Taylor even though we mentioned a little bit of a pullback today, the take a look at this chart i am showing inside my terminal. S phe top, the percent of 500 members trading above the average. The highest on record. At the bottom of the screen, the percent with rsi over 70. The highest since 1991. The general tone continues to be a slow grind higher. 500 toive inside the s p some individual movers. Macys has opened 450 stores, but that is not enough to give investors optimism. Suspendedy company their dividends and said they will not reopen at least 150 of their stores. We move up into some of the luxury names. Sales off 52 . They will keep north American Stores shut until july 15. Along with jp morgan, the financials mentioned earlier, selling pressure today, facinglarly the consumer banks. Short positions are back. This is data as of last week. Futures seeing the biggest net short positions since 2015. This is interesting because last week, the put to call ratio was the lowest ever. People were either hedging with options or thinking options were not the way to play it. It makes you wonder whether it is something more. Beh this market, that may the bears are back. Caroline people starting to assess the valuations we have hit, the record runs. No matter no wonder you are now starting to see. It still reminds you of the woeful state of the u. S. Economy and global economy. When you have the World Bank Warning us this will be the worst recession since world war ii. Amaine dont forget, relatively critical fed meeting at the moment. You are seeing buying in gold, buying and treasury. It does give you some sense that ab folks are trying to hedge their bets to get a little more clarity over what comes out of monetary policy. David, when you look ahead to tomorrow, the announcement, the news conference, what are you expecting. David the fed has done a great , driving a significant rally in credit spreads and equities during the course of that process. Tomorrow, i am looking to powell to put up some bands, some porters around what the fed will do going forward. The qe story has been one of they will do whatever they need to do, unlimited purchases, so on and so forth. I would expect powell will begin to telegraph that they have either chosen a monthly cadence topic ofhat is a conversation the effort for. There will come a time when the fed looks at the economy and says, we are not sure that the patient needs to be on life support anymore. Also hashat powell seen how the market works and how it has responded to this stimulus. He wants to avoid the potential downside. I think that this is going to involve into a highly linguistic experiment and the fed will increasingly use the rhetoric to try to manage markets. They established all of these facilities, the alphabet soup of the downturn. The fed has yet to buy a single individual corporate bond. They have bought some etfs but both of those Credit Facilities remain relatively unused. The credit spread, it is apparent how powerful a central bankers spoken word can be. Caroline jp morgan Asset ManagementGlobal Market strategist, david lebovitz, thank you for your time. Whatd you miss . Is up next where we will be talking about the protests with stephen baker. This is bloomberg. Caroline from bloomberg World Headquarters in new york, i am caroline hyde. Romaine this is what you missed. Caroline down day for the s p and dow jones. We lower on the year. The nasdaq 11 higher for the year. Apple its further highs. The protests continue on and democrats in washington look to create concrete legal changes in response to nationwide restrictions for Racial Justice and police brutality. Jobs plummet in april, reminding us of the poor economic picture. Taylor, you have got a look at the all important fed decision. Taylor i specifically picked a chart that was still messing. It highlights how much the fed has jumped into this market. 7 trillion Balance Sheet. Thanks to them, they have also pushed up stocks to almost 40 since the market bottomed out. All is well, right . Not particularly. Our next guest, tim julie tim dewey, joins us from the university of oregon. Enough . Fed not done fx i think the fiscal tim i think the fiscal stimulus is important to creating income in the second half of this year. We do not want to dropped off too quickly so they have to create a fiscal cliff and respond to it with a new set of tools. To account for the possibility. Stimulus, wefiscal heard from Mick Mulvaney a little bit earlier, it is going with regards to what powell and company can do further here, is there any ability that they have in their proverbial toolbox to provide an economic floor, not necessarily an asset price floor or Financial Market floor, but a floor for the economy that could provide a springboard to the economy. This is a very interesting question. Certainly, we think the fed has or capacity in the toolkit. Managing the shortterm path of interest rates. Talk about yield curve control. Things, the question for us, to what extent those will be effective. A situation right now where we are kind of still struggling with the aftermath of the pandemic. The economy really has not got its feet under it right now. In that zone, i am not sure that the fed can really push on levers in the shortterm that can do a lot in the economy. Theye longer term, i think have more to work with. I think it is going to happen that the federal government is going to come through them policy. Caroline how important does that become if we do see a second wave . Are you concerned about that . Because the market seems to be ignoring it. Tim i am concerned about a second wave. One of the issues one of the reasons the market might be ignoring this is i think the lockdowns as we saw are probably behind us. I am not confident that we will lockdownle nationwide again. We will probably see more targeted approaches to whatever the second wave is. I think it is clear what is going on is that the economy has to learn and grow its way around the virus at this point. Another reason why we one that fiscal support in the background. Duy, great to gain perspective. Bloomberg columnist and university of oregon professor. Coming up next, some of the policy choices next there choices out there to address police violence. Steven pinker will have some thoughts. This is bloomberg. Mberg. What you saw over four weeks from mid march to mid april, the fed added to Balance Sheet to trillion dollars. To 7lion to 4 trillion trillion. I think what comes out of tomorrow is they will slow down the pace to about 100 billion per month, coming down from 2 trillion per month. The markets have done their job by normalizing. Fixedquidity of that has the liquidity in the system. Tomorrow, we will get more violence. More guidance. Of course, you conduct about the yield curve. The commentsost of will be around the fundamentals in addition to monetary policy. The fundamentals is really all about jobs and gdp. We have had a bunch of programs aiming to help companies and may be your job for you in some ways. The default right now is about 4 . What happens next . Do we get another leg lower . Do we get more fallen angels . That is a good question. When we spoke last comedy highyield market was 12 , now 6 . 50 billion coming into markets like mutual funds, etfs, and others. Record inflows. With that, the markets feel a lot that her. Below that market and below the surface are these undercurrents you are talking about. Though the markets are somewhat healed now, the real economy is not. There are a lot of problems brewing. What do we expect with default rates . What we have recorded at earth on, since midmarch, 60 bankruptcies in the United States totaling about 100 billion. 400ink that will grow to billion. 18 cumulative, which takes you to an annual default rate of about 10. Before this is all over, the cumulative rate, four times the 4. 5 we have already seen, 18 . It relates to downgrades downgrades are coming ferociously. Close to 30 downgrades for every upgrade by moodys, s p, and rating agencies. That 20, 30 to one ratio is so much greater than what we saw in the financial crisis. In terms of fallen angels, there has been about 200 billion. Not quite, about 185 billion thus far. Investment grade, we think that number grows to 400 billion as this plays out over the next year, year and a half. What is really ailing in these companies is really revenue and ebitda. Markets should improve because the liquidity gap has been healed in a very big way. Trillion gdp. 21 to fed has added 3 trillion its Balance Sheet. A 21 trillion gdp. If you think about it that way, that is 28 . On the bankruptcies for a second, will that be the liabilities on the Balance Sheet or what will that be . In aggregate, we think it is the 400 billion. It is currently 100 billion. We think it is a fourfold increase from here. Romaine we were just listening to bruce richards, speaking a little bit earlier on bloomberg tv. We want to turn to the events of the past six months, from the return of the covid19 crisis to the latest social unrest in the u. S. Our next guest has researched and written extensively about the progress in society and tugofwars that sometimes threaten our advancement. Steven pinker joining us now. Great to have you here on this program. We have been spending time over the past few weeks talking about what some looked at as i guess unmitigated risk in our society. At the same time, you have a Financial Market and even folks in the real economy seeing unprecedented opportunity. When you start to square the circle between some of the optimism and pessimism out there, what is the thread that keeps it altogether . Our perception of the world if it is driven by news is bound to be overly pessimistic. News is a nonrandom sample of the worst things taking place over the entire planet on any given day. It is inherently biased toward the negative, not only because we all have a lurid fascination with the negative. The journalistic cliche, if it bleeds, it leads. But also, if you are covering something that happens suddenly, it is biased toward the negative. Bad things can happen quickly. It is easy to destroy something. That could be a shooting, a war, a terror attack. Good things either consist of nothing happening, or things that built up a few Percentage Points at a time and can compound, but fall below the radar of journalism. There is never a thursday in october where the whole world gets richer. We tend to underestimate progress. I think people tend to maybe not understand why progress has taken place. They often think, if it occurs at all, it is some kind of magical escalator that makes everything better and better automatically. It could not be that. That would be magic. Instead, it is people solving problems. And problems are inevitable. Endemics can always happen. But, over time, we get that are in better at solving the problems that we do phase. Course bad that of news can happen quickly. Can progress happen quickly . For years, we have seen little to no progress when it comes to the inequality in the United States. We are seeing a very slow burn in terms of what is the pandemic. Can we see, from negativity, optimism . Protests in the streets, the art that is felt in terms of the negative news flow and horrendous death of george floyd . Steven sometimes, it requires being more of a more aid oriented, more statistics oriented, seeing graphs that you extreme poverty has plunged over the last 30 years worldwide, that more and more people can afford the necessities and luxuries of life. Unfortunately, they tend not to happen suddenly enough to make a headline. Occasionally, something good happens very quickly. Perhaps the fall of the berlin wall. The proof of the efficacy and safety of the polio vaccine in the 1960s. In the 1950s. Lets say, if there was a breakthrough for covid, that could start that could count as a sudden good thing. But there often tend to be reforms and improvements whose payoff only comes gradually. So we are apt to miss. A lot of people dont know that the clean air and clean water act of 1970 has led to a 60 reduction in the rate of pollution in the United States. It took years. Other social programs have led to a huge reduction in poverty among the elderly. Even that black poverty has declined steadily since the 1960s, although it is still shockingly high but much better than it used to be. That racism is in decline. Again, it does not happen on a friday in february. It creeps up. That is why i have argued that to understand the world you cant let your impressions just be driven by headlines. Because you will get a nonrandom sample of the worst things that take place. Anecdotally, there is no doubt about it. Anyone who is alive today can look to what their parents went through work their grandparents and sort of dry line from their struggles to where they are today, which is definitely on a much better platform. When we look at the theories out there, the theories you put forth in your book like the blank slate, one of my colleagues, john authers, gave me a book a while ago, which talks about this general idea of thinking a little more optimistically. This idea that progress does come in increments. But there is also this idea that how people feel at the end of the day does end up having a tremendous impact on how they live and what their general status is. How do you bridge that gap between may be what they should be thinking and what the realities are for them . I try to tell a story with graphs. Roseland more effectively than i did. He called his book fact fullness. Generally, you do not want to be optimistic in the sense of just expecting things work out. Identify ao Robust Public Health infrastructure, the best science. Pandemics, he warned about. He died a couple of years before the current pandemic, but he was not so optimistic to say that this cant happen. Quite the contrary. Was snappedt ebola out before it became a global pandemic. General aren killing fewer and fewer kids every year. So, progress is possible but it is not inevitable. It only takes place if we are good scientists, good humanitarians. Caroline professor stephen pinker, i wish we had more time. Coming up, the future of fitness. Virtual workouts are booming as a result of the pandemic but will it out last quarantine . This is bloomberg. Caroline the pandemic has forced many people to change their daily routines, including how they work out, which led to a boom in virtual exercising. Well, real exercising, but virtually done. Will it be the future of fitness . Lets ask nate forster, ceo of neou, a fitness platform with some incredible statistics. 100plus studios and trainers. 1900plus workout classes. I have loved working out at home. The competition between my husband and i is real. But when i speak to colleagues here, they cant wait to get and workoutreal gym routine. How will you ensure that the retention rate is remaining high . Nate i think it is a key point in looking at the future of that old fitness and how we Work Together with the big brick and mortar business. I think we actually work well. What you will see is a lot of these brickandmortar businesses want more of the ability to consider to munich it with the consumer. When things start to open back up and the consumer becomes confident and it is a positive experience for them to get back in the gym, they probably wont want to go every day. If they were going four days a week, now they will probably just want to go two or three days a week. What has happened with covid19 is people have realized they can get a real workout at home. These bigbox gyms realize they need to have a digital presence. Digital and brickandmortar will work well together. It will help people supplement their fitness and fit more wellness into their life. Romaine is the idea here that you will try to bring in more fitness folks to lead different classes, or is the idea that it all sort of gets created out of . Our own wheelhouse nate we are a true marketplace. We are helping thousands of trainers, gym owners have a Digital Business and connect them to the consumer. The way that we do that currently is we do shoot all the content in new york city. We have 20,000 square feet on 5th avenue. What happens in the studio, the programming, the brand, the ip, that is there. But the quality of the content, the production, we handle all of that to make sure the consumer has a great experience. Risk thats the real some of those folks creating the content can just leave, go to another platform, youtube or a social media platforms, and may beget the same sort of traction from their Customer Base . Nate absolutely. We have seen through covid19 that using zoom, instagram life, even youtube was more apparent. It was an easy tool. We know that when gyms open back up, a lot of the consumers are going to go back into the brick and mortar. Before covid19, digital at home fitness was growing tremendously. On zoom, onappening instagram life, because those User Experiences are not great. You are not really creating that community aspect. Neou that brings consumers together, gives great quality, allows us to separate ourselves from the zoom. We do know that the consumer wants great Quality Content and a great User Experience to stick around. They may do that content class once or twice but that can get boring, difficult to filter, how do i know if i have a good instructor or bad instructor. With neou, you know what you will get is really good. We are really curating the content and making sure the experience is good. Caroline what is the most popular ones being downloaded at the moment . Nate i think boot camp will always be one of the most popular. It is that high intensity training. You get some lifting in, get your heart rate up, and you have a lot of fun. We do see dance being popular. Even things like toning and sculpting. When covid19 hit, we saw a lot more people staying at home and working on. Finder great point that we in Digital Fitness is that people like different things. The consumer loves to do a yoga class, boot camp class, then a dance class. Get like to jump around and these different experiences. We have all these different options, so we know the consumer is looking for that. Romaine like to keep it mixed up. Great to talk to you. Neou i