Fed vice chair Randy Quarles talking about the stress test next week, seeing dividends might be influenced by the pandemic. He thinks most banks will be allowed to retain the dividends, and particularly with wells morgan believe, and stanley, highlighting concerns about financials recently. So the underperformance today caught my attention. Caroline we get even more insight on underperformance, and what led to the selloff at the end. The northwestern wealth chief manage he chief strategy manager is with us. We were lower earlier and then i got a message from a key r on the bloomberg squawked talking about how the vice chair of the Federal Reserve was saying, there is no limit to fed treasury buying. That seemed to give the stock market a little more support toward the close. Is the fed still the be all and end all, is liquidity still the beall and endall in this market and can we grind even higher as the covid rate is still causing concern . 26 years of doing this, the fed has been supposedly pushing on a string and it has never proven to be true. The biggest changes i have seen is the central bank. This central bank is much more active than those in the past and they target the market much more. The market told them they want to change. This fed talks about helping with inequality, pushing markets think this i do week, buying individual corporate bonds, shows how hard they will how far they will go to make sure the market grows and make sure they get a 13 inflation target. That also helps equity valuation. We have talked about that. When the 10year treasury yield is at. 7 or whatever it is today, and the fed is promising to lean on that yield curve, if the economy gets better, where do stock valuations go from here . I think that keeps pushing capital toward stocks, at some point it will lend, but it wont yet, and they are a powerful backstop for the market, as they have proved over the past months. Romaine good point about the fed, we had research this week where they talked about the price liquidity ratio, factoring in the money the fed has injected into this economy and why that makes pe valuations a little more in line with reality. When you think about the fed backstop at how so many people seem to be under impression that the fed is not only go to be there, but for a fairly long time, at least into 2022 if you want to believe what futures markets are saying. Is there a risk that we worry about the fullback, or does the fed have the capability to do an orderly pullback when and if that day comes . Day thatis the days in the future and i guess that will be something to worry about then. People keep saying the fed is a backstop, and i believe that. What if you look at cash on the sidelines, the data, how funds are invested, im not sure everybody does believe that. When you talk about the fed, there is still quite a bit of money that has to come to the market and Fund Managers have a lot of cash. So many people think this is a bear market recovery, and if the market does selloff a bit, you have capital that could come into actually support it. Dip,ine by the northwestern Wealth Management company chief strategist brent schutte. Next. D you miss . , is up landel be joined by ruth shuman to talk about wealth and equality. This is bloomberg. Caroline from bloomberg headquarters in new york, im caroline hyde. Whatd you miss . The s p 500 slides 10 but it is a weakened green, closing up one point 8 on the s p 500. The e. U. Locked in negotiations plan, Angela Merkel saying stimulus package failure is going to be dire. And juneteenth, against the backdrop against calls for equality and against police brutality. Shuman with ruth lande executivechen, director of times up now. Joe romaine moodys is saying this stock remains under review for cart downgrade, wifi. Ire card cited by moodys lookr we want to take a at the volatility caroline was talking about. Take a look at the chart. It is a rebalancing and reconstitution of these indexes. The last time you had the quadruple ridging day quadruple witching day was 2007. Goldman sachs was looking at 1 trillion worth of options that would expire, making it the thirdlargest nondecember expiration ever. This is a day when options and futures on indexes and equities are set to expire. I want to bring in julian managing director and chief equity strategist. You said during the break was a sloppy close. How was volatility on this big day . Julian we saw trading volumes we expected, but if you look at it, the real volatility was in prior weeks. Downd get to a close about down about. 5 or so, but the market for us is in the middle of a range that carved out at last weeks highs, and the near panic load you so monday when he before the fed stepped in. Buthere is a lot of noise, the one difference we have this afternoon that we didnt have before is that Public Confidence , and the public has been a very large fire of this market, we know that, it may be dented a little when the worlds most iconic brand tells you they are Closing Stores in florida. Apple having to pull back on some of their openings is really starting to shift retail buoyancy. What have you made of retail exuberance in this knock market the stock market, not just the normal stock market, but the incredibly risky trades come to mind. Another one we are worried about, are you worried about shifts in the market and federal regulators getting involved . Jillian it is not so much the regulators, it is just one of those things. In a summer where, granted, you have had the first kind of bear market and now a raging bull market, the likes of which both happened in performance that night that might likely take four years, and you have drawn in an entirely new class of investors, young people probably with time on their hands, and other young people just curious because you are in this work from home environment, you are bound to get that kind of action, and there is just a locked enthusiasm that reminds in 2000. What we saw romaine how close attention are you paying to the vix . In the vix selloff a couple of years ago, there was a lot of ink spilled about the level of the vix and what it meant to the risk of risk assets. We have seen it end about 30 and some strategists talk about this idea that it to see the vix drop more, we wont see the rally go much further. The tide ofually, liquidity the fed has thrust upon the markets and economy has really helped things move along. Stickingge of the fix that the vix stick the message of the vix sticking in the 30s tells you that there is only such an extent that that can follow through. It tells you the fed can provide liquidity, but what it cant do a solid economic reopening over the next six to 12 months. Taylor the russell 2000 vix, walk me through, you talked about neutral hedging strategies in this environment. Explain what you mean by that. Jillian sure. Off the lows at the end of march, beginning of april, we noticed the risk measure in the smallcap russell 2000 with trading at a historic premium to the larger cap s p 500 vix. It was one of those things that was telling you that the market , butlready capitulated looking out 12 months, you can expect very strong gains and smallcapg performances. We got it in six weeks instead of 12 months, because the cycle has been compacted. The difference now is that there is still this large risk premium out there in terms of small cap stocks, which should necessarily happen because we are at 50 or more off the lows, but it is there because the fundamental backdrop of the difficulty reopening the economy and the political wrangling over the next stimulus round is the thing that is going to hit main street usa the hardest, ed makes small cap starks and makes smallcap stocks in the market in general a riskier cash riskier prop is riskier proposition. Thank you, for your time and wishing you a statement and will weekend. At 6 00 p. M. Estin eastern tonight with former treasury secretary Larry Summers and Charles Schwab investment strategist liz ann saunders. This is bloomberg. We need an active industrial strategy as we come out of lockdown. And although the government has been pretty good in helping businesses, in relation to staff being furloughed, they have been pretty good in the short term. Of thenesses come out lockdown, they need additional existence that additional assistant additional assistance. Many local communities have lost with we call council tax, people who dont have jobs dont pay taxes, and businesses that paid Business Rates have stopped paid Business Rates because their businesses have basically been incubated for three months. That means governments, municipal governments havent got the funds to provide services. I have lead by example, taking a pay cut, but we need the government to step in for the medium to longterm. The largest municipal governments, not just businesses, and governments across the globe have to do this. Mervyn king and i are reaching this book, and it is the spirit of london mayor and the trading environment of the 16th century. Tell us about the need to reopen trade to london in goods and services. How critical is it to get the euro back, how critical is it to get the airlines up and running . i know you are speaking from new york, but forgive me, london is the greatest city in the world. And the people who come to our city are what make our city great, students, tourists, investors, businesses, sports fans. And that stopped over the past four months, and we need that to return. Im very concerned that is the Academic Year begins, many undergraduates may not come. I am very concerned multinationals have stopped sending their staff, may be riskaverse about coming, i and very concerned the theaters that have been closed may not reopen. We all know the world is a smaller place now. Globalization has given us many advantage, and our strength is our diversity, and that comes from our visitors, and it is really important we safely, safely reopen again to visitors, businesses and investors. Because we want to either return to, not business as usual, but a new normality when we recognize what this pandemic has done. It has shone a spotlight on the fragility of our society and our business model, and the recognition of a new normal addresses those issues. Us of colleague reminds the preeminence of london on a regular basis. I do wonder about the unrest we have seen in the biggest cities around the world, the black lives matter protests in london that are ongoing, and i wonder how that complicates issues . You have been calling for more police at a time of lower budgets and increasing pressure on the presence. Have you go forward . Mayor khan i dont know if american viewers realize this, but the brutal killing of george floyd didnt just impact minneapolis in the usa, it had an impact around the world. And if you are a black londoner, you can relate to the off away george floyd was killed, but also black people around the world could relate, because they knew racism, discrimination and inequality. I not only support the lack livesmove black matter movement, but im concerned that when we are in a pandemic and asking people to social distance and stay home when they cant, we want to mixer that they are only protesting as they are allowed to do, because that can inadvertently lead to the virus spreading. Caroline that was the london mayor speaking to bloomberg earlier, and he talked about the need for visitors in london. There was a famous one earlier this week, french president emmanuel macron, he met with Boris Johnson in the first bilateral meeting of eu leaders, as they focus on a trade deal with the eu. The eu was still struggling with details for a stimulus package to help their economies rebound from the lucked out. We look at action across the atlantic and welcome heather conley, Senior Vice President for europe, asia and the arctic cssi. We are so concerned about covid is therel unrest, and any progress being made in terms of euu. K. Trade deal by the end of the year . Heather there hasnt been progress. If anything, it seems like it has been moving backwards as both sides harden their own redline, where they want negotiations to go. We are about to get a more intensified process, weekly meetings to try to intensify. So Everyone Wants to intensify, to speed, but i am not sure where we are speeding toward. Again, this comes as we watched the u. S. U. K. Freetrade agreement conversation. Ambassador lighthizer said the other day, there are really strong demands on agriculture, to make that deal. It feels the u. K. Is getting pingpong between making decisions toward orienting its market toward the eu, or trying to lean toward a north american market. It is unclear what this is going to go, but we are going to get more talks. I just hope get clarity about where the u. K. Is going to make decisions, whether that is on regulatory harmonization, data equivalency, these are the types of issues we need clarity on immediately, and they havent been forthcoming. Lots on fisheries, but not a lot of other important issues. Romaine when we talk about speeding up this process, im curious as to whether that benefits the u. K. More so than the eu. Heather i dont. Frustrationn the watching this process over the past six months. Some very difficult decisions have to be made by the u. K. On how they are going to approach this. To keep the goods and regulatory processes going towards europe . They are going to have to agree to certain things in order to do that. If they dont want to that, they are going to have to make other decisions. I dont know what intensification is going to do, somebodys going to have to give. K. Estimate decisions and right now it is only focusing on redlines, not what it wants to do and until that happens, they remain stuck. The eu is going to make changes to the single market, but i just dont see that happening right now. Said, the absolutely problem is, brexit is now falling way down the agenda. It is obviously dealing with the pandemic, recovery and resilience, the multiannual financial framework, brexit for the eu is not on top of the list here. And i dont know how much more it will become a to do serious negotiations. Taylor on that note, how much is the pandemic changed underlying tensions of the negotiations . Heather clearly, doing this video has been noneffective. Done onn, you get work the margins and in the coffee breaks, you see body language, and having, whether a debate in the European Council with 27 separate screens and everybody going, it is very, very difficult. That they are going to start introducing in person meetings, that should help, the body language per it, the issues are very very entranced. So hopefully, when the Council Meets in july, there will be momentum on the next sevenyour budget on this recovery facility. Toughe red lines are very for those countries who want to be frugal and not create a debt union, and for those countries that really want to increase this integration. You will see those dynamics, and now they will be able to conduct those conversations in person beginning very shortly. To get heather, great your thoughts, have a great weekend. Directoreather conley of the Europe Program for the u. S. Center for strategic and International Studies program,on this beautifying new york schools during the coronavirus leads to something much bigger. Lande shuman,uth founder and president of publicolor. This is bloomberg. Caroline in these uncertain times, many students feel the need to make their voices heard and make a difference. Publicolor mentorsgram that children in highrisk areas to set them up for success in the future. Joining us as the president and founder ruth lande shuman. Thank you for joining us. Explain the impact the coronavirus is happening, even in this time when people are not meant to be gathering, wearing face masks, peoples keeping social distancing. How are you doing what you do best, weekend activities, afterschool activities, bringing vibrancy to schools . We have done is, we stopped all the painting and we put all our programs online, and amongsted 251 students 11 program staff, who called them every day, offering homework help and emotional support. 40 tutors, who additionally are calling students multiple times a week, and devoting 1. 5 hours to two hours in individual sessions with the students to help them with Online Learning. It has been a real challenge for many of our students. Thanks to af that, generous donation from bloomberg, we are delivering food multiple times a week to 70 families, with an average of about 78 people per family. So we are in touch with our students all the time. 100 of ourult, students will be matriculating to the next grade. And 100 of our High School Seniors will be going on to college. We are pretty proud of what is going on. We didnt skip a beat. We just continued to be a second for ournd safe refuge students, and intend to be like that forever. Romaine you mentioned bloomberg , publicolor did receive grants from bloomberg philanthropy, which is run by Michael Bloomberg and its parent company, when we talk about kids being out of school and not pack and not having normal structure, particularly lowincome kids where the Online Learning process might not be as smooth as it might be for parents who have certain means, im concerned that we are getting into the school year in the fall and dont have clarity from local government on how that is going to work, full come back or not. And yourred are you organization to facilitate this mentoring and support for much longer . Ruth we we are totally prepared. I have told my team that i believe in silver linings, and so much good has come out of this. I mean, just watching how intensely we are involved with and how much they are benefiting from the constant tutoring. To continue that. Even if School Starts and reopens, i want to continue that. And the other thing we have done is, we have embarked upon a device drive to try to get laptops donated, and computers manyed to us, because so of our kids have to share one computer with an entire household. So if finding time to get on the computer so finding time to get on the computer is difficult. One thing i didnt mention that i am proud of is the fact that we have introduced a sense of routine into our students lives. We call them regularly, same time every day, so they know to expect that call. Tutors meet with them regularly. Workshops on line regularly, so they have to show up. And our students have said that that has made a huge difference, and even feedback from parents has been incredibly positive. The sensey appreciate of routine that we are introducing into their lives. We are going to continue this. There has been a lot of studies done on getting young women in particular excited about math, and telling young girls that you are smart, just as the boys are, to do the rigor of science and math dot plot requires. Im curious what research has shown you getting young women excited about those topics, and how successful they can be going forward. That is interesting. I dont think we have researched that. And i will. I am making a note as i am talking to you, research this. Honestly, we take it for granted. We just assume that the girls are going to be as engaged as at boys, and just throw it them the way we throw it at the boys. We make absolutely no distinction, and frankly, it is as,same with something quote, feminine related as sewing. Summerummer we run a Design Studio program and immerse our children in literacy and math through product design, and it happens to be a hugely effective antidote to Summer Learning loss, which is the greatest contributor to the educational gap between high and low income students, and very very easy to remedy. I want to take this national, my summer Design Studio. But in any event, when summer we were making backpacks and something else. We were redesigning backpacks, sewwe had to sew, we had to by hand and we had to sew on machines. And you generally think about that as a girl thing. But our boys, we never, we dont talk about, that is superficial, we just dont talk about it. So of course, the boys got on ,he machines and or hand sewed just like the girls. And nobody made a comment. No one, the entire summer long. Summer and last summer, even more this summer, we are going to be teaching rhino and we are going to be teaching coding. We are Teaching College and graduateschool level courses to i think and honestly, it depends what your expectations are. Highxpectations are very and the kids, what they hear in our high expectations, is respect. That is what they hear. Taylor romaine you got started the organization, seems like 25 years ago, as a project to spruce up schools, and it has grown into something much bigger. You do a lot of work at we appreciate you being with us, publicolor president and publicolor president and founder ruth lande shuman. Mayor new York Governor Andrew Cuomo says new ink has done the impossible dealing with the coronavirus. New yorkers tamed a virus that threaten hospitals and nothing must be on guard for a second wave. Arerom worst to first, we controlling the virus better than any state in the country ,nd any nation on the globe even more by reducing the overtion rate, we saved 100 thousand people from being hospitalized and possibly dying. Just think about that. Added,overnor cuomo quoting, we are seeing the virus spread in many places. More people are going to die. It doesnt have to be that way. Smart, open the economy intelligently and save lives. It is what we showed works in new york city. The u. K. Government today lowered its covid19 alert level by one rank. Officials say the virus is no longer spreading exponentially, after almost three months of lockdown. The new level allows for more relaxation of social distancing measures. A global emergency Delivery Service that has kept tons of humanitarian aid flowing despite humana fight despite Coronavirus Travel restrictions is in danger of shutting down. Says itd food program has just 18 of the millions of dollars needed to keep the program running. Travel bans imposed by National Governments closed borders and airports around the world, disrupting supply chains and stranding humanitarian workers and supplies. 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 mark crumpton. This is bloomberg. Romaine welcome back. Inclusion. Nd in corporate america, it has been front and center approaching juneteenth, with many pledging to increase diversity. ,e are joined by tina tchen president of times up now and the times up foundation. President obama as executive director of the white House Counsel on women and girls. You are very accomplished, to say the least. I want to talk about times up now, largely an outgrowth of the Metoo Movement that focused on Sexual Harassment, in the work waste specifically. You have expended a little too focused on issues related to that, but broader in the sense of attacking diversity issues and trying to make companies more accountable. Tina thank you for having me on, and happy juneteenth, everyone. We were created in the aftermath of the Harvey Weinstein article of women coming together and realizing they werent alone, and how prevalent Sexual Harassment was in the workplace. Our First Initiative was a Legal Defense fund to provide unprecedented Legal Support for survivors coming forward, but we didnt want to just deal with the aftermath, pick up the pieces afterwards. We wanted to keep Sexual Harassment from happening in the first place but that is the goal. We want safe and dignified work for women and men in the workplace. To do that, you have to create better workplace cultures. Only workplace cultures addressing Sexual Harassment, but that address things like diversity, inclusion, preventing mixer we haveon, things like equal pay. If you dont value your workers in their entire sense, you are going to victimize then and make them victims of Sexual Harassment and other abuses in the workplace. That is why we have been working now on this Broader Mission of safe, fair and dignified work for everyone. Caroline and you have the times up guide during a crisis, practical guide that many a company and Business Leader are looking at that and thinking of their workforce to see how they can better serve stakeholders, employees, customers, shareholders. Tells about the immediate, practical ways and means they can drive more versatile within their businesses . Tina the guide was created by soliciting input from over two diversity ands, inclusion experts in those companies that represent 700,000 employees across multiple industries. Learning put the best into these practical guides. It is the first edition. We plan on updating it. It started with the pandemic and coming back safety things like , if you do social distancing in the workplace, think about when you move your desk, if you can only have 10 people in a meeting, who is getting excluded , like a young person who is just learning the business you might be able to listen in to learn. We are going to lose opportunities to bring people along in our workplaces. But it also applies in the current moment and what we have seen in the past three weeks, this reckoning in our country around antiracial efforts, and this means things like recognizing that lack and brown employees experience the pandemic differently, experience their own life histories differently and there were lace different. Experience their workplace differently. So have the courage to listen to them, have the courage to speak out if you are not sure what to say. Being silent isnt the thing to do. You need to say something. Dont be afraid of saying the wrong thing. If you say the wrong thing, apologize and come back. But make sure your employees know you care about their entire life experience, and want them to succeed in your workplace. Caroline i was reading an article from the Bloomberg Opinion page about harassment and it seems like it wasnt just in the workplace, but through emails and chats and messaging as well. What is the best way to stop it as we have all moved home, but harassment has continued in many cases . Tina this is hard for managers, but it is absolutely true. Harassment continued on zoom calls, emails, chats and it can increase because of anonymity, texting and doing emails. And it gets harder for managers because it is more invisible. Number one, have a place where your employees feel safe reporting, and make sure there are multiple places, not just their manager, not just to hr. Maybe have an anonymous tip line, and outside counsels office, make sure there are multiple places can go to feel safe in reporting. Pay attention to what is happening when someone has all of a sudden gotten more quiet in their engagement with you. Check in with your employees constantly, especially now, when the stresses of what is happening at home, people dealing with no childcare, schools and summer camps, trying to balance work, check in with them often. And then watch for what happens on zoom calls, the microaggressions, talking over people, belittling people. It can happen in a zoom environment as well. Caroline we think about it not only in terms of that the city, gender, age, but also your sexuality. We need to remember that it is pride month. This is a time when we see the Supreme Court of america driving forward real change in terms of acknowledging that diversity and making sure there is a drive forward for equality. Is that something that times up is looking at now . Tina absolutely. One thing we are proud of is that since our founding, we were intersectional in our approach. All women, women of color, transgender, lb gt q, and the kinds of workplaces we are working for a ones that are inclusive of disabled workers, inclusive of older workers, inclusive of lgbtqi a plus and businesses are going to be great when you can tap into all the talent of our country and make the most of their talent for you. You can do that in these Economic Times that are tough. Here is the secret. If you invest in your workers, they will invest in you. They will stay with you so you dont have to retrain new people when times are tough. It will be more efficient, they will be more productive. When we were in the white house at the Small Business roundtable, Small Businesses would say, how do you invest in your workers . And one woman who owned a restaurant in San Francisco said, i cant afford not to. I havent had to replace a worker in my restaurant in 11 years. I give them incredible benefits and i dont have employee mishaps, im not getting osha violations filed, because my employees are as vested in my business as i am, and it is making my business more resilient and successful. Romaine we have seen progress on a lot of these issues, and in this moment today, sparked by the george floyd killing, we have seen Companies Embracing it, at least for now. That is also against the backdrop of administration for years that have times hostile to some of that progress. Im wondering if the changes we are seeing at the individual and corporate levels are going to be lasting more broadbased level nation. Tina i hope so. What you are seeing is something a lot talking about or a while, that the millennial generation, now the largest generation in our work or our buying, consuming public, shares those values. They care about the values of the companies that they are going to work for company that work for, companies that they are buying they are seeing that in the companies that they are going to work for, companies that they are buying from, and that is playing out on the streets of america right now. And that is not going away. They are still going to be caring about that. You see it in all the advertising that companies are doing right now. They want to capture the valuebased consumer. That is going to drive inies, in their ownh their own interest, to drive their values. People are looking for more than just a statement and that Means Companies internally, and i have talked to ceos about how we can do better and address antiracism, antisexism in our workplaces. You have to address it with your own employees, take a hard look at composition of your leadership, board, your hiring processes, how can you get better and to be more inclusive . How can you do training you need to . And really invest also in your communities. Bring your suppliers in, make sure they are diverse, invest in communities that have been hardest hit by the pandemic about the protests happening in the streets. Holistic approach, they have to walk the walk and talk the talk. Tina tchen, ceo of times up now. Thank you. This is bloomberg. Taylor well romaine welcome back. Time to check in with joe weisenthal, somewhere out there in texas. Joe, we talked about the outperformance we saw on equal weighted stocks in the broader indexes and that rally is over now. Joe we have seen the pickup and virus cases, a lot of attention to that, and people wondering why it hasnt hit the market more. Part of the answer has to do with sectoral composition of the market. If you look at certain areas, we are starting to see weakness. If you look at return normal stocks, hotels, airlines, real estate, they have definitely been weaker lately. Check to do well, itg is the 21st century. But unlike two weeks ago when we saw outperformance and cyclical, we are starting to see key breakdown in indicators again. A great wishing you weekend in austin as we see this potential bifurcation in the market, and tech wins out in the 21st century. That is all for whatd you miss . Taylor stay. Bloomberg technology is next on bloomberg. Romaine have a great weekend. This is bloomberg. Emily welcome to bloomberg technology. In sanily chang francisco. U. S. Stocks dropped the most in the week in a way, covid19 cases rezai rising almost of the most in a week, many state seeing arising infections since the pandemic again. This, as Companies Across the country commemorate juneteenth, the date that the last slaves in the
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