March and early april. How is it in london and the United Kingdom . Is the same tension there . Francine attention remains around the world but i think if politiciandoner, a in the u. K. , france, and spain, look at states that reopened may be more quickly than others, maybe without the same precautions than others, to try to give you a sense of what you should be doing. In london, if you look at our rate of infection, still below 1. Boris johnson this week said bars could reopen july 4. We will see as the number of cases around the world increase, exactly if consumers will go out and spend like the Prime Minister has asked them to. Return one has done the to sport like english premier football. It has been extraordinary. Their distinctive from the disaster that is american sports. Speaking of that, jason kelly in february began a project in speaking to the basketball star lebron james. Little did mr. Kelly know that this would be an extraordinary moment for bloomberg and also the speaking of mr. James to america. Extensive Coverage Today and all moving to special coverage, Bloomberg Businessweek. You will see that tomorrow night on Bloomberg Television worldwide in its entirety. Heres lebron james on education. The education side is what were most proud about. That is success for us where we are actually getting these communities out to vote. Theyre even more educated on who theyre voting for, how they can vote, where they can vote. They have that power. Those are the real ones from the people in the community that are living and walking the streets and being racially profiled and being judged every day they walk in their city. They are the ones that need to be heard, and they are being heard right now. It is great to see. Francine tune into our special conversation with lebron james and maverick carter this friday at 7 00 p. M. In new york. Lets get straight to the bloomberg first word news in new york city. Milestone number of states in california, florida, and texas each set records of new coronavirus cases yesterday. Arizona hit a peak in hospitalizations. It reflects the virus spread in some states that were slow to enforce lockdowns or quick to lift them. A new model predict the death toll will hit 180,000 by october. In the u. K. , under pressure to open up the checkbook. British businesses are urging the government to ramp up public spending to protect jobs. The confederation of british industry was an extension of grants my business rate relief, tax deferrals. A list of 20 Chinese Companies owned or controlled by the military. Mong them, huawei it does not give President Trump any new authority. He already has the ability to impose financial sanctions against those Chinese Companies. Overess is in a stalemate police reform. Democrats have blocked Senate Debate over a republican plan they called inadequate. Republicans are refusing to budge from their proposal. The house is likely today to present democratic land, amongst other things, making it easier to sue work prone only charge police officers. The white house as it would veto that measure if it passed. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tom thank you so much. Equities, bonds, currencies. The vix at 34. Showing a pullback or risk off feel. I look at the bond market, 30year and tenure command with a vengeance 10 year coming with a vengeance. Even the twoyear question. At marketsf you look in europe, there was a bit of rehearsal and theyre getting 0. 3 reversal and they are gaining zero. 3 . There was that wired card filed for insolvency after the 2. 1 million went missing. U. S. Futures are fluctuating because bonds are gaining. I want to show you not only the dollar nudging higher, gold 1762, tom. Tom we are focused on the pandemic. Thank you to steven riley of Imperial College for joining us last hour. We want to stay on script. Linkage of economics to finance and investment. Is a black rock he is a wonderful synthesis of any given moment at hand. Russell, what is this thing you see right now within the koester ich synthesis you have . What is a moment for you in investment . A right now we have got a pull and push about the uncertainty about the virus, the pace of reopening, the longterm damage, and the fact we have had incredibly powerful response by governors not just in terms of the size, so in terms of the rapidity and unlike in 2008 and 2009, 2010, we have this time as a handcheck between fiscal and monetary. Investor should not dismiss the boards of that when they think about the importance of risky assets going forward. Tom how do you adjust to a second half 2020 after a 40 move in equities . Stocks are likely to end the year higher than they are today. It is certainly not going to be a Straight Line as we have seen this week. Were still wrestling with the virus. I think we will be living with these episodic flareups for some time. At least until we can have a vaccine. If you look at the national numbers, they are more encouraging than some of the individual states and counties. What i would also point to is the economy is starting to recover. It will take some time. When you look at not only the may unemployment report, which brought a lot of people back to the labor market, look at housing, credit card data which shows resilience by the u. S. Consumer i do think stocks can go higher, particularly in this environment where shortterm rates are zero and longterm rates are at 1 and less if you look at the 10 year. The biggestat is concern right now in the markets . I know it is the number of infections which is almost impossible to predict, and the lockdown, but what do you ask yourself every day to decide where you put your money . Great question. I think you alluded when he spoke to some of the metrics talking about hospitalizations, investors are trying to wrap their arms around, we know were going to see an increase of cases, particularly in hotspots. There are going to be flareups. I think the question is, are they contained . Is it putting stress on the medical system, the type we saw in march and april that really forced a more severe lockdown . Of course, how quickly is the consumer able to come back . We are paying a lot of attention, for example, to weekly credit card data. Here it is interesting. Obviously, a big kid to income, to the jobs market, but going back to that stimulus, at least in the near term, the government has replaced a lot of that income. You are seeing that in the spending numbers. Not every category. Where people are cutting back, you are cutting back, youre seeing rises in other areas, not just internet commerce but also places you would not expect housing, recreational vehicles. People are looking to spend, albeit differently than previrus. Francine what is the one thing that you worry about . I know you talked about yield control in the past, we talked about negative rates. What exactly could be something that would surprise the market . A couple of things. Im not worried about negative rates in the u. S. I think the fed has been clear. I think they have other tools in their arsenal. I dont think theyre inclined to go to negative rates. Not negative nominal rates. In terms of concern, most obvious, the second wave of the virus. How hard you have to clamp down to contain that. The second issue, which were not talking about today but we will be talking about by the end of the summer, the 80 pound gorilla of the election. This is very fluid. It is hard to handicap. You have the potential for a wave election. This is something i think investors will start to wrestle with in the late summer and into the fall. Tom Russ Koesterich with us. Agf underscores what mr. Koesterich just at about the possibility of a wave election. We will continue with Russ Koesterich. Through the morning, we will be playing you little teases, nippets lebron james and maverick carter speaking with our jason kelly. Watch it in entirety tomorrow night at 7 00 p. M. Stay with us. Yields lower. This is bloomberg. Francine this is bloomberg surveillance. Tom, we were talking about the markets and what next. We are back with Russ Koesterich blackrock. How long will it take for the recovery to take hold . Is there danger the recovery going to be so patchy i think youre spot on. This will be an uneven recovery. What i would say is we would expect growth to resume in the second half of the year. To get back to where we were anytime soon. I think the part of the market that you would expect, maybe two parts, the longest healing process, one, i think are small and midsize businesses. They have really been hurt by the shutdown. That will take a long time. The second is a labor market. Fortunately, we started this crisis with a very strong labor market. Unfortunately, it will take a long time, measured in years, to get anywhere close to where we were in february with the 50 year low of 3. 5 unemployment rate. Francine when you look at some of the market dislocation, wordy see the most . Should we talk about bubbles or quantify them in Something Else . I dont think we are looking at bubbles. That does not mean they are not pockets of excess. There were pockets of excess before we got here. Let me touch on two areas often talked about as bubbles that i think are not. One of which is people, the case equities are a bubble. I dont think that is right. Whenever you look at equity valuations at the trough, there will always look expensive lookse the e ratio will weak. If you look at cash flow over the longterm and you discount it by where shortterm rates are likely to be, the market actually looks very cheap. Im not making the case it is necessarily a screaming bargain, but i think in the environment we are in with low rates, stocks do not look nearly as expensive as some have argued. The other place we hear his credit. This will be a low for a very long world. Investors, whether pension plan or individual starved for income. They probably will have to look in places other than the past other than where they have look in the past. We think theres a huge opportunity in credit. People are going to need income. That is another place that has been talked about as a bubble and we dont think that is right. Tom i have been fascinated the last couple of days of the acceleration when small caps give way. There is bad news, whatever. The bid drifts away and small caps really go down and go down hard. What are your thoughts on the theory that one day small caps will see the light of day . Every dog has its day and nothing small caps are no different. They are part of this broader cyclical trade. Small capsoke about and we could just as easily talked about value in general, shortterm bursts of activity, everyone gets excited, then it fades. The basic challenge for both styles of investing is you need growth. You need investors to be confident that the economy is really going to accelerate. The last time we saw that for more than a couple of weeks was the back, 2016, and that was a great period for value. I think value and small caps to get a run that last more than a few days, there needs to be some conviction, some enthusiasm by investors that the economy is going to start to take off. Tom russ, i want to get out front of our conversation with Mario Gabelli coming up, and that is on use of cash. ,articular you, Russ Koesterich do you feel like there will be a difference in use of cash or will they sustain Dividend Growth . I think you certainly youre going to see maintenance of dividends. Buybacks i think is an open question. There are questions about cash flow for some segments of the market. In general, Corporate Cash in the u. S. Is very strong. This will be more of an issue when you go to europe. You think about more of the challenged segments of the market there. What do you do with cash in your own portfolio . Here i think the world has changed a bit. We are still of the view that longduration bonds connect as a hedge against equity risk. At 65 basise is, points for the 10 year, the yields can go down much less than was the case six months ago. That means while directionally bonds still provide a stock ticket hedge against stocks, it is probably not as convex of a hedge. Running with a bit more cash in the portfolio. That is what we are doing relative to the lets say in december. Tom Russ Koesterich, inc. You so much. Greatly appreciated this morning. He is with blackrock. Coming up on the equity side, has been quite good, looking at caution early in the year and looking at optimism now. That would be Michael Wilson at morgan stanley. Stay with us this morning. This is bloomberg. Francine this is bloomberg surveillance. The nba is gearing up to resume afterason on july 22 halting games due to coronavirus. We spoke exclusively to lebron james about the return of professional sports. I believe that sports in general has done so many great things for communities, for households, bringing people importantly, more like you said earlier, our commissioner in our league has always allowed us to express values and things going on in our lives. For us to be together as a league once again, along with what is going on right now, it gives us another opportunity to continue to talk about what is going on with social injustice, police brutality, black lives matter, and continue to hit home on things that is going on that matters a lot as well. But sports has always been something that kind of galvanized and brought people together and just made people feel very uplifted. I know in my community right now, unfortunately, a beautiful 18 old girl by the name of Nikia Crawford was just gunned down in akron, ohio, a week after graduating high school. T to get peoples minds not saying forget about certain situations, but to just have a breath of fresh air, to have a breath of a sense of love that sports can bring. I know what i joined the Basketball Court can bring a lot of happiness to a lot of households, including my own, including my community and my kids. Im looking forward to the season getting restarted, bidding back in the later uniform and continuing getting back in the laker in form and pushing not only on the corporate off the court. Like ive been telling a lot of my colleagues and friends, i wont stop until i see change. I mean real change for us as a community, as a black unity both on and off the floor. My mission stays the same. Lebron james in conversation with our jason kelly. Look for that special tonight excuse me, tomorrow night in the 7 00 hour. I want to look at the data right now. Very importantly, the 8 30 jobless claims, the anticipation there still a painful one above one million statistic for that weekly indicator. Hugely anticipated by professional economists. The data this morning is less, i will be honest, about the economics and far more about gauging the effect of the pandemic on the american economy. Yields coming in, as youd expect, lower. The vix goes out to a 34 level, which really does get my attention. Francine . Francine i think it is about worries that lockdowns may be reimposed and economies reopened more slowly. Poisonedhurt but not sentiment. Investors when reports of new daily records of infections in texas, florida. Coming up, Mario Gabelli. We talked about the markets. This is bloomberg. Tom good morning everyone. Bloomberg surveillance. A really most interesting time in the markets. Francine lacqua in london. Im tom keene in new york. We are celebrating jason kellys important interview with lebron james and we will be playing highlights throughout today. Right now we need to catch up on value. You can do that with Mario Gabelli. He has this and that title. And hes a great philanthropist and all that. But what you really need to know is he was a disciple of roger murray. One of the reasons we have the ira and frankly the 401 k was a Columbia University professor who stood up and changed the perception of Value Investing many many decades ago. Mr. Gabelli was a disciple of roger murray and he joins us this morning. Investingvalue changing right now . Is it changing from graham and dodd to roger murray and now into something new . Thats a great question and im glad you mentioned roger and the success of bruce greenwald. What we do is basically read annual reports. I was on Conference Calls. Were talking to broadcast executives. Microscope ona the details that are unfolding but also use a telescope for what its going to look like in five years. March, coldddle of and Growth Stocks have been the flavor of the day. Hascrepancy between been a challenge. Team is probably down 15. We think the best is yet to come and youre going to get a search as the economy improves in Value Investing type stocks. Tom you are notorious for the Conference Call and for speaking inpatientent are they in there under undervaluation and can they affect a plan to find value while they wait for the market to find value. Are they motivated to see their shares move higher . If you want to be practical, if you had a stock that was 40 and your options for a strike price of 45, you reset the options. The point is that what is intrinsic value, why arent there more deals surfacing that value. When will the private equity guys unfold. Youre going to see that particularly as you get closer to the election into 2021. Independent of that how bad is bad, how good is good. Whats going on in the Digital World and whats going on in the economy and what are the speed bumps shortterm and longterm. So youve got all of those. Bad . Ine how bad is what the fed did was they went into hypersonic in terms of Monetary Policy with Monetary Policy and fiscal policy. He will hopefully get some kind of infrastructure bill coming down even though its politically a challenge to do it. Bottom line is the Second Quarter earnings are going to start showing some uninspiring results. The question is when do they look through the windshield. The second part is fairly uncomplicated. When ppp drops out at the end of july will the u. S. Economy, the japanese economy, the chinese economy and will european economies improve. Imf painted a very robust picture for 2021. The chinese are doing better at an accelerating rate. So the Global Economy looks ok. U. S. Margins will be under pressure because of high cost. Tax rates are likely to be questioned for 2021. Corporate cash flows are not as good as they think. Companies are not buying stock back. Yesterday tmobile to buy softbanks ownership of their stock. And so on. Are seeing corporate issuances also putting the lid on the market. We are very optimistic about what we find. Francine how do you look at supply chains . Something happens in trade wars or countries are much more inward looking and it changes everything. Thats a great idea. The old concept of the 1930s where you look at companies with a microscope. We find them today. Hard to believe there are companies out there selling below cash value. The problem is they are not large. What do you do with financial engineering. You saw dell look at spinning off vmware. Tmobile and softbank in the united states, thats financial engineering. Dupont with its fragrances. Sayingu see companies lets try to make corporate love. And its politically not appropriate because Everyone Wants to not lose their champion to takeovers and then you are also seeing a lot of fraud. You had another one today and singapore. You had other companies. It reminds me of worldcom and enron 18 years ago. Gabelli, ive got to make a tuition payment to fordham and then i have to write a check to boston college. Education. Start thinking about helping out innercity schools. Tom ok. Mario gabelli, lets rip up the script right now. Is talking about education matters. Needthe fat cats like you to do to generate a jumpstart education experience in the poorer parts of each major city in this country . Whats the action plan . 25 years ago we started giving money to the south bronx educational fund. Been involved in innercity schools. We like to give back to the community in that fashion. The problem we have today even though we are working with zoom and team and those kinds of technology, how do i train individuals . How do i get them to learn about how to do research and independent judgment unless we can get them in one location . So those are the challenges. In terms of recruiting individuals we hired individuals from high school in the innercity. Thats a challenge today in terms of you can put them on mass transit to get to wherever we are located. We have professorships at tulane. Why should we not go to temple and morehouse and try to do Something Like that. Weve got to figure it out. Tom Mario Gabelli, thank you so much. See our interviews with lebron james across the Bloomberg Network today. Later today, love talking to her in davos. Stacy cunningham later today. Stay with us. This is bloomberg. Bloomberg surveillance. Lets get to the first word news. The coronavirus pandemic is racing through the u. S. Heartland setting records for hospitalization and forcing businesses to rethink their plans to reopen. Florida and texas each hit records for new daily cases yesterday. The virusl predicts will kill 180,000 americans by october. Joe biden will not officially accept the nomination in front of thousands of screaming delegates. The party has told delegates to stay home from the National Convention in milwaukee this summer. They will conduct their official business remotely because of pandemic. Biden will still make an acceptance speech but the audience will be much smaller. California voters will decide on affirmative action in november. They will vote whether to reverse a ban on race and gender preferences. One of eight states to outlaw affirmative action. And his Business Partner have launched media empire Spring Hill Company with a 100 million investment. He spoke to Bloomberg Businessweek about the company and the black lives Matter Movement and the protests against police brutality. People in the community, those are the real ones. Walkingle living and those streets and being racially profiled and judged are the ones that need to be heard and they are being heard right now. Its great to see. You can watch all of bloombergs this weeks conversation with lebron james on friday. Global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Tom it has been an extraordinary 48 hours for the nation. Politics,ome of our the voting on tuesday were liberals and progressives did that are then good. But also the silence coming out of 1600 pennsylvania avenue. The Vice President pushing optimism on the pandemic. For more as a president looking for a new path. Martin shanker has seen many president s look for new paths. , our chief now content officer. You have seen this before where a president has to recalibrate. How do you suggest President Trump will recalibrate . So far im not seeing any sign whatsoever that hes into recalibrate. He seems to every day be doubling down on his rather narrow base and unless he expands that base his prospects for reelection looked pretty dim especially in light of the New York Times poll this morning. Extraordinary particularly in the battleground states. There was the image of the president visiting the border wall. It was something almost out of the museum of modern art but dirt in the distance and the very high wall and the president looking over it. What wall does he have to climb to get his public statistics better . Are . Lling statistics that you are right. Of him stark contrast gazing at the wall when virus numbers are spiking higher. I think this virus has touched every single american and filled donald trump exhibits some understanding of what is really concerning americans, his poll numbers are probably not going to improve. Vonnie we saw changes announced by the convention but how does it actually change campaigning . With this new spike in cases, its going to really, the democrats are telling their delegates to plan to stay home. And thats going to be in stark contrast to what donald trump wants. He wants a packed arena in Jacksonville Florida which is now hotspot full of nonsocial distancing nonface mask republicans delegates. See a sharp contrast between how the democrats apply this campaign and how the republicans do it because thats what donald trump wants. So it will change. It will be much more virtual. Morninga story this that shows that joe biden is campaigning like an incumbent and donald trump is campaigning like hes the challenger. Its quite a stark difference between the two of them. Vonnie what does that mean . Donald trump could surprise us even if the polls are pointing to joe bidens popularity increasing . There has been speculation that hes going to revamp his Campaign Staff. Brett pascal is apparently under a lot of pressure after the debacle in arizona. Be a shakeupwould in his Campaign Staff and that could happen if these numbers dont change. You so much, marty schenker. Jason farpeak with the professor of nursing we talk and track covid19. This is bloomberg. Francine this is bloomberg surveillance. Bloomberg has developed a unique partnership with the leading authority on covid19. Johns hopkins has been at the forefront of the international response. Retail we bring you experts from public health, Infectious Disease and emergency paired news. Knowing us is Johns HopkinsUniversity Professor of nursing. Jason farley. Great to have you on the program. We see really worrying and huge numbers of infections rising in the u. S. , why is that . Economies opened to quickly . Opened in a way that certain people at risk . I think if we look at the s that are experiencing large increasing in cases, there were some nonpharmaceutical interventions that were rolled back quickly. Cases inre seeing is states that remained closed for longer have continued to decline and cases in places that opened earlier are really seeing these increases day after day. Francine what are the risk mitigating strategies we should be thinking about . Everyone needs to understand there is note absolute no risk other than staying home and avoiding contact. We have to recall that asymptomatic transmission to the days before symptom onset that a person can actively be transmitting the virus. Contactals in routine with others, politicians are one group, must be exceptionally diligent. Theink you saw with staffers preempting the Tulsa Campaign rally that were all infected. Six of them. Its really critical that politicians understand contact their staff and individuals around the because they are at great risk given the amount of contact they have with others. Its the same for any general citizen. Withu have lots of Contact People whose exposure status you dont know you ultimately are placing yourself at greater risk. Francine should people wear masks outside or only in Public Places . It depends. If you are outside, absolutely. Youre protecting other people. Its an act of altruism. Its not really to protect yourself. I think its really critical that this is an altruistic act. I wear the mask because im trying to protect you, not myself. When everyone does that it ultimately leads us to greater protection until the point where we have a vaccine or greater levels of herd immunity. To be evengoing possible with this virus and have limited the antibody response seems to be. Francine what percentage of the population needs to have herd immunity . Our team at hopkins has put out a National Report around how to correctly do these surveys but they are quite biased. We know the data is really convenient for the investigators trying to obtain that data. Out ans lets put facebook ad and have anyone with Internet Access who is not working come by and have an evaluation. What we really need is much more robust population level estimates. Some trickling in of that data but it is few and far between. Those estimates range variably depending on the samples and location. Studies that have followed populations over time thus far have really shown us that it changes markedly from each time point. Greater than 50 of the population to have some level of herd immunity. Thatbly even higher than in order to effectively stop transmission. Vonnie what do we know about these antibodies . Today actually protect you . Gainst the virus even if you are protected, can you still transmit the disease . Antibodies demonstrate that our immune system has responded to the virus. So importantly antibodies can demonstrate but may not demonstrate. What we are seeing in patients with severe infection. Maybe they need of hospitalization or mechanical ventilation. They have higher levels of a type of antibody called broadly quitelizing they are protected from reinfection but they may diminish quite quickly. The key thing now is how long they last. Our first case was in february and we are now into june. We really only have a six month window. What we really need to know is do people persist with antibody levels that are protect and for how long. Outcine be sure to check u. S. Go on the bloomberg. Tuning every day for an exclusive conversation with an expert look at covid19. Unlike a number of other countries, the fed is not going to be going negative with rates. Pointone knows at this for what earnings will begin 2020 or 2021. That initial shock effect from reopening, which is basically going from no activity to some activity, then i think you settle at levels where you dont really know where things are going. This is bloomberg keene,lance with tom and lisa abramowicz. Athan from our audience for our audience worldwide, good morning. Alongside tom keene, together with lisa abramowicz, im jonathan ferro. A massive outbreak is sweeping the state. Tom no question about it. Peter hotez leading