record regions. Earnings have not kept pace and have actually stalled long before the pandemic. The search for yield means risktaking is up, and that continues to be the theme. Vonnie Corporate Bond buying making for looser financial conditions. What is credit telling you . Scarlet when you look at the etf that tracks investmentgrade credit, it is taking a breather after a record run. The etfs that the fed is buying, a lot of front running ahead of that announcement, effective purchasing. It is up 29 since march 19. Demand has been through the roof with shares jumping 50 since march 19. 52ts swelling by 89 to billion. This makes it the third biggest fixed income etf that we track. It has been overbought for a while. Overboughtcan stay for a long time before the air starts to come out. You. E scarlet, thank like i mentioned, scarlet mentioned, jay powell saying the u. S. Economy may be bottoming out. But he did give some restraint, saying the economy has a long way to go. Joining us now is kevin nicholson, Global Fixed Income cosi of riverfront investment group. Lets begin with the idea that the fed needed to buy Corporate Bonds because they said they would. Was that really necessary . Kevin it really wasnt. When you think about what was going on with the fed, they have put the bazooka out into the marketplace, said the credit 250 billion. Up until now, they have only bought 5. 5 billion in etfs. Credit has continued to tighten during that process. I dont know that it was necessary but it was a good backstop for the market. Vonnie i know you have a raging your forecast, stocks through the end of the year, no matter what happens with the coronavirus, with the fed getting all of this to markets. What do you do with bonds . Kevin we have been focused on iveyear Corporate Bonds because that is where the fed is buying on the corporate graveside. Fixed income is tough to own right now because yields are so low. From a treasury standpoint, we have just been using treasuries in our portfolio basically as a shock absorber. We are keeping duration pretty neutral to the benchmark. Vonnie what we are seeing today is the long end rising more than a short end. Kevin, what do you do in terms of protecting against inflation, should it materialize . Kevin if inflation materializes, we would buy tips in the portfolio. Now, given that you have core pce, the feds preferred indicator sitting just at 1. 04 as a last month, inflation is not there. At this point, we dont think its necessary to hold tips in the portfolio. Vonnie i presume you are listening to the fed chair earlier on. Probably a little premature in that environment to talk about it, but among investment managers, how are you thinking about how the fed exits gracefully from these programs, qe forever . Kevin [laughter] i think it will be a long time before the fed is able to exit these programs, years, and i think that is part of it, especially because they have said they would keep rates basically anchored toward zero through 2022. With that in mind, i think you just have to be patient. It is going to take a long time s. R the fed to unwind thi to be honest, they are not going to do it any time soon. That gives you the ability to go and buy equities because of this low Interest Rate in farm. Vonnie you keep an eye on asia and europe as well. Im curious as to where there are attractive opportunities, given the difficulties in the United States . Kevin we do look at europe and asia. One of the reasons we have continued to like the u. S. Over the developed international markets, going into the pandemic, the u. S. Was in a much better place from a fiscal and monetary standpoint. When you look at what has transpired in the pandemic, the u. S. Has definitely throw more money from the central bank standpoint behind their economy, its economy. In europe, europe is now starting to come around and the ecb is starting to make some headway, as far as trying to support their economy. You are also seeing germany get stance,m its austerity start to actually spend money in fiscal stimulus. They are making progress. Thetill believe, though, fed is leading the way and the u. S. Is ahead of the game as it , and itshe markets rebounding from the pandemic. Vonnie thank you so much for your time, kevin nicholson, coming to us from hampton, virginia. Lets get to the first word news with Mark Crumpton. Mark President Trump signed an executive order on policing today. To improve is aimed Police Practices and would establish a database to keep track of officers with a history of excessive use of force complaints. The move follows weeks of since the death ofat george floyd. Wales. Irus cases fell in that is giving officials more confidence to reopen the economy. Ubs and restaurants will follow in july. The u. K. Has had about 52,000 coronavirus cases. Coronavirus outbreak could triple over the month to more than 800,000 cases. The forecast comes from scientists at the university of michigan. Leaders have eased the nationwide lucked out and have told citizens to learn to live with the virus. India has had 343,000 confirmed cases. Nearly 10,000 people have died. Nothing has kept Queen Elizabeth ii away from the royal ascot horse racing event, not pregnancy, a speech to parliament, or even an outbreak of foot and mouth disease. But this year for the first time, the queen will not attend because of the coronavirus pandemic. The queen has been isolating and Windsor Castle with her 99yearold husband prince philip. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. In a literal explosive rebuke to thel, north korea blew up interkorean Liaison Office. Is this some sort of declaration of war . With us now is bill faries. We be aboutd should this particular explosion . It is the latest sign that north korea and south korea relations are in a tailspin. Also just how bad things are between north korea and the u. S. There have not been constructive talks in a long time. North korea has essentially cut off all talks from south korea. This specific destruction of the Liaison Office is a highly dramatic and symbolic act. I dont think we are expecting any Armed Conflict to take place, though. Tois kim jonguns signal the world that people should be paying more attention to his regime, the situation with north korea. But i dont think we are talking about military actions coming on soon. Vonnie how should we read the emergence on the scene of kim jonguns sister . Is this the beginning of a Succession Plan . Bill everything with north korea is reading the tea leaves, but we have seen her with a much higher profile in the last few years, going back to the Winter Olympics in 2018. She seems to be filling a more regular and highprofile role. She became a member of the Central Committee in north korea. There was obviously a lot of talk when kim jongun disappeared for a little while, about whether she could be one of his successors. North korea has only been wronged by the kim family since its founding. Isanyone in the family, she seen as the most likely person to step into kim jonguns shoes if he needed. Vonnie will President Trump engage . Bill the u. S. Has said it is open to talks at any time. That is the message they give when we ask. We know there have not been any constructive talks for well over a year at this point. I dont know if it is the u. S. Side that needs to make the decision. The americans would say they are ready and willing to meet but kim jongun and his regime have not been willing to show that they are willing to have negotiations. More flashpoints around the world, hard to know how many of these new tensions are a result of the coronavirus, the fear of the coronavirus across borders. India just said that a total of 20 soldiers died in the standoff at the china border. We thought it was three originally. This border standoff, does it escalate, can it be calmed . Bill it certainly could escalate, could get much more dangerous. Many of those soldiers on both sides are not armed with live ammunition. That would be the first thing we will look for in terms of whether tensions are really going to a bad place, whether they are carrying more live ammunition and weapons ready to fire. It has been a contentious border for decades. Frankly, theres a lot of speculation that china, because of the coronavirus, problems it had at home with the coronavirus and its intention to maybe take advantage of the west being distracted with the outbreak, is pushing out a little bit, on the whether it is border with india, the South China Sea were other places in the world. It is hard to give a definitive answer but certainly the situation on the border is worrisome. People are looking to see if there is maybe more of a will military role coming. You. E as always, thank that is bill faries from washington, d. C. Demand for oil and gas will take until 2022 to recover according to the iea. They say the market will slip into deficit exterior and stockpiles will drop rapidly. We spoke to the iea executive director about the assessment. Demand gettingg stronger. This is mainly driven by china. Demand as we speak now is basically equal to what they had before the crisis. What do you think price will do, given the demand elasticity that you describe. Oil does sense of what from 40 higher, lower, i have no idea. There are so many answers. Rebounds, as is expected by all the financial institutions, and if there is no second wave of coronavirus, i would expect the oil crisis to give a boost to even producers inhale the United States. Vonnie that was the executive director of the International Energy agency. Coming up, we speak to kim dixon of fedex office about her companys new push to help Small Businesses during the pandemic. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Investment grade bonds that will help fund its exit from bankruptcy. The utility is issuing mortgage bonds in as many as six parts. The offering may total 6 million, totaling to the total package of 11 billion. Hit with billions and liabilities from the wildfires. Retail sales soared from april, more than twice the forecast. Was well down from this time last year, even with the improvement. The value of sales was more than 6 below that level. Two European Union antitrust investigations in its pay. Tore and appple they will also look at their use pp inndatory use of their a certain systems. Latest Bloomberg Business flash. Lets get a quick check on the markets. On. Ad a nice rally early the s p 500 is up 2. 3 . The nasdaq is up 2 . The dow, 2. 5 . Coos get to fedex office kim dixon joining us from dallas. Talk to us about Small Businesses around the states, what fedex office has been able to do for them during the pandemic, even as areas were shut down. Kim happy to be here. We have been an essential service, we have been opened the entire time. We have had a tremendous opportunity to help businesses navigate this current situation. We found many businesses like ourselves have had to adapt things like social distancing standards in stores, step up cleaning protocols, and we have been able to help many of the Small Businesses in our community put up signage, communicate clearly what they are doing. Vonnie fedex office makes up about 3 of fedex sales in total. Stores,ave about 1900 customer facing stores. How many of those had to close down, how do you plan on reopening them . Kim we have close to 2200 stores altogether. A couple hundred of them have been closed during the pandemic. Most are in locations that have closed, so in convention centers, large hotel properties, casinos, on a university or corporate campus where they have shut down the facility. Other than those locations, we had remained open. We have every read our hours, much like other retailers. Vonnie are you seeing a difference in foot traffic or perhaps package volume . Kim package volume has been phenomenal. It is no secret ecommerce has grown my crazy through the pandemic. We have also seen the print marketplace release her to come open. As markets are opening up, we are finding, particularly entrepreneurs and Small Businesses saying, i need reopening banners, marketing materials. They have been closed for several months and they have to drum of their marketing machine and get Communications Going so they can get back to business. We have been happy to help them through that effort. Vonnie do you imagine having to furlough or lay off workers, and if so, how many . Kim we have furloughed some of our team members as we reduced hours, reduced services. ,ut im happy to say that because the markets have been opening up, we have been able to recall many of those team members. I anticipate that we will continue that recall because we are seeing the markets are to open up. Vonnie thank you so much for your time. The best of luck getting all of your stores that were closed open again. Of fedex office. It appears u. S. Consumers are getting their groove back. Retail look at todays numbers and what we heard in jay , speakingestimony with Danielle Dimartino booth. This is bloomberg. Mark im Mark Crumpton with bloomberg first word news. A group of republican art at budget hawks is urging a halting in new spending designed to help the u. S. Recover from the coronavirus. The group says further relief measures would put the u. S. On a road to financial ruin. The letter is signed by 20 economists, including art laffer , and antitax advocate grover norquist. The president signed a stimulus bill into law in late march. The u. S. And canada have agreed to extend their agreement to keep the border closed to nonessential travel until july 21. The restrictions were announced in march and have been extended twice. Americans returning to the u. S. And canadians returning home are exempted from the closure. Essential workers Like Health Care professionals, airline crews, and Truck Drivers are permitted to cross. Beijing is seeing a resurgence of the coronavirus. The city has urged all schools to close. The Chinese Capital is also lifting its Emergency Response to level two, and said people who have to be tested will have to be tested before being allowed to leave the city. The total reported number of infections has reached 106, according to the National Health commission. It is one of the largest provocations north korea has made to south korea in years. Kim jonguns regime blew up an interkorean office on its side of the border. In recent weeks, the north has issued an escalating series of threats against the south. It is unhappy that south korea backs the u. S. Led sanctions campaign. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Amanda live from toronto, im amanda lang. Vonnie im vonnie quinn. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are the top stories we are following from around the world. Powell testifies. The fed chair stays with his message on an uncertain path for economic recovery, even as retail sales come in positive, jumping by the most on record. At home fitness surges. Raises 21 million from investors after seeing sales job 400 since the start of the virus. We will speak to ceo bruce smith. And a lowcost drug shows promise. How a widely used antiinflammatory is improving survival with patients with covid19 as infections spike in the u. S. Thisa we are watching risk on attitude returning to markets despite the fact that there remains fears about the resurgence of covid19 across reopened parts of america, and as we heard, the world. China saying all schools in beijing will close down. That didnt cause the markets to miss a big beat. We are seeing Oil Move Higher on the day but it is a pretty broadbased move, although the price of gold is weak. We are still seeing the subgroup move higher. Consumer discretionary, staples are up. That big jump in retails is part of what is bullying markets. Eli lilly, there is other business to conduct here very promising results for a Breast Cancer drug, reduced relapse rate. That stock is moving 70 higher today. Atmosphere, the day of good news for the company. 17 higher today. Surge. Reporting a record as jay powell testified, while signs thatere are the economy may be bottoming out, there is still pain ahead. All quite uncertain but we appear to be entering that of the economy reopening. We are seeing apparently the beginning of that with the employment report. We would expect to see large numbers of people during this period coming back to work. There are parts of the economy that will struggle to return to their old ways of activity because they involve getting people together closely, in large groups. All of this assumes that the virus remains reasonably under experience does not an event where the virus is wildly across the nation. That we, im confident will have a full recovery. The economy will recover from that, but we just have to be patient with it. Amanda Danielle Dimartino booth is with quill intelligence. Obviously, the fed has played a big role in how sentiment has unfolded here. One of the big stories is the how itting more color on will operate in the Corporate Bond market. How much of that is supporting the equities here . Even though a lot of strategists on the street are saying there was nothing new in yesterdays announcement, i think they are looking over the most important detail. The fed will set up an index type structure to go after these Corporate Bonds. As theys the need have been purchasing individual Corporate Bonds negates the need for issuers to go through a certification process to prove they are eligible for these bond purchases. This was a big Sticking Point for markets because company did not want to be stigmatized by coming to the facility and signaling to the markets that they were in distress, in need of fed financing. Now that the fed has set up a structure that goes through an index structure, they dont have to worry about that. Much larger swathes of Corporate Bonds, and that is what markets are celebrating. Days, in the last few members of the fed or even chair powell suggested that we could do something about inequality. What can the fed do about inequality . Danielle i think we are seeing the limitations of the fed in terms of how it can reach its Monetary Policy into main street. That is why, when he is in front of members of the senate, tomorrow, the house, he is being so vociferous in saying i need more stimulus measures passed. It is your business to decide what it will be, but we need more stimulus. The fed is happy to monetize again, the stimulus measures have to be on the fiscal end. We have just heard about that letter going to the president saying we need to step back and have more austerity. It will be interesting to see what the pull and push is with this july 31 expiration of that extra 600 per week in unemployment insurance. Amanda that is one of the questions when we see this historic jump in retail sales, how to factor that in, if we were to smooth it out over the year. What are your thoughts about that as we get to that withdrawn fiscal support . Danielle that is the critical word you are using here smooth. , whichlook at retail feeds directly into the domestic product category, or sales are up 0. 8 . You are taking away the artificial plunge in retail sales, the huge surge back, and you find out you are flat on the year. After this extra stimulus wears out, where our retail sales going to be in august, as people and states, such as texas where i am, an arizona, as people become reticent all over again about going out into the economy and spending because there is this resurgence of coronavirus that will make consumers more reluctant. Vonnie there is also the inability, if congress does not come up with something to extend benefits, they will just be cut off at the end of july. It will people do for money . Danielle absolutely. Cox automotive came out with a survey recently and said people would delay purchases of autos because they are not certain when the moratoriums would be expiring on rental evictions. For many families right now, its a matter of feeling they have a ticking time bomb has to how long they will get grace on skipping car loan payments, and whether elections will become a reality, or how long they will get forbearance under mortgage payments. These are big and enormous expenses for the average family, went food inflation is still rising 4 over the last 12 months. Amanda one other factor that will come into play as the strikes to the fall is, at some point, the actions of the government will be in the midst of a campaign. That will affect many of the political players out there. Will that be proor antifiscal stimulus as we get to november . Somethingthere was telling indiayesterday, coming off of the heels of Larry Kudlows weekend holding the line, no more 600 a week, and then we hear from the administration, maybe there will be a bonus, a bonus in the stimulus bill. It is almost as if they are trying to say it without saying it. We want to give a bump to consumers to get us over the election, and then we will hold back all of the stimulus. It will be good watching for political aficionados to see, as we get closer to the election, how much there is for an appetite of further fiscal stimulus measures. Vonnie thank you for that, Danielle Dimartino booth. Coming up, we will be speaking with the ceo of hydrow about their surge in sales of their indoor rowing machines. This is bloomberg. Vonnie amanda this is bloomberg markets. Im vonnie quinn in new york. Athome Fitness Company hydrow has raised 20 million in a new funding round. Up to take on the line of balaton and others with its line of rowing machines. The Company Reported a 400 increase in sales since the beginning of the pandemic. Ceo,ore, we welcome hydrow former coach of the u. S. Rowing team, bruce smith. Obviously, indoor rowing has been ticking of since the pandemic. 400 increase in sales. To do you plan to continue grow that once people start to get outside more . Rowing is one of the best cap secrets in fitness. Tshirt has crew cuts but i dont know how connected they are to rolling. It is phenomenal exercise. As soon as they find out about it, they may migrate to the wrong machine. Amanda go ahead. In terms of how you extend your sales post anthemic, there is a fear that there is a little bit of novelty as we are shut in, but people will get back out. What is different about hydrow that allows you to build on your base here . The adoption moved curve. Not structural change. We dont want to be just in your home. We are also in your hotel, your schools. We want to be wherever the customers are. As the economy opens back up again, we see that as a plus also. We want to be the rowing machine of choice for everybody. Vonnie just for some context. 2495. Is priced at you are below that at 2199. But we were reporting that pleoton wants to get into the rowing business as well. Why wouldnt they, because they want to build up a consumer base. How do you plan on tilting a not havend hydrow, and anyone by anyone elses machine . Bruce through a lifetime of being involved in the sport, i have been able to build a new kind of machine which is patented. Ip not just strong around the physical mechanism, which is smooth and the best in the world, but also the idea of broadcasting from the water to your home. , hugehuge fan of peloton respect for what they built, but they are broadcasting classes from new york city. This concept that we have is live outdoor reality. We take you out on the water and you get a little bit of the splash, a lot of the sweat of being out on the Charles River in which is different from peloton. It is fascinating to see our customers response. Your not indoor classes in home, it is actually getting out on the water in your home. Nda you just raised 20 my 25 million. Is that your market for a specific purpose . Bruce we had two plans. The first thing that im excited about, we dont just want you to row, we want you to be really comfortable our company is aimed at whole health. We are expanding our offerings including functional movement and yoga. We currently have those, but those will be expanded to include more options and variety. We will also be getting the word out nationally with a Marketing Campaign that will be set up to kick off in september. Some exciting news around that. Vonnie apparently your machine is shipping without delays, which is not the case for other fitness agreement people are trying to get in their homes. We dont know how long the pandemic will keep us in our homes. Talk about when you may think about going public or offer your investors an exit. Bruce we are really excited about our growth trajectory. When you map us against our friends at peloton, mirror, tonal, we are accelerating at a great rate. We will have 5000 customers by 2024, which would be great. Amanda do you expect there to be consolidation when you look across the space . It has really exploded in the last five years. Will there be fewer players down the road . Bruce great question. I think there will be four or five companies that own the market. Eight out of 10 homes in the u. S. Will definitely buy some sort of connected Fitness Equipment in the next two years. It is a race to those first 10 million homes. Peloton has a good start, several Companies OfferDifferent Solutions for different families. I think there will be a definite flight to quality, and that is absolutely where hydrow sits right now. An incredibly engaging and immersive experience. We are excited about that. I think it will be a lot like the computer or car market, where there will be a few great players and not any room for anyone that does not deliver a great experience. Vonnie like the u. S. National team. Bruce i hope so. Amanda thank you for that, bruce smith, hydrow ceo. Premier League Returns tomorrow. Organizers trying to reverse the damage that was done through the coronavirus pandemic. Expressed the league difficulties that lie ahead. What football will look like in a post covid environment, my views on that will be shaped by what happens over the next three months, how we start this season. This season has been significantly impacted by covid. We are hopeful that the season will be less impacted by covid from an organizational and financial perspective. Obviously, we dont know the course of the virus. Vonnie it is time for your latest Bloomberg Business flash. Lets get to some of the biggest stories in the news right now. Jpmorgan will start to bring back more traders to its offices in new york. The bank host to have 50 of its sales and trading step by the middle of july. Returning will be voluntary. That is her latest Bloomberg Business flash. There is renewed optimism about a Treatment Team developed at oxford university, and antiinflammatory drug that appears to reduce the deaths of patients with covid19. John larimer is with us now. What does this drug do, why are people excited . John this is an antiinflammatory drug. It does not till the virus, although many people who get covid19 you have probably heard of it, a cytokine storm, a strong inflammatory response, probably responsible for the most destructive symptoms of covid. Organ damage, clotting, heart attacks. People that are very sick with covid, it is very important to start stop this cytokine storm. Dexamethasone has been around, maybe not as long as hydrochloric win, but 60 years. This was a drug that a number of people have been looking at very early on. The British Government started a recovery trial where they compared a bunch of different. Xisting drugs all the drugs in this trial were approved before the trial began, put them up against one another, and lo and behold, now we see dexamethasone associated with saving lives. Vonnie it reduced death by a third on patients with ventilators. On aow that once you go ventilator, things are dicey already. What happens next . This is a u. K. Study, will it be studied elsewhere, can it be combined with other drugs . I am sure there are studies elsewhere. Model. Overy trial is a the World Health Organization has a trial like this where they have a number of drugs up against one another. Thisow that we have seen dramatic improvement in patients that get dexamethasone, again, along with standard care, once people start not only getting on ventilators but just oxygen because they saw an improvement in those that got on oxygen, not just ventilators, that both of those classes of patients, which includes a lot of covid patients, will start getting that drug. Vonnie we can hope for the best. Thank you for that reporting, john lauerman. Now lets look at where things stand markets lies. Nasdaq comingand off of their highs. The s p up 1. 3 . Dxy just above 97. The Canadian Dollar unchanged. Of course, crude oil having a nice day, a rally of 3 or wti. 38. 23 a barrel. This is bloomberg. Scarlet 2 00 p. M. In new york, i am caroline hyde. Romaine i am romaine bostick. Taylor i am taylor ribs taylor riggs. Caroline lifesaving promise months into the covid19 pandemic. New information about the to we speakn to dr. William heseltine this hour. An uncertain path ahead. Chairman powell morning the u. S. Economy has a long way to go and failure to address a downturn will magnify inequality. Romaine quite a day in the markets, we open significantly higher. Up 2 , and nasdaq were small