Fullyear guidance. Not having much visibility into the full year. Again, for the first quarter, adjusted eps and revenue higher than anticipated. Quincy,o bring back chief Market Strategist at prudential financial. These earnings, whether it is for intel, other companies. Let me add another. 18. 5quarter revenue of billion. The consensus estimate was for 18. 0 8 billion. An increase from what analysts were looking for. It be a bellwether for the global chip industry when you hear these kind of numbers versus localized situations . We know that the world is becoming less and less global and are trying to secure supply chains inside the country. Quincy i think you have to take semiconductors, chips together. Some of them are for working at home. There are others that have to do with gaming. Also working at home one you take a break. Future, 5g once we pick up. You put them all together and they have become a major bellwether. I started following them in 2018 whenatching the group move it believed the Global Economy was slowing. They became a bellwether subsector when we were dealing with the chinese and u. S. Trade war. I put them all together. Some days, nvidia is up. They are all part of that story. The fact is they have been at, atently a look perspective on where we are headed after this. I dont include all of them but i include them altogether. They each have a part within the entire subsector. Romaine i want to get your thoughts on the credit market. We did see credit spreads tighten a little bit more. This seems to be the trend line we have seen in recent days. Our performance of smaller and midsized stocks many folks have started to write off. What is your general take on the health of the credit market . Interesting, the fed, just by announcing what they were going to do, they did not have to do anything. They just had to announce it. We started to see the spreads come in. Underpinning those spreads, we saw the credit default swaps also stabilize because they go handinhand with a market that is fearful for more defaults. Wewas interesting because saw the spread stay fairly contained and we also saw the credit default swap stable. When the credit markets are feeling more comfortable, it is a positive indication for equity markets. Usually, you dont have the reverse. If you have the credit market signaling default, it may take the equity market a little while to get the memo. This time, it is stable. If we have any problem,in the credit it creates a new low if the fed cant fix it. Scarlet i want to get your thoughts on what is going on in europe. We talk about this risk of a second wave. It is pointed out that parts of europe are opening schools. In the u. S. , it appears that most schools will be shut for the remainder of the year. Is the risk of a higher of a second wave higher in the u. S. What does it mean for a Risk Appetite not only in the u. S. , but globally. Quincy i think the Risk Appetite receives on the discretionary names. Disney today closed a little bit down. They shut down early. If you look at denmark, the children are back in kindergarten. Ill be at they are spaced out by six feet in small schools. Germany has been opening up small stores. Apparently, the business has not picked up yet. Also austria. We are watching that just as we are watching spending in china. It does not have the same catalyst as hearing the u. S. As they have apparently more money to spend. All of these are proxies. The biggest fear is, again, the second wave. We are watching sweden. Of all the countries in europe, they kept the economy open and basically said, we are watching for the hurt to come in inching for the herd to come and give us all immunity as much as possible. They claim we will get the data in a couple of weeks to see if it is working. That is what is important for this market right now. When can we go back to work and when can we feel safe . Romaine some breaking news. Capital one earnings breaking the wire. The loss per share, 310 versus an estimate of 286. 7. 25 revenue did rise to billion. Versuschargeoff, 4. 68 4. 9 estimate. That is kind of a breakdown of where we stand with capital one. A lot of folks want to see what the reserves are going to be as well as what kind of forecast if any they give. Scarlet we will give you a recap a little bit later on. Rosbynt to thank quincy k for joining us for the close. Is up nextmiss . Where we will be speaking with the ceo of state street. This is bloomberg. This is bloomberg. Romaine broadcasting live from new york to our viewers worldwide, i am romaine bostick, this is whatd you miss . I am joined as always by the cohost scarlet fu. Scarlet stocks closing flat, mixed with major indexes giving up early gains. We heard from several companies. Intel reported firstquarter beat. The current quarter, revenue forecasted top analyst estimates but the eps number falls short. It says it will keep its dividend unchanged and will reinstate buybacks as circumstances warrant. Shares down in extended trading, ingand peers lower pull peers lower as well. Not providing a full year outlook romaine their credit card delinquencies at 2. 95 . Credit card chargeoff at 4. 68 . All of those numbers are slightly better than what the street was expecting. The shares in after hours trading pretty much flat to down slightly. Scarlet when it comes to the u. S. Stock market, a report that Gilead Sciences experimental treatment did not do well in initial clinical trial. That was one of the reasons why stocks lost momentum. This comes as this debate over reopening the economy rages on. In earlier onhed this topic. A ushapednk it is recovery. I am trying to foreshadow or ushaped recovery knowing that certain businesses and events will not come back in a certain period of time. I do not think we are going to basketball and baseball games anytime soon. Do i think that basketball and baseball might play without fans in the stadium . Yes, i do. But that is a different type of environment than when you have 20,000 or 50,000 people going to a specific event. Former commissioner drafted for the country a roadmap. It relies heavily on logistics and compliance. I have talked to scott during this quite a bit. I think scott has been very practical. He has tried to be reasonable and what he has suggested. I think he is trying to lay out a way that we can try to get economyore normalized as soon as possible. What do you think of the biggest obstacles to opening . You talk about your trepidation and the gut instinct you have to temper your optimism with realism. Gary there are a large amount of people in this country right now that are getting government benefits that may be in excess of what they are and when they get back to work. That is a whole other conversation. If you are home doing nothing earning more money than you would if you go back to work, it is harder to get those people back to work. I know of and have heard of many fast food restaurants right now that are doing Curbside Pickup that are trying to hire people. I have seen help wanted signs. They cannot get people to reengage in the economy. We need people to reengage and want to go back to work and not rely upon the government handouts. That is number one for me. Amber two, we will need natural feedback loop through testing. We are going to need to know, if we have a sudden outbreak of the ,irus and the virus reappears we will need to slow down the economy in certain areas. It will not appear everywhere at once. The better data we have, the be to reopenwill the economy in some places and keep it closed in other places while allowing places that we are not seeing the economy seeing the virus reappears to stay open. Lets turn our attention to Financial Markets. What do you think are the most important lessons to be taken from the panic selling, massive deleveraging, and the speed at which prices collapsed during the month of march . Gary these are not normal environments. The Financial Markets around the world have held up quite well. We have had relatively good liquidity, very good price recovery. I think everyone who has wanted to get in and out of Financial Markets has been able to do that. I think when we write about this period of time economically, we will talk a lot about this. Yes, the banks have been in very good financial position. Troop Central Banks around the world have had to provide substantially more liquidity to this crisis than other crises in the past. Romaine you were listening to gary cohn, former director of the National Economic council under president trump. He was speaking with erik schatzker. Erik schatzker will be joining this program after the break when he will have a interview with the ceo of state street, renault hanley. This is bloomberg. Scarlet during last weeks round of financial earnings, state street posted firstquarter profits and provisions for losses. Erik schatzker is standing by with the chairman and ceo. Erik that would be ron ohanley , who is with us from state street headquarters. Good to see you. Ron how are you . Erik doing well, thanks. State street plays such an Important Role in Financial Markets. But here is where i want to begin. There are few more important things right now than the fed liquidity programs. State street is playing a key role in at least three of those programs. What can you tell me about the way those programs are working so far . What these programs are emblematic of is what effectively the fed, policymakers in general have operated here. What everybody recognized quite early on is that you have a Public Health crisis that has caused a rapid shut down in Economic Activity that was quickly transferring to the Financial Markets. These programs were designed to make sure that liquidity was brought to markets and that transacting would occur. Thatone quickly realized when you were shutting down Economic Activity, there would be big needs for credit at the same time as investors would be moving money to cash and taking risk off. What you dont want is lots of money being idle and not being able to meet needs from the capital market. Those programs and several others were designed to make sure that they continued to transact. That and the liquidity has enabled markets to continue to function well. It was important in march and will continue to be important. Erik are you surprised at how little lending the first few of . Hose facilities has had to do i am thinking of the money market facility, the primary dealer credit facility. And there is not much going on in the commercial funding facility. Not yet anyway. A reminder that with all of the machines and computers we have, there are human beings find those. I think there has been so relatively little transacting in that because people know that it is there. Price discovery was able to happen because investors knew that if they had concerns that there were not a market, then you would have a real crisis. , if ieally comes back to know i have the insurance, that does not mean i need to draw on the insurance. What policymakers done have done, putting insurance in place. Is somehave heard there confusion about which kinds of companies are eligible to borrow from the fed under the Corporate Credit facility. Are you up to speed on . Ron there is some confusion. That some of these programs have been set up quite quickly. The fed has been good about taking feedback to the extent that there is an unfulfilled need. They have been pretty quick at pivoting. The money market liquidity facilities, there was a narrow set of facilities. Literally overnight, the fed would take feedback and change that up. Erik gary cohn, former director of the National Economic council, told me today that one of the obvious lessons of this crisis is that because of doddfrank, those same banks cant provide as much credit and liquidity when it is most needed. What do you think we should do . Do you agree that maybe the rules should be loosened at times like these or would that just open a pandoras box . Ron you have to remember the last financial crisis and the problem we were trying to solve, banks undercapitalized in some cases and not having the capital strength to do what they need to do, a sense that some of these banks were excessively leveraged. That problem was solved. But you solved that problem by putting in place heightened capital requirements, liquidity requirements. Think at this point that one could conclude that there is not enough money available to land. Again, think about the crisis we are trying to solve for. This is shutting down not just the u. S. Economy, but the world economy, realizing that furry economy wille, the be at a fraction of what it normally is. That is where you have Central Banks and governments coming in to provide a backstop. I am sure there is going to be a conversation about, do we have the balance right . One thing we can be confident in is that banks now are under stressed but seem to be operating fine. The extra capital has allowed them to not be stressed in this environment. Has antate street enormous operation in china. You know what a stayathome order was all about long before we had to deal with it here in new york state, massachusetts, the rest of the United States. What lesson has state street learned from china that we ought to keep in mind here . Ron as you note, we do have a large operation in china. Of back Office Operations for our clients across the asiapacific region, and provides we jewel Fund Accounting and things like that. It was in midjanuary that we learned we needed to start working from home. Of our Business Continuity plan. We never imagined we would be sending everybody home in basically four business days. We learned how to do that and recognize that one thing we needed to do was prepare the rest of the world for that, particularly other parts of the developed world. We are now at the stage where we are bringing people back. You have got to reconfigure facilities. Testing is part of what we are doing in china now. In thes people are building, separating them so people are not on top of each other. I think this will be very much how we and others operate in the. Nited states erik do you think one of the end results of this is that you will need less real estate . Will be somethere profound lessons out of this, and that is one of them work from home will not just be something that is for the convenience of the worker or a disaster situation. First of all, we have all learned that there is more we can do from home that we all realized. Again, we have to be sensitive to our workers and make sure we are supporting them. Interrupt, iry to would love to keep up the conversation, but we have run out of time. Let me take this opportunity to thank you. Ron ohanley is the chairman and chief executive officer of state street. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Romaine as oil rebounds from the historic collapse, and a lot of folks looking to other assets, wondering if maybe the bottom will be there. Lets bring it john authers, a Bloomberg Opinion columnist, pretty much one of the mustread columns on a terminal if you have one. I want to Start Talking about em. I have seen this theory bouncing around that em may be right for a comeback, at least based on certain metrics. First of all, lets make clear, i am not necessarily saying today or tomorrow, but in terms of a longterm buying opportunity, things do look good. Partly, it is because the emerging markets cycle is closely tied to the commodity cycle. Commodities are at something of a low. The lastd bought at time that oil had hit a low blow 20 8 a low below 20 a barrel, i think it was 2011, it was emerging markets that goodtically outperformed a solid decade. If there is a point at which to get in at the bottom of the cycle, it is around about now. If you straightforwardly look at generally valuation, once a rebound starts, once people are confident that there is an economy that is recovering, it is value that does by far the best because whatever reason people have for making a stocks cheap become much less important. Youre much less worried about the worst things that can happen to an economy. It is also very much true geographically. Emerging markets will tend to do better when the Economic Cycle is doing better. Value within them will do much better. As you have seen, really extraordinary selloff for value, cheap stocks compared to others. Point where near a emerging market value can become very interesting indeed. I suppose the final point is carry on. Scarlet that all makes that all makes sense. I want to ask about the u. S. Dollar. So much of the emerging Market Outlook depends on the direction of the dollar. For a while, it looked the dollar was strengthening, then entering this period of weakness. Helpfulare typically for companies who want to keep experts priced competitively but there is not really an end market for those exports. The strong dollar makes u. S. Dollardenominated debt more expensive. John that is a very good point and it is another reason why you might ultimately think this is getting close to a buying opportunity. Marketse, yes, emerging hate a strong dollar because, as you said, primarily for that debt reason. Many of them have historically dollardenominated liabilities. Morganlook at the jp emerging markets index, perhaps the most popular overall basket for emerging markets, it is at an alltime low, which ties in with how badly emerging markets are doing in general. Trade, the degree to which they are exposed to the dollar through debt has not gone away. Decadeve not used the since the last crisis to convert to local Capital Markets as much as they could and should. Dollarre are far fewer exposed markets then there used to be. The exceptions to that rule are the ones that are in serious trouble. Argentina being the most serious example, followed by turkey. Strengthense dollar even more from here, which i can , in dollar terms, we have a fed committed to doing whatever it takes, i think it is fair to say. I think that is reasonable to emerging markets. Authers, thank you so much. Read his column, emerging markets could lead the coronavirus rebound. Lets get to mark crumpton. Mark European Union leaders agreed today to revamp a longterm budget and set up a massive Recovery Fund to tackle the impact of the coronavirus. It will help rebuild the ravaged economies but deep differences remain over the best ways to achieve those goals. More than 100,000 europeans have died from the coronavirus. The house of representatives is voting to create a new subcommittee that would track coronavirus aid. House Speaker Nancy Pelosi says the oversight and reform subcommittee is necessary to root out fraud and abuse and examine the governments response. The white house says it duplicates the work of other facility other committees and will be politicized by democrats. In russia, the official death toll is 555. Russia has been in lockdown since the first week of the month. As the outbreak of speed, Vladimir Putin postponed a nationwide vote on a constitutional reform that would allow him to stay in power until 2036. 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. With the bloomberg first word news update, i am mark crumpton. Right now, the vaccine studies are looking at what we call phase one vaccine studies. These are really looking at the safety and whether or not we actually see a response. Does the immune system respond to the vaccine. That is not testing efficacy, meaning is it effective . That is why we are continuing to project timelines of at least 12, if not 18 months away. The raging debate this morning is in your wheelhouse. You are one of the nations experts on the resistance hes in hospitals. The archer fear of medical experts is a secondary out of this virus down the road. Likelihood and how it will demonstrate if we get a virus, september or december or even into 2021. We are looking at estimates of antibodies right 5 emerging, suggesting that of the population may have been exposed and recovered. , do thefirst question antibodies lead to any form of protection in the future . The second question, if that is 95 of theill leaves population with no prior exposure and recovery. In other words, if we rollback social distancing too fast, that subsequently leads us into the season of cold and flu, september and on in the United States at least. In the northern hemisphere. Then we get other respiratory viruses emerging such as influenza. It complicates our scenario because then, clinicians are seeing a patient with respiratory symptoms and scratching their head saying, is coronavirus,this is this another we know how to treat the flu. We know how to diagnose it, how to prevent complications in most circumstances, not all. Yet, transition parameters and dynamics affect the way that we may respond. We are concerned about cooccurring respiratory viruses in the same season. It is not exactly that we dont anticipate coronavirus to return during the fall. A secondtely expect wave of infections to occur. We have already seen it around the world. Romaine we were just listening hopkins farley, john nursing professor. The Johns Hopkins school of Public Health is supported by michael r bloomberg, the owner of bloomberg lp and bloomberg philanthropies. Lets turn to what is going on in wall street and specifically the lending market. Some companies have flooded into u. S. Banks with loan requests and those banks see that they have a little bit of leverage to extract concessions. Should ali bostic joining us now with a few of those details. What type of leverage do they have and what specifically are they asking for . Nali my colleague makes a great point here, that they are rushing to make sure they get the cheapest rates available for their clients. But now, you are seeing Interest Rates for some of these Corporate Bond yields go higher. Finally, after many years of not having any leverage, banks are starting to say, wait a minute, we are going to need to tighten the reins. Little bit, especially as all of america is rushing for money. Scarlet in some instances, you have banks treating investmentgrade borrowers as if they are junk borrowers. Can you give us some examples . Sonali something that is so interesting, the rates are one thing. Interest rates for mandatory repayment clauses. The idea that they are having anticash hoarding provisions here to make sure that they are not just drawing down their credit lines to hoard cash. The reason that is interesting is because right after we saw this pandemic spread, we saw people tapping down credit lines at breakneck speed. Private equity talking to a lot of Portfolio Companies to do it. Remember, this kind of debt scenario, the idea that you can get junklike yields, is not for everybody. I think one of my favorite deals in the market today is netflix. If you are netflix, you can still get ultra low yields here. Is if you are carnival, that not going to be the same for you. Romaine the netflix deal of course was watched by a lot of people. They are paying under 4 for junk rated debt which is astonishing to me. But i guess if you are getting 60 basis points, why not . Netflix is obviously a little bit more unique in that they have a pretty decent cash flow to back this up. Sonali netflix has cash flow but the profitability is not there. They are an anomaly, not the norm here. The question is whether yields will really come down for more normal companies. It just kind of depends i guess on how long this goes for because right now, nobody else can really give a sense of how cash flows are going to be affected. Right now, they are arguing over negotiating with banks to get revisions. Scarlet Companies Need a lot of cash, they are borrowing the banks are charging more for those loans, and of course now there are Asset Managers raising money for new funds to basically take advantage of these issues. Those that are taking advantage of those situations. Sonali you do see a lot of hedge funds like diameter coming in ready to make longerterm bets but also ready to short the market. In a lot of places, a lot of their gains come from the short pets they made. Also interesting, blackstone will be raising a 7 billion fund for more performing credit. Onsee a blackstone or private equity firm come in where the banks are unable to, that will be a very interesting thing to see what kind of yields they will be able to extract. Scarlet great work. Should ali bostic, bloombergs wall Street Television correspondent. A big changeover at apple. Bloomberg has learned the company next year will start selling Mac Computers with its own name processors. Chipscs currently have built by intel. Expedia naming eight new chief executive. At the same time, the company is raising about 3. 2 billion to shore up finances. The new ceo is vicechairman peter kearns. He has been running expedia with chairman since december. The 9to5 workday has gone by the wayside for those working at home. Homebound employees are now logging three more hours per day on the job than before the lockdown according to data from nor vpn. U. K. ,nce, spain, and the the workday is stretched by an additional two hours. This is bloomberg. Romaine we want to get a recap of some of the earnings that have crossed the wire over the past couple of hours. Capital one did beat on quite a few metrics but what most people are focused on is the reserves. Loans from a year ago. Setting aside 5. 42 billion in provisions in the first three months of the year. The company has mobilized and they say they are wellpositioned to mobilize for this crisis. They did not provide any kind of a fouryear forecast. Scarlet intel did not either. For the first quarter, a betterthanexpected topline and bottomline. Laptops andllowed servers for workers to work from home. That raiseded, so concerns. Amd, its rival, and nvidia, also falling. Romaine it is time for that special time of the day that we all wait for, when Joe Weisenthal rejoiced the show. Joe of course is somewhere in the wilds of texas, may be on his way to georgia to get that the closing bell to get that whatd you miss . Tattoo he has been talking about. Joe you are right. I am taking a road trip to georgia to get a tattoo, go bowling, and get a haircut. That is why i am not on air right now. Haves been so long i gotten a haircut that i would be on presentable. We are about to see several of the big tensions begin to emerge all at once. Obviously, we are going to learn what reopening theoretically could look like. Georgia is going to start reopening some institutions starting tomorrow. We will see how many reopened, how many show up. Governors have to deal with tax revenue beginning to collapse. The fight that is going on in d. C. , or maybe i should say the debate emerging in d. C. About phase 4 stimulus bill, with a lot of focus on municipal finance. It will speak to this, how much should the degree federal government help out cities and states . Scarlet speaking of stimulus, the house has begun voting on that 484 billion virus relief plan. This would be, i believe Company Fourth one. The small top off ranness relief funds that out after businesses get their money disbursed. People were keeping an eye on what was happening in d. C. And every comment from the house or senate seemed to move markets but people have looked past it. It is a given now that there will be more money poured into this. Joe right now, this house vote, there does not seem to be a lot of drama. The speed with which congress is perceived to be moving on the next round will be important at least at some point. I think what is a little ominous, this phase, i dont know what you want to call it, maybe phase 3. 5, it should have been extremely easy because the centerpiece of it, the payroll protection, was broadly popular. We saw it took longer to get it done than anyone thought given the scale of the economic emergency. It is a fact that it is going to get harder next time, particularly when it comes to how we allocate to state governments. That is going to be very tough. Romaine when we start to see this reopening in georgia and other southern states, whether the public will start to embrace this. There has been a lot of anecdotal reports of people saying they dont want to go back out in terms of health and safety. That may be the biggest determinant of the kind of recovery. Joe yes. Some people have pointed out, the sales that things like restaurants in places like seattle collapsed before the stayathome orders were put in place. Thought, it happened the other way around, the other way around, that it is more of a confidence angle other than the determination of a governor or mayor that will determine whether the economy reopens. Scarlet something to keep in mind as we hear the debate over how and when to rejoin the economy. Joe weisenthal, thank you for dialing in. That does it for our program. Have a great evening. This is bloomberg. Emily welcome to bloomberg technology, i am emily chang. A promising drug from iliad to treat covid19 has apparently failed in a chinese clinical trial. We are standing by for the Daily White House briefing. Million new people have filed for unemployment