Movers was in the s p 500 this week. Tshirt. Ands and your underpants, right . I guess what. When you work at home, you still need your briefs. [laughter] still with us, hopefully, david balin. David, we are heading into the heart of the earnings season next week. Earnings companies next week, that is the real meat of it. What are you looking for to see from these companies . Margin improvement . Revenue growth . Or are you still concerned about the bottom line . Those three, but more importantly we are looking for the trajectory, the information they provide about the trajectory in their business at this point. The Balance Sheet health of the companies and their ability to fund operations, the degree to which they are bringing back employees and we are looking at changes in competitive position, which you touched on several times in the weeks passed to see if companies are actually gaining share in their respective businesses. So, its a lot of data that we think indicates the degree to which they have been resilient during this pandemic. Well . Its noted just one thing, thats my point. But it is the health of the business as it goes into the future. Im interested in your perspective on opportunity costs right now. As we have started to see a shoulds in the dollar, we heed the calls to go more overweight europe . Or the rally that we saw in china that seems to be cooling off . How are you and your clients talking about u. S. Stocks versus the opportunities abroad . There is still an a normas amount of room to run in some of the latin american markets. Theres been a great uptick in brazil. Mexico has yet to really rebound as sharply as it will when the u. S. Gets its economy in gear. Mexico will be a huge beneficiary of the recovery as manufacturing moves up. As far as asia goes, china has benefited from the fact that it is the first to come out of the pandemic, deriving a lot of stimulus in the form of lending in the country with a 2 growth target for the year, the stock market reflects that and is fully priced. On the other hand one of the markets we like is hong kong, which we think is undervalued because of that political upheaval. Nonetheless, china will have to maintain the status of hong kong as a Major Trading center and these changes will not affect and may benefit hong kong, like in 1997. From a foreign markets perspective those are good. In terms of europe, you have to be pretty highly selective and it depends on whether or not they pass the stimulus bill that the we expect they will. If they do, i could see 3 growth for the next few years, that would be a good switch. We Like International diversification purposes. I think the opportunities that we laid out make a lot of sense. What are the main risks you are keeping an eye on . Big riskrkets have one they are keeping their eye on, with coronavirus resurgence and another one possible in the fall, we need a fiscal package from the congress that is strong. The fact that they have to pass the bill in august and get that done and that that isnt a certainty before the election, thats the first thing. The second obviously has to do with the real Economic Data that we get and if we dont have a bill passed or if we see a major downturn, which we dont foresee, but you never know, then the election itself will take center stage very shortly and we will have what looks to be a 90 day run in the news every day, clearly the perception of what the second try presidency or a biden presidency would look like. One of the things i will tell you guys, looking at the data, most predilections are positive for markets preelections are positive for markets. But if we can depend on history for anything at the. Oment exactly. Fiscal clips are coming next week. What are you thinking in terms of how much the markets have priced in stimulus in the u. S. . To your point, the market is definitely priced about what will happen if there isnt one and markets havent gone down get as a result, so if uncertainty rises, the markets could take a hit, but in terms of stimulus we are focused on what it is and we want to see stimulus that has been provided in several areas with individuals who are on them lloyd without having them benefits to the degree that they want to remain unemployed. Then there are states and municipalities that have been deeply impacted, like hospitals, and the need to refill coffers in those areas. Those are key employers in those states. The third has to do with special actions that could deal with teachers and schools providing resources to maintain their operations and things like that, so there are specific areas we want to see their and to the extent that some industries have a longer runway in terms of recovery, we definitely want to see some for them because ironically airlines are like the banks of the crisis, we need them to become operational and even though you saw part of them flying this week, the fact is that people will want to fly more over time and as the pandemic progresses. Always great to have you on, david. Just talking about the stimulus effort. Whatd you miss . , we are going to be discussing those very things. President trump pushing for stimulus that includes a payroll tax cut. We will be speaking to the faculty director of the penn wharton budget model about whether it helps the economy at all. This is bloomberg. This is bloomberg. Caroline hyde im caroline hyde. Is whatdtick this you miss . Caroline the nasdaq with a drop this week as we rotate from tech into defenses. But hey, its a friday. Lets get takeout. Or you could head to the store yourself. Habits areting changing. And trump demands a payroll to taxes. What cut a cut mean and why are lawmakers on both sides speaking against it . The banks are all out, pretty much, as the government sends money in every direction at the same time. The banks putting up about 35 billion in profit to brace for the potential of souring loans. Ceos talked about this in their call, not knowing how bad it could get. Ask the economy, its hard to tell. We cannot forecast future, we dont know. Its a completely unpredictable environment. Where it goes, we will see. It depends on how quickly the covid outbreak subsides. Its going to be a much murkier environment going or word. The path reopening in many states remains unclear. The pandemic has a grip on the economy and it doesnt seem likely to loosen until vaccines are widely available. Ask the raw data is not providing optimism. We have to advise caution. Unclear, uncertain, that was the general tone out of the Conference Call. We also got earnings from blackrock, and their ceo had a lot to say about the uncertainty in the economy. Annie interviewed mary a little bit earlier after that Conference Call and after the company roof ordered earnings. Can you start off and tell us, what did larry fink tell you about his view on the economy . Annie sure, he said looking ahead and considering where we are now with virus impact and recovery, the researching market for small to midsized is this is needs to come back in a meeting away and he said that what we are seeing right now in his words a kind of ive older economy where you have Large Companies that have been able to bounce back a bit from some of the pain that we saw in march with small and incised companies suffering. Caroline saying that we havent seen the worst yet with relation to the virus, but this business has benefited from the stimulus provided and also from the Retail Investors to get in on the act and money to be put to work for fixed income. What were the key people ways, from your perspective . Estimates for profit and revenue this quarter. The inflow into the longterm Investment Products was really driven by the strength of their retail segment and fixed income products. Investors a retail get more comfortable in investing in the second order, they came back to blackrock rod ox and you saw Significant Movement there, almost eight times the influence as with the retail customers a year earlier. Risk heres there a that the inflow activity from last quarter might actually abate or erode in some fashion or another as we get deeper into the year and things settle out regards to the economy and the markets . That itarry was saying is hard to tell right now, but that he doesnt see this resolving itself in just three months or by the end of the year, even. That it is going to take a longer time to see what shakes out as far as the suffering of small and midsized businesses in the u. S. Caroline the imf has been pointed to concern for small and mediumsized businesses worldwide taking a hit. Businesses that are global, was there any talk on different arts of the world or any hope for what the u. S. Government or other governments might ring to the table to make sure that we dont start to see this collapse in smaller and mediumsized annie the imf did say that those numbers can triple this year, echoing what he had been expressing. Inflows in terms of america, europe, the middle east, africa, aipac, they saw the flows coming in from all different parts of the world, in the paint indicating you are seeing bounce back from these regions, but in terms of how long it could ease sustained he said he saw a strong possibility that more could be necessary. Romaine you cover the investment industry, what are you keeping tabs on next . Blackrock is the first asset manager to report earnings, others are coming up this month. Speaking to analysts, one thing they said is that blackrock earnings might be a bit of an outlier and you might see other Asset Managers with outflows from this past quarter, that that is something to look out for in terms of the pressure points we have seen in the industry and how they could be expressed. But for blackrock, the quarter panned out pretty well. Thank you. Coming up, Retail Investors have been blamed for driving the market higher and naively adding up u. S. Stock rises, but is there real evidence for that . We will discuss that next. This is bloomberg. Romaine all right, the surge of Retail Investors flocked to the stop market. Marketked to the stock and in robinhood they added 300 new accounts with a concern that the influx are game will gamblers here to destabilize the market. Not be enough evidence to show it. Joining us now, there is an old saw out there that when you start getting stock tips from the shoeshine guy and taxi driver, you know that the top of the market is near. I guess the modernday is robinhood in these retail accounts. Looking at the data, what does it tell you about who these people are and what they represent to the market . Its a good question because they are certainly taking a lot of criticism about being gamblers andrew is that dont know what they are doing, but the truth is we dont really know a lot. You know a few things, we know they are playing with very little money. The sizes of the accounts tend to be under 5,000 and if you add up all assets at robinhood are talking tens of billions. We have added 11 trillion to 23, soue since march this is a very small section of the market, so they are probably not moving the needle very much, and the second thing is that some studies have been done about what they are buying, the stocks they are buying and how they have done subsequently. Whatoften it shows that they are buying has gone down rather than up. Causing the market to go higher, thats probably not true either, but we dont have any evidence to show or support the widespread narrative that they are having a huge impact on the market. They have had idiosyncratic impact, to some extent, like what we sow with hertz. It really took a regulator to weigh in and you shouldnt dine out on these sudden interest in retail testing. Oversight needed, but time and younce also needed . Are right, you can point to certain stocks or certain decisions, you can scratch your head as to what seasoned investor would do that. The answer is that nobody would, right . Often we say that ordinary investors are not savvy enough to dissipate in the market. But i think we have that wrong. Thattake the experience they need, we have to be able to let the mistakes. Giving access to the millions of investors who didnt have access but or. Age is 31. In terms of small dollars, is the market asset answer. Romaine in terms of someone who , when they look at how the market rallies so hard in the face of Economic Data, what do you say to them and how do you factor in the retail side of the trade in that perception . Well, no one likes my answer, but the market really only cares about one thing, the Public Companies that trade on it. Its not really a statement about politics or the economy, its just a consensus about whats in store for the companies that trade on the market. Thiss no way to look at and come to any other consensus ant right now there will be earnings recovery soon and companies will be making money again. They are a part of that consensus and it may change where people disagree with that consensus, but it isnt to keep in mind that that is all the market is telling you, that in general the prediction is we will get a recovery relatively soon and if that changes, the market will change along with it. Always great to have you with us. Happy weekend to you, stay well. Lets get you a quick check on the latest is this flash headlines. A finance executive in japan worried about progress in gender equality. Bloomberg that japan has a long way to go. Market is a bit slow now, but there are a lot of reasons it could be somewhat or act of in a positive way. We were quite strong in, so that was encouraging for us. Caroline according to japanese prosecutors, this man spent her final hours his final hours with his daughter after meeting with [indiscernible] fewer cars on american roads is increasing the risks for municipal bondholders. The problems are about 4 billion in government at. Nationwide shutdowns have left those parking slashed the ratings on debt renotches to junk. Suddenly traffic is becoming more and more of a headache during my commute, so i think that once businesses open up, cars will be coming flooding back. But perhaps not at the mall or the cinema. Romaine keep in mind those parking garages depend not only on Office Workers but people going out for entertainment and that isnt happening. Talking about the s p, they were pretty clear in the report that they expect this to be a longterm term trend that could last into 2023 and a lad logic isnt that people arent going to park but that the level isnt going to be enough to sustain the bond payments of these agreements. Caroline also a longterm trend thee when covid is in rearview mirror, no pun intended, we will be going back to car sharing a bit more. It was always a bit of a fear that parking was on a downhill trajectory no matter what. Romaine a lot of changes could come out of this crisis. Coming up next, the future of, the pandemic and how it is changing how we consume meals. This is bloomberg. Hike Simon Pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. Touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Iredefined the wordng thschool this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. Caroline the pandemic has affected every industry, but especially the food industry. With delivery demand skyrocketing and restaurants struggling to stay afloat, Consumer Habits have significantly changed the last two months. Bank of america has been looking into all of this, a Research Analyst there. You looked into the new ways and means of feeding ourselves, physically. I want to start first and foremost with the fact that last night my husband insisted on making homemade pasta. Is this people staying at home and cooking up a storm . We have a leveraging survey work in the Consumer Sector trying to take the datadriven approach to these things everyone seems to be experiencing in their own home. We wanted to put data behind it. Ourlatest edition of serious than we are looking at how people are spending time at home. One of the takeaways from a survey is 80 of survey respondents are spending more time from home even when restrictions are lifting, and they are doing tasks themselves that used to outsource like making coffee, coloring their ,air, fixing up their car fixing up their home. 60 of people preferred to work from home if given the option. This is a medium to longer term driver of above average demand for these kitchen tools and appliances benefiting the manufacturers both also the retailers like lowes and bed bath beyond. It also a crisis it also increases demand for groceries. It is a pretty good benefit for the grocers as well. Romaine im sure there will the putting in a pizza oven any minute here. We are cooking at home a lot more, doing a lot of things at home. Ive seen some data that suggest that because people are stuck at home, they are doing home renovation projects come whether it is fixing up kitchens or backyards. Which types of companies are benefiting . Liz we have definitely seen a lot of strength in the Home Improvement category. There is a lot of optimism about the homeimprovement stuff as well. It has been the strongest category within hard lines for a long time. We have seen doubledigit growth consistently week after week in homeimprovement spending. The biggest question is that there is concern about the disconnect between spending, which is through the roof from an Economic Indicators like existing home sales and gdp and employment which would usually correlate to homeimprovement spending. The spending growth cannot really last. One of the things we found in our data is even in spaces that are reopening like georgia, arizona, florida, growth in Home Improvement there is just as long as the state still in lockdown like new york. Even as people are leaving the house m