Liquidity conditions. But, fundamentally, this is coming back to a physical problem rather than a monetary problem. Romaine the dow jones down about 3 . The s p. Composite finished in the red. Into the green at the close, about 0. 2 . The only real sector was actually consumer discretionary, but it was a pretty lopsided victory. Namesof the semiconductor actually moving significantly higher, up about 10 index was your outperform her. A lot of names that people think could benefit from the stay at home, work at home environment. Netflix, intel, a lot of those names. Of course, to the downside, we see some of the names in the travel and tourism spacelike marriott, down about 6 on the day. As far as the treasury market, we continue to see some buying. 10 year yield 0. 795. The bloomberg dollar spot index is still higher on the day. 10th street day of games of gains on that index. Still with us, jack manley. Joe weisenthal, scarlet fu, still in their bunkers somewhere. Jack, when you look at the market movements, what is being priced in here . What is being priced in right now, i think, is a whole lot of fear. Everybody who is listening right now i am sure knows at least one person that is really afraid of what covid19 means, either from a health perspective, economic perspective, or Capital Markets perspective. What i dont think markets have priced in just yet is what it will actually look like in terms of those earnings expectations. That is why i think there is probably another shoe to drop once we start hearing numbers coming out of corporate america. Scarlet six more days of the first quarter, then 14 days before jp morgan it wells fargo kickoff earnings. Can we rely on what we have seen in the past, a slew of preannouncements where Companies Give some kind of guidance . Or are we going to get more silence, because this is a moving target and a lot of these companies are not even fully operating. Jack i would like to think that silence is not an option in situations like this. All eyes are on the csuite to see how we are dealing with these broader problems. I think everybody out there can acknowledge that this is a moving target. If it would not surprise me, you do start to hear ballpark estimates in terms of how this is affecting shortterm business, but also some reiteration of confidence in longerterm growth prospects. We came into this situation without any clear over extensions or imbalances in the economy. With the exception of multiples looking a little bit rich, nothing really fundamentally wrong with the equity market either. If we believe that there is a recovery coming down the apeline, then sort of reiterated sense of confidence in those longerterm numbers i think is going to go far in terms of dwelling investor concerns. Joe you mentioned earlier that maybe we have come to the end of some of the selling. One may have been able to say that last week but then you had another terrible week after that. We often talk in terms of timing. But, are there areas of the market, certain beatendown sectors, certain areas of credit that are just so distressed in their trading right now that you dont have to worry much about timing because they are giving you such a margin for error relative to some notion of valuation . As longterm investors, we know that we have to be willing to take risks. When you combine that with the Interest Rate policy not just here but around the developed world, seems to point to lower Interest Rates for longer, we have to be invested in the stock market. Right now, with multiples as low as they are, for a longerterm investor, things are starting to look more attractive. In terms of certain sectors that could make sense, technology is a perennial favorite, very clearly proving its use case right now as almost all of us are dialogue and from our mark dialing almost all of us are dialing in from our bunkers. We have adapted pretty effectively. There is not in a lot of disruption at least in the kinds of businesses that we are in. Streaming things like services, music services, video games. Tech i think continues to be a growth story. It is only becoming more important, not less important. Another area where there should be some interest is financials. Banks have performed extremely poorly recently. They are basically priced as if we were already in a recession. The longerterm story, ironclad Balance Sheets at these banks. The odds of a financial crisisstyle meltdown, increasingly low. Cases safen some haven assets. You combine that with a relatively good buyback yield. From a yield perspective, financials can actually look relatively attractive. Those are the two areas i would say have longerterm viability. Romaine before we had the meltdown over the past few weeks, we saw investors, Portfolio Managers sort of nibbling around the edges. Looking to real estate and other areas. Ored income, even a safer less volatile return than equities. I wonder if you see that trend continuing once we get through the worst of this, if this will all be about the normal equities, fixed income. Jack it may take a couple of months for us to get back to normal, but i think that is the direction we are getting forced into. You are still looking at a longterm Interest Rate environment of around 2 . You are barely beating inflation in most of the bond markets. When you look at what is going on around the west of the world, even more bleak. I think we have to look to riskier assets. The public equity market can make sense and does make sense if you are looking at those larger cap, Higher Quality names. We are increasingly looking toward real assets like real estate, infrastructure, transportation, and if youre willing to take the liquidity risk, there is an extremely healthy coupon, 6 , 7 , 8 , thegs unheard of in most of equity markets. I think we will continue to see it happening in the future as more and more money moves into private assets. The yield environment is just so attractive in that part of the investable universe. Scarlet that is something to look ahead to when things start to look or normal. You have these Interest Rates, in this case at zero. Low Interest Rates have really encouraged companies to borrow money and buy back their shares. You mentioned earlier financials being attractive because of buybacks. Buybacks arehat politically poisonous, perhaps, because president trumps comments about the buybacks did not necessarily lead to investing in building facilities and ringing back more work to the United States. What does it look like when a key source of demand will no longer be there . Jack i think that will be a sector by sector story. Arere right, things political right now when it comes to buyback activity. I think that is where the oppotaco problems come into play. Most of these big banks are not going to really need any government assistance, at least not right now. We are out there spending money, taking loans, buying houses, the economy keeps turning. Stock my dont think is the end of the world for these companies, because they will not be doing it on taxpayer money. You compare that to some of these businesses that make it a bailout, then i think buybacks become politically unfeasible. Frankly, i think that makes sense in the near term. Continuelong run, we to see investors having to put your money somewhere. If you look at a world where cash is barely yielding you anything, that somewhere is going to increasingly be the equity market. It is the place where we are being cornered into. It may not be the most compelling argument, but it is sort of the hand we have been dealt. I still think there is quite a bit of support from the equity market in the long run. The immediate term, the big question, what does the fiscal package look like, is it big enough, will have to take another whack at the apple sometimes in the weeks ahead . What about the virus case count that we expect over the next several weeks to absolutely surge in the United States. It will be very grim. Even in the best scenario. Thethe market recover with overwhelming intensity of the bad news on the human tragedy front that we are likely to get over the next few weeks . It is going to be tough, but it is going to be tragic, you are right. You never like talking about these things while divorcing them from the human component. I like to think that the market is a forward thinking instrument. It is see and how we are a few weeks behind in terms of infection rates and as a result, a few weeks behind in terms of recovery rates. We kind of know where this is going. At least we have historical precedent to actually look at. You look at what is going on in major metropolitan areas. New york is not the only place really shutting things down. We should start to see the effects of social distancing come through in a big way. If new york state is the epicenter of the outbreak in the u. S. And the entirety of new york state is locked down a, hopefully we start to see new caseloads fall. If we dont see new caseloads fall, i think we will see the mortality rate fall. The reason the mortality rate is so high right now is because there are a number of cases that are unreported. Either because you think you have a mild cold or you think you may have it, but you dont want to go outside, you dont want to put additional stress on the already stressed health care system. You would rather drink some chicken noodle soup, get some bed rest, watch some tv, and let it low over. Morgans jack jp manley at the start of what is sure to be a satisfying week. What did you miss is up next. What you cannot miss for tomorrows trading day. This is bloomberg. Romaine live from bloombergs World Headquarters in new york, i am Romaine Bostick. I am joined from my cohost, scarlet fu. Joe weisenthal will join us a little later in the hour. Scarlet the question is, whatd you miss . Stocks slumping but they come off their lows after Congress Fails to pass phase three of the stimulus or survival bill. We are looking at stocks starting the week on a down note. Romaine lets talk about what happened in the markets today. We have to start with the fed. Creekr and ceo of Morgan Capital management joining us now, as will should only bostick. Theously, the big news of day was the fed coming out. To a certain extent, it kind of waited into political territory the expansiveness of what i guess can only be called qe4 at this point. Do you think with the fed is doing is enough to at least sort of tide us over until we get a little more help from the fiscal side . Qe4 we needom to qeit from qe4 infinity. I think the market called the bluff a little bit. Fedof the challenges, the is kind of in a box. The market is calling a little bit of bs, saying, wait a second, you said that a week ago, now we are talking multiple trillions. The markets did not like it and ended up going down. Kind of a tough situation. Scarlet we know everyone is waiting for congress to act and come up with some kind of package. In the meantime, the fed is doing what it can to ensure liquidity. How desperate would you say they are for cash at the corporate level by companies, not just Big Companies but small and medium companies. You hit on the biggest question out there, which is can liquidity solve a solvency problem . I was talking to a friend a week ago and she said she was looking at the treasury market and there were no bids. We are starting to see that leak into commercial paper markets. You are also seeing a problem in that hedge funds with lots of leverage are needing liquidity. In your point is really spot on. What about businesses that are now shut down because of the National Lockdown that are going around of cash . The average restaurant i think has 17 days of cash. They have already been closed for a good part of that. Leadash crunch is going to to some other real problems over the next few weeks. We have been listening and waiting for congress to take some action. Meanwhile, the fed pulling out on resident action. What are the risks to the Federal Reserve pulling out so many stops at this point . Again, really important point. History tells us that there is a cyclical nature to markets and the business cycle, and in that ebb and flow of business activity, the central bank andlly reloaded the gun raised rates to slow the economy down. This time, they never did that. They never increased their arsenal. I think we are finding they are in a very tricky position today and that they do not have the normal ability to cut rates. They try to that. So they have said, what about doing more qe . It is like any drug. The first time you administer that drug, it works really well. The second time, a little as well. The fourth or fifth or sixth time, you need a lot more of the drug to get the effect. I think this is what we are seeing with this problem of qe infinity. This is i guess probably looking a little too far in the future, but with all the measures the fed has implemented, we went through madeperiod were the fed attempts to normalize rates. I wonder, do we sort of have to accept the fact that, structurally, what we get out of Monetary Policy now is just going to be lower for longer if thatower forever, the idea the feds role, we will have to structure our thinking around that. Mark you guys ask all the Great Questions today. These are perfect. We are just turning japanese. That is what is going on. Japan is 11 years ahead of the United States demographically. We have demographics of a bad demographics. Every day, 10,000 people in the u. S. Turned 65. It turns out 6585yearolds do not spend as much. Productivity goes down, spending goes down, saving goes up and you have the problem of debt. Too much government debt, too much corporate debt, too much individual dad. That leads to deflation. We have seen that in japan. Q qe. Ried to say no more they call it qqe. They said they would not buy any more bonds. Today, it is 100 of gdp on their balance sheet. The u. S. Is at 20 , we are going to 100. We are going to have to monetize the debt. Scarlet thank you so much, mark yusko, founder and ceo of morgan creek capital management. Coming up, pharmacy giant rate eight joins forces giant ride aid joins forces with the white house. We will hear from the ceo. This is bloomberg. Guest addicting the next recession will be the worlds First Service recession. Joining us by phone, gabriel massey. Why quickly, explain to us this would be a recession unlike anything we have ever seen before. It depends on your view of recessions. For me, businesses and households will get pessimistic and cut back their spending for that is usually stuff like durable goods. Households will drive their cars longer, maybe they will not buy a house. Most of those recessions originate in things like durable goods. Because of social distancing in this recession, people will stop doing services. That makes a big difference because services are very laborintensive by their nature. When you go out to eat, you are involved with a lot more humans than you are when you buy a car. We have a lot more employees in the service sector, so we will see a hemorrhaging of jobs. Joe we already know that we will see the biggest initial jobless claim in history this thursday, absolute obliteration. What does the different nature of this recession tell us about what it is going to take to come out of the recession . Somewas just running numbers, looking at how many employees you have per 1000 of spending. For durable goods, about 4. 4 employees per million dollars. For services, about 15. Three times as many in services. So we will see a huge hemorrhaging of jobs. In terms of the recovery, one thing that is so different about services is that you dont have inventories. Durable goods can build up inventories and make sales when it recovers. If your favorite restaurant is shot, the customers will come back and they may not get that signal to reopen. I am very pessimistic about how fast the recovery will be. Joe thank you so much for joining us. Scarlet pharmacy chain rite aid will be joining the white house covid19 working group to start allowing testing. A pharmacy in philadelphia will feature testing for First Responders and health care workers. The ceo, Heyward Donigan, joins us now by phone. Thank you for taking the time to speak with us. It is great news that you will be offering First Responders testing. Do you see this as step one to be able to offer broader capabilities to the general public . Heyward thank you for having me on. It is really early days. It is amazing how fast we were able to work with the white house and our team to get this up and running. We Just Launched our first public test site in the parking lot of one of our philadelphia rate eight philadelphia rite aids. We have been working with them to try to get testing into the market. We are ministering these tests as we speak. They are currently available only for Health Professionals and First Responders. So we are all trying to prioritize the Critical Community resources. These are the people that will be working with the sickest. Is for all ofan us to expand where we can. This is really a pilot. So we will learn a lot today, tomorrow, and over the next few weeks. We are also obviously interested in providing testing once commercially available testing is in the market. Testing in certain states today. We are hoping that as they identify tests and make them available, that is something we can do as well. Scarlet we look forward to that possibility. Clearly, your local pharmacy is more critical than ever these days. It is essential for Health Care Services and groceries as well. We know that one of your competitors, cps, plans to hire 50,000 people to increase demand. Tell us how you are managing the increase in demand at your stores. We are definitely going to be hiring more. We are going to be forming swat teams that can go from store to store, whether it be front and clerks or pharmacists and tax. We want to hire in our stores but we also want resources that can go from store to store. We do see that, from store to store, it will have needs and may be different o