In the corporate world office cash and apologies for historic racism. Critics say people want more than just words and serious action is needed. Lets get you a look at the markets. We had a whipsaw session as these comments from jay powell really causing investors to take a step back and consider the amount of risk being put on the table with this record rally weve seen this year. We are seeing on the downside when it comes to trading in u. S. Futures. Down by 4 10 of 1 . Chicago futures, also pointing like a down stock when it comes to trading. Over in tokyo, i should say. In sydney, a downside of 1. 4 . Interestingly, we are seeing that strong rotation from gross into value stocks in the australian market. New zealand, on the downside of. 25 despite rough data that suggests credit card data for may saw a bounce in consumer spending. Story, back to our top the Federal Reserve sent the most dovish signal it could after they didnt. Make a policy change Kathleen Hays is here. She has powerful words from jay powell. What did he say, how was it backed up by his colleagues . Is an interesting bed jay powell, as far as i heard, we will keep the key rate near zero. It is clearly not back on track. The extra strong unemployment report which powell called the biggest prize ever made people wonder, could they start signaling pull away a little bit . When jay powell spoke, when the fed issued its policy statement, it was pretty clear. The fed is not going anywhere for a long time. Going to keep that key rate at near zero until the end of 2022. Lets listen to how powell described it at the press conference. We are not thinking about raising rates. We are not thinking about thinking about raising rates. What we are thinking about is providing support for this economy. We do think this will take some time. I think most forecasters believe that. Kathleen i think thats my new favorite phrase, im not even thinking about thinking about it. Lets look at something from the bloomberg terminal. Plot. The dot we have not seen any dots since the end of last year because the fed skipped them in march when they had emergency meetings to push it down to zero. This is amazing. You have got no change to the unemployment in 20, and then when you get out to the end of 2022, just to out of 17 see some kind of hike in rates. If you cannot have more dovish support from your colleagues on the fomc, i dont know what it would be. Theourse, jay powell said may jobs report sweeps 22 Million People unemployed. Thats why they will be aggressive. Ddp down 6. 5 . Rebounding 25 . You have until also unemployment, falling to nine prepare percent by the end of this year. Down to 6. 5 by the end of next year. That is reasonably optimistic. Powell said more needs to be done as the fed is going to be buying 80 billion worth of treasuries a month, 40 billion worth of mortgagebacked securities. Why . They need to increase their Bond Holdings to keep credit flowing, to businesses and consumers and to having smooth market functioning. Shery the question of racial inequality in the economy has really risen to the forefront in peoples minds. How does powell see feds role in this . Kathleen i would like to remand everybody that he has been clear that the pandemic has hurt those who can least afford it the most. Lowwage workers and proportionately, that has affected women, africanamericans, hispanic most. S the it is interesting that he went out of his way to put something in his prepared remarks. I think this is clear that the fed wants to make it obvious that yes, we too are concerned about racism. I speak for my colleagues when i say, theres no place at the Federal Reserve for racism. There should be no place for it in our society. I think jay powell talked about wealth inequality, income inequality, and talked about if you get caught on the wrong side skills,ng technological if you get caught on the wrong side of globalization and having the right kind of job to keep yours even as other people find they are falling behind, then you are in a tough place. Black and employment at 16. 8 in may white unemployment at 12. 4 . Still a big gap. Staying withen is us peerless get perspective from one of wall streets most accurate observers, ellen zentner. Great to have you with us. Why dont we start with unemployment numbers. The fed did not seem to be singing victory with the may jobs rebound. What is it telling us, the fact that they are increasing their holdings of mortgagebacked securities, as well as treasuries . You thatthink it shows they accurately believe that we are not out of the woods yet. We can be heartened by what we are seeing in the incoming data. It confirmed that there is a bottom in the economy in april. The economy is opening now. So we are seeing a bounce upward and all of the indicators, including states opening up. Businesses are bringing employees back. To some extent, if you are a policymaker, and you are focused on the outlook, what does this you . Term data tell it tells you that structurally, because the economy is opening up, we are bringing jobs back. You,es not ultimately tell does that mean we are on track for the Unemployment Rate forecast that they envisioned . It does not tell you anything about after businesses bring back all the workers in order to meet those requirements for the payroll protections paycheck protection program. Do they keep those workers . Thats a big question mark. When we look at six months from now as government stimulus is stating and businesses are starting to take a closer look at, does the underlying demand really support having brought back 100 of my payrolls . That is where the rubber hits the road. Not just because data is Getting Better because states are opening up. Shery given what we have seen with the Economic Projections showing gdp will not return to normal until at least 2022, does that put a vshaped recovery off the table . So, this is where economists get to antics. If you look if the fed were to give us a quarterly profile of growth, which we dont, we only get an annual profile, then you would see what looks like a ve. It is because you would see a very historically sharp drop into recession. And a big bounce out of it. When you are going to no activity, opening up to a little activity, and you annualize that, it looks v. It would look like a v even in the feds forecast. But what they are sending a message about is there could be dislocation fear, it take some time to work through. We should have a little bit of humility and our expectations of where the economy can go, account for the considerable uncertainty of where the economy could go. That is the reality that the markets needed. It is dangerous for them to get a little too fuzzy about what is going on with the data now just because it is a factor of us opening up. We need to be mindful of what growth looks like on the others have the pandemic. Kathleen i think that is what jay powell said. He put a lot of emphasis, he stressed many times, you still have over 20 Million People without jobs. That will take a long time to work down. I want to come back to this new rate hike, no moving up zero, to the end of 2022. How much is this job learning . Using your words, using Forward Guidance to be a form of stimulus for the markets, for Consumer Behavior and reassure them. And how much is it something that could change very quickly if powell and company, that we get lucky, and it does come back more, into does grow faster, more quickly, then is expected now . Wasn i think today, today a beautiful example of how powerful Forward Guidance can be. And you started at out started it out with that quote, we are not thinking about raising rates, we are not thinking about thinking about raising rates. There is nothing more forceful than that. Dot and, alongside the how you can manipulate Market Pricing just with your communication, which Forward Guidance is an important part, shows you how little room there is for Something Like guilt per capita that would artificially keep markets from pricing in rate hikes over the nearterm. You just dont need that when you have got this kind of guidance. It is really what we saw today. Said at some point, Forward Guidance may not be strong enough. What if the data starts running ahead . Communication is still important. If the data is coming in better than expected and markets start to bring forward those rate hike expectations, if the fed this is how they always operate. If the fed does not believe the market has it wrong, then there is no job for them to do. They let it lie and let those expectations bring expectations forward. If they think the market is getting ahead of itself, then you have to get out there and either pound the pavement and pushback on those expectations, or put in Something Like the caps. Kathleen markets are getting ahead of themselves. There were questions about this toward a jay powell p there will continue to be questions when you see stocks plunging ahead. The next thing you know, people are buying like crazy again. It is your concern, if any, about a stock market bubble, people getting ahead of themselves . . If the economy is still this weak and the fed has to signal that the markets are getting ahead of themselves, that is kind of selfdefeating potentially if you are trying to boost confidence and get things going by saying you will not raise rates forever. Ellen yeah. First of all, you are an economist by training just like me. You know that it is dangerous to try to glean from economists that there is a bubble in markets are not. We are very good about how to clean up the mess, we are very bad at saying whether there is an actual valuation justified. I know investors are saying look, 20 20 is a wash. We know 2020 is bad. We are looking ahead. And we are trying to price in what the world looks like ahead one year from now. Case, you are assuming the path of covid means we get a vaccine in the spring. That is when your year on year comps look start start looking very very but favorable. Truly, they discounted what they are looking at. When are they taking into account the proper risk that lingers out there . We could get unemployment down and it stalls because of the dislocation that is evident in the make in the labor market. I really cant say but if you are the fed, ultimately, this is something powell wanted to stress. When the Banking System is wellcapitalized, and you can absorb the bursting of bubbles better than in the past, then it is better to let the economy run youruse you are overarching duty is to get the labor market as tight as possible and get as many folks back to work as possible. And that is your number one priority. And it has to come at the extent of whatever equity market valuations are doing. Kathleen one thing an economist like you does very well is make forecasts. Forecast . Your is the fed going to be able to wait until the end of 2022 to raise rates . Do you think there is a chance that even by next year, the fed will start pulling back some of the stimulus . I certainly think there is a chance that let me preface this by saying, as luck would have it, we only forecast it through 2021. I can tell you through the end of last year, we do not expect the fed to hike rates. That said, at some point, with an Unemployment Rate that we were in the same mindset where we are getting down to around 6. 5 by the end of what of next year. It is above where we were precovid. But that, coupled with core inflation that we believe, nothing least of which is on easy comparison, getting that toward 2 , at least they should be considering communicating reducing the pace of purchases on the balance sheet, thinking about how they can draw that down and come to a basis on their balance sheet. They should be thinking about that on the back half of 2021. We also have an assumption other than a vaccine in the spring with an inflection of growth after that because we are shaking off the last vestige of covid19 as high density Service Sectors are allowed to come back. Strip look at my wrist about, cristobal, i dont think in that scenario, i dont think it would be such an out there function that the fed would already be considering when they might begin to hike rates. Well before that, they will start thinking about raising rates, and they will let us know that there that they are starting to think about raising rates. Powell will be adjusting his language well before that. As of now, based on their forecasts, they see it right now, they are so far from their dual mandate that based on what they think they know right now, there would be no reason to raise rates for the next several years. Shery thank you very much for that crystal ball assessment. And our thanks to Global Economics and policy editor hays. En we will hear from more voices on the fed and the impact on markets as we move through the day, including guests from nuances to securities, jp morgan, and others. Haidi still ahead, the backlash against brands of insensitive remarks on racism and police brutality. Boykintowns. Ren first up, Steve Mnuchins backing cart targeted stimulus to help businesses reopen after the bite the virus. We will get more details out of d. C. Next. This is bloomberg. Is bloomberg. Watchingou are daybreak asia. The oecd says the coronavirus pandemic may cause a global slump of 6 this year, even if infections continue to recede. It says the u. K. Will be hit harder than any other leading nation with a decline of 11. 5 in the last and lost two and a half million jobs. And a second wave could mean a worse worldwide contraction. In global gdpine that we foresee in 2020 is than any we have projected in the 60 years since the oecd was created. Says itmeanwhile, tokyo will simplify next years delayed Olympic Games to take the effect of the virus into account. Organizers say they and the ioc have agreed an approach to make the event more simple. They say more than 200 subjects have been identified as potential candidates for a more straightforward game. They declined to say how much expenditure would be saved in such a move, if any. North korea is ramping up pressure on the west with the state news saying the u. S. Is being told to stay out of in korea issues. The report comes amid rising tension between pyongyang and seoul. The north has refused to answer calls that their shared Liaison Office saying it has cut communications with the south. Oulsngton has rejected se calls of easing of sanctions on pyongyang. 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. Am karina mitchell. This is bloomberg. Shery treasury secretary Steven Mnuchin says the u. S. Needs additional fiscal stimulus, particularly for businesses struggling to reopen from virus related closures, even as he says the economy has started to recover. I think we are going to need legislationrtisan to put more money into the economy. As weve said, we dont want to rush into that because we want to be both careful at this point in seeing how the money is in the economy. And a lot of the money is still not in it. And two, i think we need to be more targeted at this point. Shery Emily Wilkins joins us now. I guess a key question is how much bipartisan agreement have we seen so far when it comes to what will go into the next package . Emily absolutely. That has been something that republicans and democrats have been trying to work out for weeks. Mnuchin gave a couple suggestions. He suggested federal assistance for small businesses, travel, detail and leisure businesses. And also potentially more cash for american families. He discouraged lawmakers from doing a Capital Gains tax. That is laying out a blueprint right there on what we might see. The big question for the next stimulus bill is will there be aid for state and local government . That is something democrats have been pushing for. Republicans have not yet fully been on board with. Haidi we are also hearing that President Trump is planning to resume campaign rallies. How much concern is assigned to worries and the materialization of a second wave of infections in parts of the country . Emily i think trump is going to be doing in these doing these country. Laces of the trump wants the economy to open up. He wants the Strong Economy again to run on. The fact that he is back out there, some people close to him are hoping that signals that things are going back to normal, that our economy is going to rebound. You have seen republicans make a very similar argument in congress for months. Theyve said we need to be back out there, we are also essential workers. And if we are having our constituents go back to work, we should be back to work as well. Shery of course, protests across the United States continue. We heard from George Floyds brother, speaking to congress. Take a listen first. Im tired. Im tired of paying. Pain you feel when you watch Something Like this. When you want your big brother, who you looked up to you for your whole life, die, die begging for his mom . Im here to ask you to make it stop. Stop the pain. Stop us from being tired. He called for help and he was ignored. Shery what is the latest on any Government Action in order to address some of the demands of the protesters . He gave a powerful and moving statement at the house judiciary committee. This is a committee that is going to be marking up the bill that House Democrats introduced earlier in the week that is meant to put certain restrictions at a National Level on policing. Republicans are planning on introducing their own bill. That is expected to be more favorable toward the police. At the same point, you have Senate Republicans who were working on their own bill. I think