The bank index up 2. 1 , telling you all you need to know. The 10 year yield is down to 67 basis points. There was a little bit of an increase in volatility today, up to 33. On the actual session, the vix index is slightly lower. Scarlet fu joins us halfway into the trading day for some more details on the scene. The scene seems to be about finding stability. If history is any guide, we are likely to get it. Seven times the s p 500 has fallen 2 or more since the market bottom on march 23. In six of those instances, the s p 500 came back to close higher. Indications we may continue to build on this advance. You mentioned leading the gains, regulators rolling back some of those put in place after the crisis. That should free up about 40 billion in capital. Regulators are modifying the bulk to allow increase of investments in d. C. Funds. You mentioned the stress test results after the close. Im keeping an eye on homebuilders because one trend that has emerged is the strength of housing. Low mortgage rates, a rush to limitedof and inventory. Today, weakness across the builders. 14 out of 16 builders are in the red after kb homes reported results. The cancellation rate was 43 percent. Las vegas and nevada making up a quarter of that. Orders for new homes down 57 from last year. Going forward, it will be key on which markets which builder is most exposed to. Revolt kb homes and meritage get at least half their deliveries in worsening covid areas. Therefore, they are most at risk stoppage of construction while Toll Brothers is more inflated and less likely to run into any potential closer risk from the second wave. Vonnie thank you for that. That is scarlet fu. The Federal Reserve released its stress test results after the close. For the first time, the test included a Sensitivity Analysis. Ofning us now is the head u. S. Largecap Bank Research at wells fargo securities, mike mayo. Lets look at the stress test results before we go back to vulgar. About tell us with the Sensitivity Analysis shows us in if it is useful and if it is useful. Mike we are down to three hours 30 minutes until netting the feds stress test results. If you are a bank analyst, this is a big day. The fedthe first time will include a Sensitivity Analysis because the feds stress test they previously published has been surpassed in areas like unemployment and interest rates. They need to reflect the pandemic somehow. The fed will give, for the industry only, its outlook under recoveries that look like w. , u, and a and they will give information on the impact on losses, earnings, and what that means to the industry. What they do with the information is unclear. Is a fed stress test with more change than we have seen. We have new capital rules, new wall street rules, the pandemic overlay and what you mentioned, the stress scenarios. Will happen is most banks will pass. The industrys resilience. Most banks will sustain their dividends. Some banks will decide to cut them some banks, the boards, will decide to cut them. Otherwise, it will be more of the status quo. Later this year, the fed will use this new stress scenario overlay to talk to individual banks, and if it looks like a or a big second wave, there could be mortar coding and measures on banks. If not, maybe you keep the dividends and maybe they even go higher. The fed has already said this is an uncertain outlook a, so we will do the test now and look back at the banks this year. Vonnie the big banks have been proactive about trying to find the sweet spot where they are allowed to issue a dividend and where the fed says that is ok. At what point does the government no longer have any say in what dividends the banks issue . Mike the Federal Reserves record when dealing with banks, they are undefeated. [laughter] what the fed says goes. That is the regulator. But, at some point, the mask does take over and math does take over, and we have done the math. Over 200 earnings model showed the banks have the strength to make loans and still have left over to pay dividends. Higherist is to time then where was a decade ago two times higher then where they were a decade ago. Of the resiliency of the banks, and this is a topic being debated now, should banks keep dividends or not. The 6 trillion Investment Grade bonds,rket says bank that the banks are among the safest corporations around. What we would say to anyone saying the bank should be mandated to cut their dividends, we say what do you know that the bond market doesnt know . We have done the work, so the are point is that the banks resilience, dividends will mostly stay, meaning 4 dividend yields. I guess our tagline view body for the day would be take your money out of the bag, and put it in bank stocks, because with bank stocks, you get better yield than the interest in a bank. Vonnie what about discretionary bonuses . What do you figure employees will see this year, coronaviruswise, and Everything Else hitting the banks . I think the broader question is, are banks part of the solution or part of the problem, like they were during the Global Financial crisis . Banks, this time are part of the solution. Lending was at records rates record rates. The largest banks said they would not be laying off employees for a while. They did halt the buybacks and they have the resiliency and the crisis planning. And look at this. Three out of every four employees at the largest banks are working remotely. Talking about resiliency, banks have that. I think the question really gets to the point, are banks helpful to the economy, and leave some of the other decisions to the bank themselves. Having said that, leave it to the shareholders. You know i go to annual meetings, i speak up, and i think its up to the shareholders to speak up about outside compensation. You know, when you have big ceo pay and bad performance, that is a time to step in, but i dont think that is part of the feds stress test. Vonnie the meeting today, voting on the changes to allow certain banks to invest basically in alternatives like Venture Capital more than they had been. Who benefits most of the big banks from these decisions . Mike look, i think the whole industry benefits by having the rule in place. Deathshaving proprietary like the major ash debts like the Major Players had was one of the reasons the industry was much more safe. There is they are still recalibrating the volcker rule to make markets and make a little less punitive if you are in the slots market with a capital, and give more flexibility to invest in private equity and Venture Capital. That would be the largest banks, like citigroup, bank of america, j. P. Morgan, and morgan stanley. Our teams seek a life is winning. Bigger is better, not because big is good by itself. I said break up the banks a decade ago, but as the data changed, our views changed. Are also theanks largest Capital Markets players. They are helping to facilitate during this sobering time. Revolvers,as the loans getting drawn down and banks made the loans. They were there, and then the transition to the fixedincome markets with record bond issuance. Now, it might transfer to the equity markets. The big banks are there to help with financing and every calibration of the volcker rule might help investments that go along with that. Vonnie 40 billion in aggregate does not mind blowing the industry altering figures, but do you anticipate there will be a change in activity because of this . I think its important to maintain that we have the u. S. And those are the deepest, most liquid Capital Markets that facilitate financing, but it is also important to make sure this is not financial entity to financial entity. The real effort is to help the real economy. I think the Banking Industry has gotten that message over the last decade, because there are a lot of practices that were terrible. I talked a lot about those, and i think, for the most part, activities that take place today are eventually to help the real economy customer, individuals, businesses, corporations, governments. Vonnie there is optimism around the big banks. Wells fargo is up, and our thanks to mike mayo, Senior Bank Analyst at wells fargo security. Lets get first word news. For that, Mark Crumpton. Mentioned,u texas is pulling back on plans to reopen the economy in faces. The state is reporting a surge in coronavirus cases and says its intensive care units in the houston area are full. The governor says businesses that were already allowed to open can continue to operate, but the next faces of reopening are on hold. He suspended elective surgeries to free hospital space. Texas posted its worst day so far new cases with a jump of 4. 6 . A new poll shows joe biden leading President Trump in every one of six key battleground states. Biden all butimes racing the president s advantage with white voters, leads by double digits in pennsylvania, michigan, and wisconsin. He has earlier advantages in and northrizona, carolina. Newport are tensions between india and china. They are at a standoff at their himalayan border, despite the fact both sides promised peace following their worst military clash in 45 years. Both india and china this week agreed to deescalate the situation and disengage from all areas in the region. Is putting together his most ambitious deal yet. He and his Business Partner have launched a media empire, spring hill company, with a 100 million investment. James spoke about the company and another on a number of other issues. One of them is the black lives Matter Movement and the police brutality. [inaudible] the people in the community, living and walking those streets, and being racially profiled and judged every day they walk their streets, they are the ones need to be heard, and they are being heard right now. Its great to hear. Mark you can watch the conversation between lebron james and never carter friday on bloomberg television. Global news, 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I wanted to get their thoughts. Vonnie tesla is poised to pass toyota with a market cap exceeding 213 billion. All it will take is a oneweek rally like teslas best in april to be the most valuable automaker in the world. More on how this rise reflects a we welcomentact, Bloomberg News in chief. Matt, how did this happen . Matt i think one word sum this up, growth, particularly sales growth of tesla over the past five years. It is about 668 . Thats a calculation my colleague, who works closely with me, calculated. 668 over five years, dwarfs anything anywhere. Im talking about even facebook. Certainly dwarfs all of the automakers. Because of the growth, it is reflected in the share price, which has gone up 130 this year. Toyota andween tesla, just a year ago, when there were a lot of people at this time who thought tesl, was doomed tesla was doomed. That cap was 164,000 that was 164 billion. Now it is 26 million. It all comes down to the sales growth of tesla, which dwarfs anything comparable anywhere. Vonnie matt, is it possible tesla attracted a different kind of investor, or can you be a believer in both tesla and terms of what it will be in the future and fourdoor a toyota . Matt that is a great question. I think there are two parts of the question. One part is the shareholder. Who is the tessler shareholder and who is the tesla customer . They both converge. When i say converge, there is a Customer Satisfaction with tesla overis really hard to beat the past 10 years, for example, anywhere. Part of the reason is, increasingly, people realize that, with climate change, we all have to convert to something other than fossil fuels. Tesla is right there in the most important space if you will for automobiles. And that is the customer. The customer has had a great experience with tesla as a vehicle. Consumer reports shows that over and over. Then, there is the shareholder who is looking for, as i said, the growth. Where is the growth going to come from in the stock market . Tesla is not the only by the way. Is not the only, by the way, at the tar avatar of growth. Teslas experiences similar to amazon in the fact that it is a relatively young company, has derided bygly been analysts for much of its existence, to this day. Mostly because they just did not appreciate the growth story the way shareholders have. One, in particular, is jaffe wood. She is wellknown to your audience at bloomberg. She visits from time to time, and she has probably been the most prescient in understanding what tesla is about, because she has been a long time investor and follower, and of course it is reflected in her own Exchange Traded fund, the best performer of more than 500 of them. Vonnie matt, we have to leave it there. Some day we will talk about must kim stop must himself and his stock. That is matt winkler. Still ahead, we speak with john abouts Andrew Pekosz rising cases of covid19 in states that have reopened. This is bloomberg. Vonnie this is bloomberg markets. Today, the Texas Governor with the latest surge of covid19 cases in some states opening their economies and faces, we get an overview with Andrew Pekosz. Aboutsor, talk to us houston and more broadly texas. Positionrious is it a how precarious a position is it in now that we know hospital beds are overwhelmed in texas . Prof. Pekosz that is one of the more critical points. We followed total cases, but one of the more critical parameters to follow his hospital beds and even more importantly, the beds available in intensive care because whens patients get there, they occupy those beds for a long period of time, and those are the seriously ill patients that need the most care and in the most precarious situation. Vonnie several states have been told visitors from there are not welcome into new york. Rate, buttive testing will that grow . Are we seeing the curve continued to steepen . Housekeeper will how more steep will it get . Prof. Pekosz there are states controlling the outbreak, and then there are other states where it is clear the outbreak is on a high rate of increasing. The critical thing everybody has to remember is, as you relieve these Public Health interventions, one has to have other things in place to keep the number of cases down. That is usually the testing and Contact Tracing so that, as you find people ill, you can isolate them and keep them from spreading the virus. When we see these surges of cases, that is telling us something about the Contact Tracing is probably not working. The states either have to readdress how they are doing the tracing or take a step back and try to slow down the spread of the virus by putting more Public Health interventions in place to get the number of cases to a manageable number. Vonnie professor, where in the country are you most worried about right now if you read about economies reopening and about some not reopening at or postponing . Prof. Pekosz texas is apparently in serious trouble in terms of the number of cases. Particular cities, houston is one example. You see a large number of states through the south seeing these resurgence is of cases. Any place near 10 Positivity Rate is going to be some to watch carefully. Vonnie professor, thank you so much. That is Andrew Pekosz, from the John Hopkins Bloomberg school of health and founder of Bloomberg News. Lebron james coming up. This is bloomberg. Mark i am Mark Crumpton with bloomberg word news. House of representatives will vote on a Police Reform bill tonight, one month to the day a black mans killing at the hands of the Minneapolis Police officer sparked nationwide protests. Speaker pelosi says the George Floyd Justice in policing act as lawmakers way of saying never again. White house as indicated President Trump will veto the measure. Gavin newsom says residents need to recommit to slowing down the coronavirus pandemic. He said today, some in the state have developed a little amnesia and not been vigilant enough with social distancing and wearing masks. California has seen record hospitalizations this week has more businesses open and social justice demonstrations continue. Reopened toower is visitors after the longest closure in peacetime. Those who want to see the view will have to work for it. That usually with visitors up the tower remain closed. People are taking the stairs. Some other paris attractions remained closed. The Louvre Museum will open july 6. Lebron james has put together his most ambitious deal yet. He and Business Partner maverick carter have launched media empire Springhill Company with a 100 million investment. James spoke to Bloomberg Businessweek. The restart of the nba season. To the looking forward season being restarted, getting back in a like a uniform, and continuing to push the envelope not only on the court but off of the court. Like ive been telling my colleagues, a lot of my friends, i wont stop until i see change. I mean real change for us as a community, as a black community on and off the floor. My mission stays the same. Mark you can watch all of Bloomberg Businessweeks conversation with lebron james, that is at 7 00 p. M. Friday here on bloomberg television. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over