Something a little askew with the data. Consumer confidence coming in a little shy of expectations at 86. 6, down from 86. 9 in april, and a little lower than economists were looking for at 87. We will get to that data and what it all means for the economy. This is all still coronavirus data, and how much you can read into it is still in question. The first trading day in the united states, the s p up 1. 8 . Doing and leisure stocks well. The dollar index just a little like today a little light today. Crudee strong dollar, and oil is up 3 . Matt i almost want to ask how many years it took you to say leisure rather than leisure, but we will save that for later. Today. Big rally the dax adding another 100 points after a 370 point addition yesterday. To 11,500 as the stoxx 600, the broader european benchmark, get back to levels we havent seen since the very beginning of march. I think both of these indexes are back to levels we last saw march 6. In the pound, big rally against the dollar today. I want to mention you can see the stock at the bottom of your screen, right now 48 , adding more than one billion euros in market cap. Tui is traded in the u. K. In germany. It is playing some major catch , on the news that the u. K. Is lifting its travel 141 countries. Just a little time ago, we got the ace and p we got as s p price homed index well, better than economists were forecasting for march. To thegoing to speak nobel prizewinning economist who devised a different way of valuing stocks, and the author of that book you saw there, narrative economics, he is yales sterling professor of economics, robert shiller. Thank you for joining us. First, a word on the housing data, which seems to be holding up rather well. You have any information for why that might be in pandemic times . More you might have expected to see more action than we are actually seeing. The increase, the monthly increase from february to march annualized higher than the previous months, but that is mostly seasonal. We normally start to see some increases in march as we approach the summer months. Unsurprising. Y if there is going to be a coronavirus impact, it hasnt have yet it hasnt happened yet. Vonnie it didnt happen in april, either. I want to talk about narrative because obviously, that is your latest book, the narratives that rule this marketplace. Clearly, we have a huge divergence between the stock market in the real economy. The stock market continues to grind higher today. What narrative is it that his ruling this marketplace right now . Robert theres always multiple narratives. I think the story right now is coming. G about a cure narrative that people remember recent sharp drops in , in the wintert of 2018 and the end of 2018, and they both had vshaped recoveries. Theres a lot of talk about the socalled vshaped recovery. The fear of missing out, a term that Goldman Sachs recently brought up, i didnt catch those vs. And it is donald trump. Everything is related to him in our Current National talk. Guys at goldman used to always say yolo, and now its fomo. Great to talk to you again. I want to ask you about a trend i am hearing about from my friends in bronxville, which is purely anecdotal, but what i am from news that renters york city are flooding out to orderburbs of new york in to get away from the densely packed urban centers, and putting in big bids on mass for the ritzyss suburbs. It is not going to be a trend we see across the nation, that people want to get out of the densely packed urban centers . Robert it is an interesting question. I sometimes think that this is a repeat of a different kind of narrative in 1949. Testediet union successfully in atomic bomb, and they also had missiles they were developing. This led to a mass exit us to the suburbs. Mass exodus to the suburbs. T is not just the virus it is also that the charm of the central cities that draws people and are going to be lessened, like eating out in nice restaurants, going to museums and shows. I think there could be a transition towards living in the country, especially if you are working at home, if that becomes the new norm, you dont have the commute to worry about. But on the other hand, there nott be a response thats that dramatic because lots of places to build further from the city, so that might hold price increases in the distant suburbs. Matt we see the average Mortgage Rate back down from the covid19 spike, now right around 358, i think. Do you expect the fed to try and pull it down further . Robert theyve got the short rates down to just about zero. They might try some quantitative easing to get it down a little bit, but it is pretty low now. I dont know how much that is going to impact the housing market. The Mortgage Rates dont seem very related to the housing market, surprisingly. 1982ne exception is around , when Interest Rates were in double digits. You couldnt get a mortgage for less than 15 or more. That did bring housing prices extremes. E if we were to lower to 1 federal funds rate, i dont see that is a major determinant of home prices. Vonnie can i ask you about the cape ratio . How do you calculate something , when itcape ratio, pe is basically a blob of uncertainty right now . Robert it is difficult for practically any metric that one uses to try to forecast the market. It has always been difficult to forecast the market. It is even harder now. Ratio isnk the cape going to be better than conventional priceearnings typically based on 12 months earnings because the impact of the Current Events will be much less on a 10 year average of earnings then on a one month earnings. The can i just ask you, team typically puts together a question of the day. The question we are going to see later on that bloomberg terminal blog is why are they real and financial worlds diverging. It strikes me that this is a question we heard a lot of people asking after the great financial crisis as well. Do you see that . Do you see the market diverging from the underlying economy . If so, why . Robert the market has always had a tenuous relation to the underlying economy. I thought you were going to bring up the great depression. According to Franklin Delano roosevelt, there was no plague of locusts. Se are his words but, the those are his words, because there was no real shock. That has been the reality for most of our history. Decadesess volatility ago because of speculative motives. We are in a speculative situation, where people see fundamental changes coming, and they dont know what they mean. We may be working at home more. We may see venerable institutions have to make fundamental changes, and these fundamental changes will change the market value of these in ways that are hard to foresee. So it doesnt surprise me that ofre is a separate movement the stock market and the economy. We have seen that many times before. , thanks so much for joining us. Pleasure talking to you again. Robert schiller is the sterling professor of economics at yale university. Lets get over now to the bloomberg first word news. For that, we go to ritika gupta. Ritika british Prime MinisterBoris Johnson facing another day of pressure to discipline his top advisor, dominic cummings. He has refused to quit over allegations he broke the governments virus lockdown rules. Members of johnsons own conservative party have called on him to fire cummings. Isfrance, Emmanuel Macron unveiling efforts to support the auto industry. It is also likely to broaden the french effort to develop electric auto factories. Federal workers see risks in president trumps push to reopen the country. They are concerned that it will be forcing them to the Office Without proper protections. The irs has called back 11,000 workers to start processing paper tax returns. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Matt thanks very much for that. We will have more on that story on federal workers later on. Plus, we are going to bring you the latest from hong kong. There,ption of protests could it get worse . Could it worsen the u. S. China relationship . More on that story. This is bloomberg. Matt live from berlin, im matt miller, with vonnie quinn in new york. This is Bloomberg Markets. Lets check in on what is going on. All the Market Action looks risk on today. Abigail doolittle has that for us from new york. Abigail a big rally on this tuesday, really driven largely by the dollar weakness, at least in the u. S. You can see the difference between the gains in the u. S. , the s p and nasdaq both up , the stoxx 600 up, but not as much. Story out of the the late march lows for the s p 500. The index now up about 35 out of those lows, really pretty incredible, appearing to break out of a range. Something to keep in mind, back in 1929, for those who like between 1929 a 1932, the s p 500 had been down 44 , then up 40 , and then made its ultimate decline, so some are still thinking this could be a bear market rally. Haven assets confirming the risk on mood, with bonds around the World Trading lower. The 10 year yield giving up four basis points. The german bund also sharply lower. The u. K. 10 year yield higher as well. That is helping the banks trade sharply higher. In the u. S. , it is the best sector on the day. Matt great to get those details from you. Abigail doolittle looking at markets. Hong kong is bracing for what could be its biggest day of protests in months. Demonstrations are planned for wednesday against chinas latest move to increase control of the city. For more, lets bring in salamat outrishaad of hong kong. Hong kong bracing itself for this eruption of protests, and theie lam has tried to calm public, but it seems her defense of chinas moves is falling on deaf ears. It certainly does. Prodemocracy politicians have called this National Security legislation, which would be enacted this week at the National Peoples congress, as an unprecedented assault on the citys unique freedoms under the one country, two systems principle. That is what china promised to govern hong kong with when they received it back from the british in 1997. So we have prodemocracy groups calling for a general strike against beijing. Tomorrow is carrie lams birthday, and these prodemocracy protesters are calling everybody to celebrate the occasion with prodemocracy rallies, protests planned near the Legislative Council building , where lawmakers plan to hold a hearing on a bill that would criminalize disrespect toward chinas national anthem. So it is not just the National Security legislation, but also the national in the bill, doubling down. Ive already seen barricades near the Legislature Area the Hong Kong Police force is said to be readying Something Like 3000 riot officers in anticipation of protests. Meanwhile, carrie lam says it is untrue that this legislation would ban protests or stop freedom of speech in hong kong. She says the various rights enjoyed by people will continue to be there still. But at the moment, this seems to be the calm before the storm. Vonnie relations between washington and beijing are becoming a little more fraught, and partially it has to do with the race for a vaccine or a covid19 therapy of some kind. Rishaad that does seem to be the latest salvo. President Trumps Administration watching a program called operation warp speed to accelerate the vaccine research, and the chinese responded with what seems to be a move to try and get some sort of soft power oneupsmanship. Throwing the might of the Chinese State behind the country, mobilizing its Health Authorities and regulators and various institutes to try to get some kind of treatment. Communist Party Leaders are going to be overseeing vaccine trials. They are likely to be tested on humans as well, the most that any country is doing. It would garner an immense geopolitical win if the country was to develop one of the first shocks. Then we got the backdrop of this blame game of where the coronavirus started, tech transfer part of all of this, over the weaker uighur population, all pushing towards this state of a new cold war. Vonnie thank you for that. Matt i was just going to ask about wuhan testing rather a lot of people right now. What is the story . Thisad very quickly here, is where it all started, i suppose. They are saying at the moment, the local health commission, that they have tested nearly 7 in 12 days. Le that is the conclusion of a campaign to test the entire population of that city after several infections prompted fears of a second wave. That means they tested 583,000 people each day. Vonnie that is a whopping number. Thank you. I am not even going to attempt the math on that. Rishaad salamat joining us from hong kong. This is bloomberg. Vonnie it is time for the latest Bloomberg Business flash. Microsoft is trying to prove that minecraft is not a one hit wonder. It is releasing a new version of the bestselling videogame title of all time. Dungeons is filled with hack and slash action. Bloombergs reviewer called it good, but not great. Fun, but not special. Music sales have soared in recent years thanks to paid streaming services from spotify and apple, and that has boosted the value of music companies. That is your latest numbered business flash. Still ahead, how those workouts a 10ome could leave billion Fitness Industry in a little bit of trouble. Bill harrison. Th this is bloomberg. Vonnie live from new york city, im vonnie quinn, along with matt miller in berlin. This is Bloomberg Markets businesses. This is Bloomberg Markets. Businesses across the world are facing pressure and reopening. Joining us is bill harrison, alsoson company ceo, and with us, sonali basak. We are focusing a bit on the Fitness Industry today. Last week, we had the ceo of Planet Fitness on with us. He talked about how his franchisees are going to make it work, that it will work, but basically because they are such a low price Point Fitness chain. What about the rest of the fitness . It feels like there are so many now, and they are all private equity backed. Bill theres quite a few companies out there that fall in different criterias within the fitness space. Planet fitness has a highvalue value, low price solution, wellpositioned to do well post covid. We conducted a fairly broad survey across the united states, looking at people who worked out at least twice a week. It looks as though theres going to be a material seismic change in the Fitness Industry. Our data shows at least 1 3 of the people we surveyed are going to be canceling their memberships. If you think about an industry hat does 32 billion in anymore revenue in annual revenue, theres a lot of where tonyity firms, four hour fitness is already where 24 hour fitness is already questioning bankruptcy, and this is testing the of business models. Sonali with 10 billion of revenue leaving the industry, they will also have massive debt burdens and rent to be paid. How much will investors be willing to pony up when we are seeing that downgrades ahead for even some of the healthier firms like when ox like equinox . Bill there are certain models out there that will survive. If you look at equinox, they have great locations, even tellico customers locations, evangelical customers. They are in cities, for the most part, where home fitness is not an option. If you look at where the customer has a reasonable alternative at home, Life Time Fitness is an example. Their average club is about 100,000 square feet. Dont of crowding issues. Fitness, golds gym filed for bankruptcy. Theres a question as to how they survive. Weve heard some interesting concepts, but a lot of these club owners need to develop an omnichannel solution. They were caught a little flatfooted. Look at golds gym prior to filing for bankruptcy. They had the strongest year in their history. In two months, this industry has transformed unlike anyone could expect. Sonali you mentioned omnichannel. You see equinox raising money partly to do more online. You see soulcycle having classes online. What then becomes of this massive commercial real estate footprint that a lot of these gyms occupy . Nearterm, theres going to be a lot of commercial real estate that becomes vacant. There are 38 thousand clubs in the united states, and based on our data, we think about 1 3 of them may go away or transform in some fashion. But the industry is also made up of great operators and entrepreneurs, and we believe theres some Creative Solutions out there. Weve heard of things such as a club that is questionably going to survive, where they are going to give their members a connected fitness solution and equipment, and allow their membership to amortize the paydown of the equipment. Most club owners realize they are going to be losing members. The question is how you make them stick. But theres studies out there that show about 100,000 retail 2025. Ons could close by 3 of fitness clubs that could be added to that, we think the number will be less because of the quality of the operators, but it is a material number coming on the market. Vonnie what do venture capitalists do with their equity . Do they write it down . Typically if they dont see an exit possibility within five years, that is what happens. They will exit themselves. What do you see happening . Bill i think it will have to write it down. We are in uncharted territory right now, where i dont think anyone has a clear vision as to what the Fitness Industry is going to look like. The 10e that of billion coming out of the club space, about 15 to 20 going to home fitness. That is 1. 5 billion a year going into home fitness that is going to benefit Companies Like peloton and others. So for those not invested in the space, we envision a fair amount of capital going into home fitness. But on the commercial side, we would imagine that most investors are going to stand on the sidelines until the data myys out, and i think partner who runs our fitness vertical, he ran one of the largest manufacturers of gym equipment in the world, and when we got this data back, he went and checked his sources to that areis this 1 3 going to cancel confirmed. Yes. Ata we got back was i would imagine that most providers of capital will probably sit on the sidelines until the new world order shakes out. Vonnie you will have to come on and give us an update very soon. Thanks for joining us today. That is bill harrison of harrison company. And of course, thanks to bloombergs sonali basak as well. Matt coming up on the program, a lifeline for deutsches lufthansa. The German Government agrees to a 9 billion euro, almost 10 billion bailout, but it may cost to the carrier some very valuable assets in the tradeoff. Details next. This is bloomberg. Lufthansa needs to come to an understanding with their boards and accept this, and we also need to have the agreement of the Eu Commission in brussels. These discussions are ongoing, but with todays agreement, we are optimistic that we can reach our goal, namely the safeguarding of one of germanys most important employers, and the interest of the people. Economyrmanysmatt minister there saying that they lufthansa aid package is a sustainable and reasonable solution to keep the company going. It is our stock of the hour. Lets get more from abigail doolittle. Abigail thanks, matt. Shares are really rallying in quite a way. The best two days since 2008 on this bailout package that has been in the negotiating process for weeks. If we take a look at what is actually happening within the providingermany is 9. 8 billion in support. That includes a 3. 3 billion, threeyear loan. In turn, they will own about 20 of the company. Not surprisingly, because lufthansa is considered to have a bit of an edge on its competitors. Protesting, saying it is going to strengthen lufthansas monopolylike grip. One of the conditions is to give up some key airport slots in germany, and fewer planes in the air potentially to ease some of those concerns. Lufthansas bonds are rally and, as our credit default swaps. This bloomberg terminal shows we cds,a little tick down in but still extremely wide. Of course, this is driving a big rally for airlines among the other European Airline carriers. Take a look at lufthansa up top. We also have ryanair, easyjet, and iag all in this package. Vonnie thank you for that. We will get more on this story and the airlines more broadly with George Ferguson, senior aerospace, defense, and Airlines Analyst for bloomberg intelligence. We already know mike or oleary we know already know Michael Oleary has a problem with this bailout. How much pressure is there to subsidize the airlines, and if they dont, does lufthansa get an advantage over everyone else . George we think the governments are clearly going to set the stage for competition in the Airline Industry going forward. In western europe, i suspect a number of countries will support airlines. We thought lufthansa would be supported. Europe, andgamut in you can have some very tourist type airlines like ali talia alitalia will survive, but lufthansa is very important to the german economic machine. We see it supporting its exports around the world and its business travelers as well as it tries to keep a stake in the but there aress, some governments that will not be able to support its airlines. We saw latam file for bankruptcy in chile and brazil. I think thats an example of some governments not being able to support theres airlines, and a lot harder adjustment happening there. Matt it is great to hear with theleary freemarket capitalism type, but isnt there an understanding in brussels, as well as everywhere else, that this isnt a level Playing Field industry . Germany is going to fight to keep its flagship carrier alive and the,000 employees, need to keep the country doing business, right . George totally agree. Michael oleary, obviously his challenge is this could potentially be a great opportunity for him. He would love to see more airlines fail in europe. He runs a very strong airline. The cost controls are great. You are the German Government , you dont want a Leisure Airline supporting your country. You would also like to have a german flag carrier flying even your leisure passengers. So you can see how Michael Oleary thinks some of these carriers should go away and clear some of the Playing Field and allow a better fare for countries in central europe. U. K. Ny, france, even the will want to support those airlines as key drivers of their economy, so importantly, i dont think the deck is going to clear as much as Michael Oleary would like. Vonnie are we in for another restructuring of the Airline Industry globally . It seems like every couple of generations, we have that, whether through regulation or deregulation, or some kind of merger phenomenon or Something Like that. It feels like we are about due for one. George agreed. I think it has been 10 years since the last one. Typically, what happens is times are good, airlines grow. They grow to support a bigger and bigger market, and then you have one of these events, and they need to shrink again. It is very difficult for airlines to shrink because theyve got a unionized labor force, they buy a bunch of airplanes that they operate that they have to make payments on. That is one of the challenges here. I think we all need to bear in mind that lufthansa may have to shrink anyways. So will air france and other airlines in europe. So when the government is giving them a bailout package like this, it buys them some time into 2021. But if this market doesnt look extremely better than it looks right now, lufthansa still has to shrink. Lufthansa now has to go to the unions and talk about what the size of the future Airlines Look like, who stays and who goes. They talk to the lessers and owners of the airplanes as well. There is still an adjustment that has to happen. Ryanair will make it happen faster, and these Airlines Ticket the Big Government bailouts still have to figure out a way to shrink the airlines unless demand comes back really strong. Vonnie a lot of conversations to be had. George, thank you for that. That is George Ferguson of bloomberg intelligence. Here is that statement from ryanairs ceo Michael Oleary. He will be coming on with us in the next hour. Well be asking him why exactly he is against this socalled bailout. Planes to from automobiles, matt miller. I noticed this morning there is a major shift in leadership at a german carmaker. Explain more to us. Daimler has been building up its stake in aston martin, the famed james bond carmaker. It has had real trouble lately in terms of sales and profitability. Its longtime ceo andy palmer is now going to step aside in august and let a daimler executive takeover. Aston or four aston has decided to take the head of the sports car unit that has power to the executive ranks ,f daimler over the last year amg. He will take over now at aston martin. I think it is interesting because hes done an incredible job at amg. It will be great to see what he does with andy palmers dbx to help aston martin make some money. Vonnie there are only so many Aston Martins that daniel craig can sell, so i wonder what happens with the next james bond movie. I think there was speculation that a tesla might be involved. Matt i didnt know about that. There was a tesla in the brothers grimmby, which i thought was fantastic product play smit for that car, but i think that james bond will continue to drive Aston Martins, and of course, Aston Martins can be purely powered by batteries now as well. Vonnie very interesting to hear about the new ceo. From new york and berlin, this is bloomberg. Imie live from new york, vonnie quinn along with matt miller in berlin. This is Bloomberg Markets. States are starting to reopen, and government workers and their unions say they are increasingly concerned that their bosses will force them back to the Office Without sufficient protection. Here . E the stakeholders who are the voices in washington, d. C. . Is it mainly the unions advocating for workers . Reporter there are a few sources for this. One is the unions, which million. More than 1. 5 the big unions that represent the vast majority of them say that they feel the Government Agencies are not putting sufficient protections in place to keep their workers safe when they come back. The background here really is that a lot of people feel that the president , and his push to reopen the country, is going to exert pressure on political appointees across the agencies, and they are going to want to reopen essentially as a sign of loyalty for the president , and that is going to put workers at risk. Our federal workers right doing less of their work, or working from home like everyone else . Is it different depending on what the job is . Nick it really depends across agency. The vast majority are teleworking now. There are some that have gone back to the office. Irs workers, for example, in cities around the u. S. Are going back to the office. There are some nationals, the department of defense and the department of state, where they have to access classified information, so obviously, those folks are going into the office, but there is a really interesting trend that shows a lot of federal workers, particularly one study out of the Social Security administration, that said that by working from home, they were actually more efficient. They were getting rid of a backlog in orders and requests, so there is actually greater productivity going on. That has pushed to a trend where some agencies are actually pushing for workers to telework fulltime. What you are seeing are some of the trendlines in the private sector are being mirrored in the federal sector. Vonnie what would actually be enough, or what would be enough of a sweetener, if you like, to come back . Would some hazard pay dewitt . Is it just hazard pay do it . Is it just protections . What are people looking for . Nick the first is testing and contact tracing. See that in the private sector as well. The unions are saying if you are going to bring our people back into the office, more than 2 million people, you have to have a system in place where they are tested, and if people are found to be positive, sufficient on tech tracing will be done to identify the source of those infections. You also have to have sufficient protections in buildings. What are you going to do about the number of people you put in elevators. What do you do about protective gear and the number of people in Conference Rooms . So far, they are not seeing a lot of real protections. The big thing is they want to make sure theres no retaliation. In the federal sector, where the president is the ultimate boss, he wants people to come back to work. The unions want to make sure that people are not retaliated against if they feel it is not the right time for them to come back in. Vonnie vonnie nick, fantastic story. I would encourage everyone to read it. Lets turn now to the oil market. Crude continuing its rally, following a positive forecast from Russias Energy minister Alexander Novak. He predicts the market may balance as early as next month. For more, lets bring in bloombergs Annmarie Hordern. We are obviously seeing another rally today, but we are still in the mid 30s. What makes mr. Novak so convinced that we will see rebalancing next month . Annmarie really good question. What it says to me is that Alexander Novak is really signaling to the market that when they go into this opec meeting in early june, they want to keep the current deal. At that states is that they want this tapering of cuts. Theres been talk in the market of whether they keep the current cut, which would mean really deep cuts for russia and saudi arabia instead of this slow tapering. I think part of that has to do with just how the oil market is in russia. They are dealing with much different climate than the middle eastern producers, and for them it is much harder to restart some of these wells. It has been very hard on the russian oil industry, and for me, this signals on how they are positioning themselves going into this opec meeting. We are seeing green shoots in terms of supply and demand, but these are baby steps so far. I think the market sometimes gets a bit ahead of itself. Matt i never understood wanting to live in brooklyn if you are going to work in manhattan because the prices are just as high for what you get, and youve got to do the commute. But my point, having to do with oil, taylor riggs says she was crossing the bridge to get to work today, and it was a traffic jam. She was stuck on the bridge for a certain period of time. Is it really the demand coming back boosting the oil market . Annmarie thats part of it. There is a supply and demand restructuring stabilization, and there has been more pickup. More people want to go in cars. No one is really taking the subway. Supply and demand means theres been enough supply to cut out the demand. The market has yet to take into account the millions of barrels in inventory in the first half of the year. That is why i say it is baby steps. Matt Annmarie Hordern with your latest on oil. This is bloomberg. [ sigh ] not gonna happen. Thats it. Im calling kohler about their walkin bath. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] hmm. The kohler walkin bath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. Kohler is an expert in bathing, so you can count on a deep soaking experience. Are you seeing this . The kohler walkin bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. Everything is installed in as little as a day by a kohlercertified installer. And its made by kohler americas leading plumbing brand. We need this bath. Yes. Yes you do. A kohler walkin bath provides independence with peace of mind. Vonnie live from new york city, im vonnie quinn, with matt miller in berlin. We are counting down to the european close on Bloomberg Markets. We got some mixed Economic Data a little earlier, better than forecast housing data, partially because of the regions. The northeast still very weak, but elsewhere in the united states, housing did hold up. Signs of stability in places like the northwest and the southwest. We have a bounce today. 2. 6 . 2 , the dow up the dollar index below 99 now, a strong section of oil currencies. That is because crude oil is bouncing as well. Wti up 2. 2 , affecting the likes of the canadian dollar. Matt we are seeing gains in europe as well. We were open across