Signs that the economy is on the mend. You have the manufacturing report that showed us back in positive territory. Manufacturing is no longer contracting and it confirms the positive reading we got in last weeks empire manufacturing. Indicators higher than expected on the other hand, jobless claims coming above one million. A waitandseein mode. We have seen the s p 500 go to the nearest peak and then last thursday happened, a sharp drop with a longoverdue pullback. We briefly dipped below 2000 in the s p 500. Recovery once again is the Federal Reserve gave more details on its plans to buy corporate bonds, not just , but individually, which resulted in a 77 point range in the last three days. We can see the dip come back again as a mantra for the markets. Volume has been lighter than average. Perhaps that plays into it. Maybe we will see volume pick up once again after that but we are after memorial day. David i look forward to this. Thank you for that report on the markets. John bolton is causing quite a star with a new book he is trying to bring out talking about his visits to President Trump in the white house. To talk about political consequences, rick davis who managed the late john mccains campaign for president. A fair amount of reporting already. Things the most damaging for the president that you have seen . It runs along two courses. One, the stories that john bolton has been telling in the book that we have seen in some say, the bookou has not been distributed yet to a larger audience. With all of the lawsuits the administration is trying to tie up, maybe we will and may be we will not see it sometime soon. One course is, information we did not otherwise have has made its way into the public domain. We knew the ukraine story. That got vetted out during the impeachment hearing. We did not hear about Donald Trumps conversations was using jinping and his acquiescence to that. That is a news item that i think will generate a lot of interest. If also long in Interesting Campaign theme, where the Trump Campaign has already been trying a message around joe bidens campaign, that joe biden is weak on china. This was a double whammy. News we otherwise did not have. It will get a lot of attention and it undermines trumps assertion that he is tougher on china than joe biden will be. Is there anyone out there, any voter, likely to switch the vote based on what were hearing . Does this really father President Trumps base . Think it will bother his face but there are people who will be scratching their head in the middle of this will stop voters who would swing one way or another, and they may be the supporters of donald trump houses Economic Growth over the last three years. The has been set back by pandemic but there are a group of voters up for grabs who want a liberal economic approach like donald trump has had and would worry that the Democrat Administration under joe biden would usher in more regulation, more constraints, higher tax is, in the could be found middle of the debate wondering whether or not trump would be effective as a manager of the nation and our economy, if he has been dogged by the scandals represented in the book. The book is not the only thing President Trump has to deal with today. A Program President obama had to not report people who have come here as children. He lost that. Will this hurt him politically or help him . About shotgunted blasts to peoples faces, saying you have to vote for me or we will lose second minimum Second Amendment rights. It is definitely a distraction to the message. He spent the better part of his last campaign for president in 2016 talking about the border, and stoppingnce illegal immigration. He threw the daca program under in his first year, saying these were done in a properly. It has been tied up in court ever since. You will notice there has been not a lot of talk about immigration. He has obviously moved off of that is a topic to his reelection campaign, and the Supreme Court decision reminds the American Public and the media that the debate has not ended, that there is still a lively immigration issue that is out there. I do not think it is one that will actually benefit donald trump. Part of what he has tried to convince his base is that he has been effective in building the wall and stopping illegal immigration, even when the facts do not necessarily present that case. Now that the Supreme Court said he was wrong on repealing daca, it will be another strike and i would say in this case, the base may be sensitive to it. He cannot deliver for them, what good is it that he supports it . I think for the purposes of today, he is trying to obviously change the topic. Extremely good at it. It does not matter how low he goes. He will everyone talking about his latest tweets and we will forget the fact that the Supreme Court made a landmark ruling on immigration. A big ruling, no question. Thank you to rick, our political trivia from stone port capital. We will talk with the head of one of the most important investment banks there is. That is next on balance of power on Bloomberg Television and radio. David this is balance of power. We welcome the ceo evercore isi my colleague. A lot to talk to you about. Why dont you get started . Thank you. For the last six years i have covered Investment Banking, we watched bankers leave most major large bank to go to firms like yours. When you talked to investors, you said the industry would be hiring a lot less this year, paying less this year. What is your expectation for where the Investment Banking industry goes . Think first of all, we have continued to hire an already hired two new senior managing directors this year. We have a handful of other conversations still underway. We typically hire 47 deliver year. This year, we will be at the lower end of the spectrum probably. Iso think that the industry recovering, along with the economy, more rapidly than any of us would have expected. That is probably because of the incredible speed and size of the monetary and fiscal response here in the United States and around the world. Say, whenever peoples worst fears were a month or two ago, we do not seem to be headed toward those right now. Address what is going on across america with protests. It has shined a light on, and diversity especially on wall street with many black executives across the firms. Hows ever are thinking about the issue . Ever core thinking about the issue . A number to support various underrepresented minorities, women, veterans, the lgbtq plus community. In response to the events of the three or four weeks, which of course, only the most recent manifestation of decades and of discrimination and racism, we made the largest charitable contribution we ever made, we set aside half love half of 19 to match our employee attributions to toanizations committed eliminating racism, social injustice, police brutality, etc. That is just a beginning. We, like the rest of society, have an per underperformed in the proportion of people we had in our firm, of color, females, minority to have a huge longterm commitment. This time in america has strong a lot of credit attention to have and havenots in society and how inequality more largely has become a greater part of the discussion moving forward. We are heading into an election cycle. What role will that play heading into november . , up until the covid19 pandemic, we had an 11 Year Economic recovery, which, broadly,touched people it clearly benefited those who and thehe upper strata gap has continued to widen, even with 3. 5 unemployment, it was still widening. I think those of us who have been incredibly fortunate in this country, should individually be prepared to put more of the bill foot more of the bill of taking care of those who are less fortunate. These are from a Health Care Point of view, from a housing point of view, from a jobs and income point of view, so i would there will be somewhat of a difference between the two candidates on taxation people,ighest Income Taxation of Capital Gains for individuals, which has been one of the single most important things, widening the gap between the wealthy and not wealth the not wealthy. Some adjustment upward and corporate taxes to 2528 . My guess would be, my suspicion is whoever is elected, their with highstart unemployment by the standards we have had over the last three or four years and whatever changes , it is vicee President Biden that might be very well advised to face those phase those in over a couple of years celeste to not stump youovery will stop set your business, you are still hiring people and that business maybe coming faster. Talk about how you are doing the business. We tend to think of Investment Bankers as people who visit roughly. When we come out of this, whatever that means, will we do more deals remotely and does interfere with you getting the work done . What does that look like now . Business is m a, and that business has been largely over the last two or three months, and the reason for that is we missing some necessary conditions for a normalized or active m a market. Need Strong Equity markets to support financing for transactions. Marketsreceptive debt because of the actions of monetary and fiscal authorities those have actually pretty much return, as i am sure you report on every day. What is not present yet is a clear direction for the future of the economy. You have seen, for example, hundreds of companies who provide Earnings Guidance normally pull their Earnings Guidance. If a management of a company and fellow shareholders what to expect in terms of revenues and earnings over the next few quarters, how can we possibly expect a buyer to be more prescient or intelligent about that than the manager of the company himself question mark i think we need a little more clarity on the direction of the enough before ceos have confidence to enter into transactions. Clearly, last week, we represented grubhub and sales. There are transactions that have strategic merit that are still underway. Clearly, companies that are not in challenged industry or liquidity challenges are beginning to think more open mind to the about major strategic initiatives. I think there is still a little bit of a way from pulling the trigger on this. I want to thank my colleague for joining us. Stay with us. We will focus on washington. How did may be affecting the marketplace. That is coming up next on balance of power on Bloomberg Television and radio. David this is balance of power. The ever core is still with us. The ceo of ever core is still with us. When the fed started buying corporate bonds, did that really , really blowing up that way . Yes. Say if you go back about there was ar so, liquidity in the debt markets, shortterm and longterm. No companies could finance investment grade. The highest quality companies, when they rolled over commercial, they found difficult to do so. Severe liquidity crisis and the further down the credit spectrum muir, the more severe it was. The interesting thing about what as by being as aggressive as they were, they moree the need for even aggressive action. The fact that they bought treasuries and Mortgage Backed securities initially, they would be involved in from a support point of view to include private sector businesses, municipalities, main street businesses, and certainly the fact that they are there as a ire of last resort, the berkeley ensures that they do not have to use those powers as much as they otherwise would of had to. David does it come a point at some point where it starts to distort the marketplace because it is not the value of the asset but what the fed might do . There is an element of andhing what the fed does certainly, if you are a market trader, a traitor, you do not want to be in the other side of the investment but you would want to be short things that they are interested in buying. That thei do think confidence provided by the fed has allowed more normalized and to get aturn real twoway flow in markets fundamental to the support of our economy. The irony is in this particular institutionscial are in as strong a position as they have ever been. So the fed supporting the liquidity of the market were Financial Institutions did not themselves provided a really important boost to the real economy and to the markets. Does what the fed is doing affect some of the deals you might be looking at . It is driving up all asset prices, almost to the Underlying Company strength. Ralph the hardest transactions to do right now are transactions where a significant amount of cash is involved. Transactionle, the the grubhub transaction, you have to do diligence on both companies prospects. The buyer has to do that on the seller and the seller because of shareholders, are taking the buyers stock, also has to do due diligence. When you have two securities that have been roughly, buying thisffective case the actions of global itetary and fiscal policies, is an easier transaction to get done. I do not think we have greater certainty about the direction of the economy that you will see any large mergers at this point. The ceos you have talked to have any sense we might get a greater certainty about the economy . Isi think the real question that we are clearly in the midst snappedtty significant back in the economy. View is thatceos the damage to the economy is suggestedan would be by this recovery. Weebody described it as could have a check for publicly with a steep decline. Solution nike swoosh. Of deltathe ceo airlines. This is bloomberg this is bloomberg. David this is balance of power on Bloomberg Television and radio. Im david westin. Earlier today, i spoke with ed bastion, ceo of delta airlines, about what the pandemic has done to his business and back. Ed we are in the process of ever covering, no question about it. It will take some time but there are clear signs, the momentum we have is meaningful, and it is continuing to build. We bottomed out in midapril with only 5 of our normal customer load. Today, it is closer to 15 . The optimism is we have tripled over the last couple of months that we have a long way to go yet. I expect that number to get up to 20 in the coming weeks, adding more flying in july and august, 1000 flights a day each month added over the next couple of months. By the end of the Third Quarter, we are hopefully back to 30 of our loads. We are being very disciplined, taking care of our people and customers on the journey, but the recovery has started. David how much visibility do you feel you have beyond that Third Quarter . Does it keep riding at rising at a steady pace or is there a plateau . When will you be back to essentially full usage . Ed there has never been more uncertainty with what we are addressing given the pandemic, economic impacts, changes in Business Travel patterns will also impact the industry. Crystal ball is murkier than normal, but right now, the vast majority of our Customer Base is leisure. There are some good bargains in the air and on the ground, as hotels and theme parks and casinos are offering opening. Most areas are largely closed, big corporate businesses. As they open after labor day, you will see an improved mix of revenue flow, and that will be the next stage of the recovery. David a key element for all businesses seeking to reopen is the confidence of customers that they will be saved. What are you doing, the operational changes you are making to reassure travelers they will be ok on your aircraft . Ed that is our most important task, protecting the safety and welfare of our people and customers. Safety is in our dna. We sell safety in the sky. We have added another dimension to that, safety from the virus, with the hygiene on board our aircraft. For those of you that have not been traveling, you will see a lot of changes and significant improvements in the experience going forward. Masks are required in the airport, as you board, on the plane. I get a lot of questions about masks. They are there not just to protect you but others. One of the most important players of protection me can have is using masks throughout society today. We had distancing protocols in place. We will not board planes more guaranteesll, which the seat next to you, every seat, is open. There are no middle seats being sold. Input electrostatic fogging place before every flight takes off. We have also added considerable amount of time and attention to focus on the Filtration Systems on board. Filters, the highest quality that one can find, the ones that are used in hospitals in clean room environment. Completelys recirculated air every two to four minutes, with 50 of that air coming from outside of the cabin. They are you are breathing is changed out throughout the entire journey. Planenitors on board our that tests the quality of the air, it is the purest air quality that you will find anywhere. It is 10 times better than a building environment or retail. It is really phenomenal. David that was ed bastian, the ceo of delta airlines. We now go to brendan case, who covers airlines. He thinks that by next spring we will be at a breakeven situation. Is that realistic, and how does that compare to other airlines . Brendan it is realistic if you upbeat view of what will happen with the pandemic. If there is a sense that it is coming more under control, you could certainly see continued. Nd substantial gains in flying on the other hand, if you think there could be a second wave currently, we are not necessarily even out of the first wave. But if things were to get worse, you could see people going right back into the shell they were in earlier this year. Time, whathe same little i know about the airlines, we always look at load factor. They will be at 60 . Can an airline make money at 60 load factor . Brendan no. The airlines are geared to make money at much higher load factors. Just last year, one of the main trends is there were getting into really high load factors, very high full planes. They have certainly cut costs dramatically but i dont think they will be able to make money, not at least on a sustained basis, at those load factors. They are essentially choosing to fly limited right now because they are generally not filling the middle seat. They want to give people some social distance inside the cabin. Is the right move for now. Looking at the long term, whether they can make money doing that, i think that is doubtful. Term, mighte long they make money because there are fewer airlines . Will all the Airlines Make it in this circumstance . Brendan hard to answer that question. Moment, and at the certainly abroad, Many Airlines have declared bankruptcy or shutdown. Here in the u. S. , with all the Government Support they have likely inat is not the near term. But to your question, over the longer term, can the market support the industry as it is currently configured . That is a real open question. We cannot answer that right now. It depends a lot on what kind of demand they get the next couple of years. David thank you for joining us, brendan case, who reports on the Aviation Industry for bloomberg. The bank of england gave more support to the british economy today. We will stick to stephanie flanders. This is balance of power on Bloomberg Television and radio. Nd radio. David this is balance of power on Bloomberg Television and radio. Im david westin. England today decided to put another 100 billion in the kitty to buy government bonds in england, at the same time, leaving Interest Rates where they were. Take us through it, we welcome stephanie flanders, bloomberg Senior Executive editor for economics. Did the bank of england get it right today . Stephanie it was widely expected, 100 billion pounds, which is a little more than 100 billion, but they have added to the bond buying. The surprise to the markets was that they were suggesting they taper off the bond buying by the end of the year. Im not sure that we really believe that they will not buy more at that point, but it speaks to the uncertainty. Remember, the u. K. Has not gotten far along lifting the restrictions on the economy, we are well behind Continental Europe on that. The uncertainty about what this crisis will leave behind, let alone worries about a second wave, is really great. Policymakers both on the government side and the bank of england side are factoring that into consideration. They dont want to commit themselves before they seem with the scope of the damages. David you have got the covid19 issues and those are devilishly difficult but you also have the little thing called brexit hanging out there. What will buying 100 billion pounds of bonds do for the economy in the u. K. . Stephanie the same question that you raise everywhere, but theres a lot more going on in the u. K. The government has not been very effective in dealing with the Public Health crisis, although the measures to support the economy have been effective. We had this prolonged shutdown, which means we may have had the biggest decline in gdp of the major economies. Add to that the decision to move , 40yearry longterm relationships with the european union. On the outside, obviously looks crazy. Is the positive spin on it whatever costs are associated with brexit, that seemed like a much bigger number of year ago than when we started seeing these big numbers related to the shock of the covid crisis. But i cannot help think that that is what ministers are thinking, we cannot wait to get brexit over with because any loss will be lost in this emergency over covid. David talk about what is happening in europe. The ecb has really try to support the economy there quite a bit. How is it working out . Stephanie when i think back to the experiences of the Global Financial crisis, the eurozone crisis after that, it was partly because the eurozone had not grappled quickly with the problems that your faced europebased as a result of the financial crisis. We are really seeing a different approach this time play out, where they are teaching the rest of the world lessons. Massive support for the European Central bank today. Another record drawdown of those longterm loans for the banking euros, over a trillion going out the door. They are not putting the brakes on the credit side of the economy when we are just starting to see economies reopen. As i said, we have talked, there will be further fiscal support. You will see germany and france in particular coming back ready quickly. Recovery we are seeing, even on the consumption side, in the latest numbers. David how do you put on the one hand the stimulus, coming fiscal, with how you are dealing with covid19 . How much of this is consumer confidence, people coming back into the marketplace . Stephanie i think there are striking lessons when you look at the data coming from germany and rants as the fear of getting infected they have a measure where they have been pulling people. You seefear goes down, consumers go back. I spoke to my colleagues in germany, their families are going out, eating pizza, going back to swimming pools. It is starting to feel normal come in only a few weeks. It is because they have confidence that the government has the disease under control. The u. S. , in some states cases are going up, or in sweden, where they never had locked down requirements, but people were worried about going out, you may see a slower pace of recovery. If you get it right, you can have that vshaped recovery that so many investors are betting on. David give us a sense of the spectrum. We are seeing struggles in florida, texas, arizona. Germany and france appears to have done a better job. Sweden never tried. Where is the u. K. In the spectrum . Stephanie Boris Johnson likes beating the we are world, but we are being the world and all the wrong ways. The highest death rate among the major economies. It looks like we will have the biggest hit to the economy. And the length of the lockdown has also been greater. And people are feeling the strain of having been trapped inside for 13 or 14 weeks. The u. K. Is coming pretty low on the table on pretty much every measure. Before you even think about brexit. I told you, it is a grand plan of problems facing the economy. David how does europe right now regard the United States in the way we are handling the crisis, on the covid19 side or fiscal . Nd monetary certainly, fiscally. Stephanie people have been impressed by that, looking past the mixed messages coming from the white house. Questions about the decentralization model. Incidentally, we may have that in every country increasingly, if we have another wave in different parts of the country or different parts of europe, you may get isolated lockdowns rather than national lockdowns. I think that is what most economists are thinking. The battle against the virus is not over, but the government response , maybe he will be more nuanced. In that case, america is similar to everywhere else. David thank you so much, stephanie. Always great to have you with us. Right now, it is time for first word news with mark crumpton. Mark a divided u. S. Supreme court today ruled that President Trump cannot and the Obama Era Program that sealed 670,000 young undocumented immigrants from deportation. The justices rejected Administration Arguments that the daca program is illegal. He deferred action for Childhood Arrivals Program protects people who were brought into the country illegally as children. On twitter, President Trump called it a horrible and politically charged decision. While many states are continuing reopening plans, several states are seeing disturbing trends. In texas, coronavirus related hospitalizations rose for a seventh straight day, the longest streak since the pandemic began. That brings the increased to nearly 50 . In florida, new cases jumped 3. 9 . There have been nearly 17,000 new cases over the past 17 days, the highest level ever. A warning from americas Infectious Disease chief anthony fauci. The upcoming nfl and College Football seasons may have to be canceled. Dr. Fauci told cnn unless the players are isolated in a bubble and tested every day, it is hard to see how football can be played. Than 5 million tourists could end up visiting japan in 2020. That is sharply lower than the governments goal of welcoming 40 million visitors. A number of visitors tanked last month to the lowest levels on record as the pandemic largely shut down the countrys borders. 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. So much. Think is coming up, we will go deeper into the Supreme Court decision. We will speak to our Supreme Court reporter. That is coming up on balance of power on Bloomberg Television and radio. David this is balance of power on Bloomberg Television and radio. Im david westin. Into debt go further Supreme Court ruling out today, a split decision on the deferred action for childhood arrivals. To take us through it, we welcome greg stohr, our Supreme Court reporter. Give us your top line on what happened. Certainly a setback to President Trump and his initiative to stop daca. Tog its a real rebuke President Trump and his administration. Was clear no one doubted the authority of the Homeland Security department to rescind the program, but the way the administration did it, the way that it cut corners, what its options were, that was not good enough as a formal matter. The administration could still try to rescind daca again. That will be hard to do before the november election. David at the same time, this was basically a regulatory decision under the administrative procedure act. They had the opportunity to say it violated equal parts tuition protection, but they did not go that way. Theoretically, they could come back and do it right. Greg thats right. Only Justice Sotomayor said there was a potential constitutional problem. There are other lingering questions out there. The court did not uphold daca in a sense that it said the whole program was legal. It was narrowly focused on the way trump try to rescind the program. There is another case out there, it is possible it will make it to the Supreme Court. Texas and other states challenging the program as a whole. We will have to see what happens with that. At a minimum, this is a real setback to opponents of daca. In reading some of the opinions, it struck me, i think the acting administrator try to repeal daca, and then after was challenged, try to come up with a new rationale, which you cannot do. When you decide something, you better have the reasons in front of you to explain why youre doing what youre doing. Greg the acting secretary of Homeland Security issued this and set our main reason is the concern that the program is illegal. ,nce litigation started secretary Kirstjen Nielsen put on another memo that said, and here are some other reasons that we are rescinding daca, more policy focused. John roberts said much of that is a post hoc rationalization and not the kind of thing that we can consider. When you take a step like this, you have to give your reasons at the outset. David it does strike me that those in the Media Campaign with too broad a brush. We can say there are conservative justices, liberal justices and they will vote one way or the other. Chief Justice Roberts has gone with the socalled liberal justices. We still have some Big Decisions coming down this term. Greg we sure do. In terms of the chief justice, this reminds me of what he did last year with the census ruling when he joined with the liberals to say the administrations rationale for adding a Citizenship Question was questionable, that it was contrived, and they were hiding their real reasons. What that means going forward, good question. We have a big ruling on abortion, the first one since kavanaugh and gorsuch joined the court. Then we have these cases involving Donald Trumps financial records. Certainly a lot of potential outcomes there. It would not shock me if the chief justice in part there agrees with the liberals in terms of whether those records have to be public. For those of us who like the Supreme Court, this was fun. 54. People joining in different parts of the opinion. Thank you to greg stohr, who really understands the Supreme Court. Coming up in the second hour on radio, we are talking about that trump rally planned for this saturday in oklahoma with the former speaker of the house. Thank you for joining us for this hour. This is bloomberg. Vonnie it is 1 00 p. M. In new york, 6 00 p. M. In london, and 1 00 a. M. In hong kong. Im vonnie quinn. Welcome to bloomberg markets. Here are the top stories we are following from around the world. A mixed picture for the u. S. Economic recovery. Applications for Unemployment Benefits fell less than forecast. Manufacturing in the philadelphia region unexpectedly expanded. Into what could be a bumpy road back from the coronavirus. Withl be speaking professor Barry Eichengreen about the political stars from the pandemic. He says the struggles to address the pandemic may leave a long lasting scar on the current generation. This week, bloomberg reported the Trump Administration is preparing a trillion dollar infrastructure proposal. Affectuss how that will the countrys plan for five g technology when we speak to the ceo of lebron brand
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