Transcripts For BLOOMBERG Bloomberg Markets Balance Of Power 20240713

Plus and russia signaled they want to try to cut output to help restore some balance going on at least on the supplyside of things. So crude of course having a pretty good start to the second quarter. I do want to flip up the board and fold it over into some analysis we heard from muhammad el 5 arian between the risks of the high yield market and investment bond market. He said beware of fallen angels. Theres a risk of some of these triple credits being downgraded to junk. One of the biggest risks is it spikes way above the feds tolerance. You buy what the fed is buying but becareful of these fallen angels and we saw just a slew of those in the last week and i think strategists are arguing it really could get a lot worse from here. David . 12340e9 taylor this is Bloomberg Markets balance of power. Earlier we did speak to larry kudlow, the economic counselor director. Lets listen in to what he had o say. Lets listen in to larry kudlow. Lets take a look at some of lets get a check on what youre seeing in the markets. As you can see, were off to own the lowest of the session. Down about 1. 5 or so. You can see the lows of the ession, lost 1. 5 or so. No one wants to be long going into the weekend. You have new york as coming out reporting some of the biggest oneday jumps. We are having some technical difficulties here. We are hearing from the National Economic Council Director larry kudlow. Lets listen in to him. Larry the president has been touch on the phone with the m. B. S. And saudi arabia and putin in russia and has been on the phone several times. Other people in the administration have been talking to their counterparts in both of those countries. So we do that independently in americas interest. We dont have to go to the opec meeting. The president told me yesterday and he did subsequently tweet this out that he believes that russia and saudi arabia will move away from their quibbling or argument and will allow Market Forces to dominate and instead of loading up the markets that are already oversupplied, that they will pull back. We will see how that turns out. The president said that oil prices have gone up quite a bit, 7 or 8 since that statement. I see no reason why these discussions with President Trump and putin and m. B. S. Will not bear fruit. I think they will. I think flooding the market with oil on top of the pandemic which has Crushed Aggregate demand was a very, very poor decision by both of those countries. But i think the president s negotiations will bear fruit. Will the United States be part of those production cuts . Larry well, look, our oil, we dont dictate our oil policies to our oil and gas sectors. Theyre smart businesses. The u. S. Is still the Number One Energy producer in the world. And we expect to remain so. Weve taken a number of policies to open the door and permit that to happen. We dont dictate. I think as you would guess, oil companies, seeing a decline in price are going to pull back in production. I think thats just common business sense. But we dont dictate those decisions. The government doesnt dictate those decisions. A final question, just to jump in. You have a busy morning, i appreciate that. As a final question, on a day when these Small Business loans are going down, on a day where americans are struggling to pay the bills, can you communicate to a broader audience to why theres such a big focus on the oil market, meeting with Oil Producers today . Larry well, look, first of all, we have im looking forward to the meetings today with the Oil Producers. I myself have done a number of Conference Calls with the oil and Overall Energy sectors. You know, let me just put this insert this, the degree of public and private, government and private partnership here is unparalleled. Weve worked with every industry, every industry, and the president has seen them in person or done Conference Calls and the rest of us have done Conference Calls. Point number one. Point number two, energy is obviously a key part of our economy and it was a key part of the tremendous Economic Growth we had in recent years before it was interrupted by this pandemic. So its important. Motorists, people who get heating fuel, gasoline prices, all that is very key parts of american life. So we always take an interest. I will say this regarding any occlusion attempts with opec that seem to be doing damage to american interests is something President Trump will get engaged with right away to protect the American Economy is what were doing here. We talk about paycheck protection for Small Businesses and to avoid layoffs, this is just general economic energy. We have to stand up for american interests and what the president has done. Energy is a key part of the economy. So to me an american operation is what were concerned about. Taylor youve been listening to larry kudlow, the National Economic Council Director. Were working to get david westen back with us as well. We have more next. This is bloomberg. Dd dd taylor its jobs day here in the United States and the country lost 700,000 last month even before many of the lockdowns around the country went into effect. Im now here with our Bloomberg Economics policy correspondent Michael Mckey. Michael, what was the initial reaction because this was a lot worse than most economists on the street had even predicted. Michael its been funny because the markets basically looked at this and went yep. Were surprised it came so early but that depth of the cuts is no surprise and this is only an appetizer for whats going to happen in april. I dont want to call it an appetizer because its going to be horrendous and see tremendous losses. Ive seen early forecasts that range between 10 million and 20 million. Weve never had anything like that in the past. And its going just going to be crazy. Most traders are telling me, im not even going to trade this. Im not even going to worry about the economic data. I know its bad, i know its terrible and hoping its temporary so theres no reason to respond to each individual data point. Taylor its hard to understand how economists can forecast because like you said, its unprecedented, we heard calls for 5 unemployment, 10 unemployment, 20 unemployment. Is there a consensus on wall street when we get to april, for example . Michael theres sort of a consensus on the Unemployment Rate in that you can experhaps late out from the jobless claims numbers and do math on it. You have to fudge a little bit because there are people who are unemployed who will not be claiming jobless benefits because they think theyre not eligible or dont get around to it. Theres also the aspect if the Lending Program in theory starts today, the Paycheck Protection Program gets in place and they can put people back on their payrolls, that can take some of the employment out and youre looking anywhere between 10 and 15 unemployment in the april report just based on the numbers we have so far. Well see what happens with jobless claims through the rest of the month. The overall payroll numbers, who knows. Thats why the dispersion is so broad between 10 million and 20 million and automated models doing this and theres no way to guess doing it. Taylor the Real Time Data perhaps are these monthly reports. Michael thats what everyone is reporting, the real time number of people who have been laid off and even those are distorted because we dont know how many people havent been able to file because their local office is overwhelmed and we dont know how quickly the states are being able to ocess these we had 200,000 jobless claims basically and states put off modernizing their systems and let a lot of people go and didnt need extra bodies to process all these so theyre completely overwhelmed. You look at some states like new york reporting very low numbers compared to others and youve got to figure thats just because they cant handle it and were going to get this deluge in coming weeks. Taylor what are we hearing about the Small Business owns that were affected on midnight on friday and you heard banks say there was some confusion and we heard its been up and running in record time and only took a week but still there are i think a lot of concerns about Small Businesses being able to go to the banks and actually get loans. What is the execution of all of that looking like . Michael right now its not looking good but based on anecdotal reports and we dont have any kind of overall look at how its going but going into this, a lot of Small Business people and of course reporters following up on what they were saying were reporting that banks were having trouble getting set up in part because they didnt have complete instructions from treasury in the Small Business administration and in part because there were Unanswered Questions like if somebody commits fraud, who is on the hook for that . If somebody takes out a loan that doesnt deserve it, does the bank have to pay it back or does the federal government have to pay it back . Also questions about how much additional lending banks will be allowed to do under the federal regulation. All that had to be worked out. Part of the problem is that the Treasury Department and the administration has come out with some sort of artificial deadline and we understand why and theres a lot of pain because they rehave to get it out there quickly and it will run by friday and youve got to make it run by friday because everybody is waiting for it to run by friday. And i could have told you this wasnt going to work immediately. Anybody could tell you. Something this complex is going to go through a lot of problems and perhaps the best example of this was obamacare when they first rolled out obamacare back in 2010, the website, you remember crashed, everybody had all kinds of problems and everybody said this is a big failure. But then it got up and it got running and it got working and now people think of it as a big success. Thats probably whats going to happen here. Give it a few days for the kinks to be worked out. The banks want to make this work. They just have to have the right guidance and have to have enough times to get their systems programmed and get everything in a row. So it does work. Taylor i want Michael Mckey to stay with me and in the meantime want to bring in Michelle Meyer, head of u. S. Economics at bank of america securities. Whats your initial take on the unemployment numbers we got this morning. Is it really just the beginning of what is going to be a long tough road ahead . Michelle yeah, i think thats exactly right. It will be quite a challenging road ahead as michael noted. So significant job loss in march, and what stood out to us is that the survey period is the pay period the 129 of the month before a lot of the government lockdown measures intent into place. And there was also a bit of a disconnect between the Establishment Survey which gives you the payroll numbers versus the Household Survey that gives you what individuals are saying. When you look at the Household Survey, what individuals are saying, theyre saying that theres been a pretty extreme number of job cuts that happen in the beginning of march, so temps layoffs were very high and people reporting that they were unemployed were very high as well. Theres more to come. This is just the very beginning. But it does highlight the severity of this downturn. Michael michelle, its mike. You put out a note after the jobs report went out that said you expect 16 million to 20 Million People will lose jobs over the next couple months. I cant let you get away with a couple months. Can you give me an idea what you think april is going to look like and how youre coming up with numbers in this kind of model fantasy world. Michelle in our view the bulk of the weakness will be in april. Heavily concentrated in april with some residual declines in may. And the way we come up with it is really using the jobless claims figures. As you noted before, you have to make assumptions for the people reporting for jobless claims that arent necessarily going to be officially unemployed. Theres different surveys that we have to account for in measurement complications. So taking all of that into consideration, you can extrapolate forward and come up with a sense of total amount of job loss. And again, it looks to be quite significant. And it shows you how big of a shock this is and how unprecedented this is. Parts of the economy were put into hibernation all at once. And as a result of that, youre seeing severely large changes in economic output and jobs. You know, think about how all of these time series charts are going to be adjusted. Theyre all just level setting right now in a way weve never seen before. Taylor michelle, im really wondering how much of the job losses could be permanent. The longer this goes on, i think the more worried businesses get, the more worried consumers get. What is the impact of a lot of these jobs that are lost dont come back . Michelle there is quite a lot of concern about that, and i think that is the right question to ask because we can do the estimates in terms of people who are temporarily unemployed because businesses are shutting down and assume, ok, is it once they are cleared they can open back up, and a lot of these people come back to work but not all. You know, you have to imagine that there will be a lot of friction in terms of being able to hire back if people are out of the work force for a few months, it becomes you know, they become a little bit detached. Businesses, once they do open, will probably be thinking what this new normal looks like, how many workers do they need, what kind of workers do they need, how much are they willing to pay . No, its not going to be the case that you just flip a switch and all of a sudden everybody who was employed goes back to work at the same pay. It will be a lot more challenging than that especially the longer this persists. Michael let me ask you a question ive been asked and dont know if you have a good answer but you have a lot of analysts in touch with various businesses around the country. People are wondering how many people are actually able to work at home . What percentage of the labor force is stuck because they cant get out to do their jobs and what percentage might be working . Michelle so you can get a good sense of that actually by looking at the industry level jobs numbers. So if you break down the jobs figures into the types of jobs available, think about leisure and hospitality, they cannot work from home. Retail trades, the majority of those workers also cant work from home. And the transportation workers cant. So you can actually get a decent sense of that share. And by our estimates, you know, about 25 or so would have a very hard time working from home or are unable to work from home. And then beyond that, you know, the efficiency level of people working from home will vary depending on what industry theyre in. Taylor michelle, i was asking mike this question earlier about banks trying to roll out the Small Business loans today that went into effect at midnight. Theres been a lot of concern from some of the banks about how to execute this, how to implement this. Do you have any idea, and we know it was put into place in record time and so you want to give credit where credit is due but do you have any sense of if this thing doesnt roll out in the next few days what the long term implications of that could be given these Small Businesses frankly need cash more so than the large corporations at this point. Michelle one thing is very, very clear is that the goal of policymakers right now is to get credit to flow through the economy, both the Financial System which the fed is very focused on and also the real economy which congress and washington is focused on more broadly. So the direction of this policy is absolutely right to try to get funds where they need to be, especially with the purposes of maintaining payrolls. But there is of course the question of how quickly that happens, the dollar amount and all of that will just have to wait to see how it plays out in the economic data. Mike you came up as a third baseman, actually. You came up as a housing specialist, so i want to ask you a question about housing in this whole thing and the rescue package. There was nothing in there for servicers and if i dont pay my mortgage then the servicer in theory is responsible to pay the investors. Whats going to happen to the Housing Market . Are we worried we might get a freezeup here . Michelle, i the one thing i would say about housing this time around relative to the prior cycle is that the fundamentals heading in are so much better. You know, if you look at average loan size, its been larger. People have more equity in their home, so youre not going to have the same risks around defaults or foreclosures because negative equity is a necessary condition to default, right . If people have a greater buffer, theyll be able to withstand that and stay in their homes a bit longer. So the fact that leverage was lower i think is really encouraging. The fact that you didnt have excess building is another really encouraging factor in the last cycle. You had a whole lot of stock that was going to be forced into vacancy very quickly. You dont have it around inventories. I think the fundamentals for housing are much more favorable than it was the last cycle. That said, of course housing is vulnerable when you have a big economic recession. If theres income loss, theres going to be challenges in terms of servicing debt. So well have to see how that plays out. I do think its a very different backdrop today than it was in the 2008 cycle. Taylor michelle, just a final question here, whats the biggest risk you see in all of your Economic Analysis . Michelle so to me the real focus is not necessarily about quantifying the size of the downturn. I think we all can do some sophisticated exercises or less sophisticated exercises in terms of how big a cut we might see. The big question is what happens next . What will this recovery look like . What are the structural changes in the economy as a result of this . Which industries might look totally different when this is all said and done . So i think thats going to be the really interesting story going forward, you know, how do we come out of this and what are the permanent scars as a result because there will be. Taylor our thank you there to Michelle Meyer of bank of america securities. And coming up next, well talk with senator gary peters of michigan about the toll the coronavirus is taking on people of his state. This is balance of power on bloomberg tv and radio. Taylor this is balance of power on Bloomberg Television and radio. Im taylor riggs. The whole world is changing because of the coronavirus, but for raytheon technologies, it is changing for a second reason as well. As it emerges from a new company today, coming out of the merger between raytheon and united technologies. We welcome the chairman of raytheon technologies. Thank you for joining us. I want to get your initial thoughts on now whether is a good time to be completing the merger, how you feel about it . First of all, thanks for having me on. I am the ceo. Dr. Kennedy will remain the chairman. Time, aterrible terrible time in the country and in the world, with what is happening with the covid19 rationale to the put these businesses together was to create an aerospace and powerhouse,nology to companies that were strong and commercial aerospace, military defense side of the business, and combine our businesses and importantly, every engineering talent, to provide Net Generation solutions. Bad time . Sure. But a great time to get working together to figure out what is next. Soe the question is not much what is next, but when. You are big in aerospace, but nobody is flying, nobody wants airplanes. When can you get back to being able to make money on these things, produce . The 64,000s question and i dont have a specific answer for you. Having lived through the collapse of air traffic after 9 11, after seeing the declines in 2008, 2009, all i know with certainty is it will come back at some point. We see in china today Industrial Production is picking up, but people are still reluctant to get on airplanes. Departures are down 60 even with production coming back. My own view, you will not see it recover until people feel it is safe to fly. That means the covid pandemic vaccine peak, trough, a put in place, and people feel safe. How long is that . Probably not this year. But things will get better, and we are here for the long haul. Have lifecycles of 30, 40 years. We have engines out there flying forever. We will make sure we are wellpositioned let me come out of this, to be stronger, ready for the next generation of aircraft. Taylor more importantly turned his times in an economic downturn, there are discussions about cost cuts, trying to reduce the inefficiencies. Are you seeing any shortterm cost cuts as you are now evaluating the merger, trying to plan and save any cash flow you have, as we look to be entering a downturn . As you think about the two companies coming together, obviously, liquidity is the first question asked. We have about 7 million of cash, access to 5 billion in credit facilities. So we are in good position. Two thirds of our business this year is in the defense space, 70 billion backlog there. Plenty of work to do there. Three weeks ago, we started on the commercial side, and they both have big military businesses, but on commercial aerospace, we have cut back on spending, reducing capital expenditures, engineering, all of those things that run the playbook. With the merger today, we are also looking for ways to move production facilities, production folks, engineering folks, to work on the raytheon programs. Witheon ended last year another good first quarter, so there is lots of work to make up that backlog. We are going to cut costs on the commercial side, just like you would expect, but we are doing what we can to protect the workforce in the short term. As i said before, we will come out of this. Having a great workforce is of paramount importance. There is a pot of moneys out there for industries important to national defense, you certainly qualify. Are you going to apply for any loans from the government . We have been studying the liquidity of the combined companies, but given the cash side, thethe defense cash on the balance sheet, credit facilities, i dont think there is any need. Maybe the one thing we should mention is i know that we will cut back on Share Buybacks this year. We still believe we can have a strong dividend. It is a testament to the fact that the defense side of our business is so strong, cash flows are so good, we will power through this. Are you suspending Share Buybacks for the rest of the year . Greg i cannot tell you the answer to that today. All i can tell you is we are not doing anything for now. We are waiting to see from boeing, airbus, our big customers, manufacturers, what their production plans will be for the next 18 months. The airlines also will be curtailing spending, as they curtail their flight schedules. We need to really understand the demand that are before we decide if we are going to get back into the Share Buyback market. Clearly, the business over the long term will have good cash flows. We talked about 18 billion to 20 billion of free cash flow. That will probably pushed out a year with all of this turmoil, the underlying business remains good. Most of your business from the United States, which is understandable, but you do sell into asia. Im wondering, what is the right now,there particularly given the situation in china . Air traffic in china is down 60 . We have some overhaul repair shops in china, that business is slow, people are not flying. What we see in the u. S. Is what we see around the world, a complete slow down in air traffic. It is not unexpected that you would see this. About 2001,ink after the 9 11 attacks, the Aerospace Market literally collapsed because nobody wanted to fly. It took roughly two years to get back to pre9 11 levels. I think that was the beginning of 2004 that we finally saw solid growth begin. I expect we will see a similar trajectory here. I have told our folks to plan for a twoyear tough spell here. Markets around the world are similar to what we are seeing in the u. S. That twoyear tough sell go along with customers like boeing and airbus . What are you hearing about the of then and the depth slow down, and concurrently, the spin back to you . Greg we have been having discussions all along with boeing and airbus. I will not speak to them. They are still trying to figure that out for us from a demand standpoint. You have to go airline to airline and see what they are planning to do with capacity cutbacks, how many airplanes they will take this year, next year. There is plenty of work to do in the backlog, and i dont expect to see a lot of cancellations. I think when you will see, just like you did after 9 11 and the financial crisis, some deferrals. I suspect boeing and airbus will have a much better review of that, which will inform us on what we need to do on the production floor. Right now, we are trying to keep the factories open. Not only do they have the commercial aerospace but also defenserelated components. It is important to keep the factories open to keep our workforce safe. That is the current challenge. I think another month before we really understand what the demand picture will look like. Raytheonur thanks to technologies ceo greg hayes. President trump says he has a problem with 3m. We will talk with the ceo mike roman about what went wrong, in a relationship we thought was working. This is balance of power on Bloomberg Television and radio. Taylor this is balance of power on Bloomberg Television and radio. Come alongsides michael mckee. Earlier we were talking about the jobs report. You were also covering the fed. Walk us through the programs the fed has started, the liquidity, and then i want to get to that main Street Lending facility, which we are still waiting on. In tothe fed has stepped keep the system going, lending to companies and dealers through various facilities for commercial paper, which is only just getting started. We have not seen spreads come down there as much, but also by Corporate Bonds for the first time, which is raising questions about what happens to the other Lending Programs that that is working on with the Treasury Department. There is a law that says the fed cannot lose money, so their programs are to buy bonds that are Investment Grade. You cannot go below Investment Grade, but there are arguments being made that the fed should look at companies that have a systemic importance in the economy but our junk rated, like macys, laid off 130,000 people. What happens if they dont get financing . For the fed to talk about going forward. Elerian alsod highlighted at risk, that we were a fallen angel. The biggest risk right now is credit spreads go wider or credit risk go to wider than the fed tolerance, and then you have a problem with Investment Grade bonds which are downgraded into junk category. The fed is assuming the responsibility for financing the loans the banks are making and who hass collateral, so the ultimate responsibility for paying them off if they go bad . Does the fed had to take on the losses, the banks . That will be a contentious issue, and that is one reason the fed will like to stay out of it. That is a question with the mainstream Lending Program as well. Who is responsible for the loans in terms of the bottom line, at the end, and what level of credit, what sort of confidence does the bank need to have in order to give you money . Taylor i wanted to look over to new york and new jersey, who now have the highest level of coronavirus cases, but michigan ranks fourth. We welcome democratic senator gary peters of michigan. Give us the tone on the ground, how does it feel for you in michigan . It is very challenging. Michigan has become a hot spot, detroit in particular. If you look at surrounding areas, oakland county, they are approaching capacity, so it is a concerning situation. We are also concerned by the fact that we dont have adequate supplies of personal Protection Equipment, which is critical to keeping our Health Care Providers healthy. We need them on the job, need to keep them safe. We have been working aggressively to get them more personal protective equipment. Claimshe administration they are the backup for the states, that the states should have been stockpiling early on. There is an argument, the federalism argument, that the states should be in charge of these things. Say a little cuomo bit ago that that is out the window right now, that we need the federal government in charge. Which side you come down on . We need to make sure there is somebody in start in charge with the responsibility, that the personal protective equipment is getting to the hotspots. Right now we have a shortage of ppe. There is a tremendous demand. Unfortunately, you have states against eachding other, which is driving up prices, instead of doing it in a pot all, coordinated fashion. When you have hotspots, it becomes particularly problematic when there is no supply. When you are doing triage at a medical facility, if the patients are overwhelming the facility, you figure who is the sickest, who we can save, you provide resources there. The same thing has to be happening with states. Certain areas are hotspots, they need more equipment. Will bethat more ppe produced. We know that some companies here in michigan when they getting the personal Protection Equipment business, but it takes time for that to come online. In the meantime, the limited sources out there right now, we have to apply to the areas of greatest need, understanding additional supply will be coming online. Taylor how is your ever important auto sector faring . Greg it is shattered now, we are concerned about the supply chain, which is why its important to make sure we are helping our second and third tier suppliers, to make sure they can have the wherewithal when we start of production again. We have to have a supply chain that is operating and open, and that means making sure our smaller suppliers have the resources they need to start at once things start turning around. Taylor our thanks to democratic senator gary peters of michigan. Masks soes those n95 badly needed by Health Care Workers. Uphas been ramping production, but yesterday, President Trump said he was invoking the defense production act directed at 3m. Joining us now is the ceo and chairman mike roman. Talk about what happened. Our colleagues have been speaking to you, things felt fine. What happened in the last few days . Thank you for having me on. We continue to do everything we can to fight covid19, support Health Care Workers at home. We have wrapped up our production in the u. S. As quickly as possible. We saw this early in january and ramped up production that we keep idle for these types of situations. We are working to expand that. We are trying to expand as much as we can in april. What was said overnight, that we are not doing everything we can is simply not true. The idea that 3m is not doing all it can to fight press gouging and reselling is absurd. We have been on the front lines of leading this. , for all thee people that have dedicated so much time and effort to lead the fight there, it was this a pointing to hear that narrative overnight. To knowways hard exactly what the white house is talking about, but in this case, it seems the president heard a report that you are selling some of these masks to canada and latin america, which as i understand has been a common business practice for you. Under normal circumstances, we produce 19 million respirators, 20 million a month in the u. S. 90 of that goes to industrial customers, a portion goes to canada and latin america. In a crisis like this, we double that output and shift to 90 plus health care only supporting Key Industries like pharmaceutical manufacturing or food production. We continue to support canada and latin america as part of our strategy. We have access capacity to bring online. This covid fight is nothing like we have seen. The demand is so much greater. We are doing everything we can to bring capacity into the u. S. While we still serve canada and latin america, where we are often the sole supplier. We have expanded our capacity, will wrap up another 5 million respirators in the month of april. We now have agreement to be able n95xport 10 million respirators from our china manufacturing into the u. S. , so we are stepping up and are bringing more production online in june. We will get up to 50 million plus from china. We are a net importer into the u. S. , even though we continue to serve canada and latin america with a small amount of production. It is less than 10 of our normal production. It becomes a humanitarian issue that we have to try to balance, and at the same time, trying to maximize everything we can bring to u. S. Health care workers. Taylor is there price gouging on these masks, how far down to the supply chain are you able to control prices . Mike it is good to be clear here. We are manufacturing respirators. We sell those two distributors. In the health care crisis, we sell through half a dozen large, reputable sellers. We work with them to get product where it is needed. Peters comment about triage, that is what we are doing. Working with our district leaders to get there. Prior to the covid outbreak that we were selling up to 90 to Industrial District leaders, and they are selling to a broad range of customers. Some of that inventory has ended up with resellers, and that is where we had this unethical, despicable behavior of price gouging taking place. And would never increase our prices for respirators during this crisis, and we do not sell to the highest bidder. We sell to authorized distributors or directly to the government. Ags tohat, doj, state pursue these perpetrators. We bring our data online, help with counterfeits, authenticate products. We work with retailers to make sure we are calling out those price gouging and resellers. We are doing everything we can to help Law Enforcement take that on. We have a supply chain that insurers in this crisis and we monitor this every day it is really an effective way to get the product to the customer. It is disappointing and unfortunate that resellers are taking advantage of the situation the way they are. Taylor our thanks to 3m ceo mike roman. U. S. Stock numbers were even worse than expected today, 700,000 positions lost. That data, and before many of the lockdowns and shelter in place orders even began. We welcome Glenn Hubbard, professor of economics to the columbia business school. George w. Bushs chief economist. Great to have you. What is your biggest concern as you look at the jobs report this morning . Glenn in some sense, we knew the jobs report would be an inaccurate picture of where we are now because we have seen such a big increase in uninsurance claims, but it was worse than what might have been expected. To me that says policy needs to doingvery much on whatever it takes to keep people into their employment. The tech Paycheck Protection Program, the cares act. Calling onere smaller and Mediumsize Enterprises early on, envisioned a much bigger program. Do you think congress will have to go back and add more to the Small Business Lending Program that is getting underway today, or can the fed handle it through the main Street Program once they start leveraging the treasury money . It is possible the fed can assist, but most of this will be on the taxpayers back. These loans are really grants, as long as small and midsize firms dont layoff their workers. I think congress will have to augment that support in future bills. Frankly, the Treasury Department and the sba will have to redouble their efforts right now to make the program work for borrowers. They are not where they should be. Waking up onember new years day and we were concerned about rising deficits. Is it correct in thinking that in these times of crisis, we dont care about deficits anymore . Glenn i dont think it is dont care, but you have to put them in perspective. The great analogy here is more like war. We have to do what it takes to win this. It is a onetime increase in government debt. Like a war, future growth whittles down that debt. Making sure that we are not wasteful, and that we do not take this as an occasion to create all new programs going forward. I dont have a problem with the kind of onetime spending that the president and congress have done. Mike i wonder if you have given economyght to what this will look like when this is over, are we going to see something completely different . Glenn it may take some time for people to be comfortable in the travel and hospitality space. We may also see changes in the way work gets conducted, education, meetings get conducted. A lot of that will depend on how long this shutdown is. Hopefully not so long. Taylor our thank you to Glenn Hubbard of columbia university. He is a regular contributor to bloomberg wall street week, airing at 6 00 tonight on Bloomberg Television and radio. Coming up, balance of power continues on bloomberg radio. David westin will be back with you then. He will be speaking to labor secretary Eugene Scalia. This is balance of power on Bloomberg Television and radio. York, it is 1 00 in new 6 00 in london, 1 00 a. M. In hong kong. Welcome to Bloomberg Markets. From threeearing notable voices on the current state of the economy. We have labor secretary Eugene Scalia talking about todays jobs report. Later on, tom barkin, president of the Richmond Federal Reserve Bank will be talking to michael mckee. And then ill be speaking to tom colegio about his efforts to access the ppp program today as applications open. The is all coming up in next 60 minutes. Lets bring in taylor riggs for a look at the markets