Chips inhouse. The dollar continues to weaken. 38. 0 two. Lets get a deeper dive into market action. I want to pick it up with the tech strength. We are seeing a number of heavyweights higher. Leadn, facebook helping to the nasdaq into positive territory. Up around 3 . Tech stocks getting another bid here as we see a rally stalling out encyclical areas. To noterally, i want how far and fast we have come. If we look at Global Equity benchmarks, this is a momentum indicator. Over boughticates territory. Remember since the lows back in late march, we have added more than 20 trillion worth of value to the Global Equity markets. I want to talk about other. Sset classes the 10 year treasury is getting a bid today. Down six basis points. We are seeing the curve flattening after the steepening we have seen. That spread between three and 10 year notes. We are paying attention to the fed meeting and what they are going to say about possible yield curve control. Perhaps a weaker dollar. The spot index is down the ninth day in a row. That is the worst losing streak for the dollar. What were you seeing play out in the Energy Sector . Marathon, pioneer, dragging the s p lower. A whole isor as lower by 3. 5 . Energy had been a poster child of the cyclical value rotation we have seen, but it was nowhere making a dent near the losses we had seen. It has lost about a quarter of its value. Oil prices have become depressed. Price at the breakeven point for a lot of players in the shale patch. Withe seeing that play out Chesapeake Energy possibly having to declare bankruptcy. It is a possibility for that company. We were talking to the vice chair of another company and he said more bankruptcy and consolidation will be a factor for energy companies. Talking to the right man about that in a few minutes. Lets get to mark crumpton. The New York Stock Exchange went dark for eight minutes and 46 seconds at noon, wall street time. It coincided with the start of George Floyds funeral. He is being buried in houston, texas. Sparkedh march death protests on police brutality. There has been a slowdown in the coronavirus outbreak. Of sudden ending restrictions is premature and politically motivated in moscow. It comes before the reform that would allow Vladimir Putin to stay in power until 2036. Pumping government is 16. 9 billions of dollars into the aerospace industry. Keeping airbus and air france globally competitive. Companies will be required to invest more and faster in electric, hydrogen, and low emission aircraft. Began trade japan talks to replace the Free Trade Agreement britain has through the european union. The deal was signed in 2018. The u. K. Will no longer benefit when it completes its exit from the bloc at the end of the year. 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. I am mark crumpton. This is bloomberg. Still ahead, bankruptcies, distress, the fed and much more. That is next. This is bloomberg. Vonnie this is bloomberg markets. May was the busiest months for bankruptcy since 2009. Of the latestone companies preparing a filing. Filingmarcus is another for chapter 11. Ballooned,rket has even as the fed stepped in to stave off any worstcase scenario. With us, bruce richards. You,ast time we spoke to yt was an extraordinar weekend in your world. We have just had a rip to the upside. It has been remarkable. Here you are, bringing me back on when we have set new highs. You are quite good at picking these inflection points. Jay powell the said, convenes tomorrow. In marchsaw, beginning running through april, the said adding to their balance sheet. Of treasuries and mortgages and assets to buy. What comes out of the meeting as they are going to slow down to about 100 billion a month, coming down from 2 trillion. Theirs are starting to do bidding, they have done their job by normalizing. Liquidity they have added the system. Tomorrow we will get forward guidance. You have been talking about the yield curve, most of the comments will be around the addition to, in monetary policy, it is all about jobs and gdp. Vonnie we have a bunch of programs aiming to help companies and maybe do your job for you. 4. 5 . Te now is we are at the highs in the most recent cycle. What happens next . Do we get a leg lower . Do we get more distress . Wase the highyield market yielding 12 when we spoke last. Today it is 6 . We have record buying of highyield bonds with inflows coming into markets like mutual funds and etfs. Feelthat, the markets better. Below that market and below the surface are the undercurrents you are talking about. The markets are somewhat healed now. The economy is not. A lot of these companies are not. There are a lot of problems brewing. Sinceorted at marathon, the beginning of covid, 60 bankruptcies here in the United States totaling about 100 billion. We think that will grow to 400 billion. The default you to rate of about 10. Before this is over, there will be a cumulative rate, which is four times the 4. 5 we have already seen. It relates to downgrades, the downgrades are coming ferociously. We have 20 downgrades, close to 30 downgrades for every upgrade. Ratio is greater than we saw the great financial crisis. In terms of fallen angels, there thuseen about 200 billion far. Investmentgrade has fallen. We think that number close to 400 billion as that plays out. Markets should improve. The liquidity gap has been healed in a big way. The u. S. Is a 21 trillion gdp and the fed has added 3 trillion to its balance sheet. Fiscal spend has been about 3 trillion. If you think about it, that is 28 . That 400 billion, will that be the liabilities . Bruce total debt outstanding of companies that file for bankruptcy is currently 100 billion. We think it is a fourfold increase. Hertz has been performing strangely. We saw this huge rally. Should we see that in other companies . Auce they are unique being car fleet rental company. Falling isrs their the margin call on the sleep finance. They have 11 billion in autos. They had a margin call on that in some of their financial packages and they could not make that. That is what followed the bankruptcy. In the month of march, you could not sell a used car. The market was locked down. Carscars, they sold 50,000 in recent couple of weeks, selling it above their marked value. Themems are not producing and as people start to move to the suburbs or think about moving away from mass transit, there has been a huge bid for used cars. They are in a much bigger position. They will shrink their fleet from 500,000 cars to Something Like may be 200,000 cars or less and they will make money from current value. That is why you see the equity respond the way it is. What you areabout buying. You had a lot of thoughts on the hotel and gaming industry and you have been big into real estate. What are your thoughts on how that is progressing . Market is real estate fascinating. You look at these markets, start with hotels. Revenues for hotels has declined the most out of any asset category in real estate. 95 e revenues are down 90 ,. I think hotels, you need people to travel again. Hotels come all the way back. There is nothing broken with hotels. There is something broken with retail. The malls and too much square ourage relative to population and our spend. We have six times the amount of retail Square Footage that we sell product out of than we do in europe. Retailed. R we moved to online distribution, we just need a lower footprint. Hotels have gotten decimated and have to make it through this time of social distancing. I think it comes back. Retail needs to be a lot smaller and a lot smaller and a lot smaller. We look at office, it is different. They have held in quite well in terms of incomes and what is paid in terms of rent rolls. The work from home, the inverse of zoom is working at office. When you listen to twitter and facebook, a lot of companies ating employees to a work home environment, or suburban office, that may have a big impact in intermediate terms in downtown. You wen we are back with bruce richards. We were talking about the dry powder you had to put to work. A little more competition with the amount of distressed funds being raised. Bruce it is a good point. We count the number at about 100 billion that will have been raised this calendar year that could capitalize. Of 400ed to a number billion in distress. Only 100 billion dollars has come. There is more opportunity than what the capital is available as this plays out over the next year. A lot of these situations will start to get worked through. You look at the airlines. At the peak, tsa was running about 2 million for their checkpoints in the u. S. On a daily basis. About 90gh to at thousand, less than 100,000. It has recovered, a fourfold recovery, but it is only up to 400,000. The fleets are going to run 50 of their fleets. 50 are going to run at capacity. It is about 25 . 65 , 75 to get to break even. Ory have to either downsize get more activity going. They are continuing to burn cash. They have taken 25 billion of cash from the government, and it will not be enough if this extends longer. The question is going to be the second wave and the impact on certain sectors. Airlines, marathon is actively looking to sell leasebacks with the airlines. We have done that in the past and we will do that in the future. We have a few proposals. Is an opportunity across all the industries. Health care companies, a lot of them are not troubled, they are looking for Growth Equity and debt financing. They are companies that need a bridge through problems they may have in the supply chain or the hospital. Lots of good opportunities across the spectrum. It is not energy or retail. Vonnie are you avoiding energy . Bruce completely avoiding energy. In terms of going forward, would love your thoughts on the gaming industry and what happens when you get further out. Do we see a change in sentiment around the country, a change in leadership . Gaming specifically, vegas reopened june 4. What we have seen is positive. It is a bounce off of a low level. If you look at the mgm, the loggia, they have reopened with about one third of their hotels. Good,the numbers look they are low numbers. About 50 of vegas receipts come from air travel. About 50 is a drivethrough about 50 percent coming from california since it is a 3 hour drive. 50 of their revenue is entertainment, whether it is or foodion performing, and beverage. They get revenue from entertainment and food and beverage. It is not conducive when you have covid19. They have reopened, they have rooms, so, receipts per gaming location look ok, but it is only a small portion of the hotels that are open. The hotel sector that looks better and the Gaming Sector that looks better is some of the regional markets like or connecticut gaming industry. The environment is fraught and troubled. It has been for a long time. We are heading towards an election. How are you thinking about how the environment is changing politically and what opportunities that might represent . Is novemberlection 3, lets all get out and vote. Predicted it is looking favorably in being a bookmaker site. That is odds in favor of biden winning, not only a blue victory in the white house, but also the senate. Sweep is completely possible at this point in time. It is still only five months away. Is tax. Ne Corporate Tax rates will go up. Not back up to 35 , but close to 30 . That will not be good for s p 500 earnings. The reciprocal and reverse will happen. When the tax rate came down to where it is today, there was a 25 boost in corporate earnings. That immediate effect over that the reverse can happen. Individual rates can go up and will be repealed. It will bens, Government Spending and big deficits. We have a big deficit today. About 3. 7dar year, trillion dollars expected. When it comes to health care, obamacare, the policy on china, tax, government policies, it is a very opposite approach. Vonnie there could be a wide open field. We have to leave it there. We will talk again soon. Thank you for that intel. This is bloomberg. I am mark crum tone with news. A Top World Health Organization official is walking back her comments that asymptomatic transmission of coronavirus is very rare. During a live event on social media today, maria said her comments stemmed from a very small group of studies, including unpublished data. She said she was just answering a question, not stating a w. H. O. Policy. The comments on monday revived controversy over how the virus spreads. A Senate Republican task force is studying propose proposal to combroofl Police Practices in response to nationwide protest overseas the killing in minneapolis of george floyd. South dakota senator john thune told reporters he thinks there is Common Ground that can be found. His remarks come a day after house and is not democrats proposed a plan that could make it easier to prosecute and sue Law Enforcement officers. President trump is hoping to get back on the campaign trail soon. He tweet today that rallies will be starting again soon. They have been on hold since march due to the coronavirus pandemic. Democratic president ial nominee joe biden has begun to resume events, but he limits the number of people in the room to practice social distancing and he wearing a mask. President trump has mocked the former Vice President for wearing a mask. The president does not cover his face in public. The midwest is feeling the wrath of what is level of kristobal. The system is unleashing downpours and bringing gusty wins from nebraska to wisconsin. The storm is expected to intensify as it interact it is with another system approaches from the west. Global news 24 hours a day on air on on quick day by bloomberg, powered by more than 2,00 journalists and analysts in over 120 country. I am mark crum ton. This is bloomberg. Vonnie live from toronto, eyewitness amanda lng, welcome to market market. And i am vonnie quinn. We are joined by our bloomberg audience. Here are the top stories we are following. Tech pushes us stocks higher. Equities pairing losses, the nasdaq goes to a record high. We speak with one investor who says this years bear market should maybe just be call a panic attack. Then the fed decides the federal kicks off his twoday meeting with marks wonder what is next for l. S. U. Programs. And the launch of bloomberg green. A look at how to fix the future in the middle of this pandemic. Speak with an expert. Mained a check on the markets showing giveback after erasing losses. Tech stocks are among the leaders in this marked. You can see still some weakness on the broad market here. We are seeing tech and Consumer Discretionary as the two sources of strength still. Among tech, big moves, apple, amazon, facebook all up about three points each. Energy is the single biggest deadliner today. We will talk later in the show about the outlook on Energy Demand. That is pinned closely to not just production levels but also the outlook for global growth. Financial and utility weak. We are seeing weakness across the punt. Materials and gold holding their own. As alluded to, one of the Big Questions being asked by one of market stat situations, is the bear market more like a panic attack. He is with us now. Thank you for being with also. Thank you. Obviously it is smantics in some ways, but it does the maer in terms of how investors think about the markets and what investors do in that market. The relevance of saying this time is really was different. Walk us thrur your thinking . Well, the bear market lasted from february 19th through march 23rd. So it only lasted 33 calendar days. That was actually 23 trading days. Of those 23 trading days, during seven of them the market was down 20 or more. So it basically was a sevenday barley market. I dont really believe that should be included in the as ooks as a barley a bear market. It was really more like a panic attack. If it was in fact a bear market and that is the way you want to look at it, then the question is was this rally a rally in a bear market . I dont think so. It was a continuation of the bull market we had that started way back in march of 2009. What on earth is the ustification for this, ed . Fundamentally the economy is in a deeply bad state. Minus 48 for g. D. P. For earnings we just had booth richards earnings year other year down over 30 . Sure. From a fundamental perspective you can say it is a bear market because bear markets occur during recessions, and there certainly has been a recession. The National Bureau of economic earch Research Declared the peak occurred in february. Some of the press has been picking at that saying the recession started in february. It actually started in march. But it may well be over in may or june. In some ways this is more a Natural Disaster than a classic recession caused by credit crunches and all the other excesses that lead to a long deadline in the economy. This could very well be the shortest recession of all times. Basically it would cover the First Quarter and the second quarter. But in terms of the monthly pattern, it really took a dive in march. That was just the last two weeks of march. Then in april it took a bigger dive. That is when we lost just about all that is where all the negatives came in. But we are starting to see some indicators bottoming in may, and the outlook is that many of them will bottom in june. We are seeing obviously kind of a rotation into the businesses that will lead us into the future. We are seeing the nasdaq here breaking 10,000 for the first time in past. Ere is as a longtime watcher of these markets, i want your check on evaluation here. In the conley text of we had this sharp issue we had to get past. We could even go back to january. What do you make of the value of these markets . Well, very often you do get meltups in bull markets, and they usually occur near the tale end. But near the tail end. But everything is sort of all over the place, comparing to what is going on now to the past. Lets just say that the bull market started in 2009 is still intact. We mail actually be seeing the meltup phase in the market. I hope not. If this thing becomes too much of a bubble, then we are goi