Small caps. Day fromw up 7 on the the march lows. Energy is now up. It is incredible, the risk rally. David unfortunately, we do ask you to repay your credit card. Is there any hesitation in the bond market because we are ready to go out with Something Like 3 trillion this quarter. Abigail the issuance is incredible, wondering whether or not there will be the demand. We do have a pullback for bonds, but nothing along the lines of what would be stunning to the market. One expert to join us for a bloomberg segment, saying from a technical standpoint it does look like bonds are set to drop. Whether or not that comes on a risk on mode where investors do not want bonds, or if there is something scarier where there is not demand remains to be seen. At some point we will have to pay for this, but right now jay powell is saying dont worry. Lets get out of the crisis. Investors are listening. David thank you so much for that report. That is Abigail Doolittle reporting. One of the things that may be encouraging equities is the report out of moderna that their candidate for a possible vaccine is encouraging in the early stages. We talked earlier today about the ceo about when they go to the next phase. We are finalizing the protocol for phase three, which is last Clinical Study before approval, which we are hoping to start in july of this year. Will be 7000 subjects across many countries. We are finalizing the protocol we speak and we are hoping thed we want to bring in man who covers the Healthcare Industry for us. He is drew armstrong. We all want this to work. But as i understand, it was a fairly small test, not even designed to figure out efficacy. It was mainly for safety . Drew this is good data and it has passed one of the early checkpoints, which is the small early safety study, it will not be the last look at safety. It does not give us a hint of efficacy. It is news you would want to hear. It tells us there are signs this does some of the right things in a test tube against the virus, that it create some kind of immune response, ill be at one that has not been tested in the albeit oneand it that is not been tested in the real world, and it has a safety protocol in line with other vaccines. Did waso be what it it showed it created antibodies. We are not convinced what those might do, right . Drew right. There are a couple of different subsets of things they are looking at. They are looking at did this vaccine create antibodies that go and bind to the virus . Those are called binding antibodies. It is not enough for the antibodies. Those are the reactive parts of the immune system that are created when you are infected with something. To they also neutralize the virus . Lots of caveats. It does appear to neutralize anybodys. The issue is this has not been put out in the thousands of people that will be needed to test this drug in the real world in properw it does reallife handtohand combat with the virus. We do not know that and we will not know that. We also do not know things like how long does this protection last. Is it effective in all groups of people . There are more Unanswered Questions than answers ones from data like this. And youill good news can see the market broadly reacting. On friday we heard from the president about this operation warp speed where they will try to creta vaccine by the end of the year. Effort haveerna anything to do with that . How does it fit warp speed . Drew warp speed is a catchall for a variety of government efforts that are ongoing. It is an umbrella that picks up pieces of things that have been in progress for a long time. The idea with warp speed is to help Companies Developing these partner with government and provide all of the resources they can and eliminate some overlap. It seems likely, and we know mode turner we know moderna has worked closely with the u. S. Government already, it will be part of that accelerated effort. If things continue to look good, that means producing some doses of the vaccine before you know whether or not they work. Set they areas planning on launching the second phase trial imminently and a phase three trial that would give us the final answers on the efficacy in july, with several thousand people. David finally, theres been a growing discussion about when someone gets the vaccine, whom will it be available to. The who has been meeting virtually and president xi said of china gets it, it will be available to everyone. If moderna comes up with vaccine, is it clear it will have to be able to everyone . Drew that is a fantastic question. One of the things policymakers will have to figure out is we will see batches of whatever line in the off the millions, but not enough for everyone to get this at once. What weve heard from most people is the first to get this will be Frontline Health care who are the first to get the infection as well as elderly vulnerable people. You can expect to see a phased rollout of this vaccine. I think theres a lot of pressure to make sure the vaccine is global, but there is a current of vaccine nationalism come in terms of economic protection, population protection, and International Prestige going on. Thank you so much for being with us. That is drew armstrong who is responsible for health care reporting for bloomberg. Coming up, out editor in chief matt winkler will join us to explain why the republicans should not be that worried about helping the blue states. That is coming up next on balance of power on Bloomberg Television and radio. David welcome back to balance of power on Bloomberg Television and radio. Time for first word news. We go to mark crumpton. Hek william barr has said does not expect the Justice Department to open a crew investigation into barack obama or joe biden despite plotting to do so by President Trump. The attorney general told reporters at a News Conference he will not allow the Justice Department to be used as a illegitimateum up investigations. Germany in early have agreed to back band for a Recovery Fund to help the european reunion whether the coronavirus pandemic. In a show of unity, Angela Merkel and Emmanuel Macron appeared together in a Virtual Press briefing today amid deep divisions over the Recovery Fund. The biggest obstacles have been bridging differences between richer and poorer nations. More than 108 Million People in northeast china are being plunged back into lockdown positions. A new and growing cluster of Coronavirus Infections has led to the abrupt reversal of the reopening. Train and bus service has been orderedpeople have been to stay quarantined. India recorded its biggest single day surgeon coronavirus cases today. Authorities are largely blaming the jump on the return of hundreds of thousands of Migrant Workers to indias villages after losing their jobs in indias population centers. India has had more than 96,000 cases, the most in a show. Or than 3000 people the most in asia. More than 3000 people have died. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. David thank you so much, mark. Senate Majority Leader Mitch Mcconnell warns of a possible blue state bailout, the attempt to get support for state and local governments. Bloombergs at her and her and she temer it is bloombergs editor and chief is looking at the facts. We welcome matt winkler to talk about his piece on the bloomberg. Give us a sense of what you found. Look we basically took a at every aspect of Economic Performance of blue states and red states if we go by the 2016 president ial elections where 30 states with voted for trump would be considered red, 20 that voted for hillary clinton, that would be blue. You can drum up on the bloomberg, gross domestic product, personal income, tax revenue, total employment, and the Labor Participation rate, not to mention the meanness of all bond market where blue states have been more coveted in their debt, that is they have outperformed red states in the past five years. Every single category of Economic Performance, the blue states have done better than the red states. I might add that on the Labor Participation rating, it actually went down in the past five years in the red states and went up dramatically in the past five years in the blue states, that people no matter where they were, they wanted a job and they got their job. David im not sure the bloomberg would show you this, but do we have any idea why that might be . Is it possible blue states tend to spend more money on their budgets and tax more and that is an investment that resounds to the benefit of the economy . Matt i think you have set it just right. Is an attitude or policy among democratic governors and legislatures to invest as much as they can in their people, whether it is health care, whether it is infrastructure, and they generally do that. The red states are tax averse and therefore their ability to raise revenue to support things Like Health Care and infrastructure is not nearly as robust. That goes back quite a ways. Policy. Lot to do with same time, Mitch Mcconnell and other republicans have a point where some of the pension obligations of the state. I went back and did research and pew came out with a study last july. It is interesting the states do the best and the worst. Some of the worst include new jersey and illinois, but also kentucky, mcconnells own state. The best include south dakota, tennessee, and wisconsin. It does not seem to break down naturally on red and blue lines. Matt on that very issue, unfunded pensions, for the most part, it is a kick the can down the road policy, whether it is blue or red. Having said that, rhode island, for decade was considered one of the worst, if not the worst for unfunded pension liability. The governor, first as treasurer, and that is governor, fixed it. The way she fixed it is she said we will tax truckers who are going through rhode island between new york and boston. It was a very unpopular tax, like most taxes, but it did make a big difference, and rhode island went from being in the bottom half of u. S. States and Economic Performance before she halflected to the top before her first term ended. She is not alone. Jerry brown did something similar. He simultaneously cut spending and raise taxes. Term ingot to his third 2011 as governor, he served four terms. When he got there, he did the that madehings california an ideal choice for investing. The proof of that is that in the credit default swap market, california outperformed every for theand every state next three or four for the next three or four years of through his third term. David thank you for being with us. That is bloomberg editorinchief of affairs, matt winkler with an important piece in the bloomberg. Coming up, would be talking with lloyd blankfein, former chairman and ceo of Goldman Sachs. That is coming up on balance of power on Bloomberg Television and radio. David welcome back to balance of power on Bloomberg Television and radio. Mark zuckerberg is speaking to the European Commissioner for internal markets. We will join that in progress. Looking forward, this is clearly going to be a very big economic recession and long what weovering are focusing on is helping Small Business around the world. There are more than 25 million Small Businesses. We have a presence online and reach people across facebook and instagram and whatsapp and messenger. A smaller set of those advertise, and that is what makes up our business. Small businesses are the vast majority of our business. We are very aligned with making sure Small Businesses can grow and thrive. Right now they need a few things to make sure they can survive. One is financial support. We launched a 100 million grams program thatants will provide grants to more than 30,000 Small Business around the world, including tried to provide financial support. Is through this period a lot of businesses are lying more and internet tools. A lot of businesses that previously had a physical storefront are coming online for the first time and a lot that had additional storefront before are now finding that is their primary way of selling stuff and reaching customers. We are working on a number of different tools to basically accelerate that. We have a big announcement coming up tomorrow where we have had longterm commerce tools we have been working on building and i did not want to preempt my announcement tomorrow by saying what it is now, but there are a lot of things we have been working on for a while, and since this crisis hit, ive been meeting with our Small BusinessCommerce Team every single day to make sure we can accelerate that work because it could be very helpful to a lot of Small Businesses that are getting to this period and thriving as they come out the other side to do more of their work online. There is certainly a lot of different fronts on this, but i think more business and more life will be conducted online coming out of this and we need to make sure the tools we have built are robust enough to support that and help support the economy and recovery. Phase, and most likely the beginning of the recovery phase from covid19 will coincide with the publication of new European Commission proposals on the regulation of online platforms. Before addressing specific subjects, i would like to relate the first question from the ience, which is addressed the question is the following. Platforms. On a wide range of activities, m social media to facilitating travel bookings. Do you think that regulations should very to take account of these different activities, and if so, how . You mentioned it. Is that we were working on this. It is clear we are working on this. Coming back to your question and back to what mark just said, it we are still describing a lot of habits changing. Online drastically during the crisis. Almost every Single Member state in europe. People are used to it. [indiscernible] when you start to do this, you will use it. It is true i wanted to come back to what we learned during the situation. Add is that we have to invent, we have to future. Ogether our we have to do this. We have been able to invent a way of working together during this period. , we just invented. We were in contact not every day but at least every week explaining the problem we had, finding solutions together. To be able to serve. Just being able to help. Without any other thing behind. That is for me extremely important because those platforms are playing a huge role today and tomorrow. If they want to continue to play these roles, they have to learn how to discuss with us, cooperate with us. Mark put it very well. Business. And your we appreciate your business. Who should adapt ourselves to you, but vice versa. This is the way it has. We are democratic. We are representing 515 Million People and we need to make sure own will continue with our democratic systems. Then we can regulate the platforms. David we have been listening to Mark Zuckerberg of facebook in conversation with the eu commissioner. You continue to listen to that. E< here we will be joined by lloyd blankfein, the man who led Goldman Sachs through the great financial crisis. This is bloomberg. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. David welcome back to balance of power on Bloomberg Television and radio. Im david westin. Blankfeinrs, lloyd served as the chairman and ceo of Goldman Sachs. We welcome them back to bloomberg. When i spoke to you at Goldman Sachs, you said you essentially assessed and managed risks. Do some assessment and management for us now in this crisis. Assessinght we be mis the risk, and mismanaging it . Lloyd there is a lot that is unknown, unknowable, and moreover, no one knows. You can dig and day, but currently, we is are not so much in the realm of forecasting but contingency planning. One of those contingencies you have to plan for it is the surprise. In my former life, surprises were almost always bad surprises. Something would go wrong, we were so big and extensive, there was nothing that can go bad in the world that would not affect us. At this moment, we are seeing that today. Somethingility of highly improbable happening could actually be good for the market. Somebody announces they are making progress on a vaccine. It is a funny situation. I i was watching the news and saw a flash, a surprise coming, im looking forward to hearing it, whereas before it was almost always negative. Be a it appears to difficult choice, on the one hand, Public Health, safety, and on the other hand, the economy. Do you think we are striking that balance more or less in the right way . Lloyd just on the predicate of that, that justification just juxtaposition is a little bit off. Right now, extreme poverty is a health risk, all the things that proceed from it, depression, drug addiction, suicide at an extreme. Asically, Life Expectancy this would be off of any of those charts. It is not just health versus the economy, it is the economy on both sides. Issuesway, the health may be more neutral than some think. Intent to flatten the curve was to stretch out the exposures that people would have so it did not overwhelm Health Care System. Is,fact of the matter unless we are going to hunker down until a vaccine comes up or the virus is obliterated from the face of the earth, which is too long to keep the country on welfare, eventually, people will go back. Where they go back, the infection rate goes up. We are just postponing the exposures and infections. With more time, we can deal better with it than at the beginning, but we are not going to avoid Health Problems from we want to unless freeze the economy for longer than anyone would want to contemplate. Is one of my questions. Whether on the health front or the economic front, extraordinary efforts are being made. Are we postponing what happens or are we changing what happens . If a vaccine appears and there was some positive news today they have to make sure it doesnt kill people, has to make sure it can be manufactured, distributed. The country cannot be on welfare for that long, even if it was magical. Theye postponing it, but are learning things about treating viruses, there are treatments that people are aware of, so there is some benefit to it. But not as huge as if there were a vaccine to make people comfortable. To a greater extent, we are postponing peoples exposure to it, and to some extent, eliminating the risk that would happen if the Health Care System was overwhelmed while people had it. In the long run, we have to contemplate people will go back to work, and no matter when you do it look at what happened to some of these asian countries. Highfiving because the virus exposures were way down. Notwithstanding that, the second they go back to work, it spikes up. When we go forward and look back future, sometime in the if we are going to go through that anyway, people will be critical that the official sector sacrificed more of the economy than they needed to, because of the end of the day, i think the exposures will be almost the same. For our bloomberg and Television Audiences worldwide, we are talking to lloyd blankfein. We have heard a lot from President Trump and fed chair jay powell. He has said that that will do whatever they need to to support the economy, but on the other hand, caution. This may be more difficult than we think. And even the possibility of longterm damage. How do you assess the longterm damage to the u. S. Economy over the longterm . Lloyd it depends on how long this goes on. It is easy to see what damage there could be. Certain businesses that come into contact with the public will go away, operating in tight margins anyway, that cannot wait afford to wait to be reopened. Some will be at a reduced level. Hat they cannot last sadly, they will go out of business. The economy is resilient, but it will sort out, but it will take time. The economy will change, but we comeesilient, and it will back. One of the things to consider is how long this goes on. The chairman of the Federal Reserve board has done and very job. An extraordinary there is no replacement for what people would have earned to keep it going, but one thing on my mind is how long we can sustain that. We have a 3 trillion grant. Congress has a grant, loans. Can we have another 3 trillion round in 10 weeks, another after that . At some point, even if we wanted to do that, would other outside investors, Central Banks around the world continue to support the debt . They are doing everything they could. They have been so quick off the block, but it cannot go on forever. Question raises the whether there might be a to the Financial System itself. That was the question when you were managing Goldman Sachs. It has not been much of a problem but now the fed is worrying about things like commercial real estate. Do you see any risk for the Financial System . Lloyd anyone that says there is no risk for the Financial System on the horizon is blind or crazy. Not talking as an insider now, observer, i know the Balance Sheet and liquidity of banks were extraordinary. I dont necessarily mean that as a compliment to the people running the banks. Legislation post the financial crisis, the way the federal for liquidity and safety, solvency, have been extraordinary. Banks have been well capitalized, and it has worked out pretty well. Most historical critics of the banks would have to acknowledge, they have been very liquid and safe. Can i contemplate something goes on for so long, massive defaults, all of that . Sure. But i would say on a list of 25 things to worry about, that should not be on the list at all, right now. David beyond the Financial System overall, our banks less attractive as an investment as they were . We see Berkshire Hathaway trimming back. Are they less attractive and investment given the crisis . Lloyd historically, banks have been a bellwether for the good and the ill external events. It is the chokepoint for the Financial System. People have bad credits, maybe they worry bank Balance Sheets are overstating because they have bad loans. That is always the concern, so they trade on lower multiples, but as i said, it looks to me, a lot of the assets of this it is bad for banks, loan growth is slow, you can worry about the loads on your Balance Sheet, at the same time, a lot of refinancing going on in the their, people adjusting portfolios, a lot more trading, opportunities in that part of the market. I dont know that every aspect of this has to be bad for banks. There issking me reality, the economy, and the markets. Ever since the financial markets, the markets have always had an arched eyebrow when approaching investment in banks. David how will we pay for all of this . You mention the trillions of dollars from congress and the fed. Fink whoree with larry says we should be increasing Corporate Tax rates . Larry kudlow says we should cut them to 10 . Are we going to have to increase our taxes at some point . Lloyd get some point, revenues will have to be raised. One of the most extraordinary things to me, to try to explain willing peopleow are, governments, foreign governmental institutions are, to hold u. S. Treasuries. Treasury fore u. S. O0 years at 60 basis points, t a country with deficits as wide and growing wider as they are right now. Now,onders, 10 years from when you turn those dollars to the lenders, are they going to be inflated, are people going to new to print money . Ordinarily, you would expect with the debt this high, people would want higher rates. This goes to the benefit of the u. S. Dollar being the reserve currency in which governments around the world have to hold their reserves. They buy and dollardenominated securities, but we should not let this go to our heads forever. I know there is a school of thought that says you can run deficits forever, but that only pertains while people are willing to finance. Who knows when that attitude changes, or when our investors decide they need to be compensated a lot higher for the risk they are taking. David when you are running Goldman Sachs, you spent a lot of time dealing with china. U. S. China relations are pretty rocky right now. Now, we are really blaming them for the virus. Do you see a possible permanent china relations, including delisting on our exchanges . Lloyd there are a lot of elements here. The overall relationship is becoming competitive. Somebody is not creating the competition. That competition is occurring because china is a rising power, the u. S. Is an established power, the chinese are outlawing their way into the space. That has happened a lot of times in history. Elbowing their way into the space. There is a lot of rhetoric, things could be a lot worse than they are now. This ty, we think of im sure we think of china differently than china thinks of china. We see a china with a gdp almost the size of ours, in some measures, the same, and yet, they have four times the population. The country about per capita, it is a poor developing country. If you think about the total of china, it is a fair competitor operating an hour scale of activity. China still has projects funded by the world bank as an emerging but they are the gross product of home country matters. If you are feeding the population, per capita matters. China feels a little more victimized. We feel they are not paying their fair share. The answer is, that is the perspective that has to be reconciled. That is still the most important relationship in the world. They have competed with us, unfairly in a lot of ways, like they areeel on the way up, but now we have to compete on a level footing. I understand their perspective, but we have to make that relationship work. I am not sad, i am glad in a way, that we put down the cudgel and are making them act in a way consistent that we would have to act in the world. I thought that was a little overdue and necessary, but preserving the relationship in a positive way will be essential for the world to come. Spent a career managing risk, a lot of risk right now. You may have some spare time on your hands now. Are you open to the opportunity to help a little bit . The Biden Campaign . We have an election coming up. Lloyd i would help anybody, given my schedule. I am invested in the world. At this point in my life, i get up in the morning, and im not firm,ing a particular worried about moving this or that around. The frankly worried about state of the nation, the american way of life. I worry about it because of what the disease is doing, and i worry about it because of what we are doing to ameliorate the effects of the disease. I worry about the disease and the cure at this time. I have a lot of sympathy for the decisionmakers. Very easy to be a critic on the sidelines. You will not be challenged later. I have sympathy for the decisionmakers, but that said, the actual decisions are important. If i could contribute who wouldnt, at this point . You so much, lloyd blankfein, chairman and ceo of Goldman Sachs for 12 years. Tomorrow, ill be talking with brian moynihan, chairman of bank of america. Coming up here, we have representatives dwight evans from the state of pennsylvania. David welcome back to balance of power on Bloomberg Television and radio. Im david westin. Of thented dwight evans venue represents the district in and around philadelphia. Congressman, walking. Thank you for joining us. It looks like a third of the cases are in pennsylvania. Tell us the situation in your home district. Right now, kind of waiting. System, red has a light, green light, blue light, that goes across the system. A lot of the Economic Impact along business but as well Public Health. Our hospitals have been taking a lot of weight, not as much as new york, but we have at our challenges. We are basically trying to figure out a way to deal with this pandemic. People are very much cooperating, trying to figure out the best way to handle it. Is there pressure within your constituency to get back to business, get back to work . A lot of people are out of work. No question, that is a factor. The larger factor is about the health issue. The issues around testing. That is a huge issue. People have real uncertainty about this virus. Testing is a huge issue. They are very much concerned about, do they go back to work, do they stay at home . They are somewhat torn. David where are you on the curve . Are the number of cases, deaths coming down in pennsylvania, specifically in your district . Rep. Evans it is sort of holding, i would say. Philadelphia more so than any other part of the state is greater than the region im in. We are in the southeast part of pennsylvania. Basically, the governor has gone from the western part of the state to the southeast with philadelphia. The numbers are greater in the southeast than they are in the western parts of the state. David democrats in the house of representatives proposed a heros act, the next level of relief. What would that do for your district . Rep. Evans that would be huge. Workers, that would be investment opportunities, the rebates would be huge. Our state and local government our State Government has a huge problem, Something Like 4 billion. Our city government, Something Like 700 million. Then we have our mass transit airport, and you are talking about a city with Something Like 25 poverty. You take the poverty and the pandemic, we have some real challenging times. But we have some good people. They understand this is no fault of anybody, but we will get through this. David your district, as i understand, has a substantial africanamerican population. We have seen in different states a disproportionate effect on africanamericans, hispanic americans, and native americans because of the work they do, proximity. What is the story in philadelphia . Rep. Evans you are correct when you say that. The Health Disparities has been a huge challenge. As a result, the governor has put together a Disparity Task force. Issuesly, some of those around health care are for real, things that we have to deal with. That is why, in terms of the heroes act, very important in terms of investment. For example, the investment we made an hospitals, investment in testing, tracing. All of those issues are very important in the heroes act. Another big issue is the issue around housing. Rentals, housing, all of that is crucial. Smallr thing is businesses. Small businesses are the backbone. There are a lot of africanamerican, latino businesses there. 30 to 40 may not make it back. We are trying to clear out how to stabilize the Small Businesses. Between the Small Businesses and the hospitals, they are very much a part of the engine of the economy of the southeast. Congressman, as we look at this proposal out of the democrats, some of the republicans seem to be in no big rush. Do you have a sense about whether the logjam will be broken, and when . I dont have any ideas but i think it is unfortunate. If you go by the chairman of the Federal Reserve when he said correctly, he understands how difficult it is, but these kinds of investment are needed. I dont think we can afford to wait or be patient. I told you already about the homelessness, the issue about food banks, things of that nature. I think we are at a critical point. Well with the other package. I dont think we have the luxury of waiting basin where the economy is. I agree with what the chairman of the Federal Reserve has said. The longer we wait, the more damaging it is to our economy. David you mentioned earlier packages have gone through. You think it is critical to have this next one as well. Tell, did theyan go to places in your district where help was needed . Ppp we well, the have to get some adjustments made to it. We were working with business organizations. We were trying to get to Small Businesses, make it more accountable. The system is basically driven by banks. It is still a work in progress. It was not perfect but they did something. Address thehave to Public Health issues. That will be in conjunction with the market. That is the only way that we can unless weis issue, address the Public Health issue. David thank you so much, congressman dwight evans, democrat of pennsylvania. That does it for the first hour of balance of power. We will continue on the radio, speaking with the former head of the cdcs immunization program, talking about the moderna vaccine. Im david westin. 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. Stocks are searching today with the s p 500 up more than 3 now. The index on track for his best game in a month. Coming on the heels of some encouraging news in the fight against the coronavirus pandemic. Saying anch moderna experimental vaccine showed promising signs and a small human trial. 24 now. E up more than a rebound in the oil markets, crude extending its rally as chinese demand bounces back. Lets get into the markets. The s p 500 up 86 points. 2950. That is a gain of 3