Its possible we have gotten too disconnected from the fundamentals. The dow and others are on their way to the best quarter since 1998, and for the nasdaq, it will be the best quarter in decades. That is happening at the same time the corporate corporate profit outlook continues to deteriorate, now trading at 22 times forward earnings estimates it will be interesting to see how we rerate in the next couple of weeks when we start to get major results. Thank you for that markets a deep dive. Players are missing out on wimbledon this year, the usda usta is getting ready for flushing meadows, except without the 850,000 spectators who attend the event. And novakemain djokovic announced he has tested positive for covid19. Is the u. S. Tennis association ceo. You have been coping extremely well with the coronavirus. You have set aside 50 million to help in grassroots efforts. Give us a little bit of detail about that. First, thank you for having me on. We realized quickly our sport was in trouble. Over 90 of tennis facilities in the United States were closed. Think about all the teaching and professionals that support those facilities. So we allocated 50 million to our Grassroots Initiative to help different stakeholders and that pivoted to addressing the u. S. Open Going Forward. About, there are a lot of Health Concerns and tennis in tennis. I know you generously outfitted the Billie Jean King center in a borough that was deeply hit, the borough of queens. Now, you have the ability to have players play again. We saw djokovic testing positive. Problems . Icipate it starts with health and safety when we had to start making decisions on hosting the open, we set Guiding Principles in the first one was the health and well and wellbeing. Ultimately, we have to protect the health and wellbeing of everyone in new york. That was our guiding principle as far as the health and wellbeing. We have a document on protocol that is very detailed and we relied on the experts doubtless publish that document. Firm yeses from people that they will play . Last years winners are still up in the air. The french open is sort of getting in the way now, because they plan to delay. Commitments . It is fluid right now. Things can always change. We have a great relationship with roland garros. We are working very closely together. We will be getting back and forth to dissipate. How has the decision affected sponsorship and tv rights . Huge amountiously a of money involved. How much of that informed the decision to go ahead with the tournament this year . We are in dialogue without sponsors going through the different options. As i mentioned earlier, we had a guiding principle around health and safety. Is this in the best interest of tennis . It does not make Financial Sense for everyone involved. That includes everyone in the tennis ecosystem. At this point, have checked all of those boxes and thats why we are at the green light to go ahead. Again, thats with the approval of the state of new york and thats why we will adhere to those guidelines. We are seeing spikes in other states now. Is there a consideration towards moving the events away from those states . We have approached it at the local level. Originally, we put a 60 day pause on all tournaments heard and as we saw, community was opening differently with 17 sections making local decisions of local play. I want to ask you about players of color. There has been a push to get the players through the ranks so they have a chance at the national spotlight. What more can be done . A lot more. Frankly, we have not taken advantage of it. But if you think about arthur and in serena williams, great people in the sport that our diversity needs to increase and made broader representation. I know a lot of people are very excited to be watching the u. S. Open. Thank you so much for joining us. Talking to usta ceo us. Ourlets take you to bloomberg invest global summit where John Micklethwait is with david solomon. Declined a very steep and we are going to have somewhat of an accelerated recovery. A comp gated question to answer at this point in time is as you look forward or you think about whats going to happen, how will the effects of this crisis further impact of economy Going Forward . A lot of that is still very uncertain. Is a lot of Uncertainty Around Health care, around human behavior. I do think we are going to see a sharp the to start with but it is very openended we will see. History would tell you that to fully recover from shock like this will take time. My expectation is that while the climb up the sea over the next several months will look quite like av, i think it will flatten into 2021. Ead the markets are down a bit byay, but are you surprised how robust they have been . Be really quite sizable effects Going Forward. Do you think the markets look high . Im never going to say the markets look one way or another, because the markets are always smarter than i am. What i will say is it is not surprising there has been a fair number of money into equities given what has happened from the Monetary Policy perspective. The fact that rates are basically at zero, people are looking for opportunities to earn a return and thats pushing money into equities. I will say the market does seem to be a little bit ahead of my view of the future earnings performances as we look 612 months out. Will see a, you rebalancing that over time. If you are looking to earn a return over some time its the only game in town. The markets are definitely telling us people are more optimistic in the u. S. About the reopening. I think theres a lot of around learning to live and operate with the virus. But the markets are certainly discounting the difficulty of that and that something we will watch. Watch your you have probably talked to as many ceos as anybody. Sense of a worry about credit Going Forward . There must be some companies which had to go running to the government do you worry about that . Are those the worries of a slightly longer term future . Areaedit is certainly an where any institution will spend a lot of time thinking about impacts. Given Monetary Policy has opened markets, any companies have access to capital and many have pulled their financing forward in a way that has allowed them to sit securely. Enterprises,edium that is more complicated. The banks,following you will have some clarity on people look at the provisioning that is pulled forward. There is no question that credit is an area of sensitivity. Depending on the severity of the contraction, there will be a bigger impact over time. Judgestill hard to because it is really unclear. There still a lot of uncertainty around the fundamental issue and how it affects human behavior. D think there is h think there is a challenge of eight merger wave . Thing thater one affects mergers is ceo or board confident. Is asia going to lead the way out of this one . A. J. Is definitely leading the way out. If you look at our own businesses and the way we are operating across asia, i would say we have a proximally 50 of people in office and increasing. When i talked to my colleagues in asia, they talk about a cautious environment in a place like hong kong or tokyo, but the same point, they talk about how people are in restaurants, living their lives and out and about. They talk about a much more normal operating environment, although with caution spirit environment is certainly a meaningful time ahead of where we are in europe. Ahead of a certainly more meaningful time than where we are in the u. S. How about the idea of how goldman itself is reacting to this. Thinkbits of goldman d will be changed most longterm most longterm by the virus . I dont think the virus is going to change parts of goldman longterm. I do think that the virus has accelerated certain trends about technology uncertainly Financial Services will play a part or touch on that. You asked specifically about the firm or how it responded. I think you have got 98 of employees out of the Office Around the week of the 14th or 15th of march. Planning and the work we had done to operate remotely, it has really worked quite effectively. Moment,fectively at the i would not say it is a longterm solution but a solution for us to offer services to our clients. Made the, we have environment worked quite effectively but there are things we lose out on from a collaboration and opportunity perspective, like not having some ability to have people working together or directly in a locationbased environment. During a crisis you really have to think about your communication in simple, structured ways. We talk first and foremost about how we want to take care of our people and operate a peoplefirst philosophy. Second, we have to continue to operate the business and we have a sense of operating in our communities. Mind, as things have progressed, we like to bring things safely, cautiously back into office. Asia, further along in progressing in europe, and just starting in the United States. As they said they were progressing continental europe. Paris,es like frankfurt, about 10 or 12 . Here in the u. S. , we started on monday in new york. We have about 5 of our people in the office has been nice. I have been coming to work throughout the crisis but its nice to see that interaction. For us to really take care of our people and serve our clients we will be cautious but we also want the collaboration and teamwork that comes from having people present. Do you think that when one looks at a businesslike goldman, it would have said you can do things like Relationship Management from home, but trading people really need to be together. Have you discovered how to do that remotely . We certainly have. And while we are doing it remotely and it is working, that does not mean it is as optimal as having people together. Talking to senior traders who are operating for us, even though they can pick up things on their terminals, one of the things that happens is that when you are by yourself, you dont have the team orientation. You have to get up from the desk, god for bid you have to go to the bathroom, just a personal time. When you are home by yourself, you feel like if you get up youre going to miss something. If some he tries, they dont get you right away, then they try some announce a different firm. So while we try to make it work, it is not optimal. One of the things we have learned is you can be more effective than people imagined if you have the right technology and systems backing them. Optimal mean we are as as having people enhance the speed of can medication. You talked about cutting ,osts and when the virus began you talked about keeping employees like most of the big banks did. Has your thinking changed on that at all. Would you keep the job cuts off for another year or how should your employees think about that. . We were very clear that we were focused on the employees but we were running a business as we go forward. We have not done it this year but has not been appropriate at the time they would normally do it. We hire about 2000 people at school every year. 5 always look at the bottom so we can bring new younger people in. We will go forward, continue with that business model. We have longerterm or medium goals where we think there are opportunities to run the firm more effectively. Obviously, the crisis changes the timeline on some of that we would do what is right for our shareholders and do what is right make sure we are operating our firm efficiently to serve our clients. You think those issues will become closer once people are back in the office . There is a time of crisis and then a time of normalization. I think one of the things that will be a drag on the economy businesses,hink all i think there will be a toll and adjustment on workforces more broadly. Something they have to manage as they go forward. When we looked at your targets, 11 black, 14 hispanic , 50 women as entrylevel. That, youre probably getting more credits. I wonder what you think about wall street, diversity, and race. Been asall street not good on race and why did you seek to change that when you came in. I was very focused on diversity and inclusion and Goldman Sachs before i became the ceo. Honest, i got my First Experience for gender diversity with my daughters and their own experience, coming to understand how their experience as young women in the world professionally was different than mine have been. We are really starting to understand the understanding of those differences. I was really recognizing there were opportunities to accelerate and be more purposeful and aspirational and moving things along more quickly. So i set goals in the Banking Division and i brought that philosophy when i became ceo. I think it is effective. You have to set aspirational goals and hold people accountable if you want a more. Iverse and Inclusive Work will have ae first lot more to do. I will say so does journalism, sodas industry broadly there are fundamental racial inequality issues that are deeply rooted in our society and i think it is a moment in time when leaders like myself spend a lot more time listening and actually taking steps that the medium and longterm will move us along more quickly. Its just a question about Goldman Sachs its a question of society more broadly. Andomething i believe in something i will continue to try to make a difference and contribute to. Theres a lot of work to do in improving opportunities and fundamentally finding ways to make our system more fair. Ella comes to diversity and inclusion, it is a broad set of issues. Oniously, a lot of focus lack committees at the moment but there are still lots of issues with gender and additional focuses. I know you are aware that back in january we made a statement we would not take a Company Public without one diverse member of the board going to diverse members of the board. Im now seeing that is having tangible results. Today thatave seen palantir announced they have added a diverse board candidate for the board, the first diverse board candidate of a private company. Im not sure that would have happened at this moment had we not taken the steps. We ceded more broadly, private Companies Taking diversity to the board and thats a good thing we have to find ways to make a difference but it takes Time Commitment and we cannot let this moment pass. Speakingsolomon their at the bloomberg invest global summit. More on that coming up. Attorney general william barr says he will testify for the house to sherry committee next month. The are examining whether attorney general has inappropriately criticized the justice department. One of bars federal prosecutors is testifying today that roger stone was given special treatment ahead of his sentence he because of his relationship. Senate democrats have blocked the proposal to overhaul policing practices, saying it does not go far enough democrats said the legislation does not go far enough in addressing injustice, such as making it easier to criminally charge individual officers. For thehumer called Senate Judiciary to Work Together on bipartisan legislation. Florida continues to see coronavirus numbers climb. Health Officials Say the number of new cases jumped 5. 3 . Highest the state now has more than 109,000 cases florida began to loosen lockdown restrictions around memorial day. The coronavirus outbreak has been exploding in brazil. Officials say it is likely to get worse paired brazil has more than one million confirmed cases second only to the United States. Over 51,000 people in brazil have died the president has frequently obstructed efforts to contain the virus, demanding local officials stop trying to close businesses and firing a Health Minister who pushed for aggressive responses. Global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Live from toronto welcome to bloomberg its bloomberg markets. Here are the top stories we are following from around the world. Stocks are in the red today with the s p 500 and the dow down. The outlook ravaged world economies projecting a deep recession and slow recovery. Moments, we will send you to bloombergs global summit bring you the biggest names across finance, economics and investing, including the Bridgewater Associates coast cio bob prince cocio bob prince. Record provisions for loan losses as they brace for economic fallout from the pandemic. We speak with the dmo ceo o ceo darrell bm white. Markets showed a downgraded outlook on Global Economic growth from the imf. Certainly a on these markets. We are seeing energy as the steepest decline or. Any strength in the market today, all brought based decline. You could see tech is certainly not helping out at all though financials were even worse than tech today. Quick check on the dollar its gone flatter than earlier. There was a reaction to a downgrade on federal debt, downgrading the aaa status to aa plus with a stable outlook. We will continue to watch that and other ratings agencies in maintaining a aaa rating. Dimethyl also downgraded its outlook on canadian today. The chiefarlier, economist explained the reason for the reduction in global outlooks. Seeing is the impact on economies was worse than anticipated in april. Is still noe medical solution to the crisis, we are expecting much more persistent social distancing. The combination will then have recruit potential for economies. These are some of the main. Actors behind the downgrade there are many factors weighing on the outlook here. Mike is our policy correspondent. Mike, we have uncertainty around what happens, now concerns about resurgence is and we cannot forget trade issues. Paint the picture here. Were you surprised at all that the imf reduced to the outlook . We knew that they were going to. We now have the overlay about this traditional trade war will be ramping up. They paint by numbers pretty bad. They have now lowered the global towth forecast for 2021 4. 9 , more than the 3 they forecast in april. The u. S. Could shrink 8 this year. They had forecast it would shrink by 5. 9 . The euro 10. 2 . China is the only one of the major countries it is really going to be growing this year. There is not going to be enough to make up the difference. They say this part of the pandemic and the result of trade tensions and they seem to be increasing around the world. This is a decision from forecasters two months ago. We may appreciate it will be revised as well. So much depends on the virus. Look at the red states and how it has flared up again. That was one of the interesting things the imf said. They dont think markets have really priced this in. At this point, they feel ahead of the virus. It will be rethinking what they think possible earnings could be. One factor we are paying close attention to is canada, as they contemplate the Border Closure and the new numbers. Are there concerns here about any kind of real push for closure happening or does there just seemed to be zero political will . It depends on where you are. Republican governors are fighting against closures. The Texas Governor said things are out of control but he is not going so far to allow them to do so. He said they would impose quarantines other states with and its arate mixture given which part of the country you are in. That brings the total of cases in california to about 190,000. Clearly, the curve is still steepening. Lighthizerobert threaten 3. 1 billion in new and additional tariffs. How likely is it given the Economic Hardship that they will go through with those threats . When youre talking donald trump and talking tariffs, you have to bet he will go through with it. They gave authorization back in october to impose 7. 5 billion on countries as part of the airbus consortium. Included. The u. K. Has is only used about half of those and now they want to use the remaining money to impose new tariffs that could be up to 100 on Specialty Food gym, machineh tools, trucks, a wide range of products. The eu says they are likely to retaliate and are waiting on their own wto ruling on if the u. S. Gave illegal subsidies to bowing. Expect 11 dollars worth, so it looks like a trade war between the u. S. And eu is only just beginning. Of course, they have to come to some kind of arrangement by the year. Thank you so much. Up, well be returning to the bloomberg invest local summit. We will hear from bob prince from Bridgewater Associates. This is bloomberg. This is bloomberg markets. A quick look at the markets. You can see the imf has reduced its Global Growth forecast and is increasing contraction forecast for this year. , as weighed on stocks early did other states joining the curve steepening in the United States. New york, new jersey and connecticut saying they will have to quarantine before they come in. Get back to the blumberg invest global summit which is in the which is underway right now. Fantastic to have you with us at this conference. Feels like an absolute lifetime to you and me. We were in the mountains of switzerland and we know they are often detached from the world around us. You said something to me that woke all of us listening. You said the boom and bust cycle as we know it is over. A couple of months later, i wonder how you have reflected on those comments and whether the policy response has summarized that. We have certainly transitioned to a new Monetary Policy regime and the nature of the cycle is radically different. Even without, we would have been in a monetary and Business Cycle regime. I dont think any of us were talking about the virus. But just focusing on where we and where that Monetary Policy fits in, i think there are three key elements to the current set of circuit. We have a collapsing Global Income caused by a pandemic. Pretty much everything follows from that. Different Economic Cycle because a typical Economic Cycle is a contraction in credit brought about by monetary or fiscal policy which is largely under the control of the central bank. When things get bad enough, they cut Interest Rates and you come back out with an extension of credit. This time isning the collapse in income that influences the virus and the pandemic. The fear of safety is basically people staying home and not producing things that would cause a collapse in income which causes a collapse in spending. Normally, you have Monetary Policy and income think the last thing. In this case, income is the first thing to fall, causing a reduction in spending and then the reaction to that the driving influences the virus, nobody really understands very well, let alone the government response to the virus and then the response the government and differences across country. There is a huge amount of uncertainty related to the virus as a causal influence, and then to pull out, you have zero Interest Rates. Normally in an Economic Contraction you are reducing credit, raising Interest Rates, which gives you a lot of room. In this case, we have zero Interest Rates and credit is expanding, which reduces the potential. So the solution is appropriate and what we refer to as Monetary Policy three. Monetary policy one is really interest ratedriven that has pretty much come to an end when you hit zero. Posted thousand eight, but when risk premiums are already low there is less potential for that. Monetary policy three is where we are now. Mp3 is the coordination of fiscal and Monetary Policy. But really, the biggest actor is fiscal stimulation where you can direct funds to parts of the economy that are most needed but you support that with Monetary Policy to buy those bonds so that Interest Rates dont go up and reverse the effect youre trying to achieve. Lesson to a direct Interest Rates and income levels. The actions are roughly appropriate. In other words, the amount of fiscal stimulation has been roughly sufficient to fill the hole in income that was created. But not all of money was being spent. . 50 on the dollar is being spent, so you have not had much of an improvement in spending in the economy as you have had in liquidity in the system. In addition, they are printing we have above so major reflation going on which has been by large successful so far. We are used to thinking in terms. F growth rates the big thing to be thinking about is the collapse in income and the levels of income that exists. These low levels of income will be with us for some substantial degree, which means lower profits and lower spending, but it also means lower cash flow. For those who are treading on thin ice with respect to their financial position, the longer this goes on the more difficult it becomes for them. You have these pressures operating at the same time you have this collapse it income which will affect those most vulnerable. You have the expansion of liquidity going into asset but it may not be sufficient to cover those cash flows. The programs today are by and large insufficient to cover the income gaps. We are really talking about an amount of money that gets you through the summer the problem is we are talking about the virus, which has a timeframe 1824 months. Essentially, the timeframe of virus impact on spending in relation to the timeframe and how it could last. As you can see, we have had a huge rebound because markets have focused on the liquidity side of the equation and none of the cash flows. Anticipating that as this bandaid starts to wear off, we could hit another air pocket . You are just going to see an instant replay. Every three or four months, you will get the instant replay until governments run out of either the willingness or ability to cover that gap. Large wereery typical emergent economy cannot necessarily go to the well over and over again. That also produces differentiation. Pressures in the production of liquidity is a force that will create a lot of differentiation in outcomes. Assets, the store holds of wealth benefit from liquidity, if you are a restaurant that cannot get the next loan, that liquidity may not help you in those companies and those companies and countries which are most exposed to the cash flow impact, they are not store holds of wealth. They dont get the liquidity and so that creates a differentiation of outcomes over time. Our standpoint, it requires two things. Requires diversification and presents opportunities if you can identify how those forces will play out. Lets talk about a divergence right now. Jobhe market doing a decent of discriminating and looking through the things you identify . We do see some differentiation, but the ultimate outcomes are about 82 or 100, then know they are not. Its a very unique set of circumstances from a market standpoint. If you get a lot of growth and you go to a 50 unemployment rate, it still a 15 unemployment rate. You need to allow it to move through the system where the government can fill that hole. If you go back to the financial crisis, the peak unplanned rate was 10 . 2010, thenck from we are there without the ability to cut Interest Rates and move forward just to cover the income hole that we are in. The difference in the way the is thiswill play out accumulation of a low level of which over a long time, is a much different grinding influence that i must cant be discounted ahead of time. The longer it lasts, that grinding effect of a lower level of income over time will gradually manifest itself on some parts of the economy, what the same time the efforts to offset that will benefit that and particularly other parts of the marketplace. I will add one other thing to this, which is that at the end of the day governments normally get what they want when they try hard enough. So we have studied every financial panic and resulting deleveraging inflation. 115 of 139 cases, governments got what they wanted. But getting what they wanted require choices. Big waysle, you have to untangle yourself from a mass , you have an easing of monetary and fiscal policy. You have a debt restructuring and a currency devaluation. The first we have two, the easing of policy and fiscal policy. That andt effort on the question becomes at what point is that enough or do we then transition to debt restructuring and currency evaluation . From there what is the status of the dollar as a reserve currency . Those of the Big Questions we are focused on right now and our clients are thinking about as well. Issues. Are huge what are you positioning for, with everything you have just said . We have got our normal processes and that is spread across a lot of different markets. But there are these three big forces that will be relevant to probably everybodys positioning. Reflation, sotrehold of wealth, storehold of wealth and differentiation. Whether it is when you hold or more active trading. Reflation, store hold of wealth and differentiating outcomes. That does it for me for our audience. We will take a quick break and be back to bloomberg invest. Almost every day. [laughter] yeah. About typically think cash as a riskfree asset. But when you are in an inflation, you can have a negative real return and it is not a good store hold. He wantspes of things to look to as a store hold of wealth are things that retain their value in real terms. Obviously,bout gold. Ut gold is just a currency so gold is one of those not because the utility value of because fiatr but money declines as you use it. As it goes up, it is mostly that the value of money is going down. The gold price is a metric for the value of money. But lets look at other stores of value. Bonds are a useful store of value because you get paid the inflation rate. We look at things like certain types of equity. Its interesting that so long as the capital system is in place for example, if you own a chain of movie theaters, its not really a store hold of wealth because people dont have to go to the movie. But if youre talking about food, water, and basic health care, these things are necessary to physically live. They are physically necessary all around the world everywhere, so there are turn types certain types of spending like assuredre you can be that people will buy food by water, and by aspirin. Effect a store hold of wealth. Have companies that are at the vanguard productivity and they are the sources of productivity, the fountain of productivity, the duration of cash flows will be much longer than a company with a short duration of cash flow and they will be much more benefited by the liquidity production then by those hurt by contraction and income. These are the types of things that we look at as thinking about how do we think about a store hold of wealth over time. You mentioned free markets and capitalism. John the Federal Reserve seems to lost have lost faith in the capitalist system. Im wondering from your perspective how things have changed now, from a Market Participants perspective, where you can make the macro call and then get the micro all really wrong micro call really wrong. How do you participate in a market like that . Bob the end of the boom bust cycle, that has progressed to what you are talking about. Mp3 puts the government in the middle of the distribution of capital. So, capitalism, as we know it, is the government steps back. Those who h