Transcripts For BLOOMBERG Bloomberg Markets Americas 2024071

Bid. The dollar was a little stronger but now we are into that risk on field. You have a bid into gold, a bid into the 10 year yield. Old futures almost hitting a record high. Coming up, we are going to break all of this down with southwest ceo. He will be joining us later on in the hour as well as the founder of robin track. Looks atg he everything robinhood traders are doing. U. S. Initial jobless claims arising for the First Time Since march last week. Joining us now Narayana University of rochester professor of economics and former minneapolis fed president. He recently wrote a bloomberg piece that talked about what the fed can do in times like now, in particular when it comes to inequality. What should they be doing and what help should they be getting from washington . Narayana thanks for having me on. I think the fed should be doing all that it can to stimulate the economy in the current setting. That will further their current mandates in terms of trying to get inflation back up to 2 and trying to lower unemployment from where we are today. Unfortunately, i see unemployment rising and not falling. Even with that stimulus. The point of my piece was, that would help on a third mandate, which has been proposed by the biting campaign, which is to shrink the gap between blackandwhite unemployment. I think that is a valid goal in and of itself, but then the pursuit of that actually would be beneficial for the economy because that cap tends to be low when unemployment is low. Francine good morning from london as well. It was a great piece. You lay out what you think the fed should also target, racial equality. How concretely can they do that . The, you know,nk the fed has one tool, Interest Rates. By, if the point is that it paid even more attention to the employment mandate than it to furtherd do more blackwhite equality in terms of lowering the gap. The reason that cap tends to be high is only because unemployment itself is high. To haveed is willing easier Monetary Policy to become creed about it, i think if you look at 2015, when the hikes,tiated the rate overall unemployment might look low, but if you look at the gap, that still was high. Ok there ishat, another reason on the table where you shouldnt be tightening policy. Alix i wonder how this plays into the conversation with real yields. The last time they were this low we were in the whole qe infinity world. I wonder how much more qe infinity are we going to need to realyields the slow and to yields sink even lower at this point . Narayana i think the fed is going to be doing what it can to push real yields even lower. Yields, hegerterm know, the challenge right now as we saw Unemployment Insurance claims come in today, the u. S. Economy is under severe challenges. I think those challenges come our one source, which is public has not been what it should be. As a result we see this surge of cases around the country. Deathsnately a surge of now. Until Public Health is where it needs to be we are going to have significant challenges and the fed is going to have to do whatever it can to provide support. Francine what do you think should be in the next stimulus bill . Do we have a good enough understanding of the pressures the u. S. Economy is going through and are all sides going to Work Together to make sure in the stimulus it safeguards the weakest points . That the i think challenges are that you were going to be facing a lot of people who are jobs. You want to provide support to them in terms of spending. And youve got to provide, even if you havent lost your job might be worried about losing your job and that is going to lead you to cut back on spending. Youve got to provide as much support as you can to people who are in a state of losing their jobs. I think continuing the cares act, that 600 benefit, is a good starting point for congress to be looking at. You know, i think you dont want to be thinking about this through the lens of the lockdown phase in april. We want to be thinking about this as, some aspects of the economy are going to be open, surging, and weve got to stimulate spending so that those boards of the economy can take up the slack for the other parts that are not going to be able to. Alix you raise a good point. We have seen Companies Take money from the government for these grants and then lay off people anyway. Toquestion is, what is going make people spend . Savings rate keeps going higher. It doesnt feel like whatever bonds the fed buys that is necessarily going to make someone buy more clothes. Narayana i think we are seeing positive forces in car purchases, i think we are seeing otherve forces in interestrate sensitive sectors. Is an unusual recession, but still i think the same forces are going to be at work. People are going to refinance, they are going to have more money in their pocket, that is going to allow them to do more spending. People are going to be more willing to buy a car, my house because Interest Rates are low. All of these same forces are at work. The problem is you are fighting against a much larger tsunami of a recession than even then we faced back in 2009. For animal spirits to really take hold, do you also need chief executives to feel a little bit better and is that in lockstep with the consumer feeling better and shopping . Is it a different fabric that makes a chief executive give wage increases or spend on . I expect ceos are looking at the same World Consumers are and that world is driven by covid19 and, importantly, by the Public Health response. Isrything in the economy really about Public Health, Public Health, Public Health. Backt to get back to to, weve got to have a more Effective Response to covid19. Without that we are facing missing normas session every shock. Enormous recessionary shock. Our congress is extremely divided. It seems difficult for them to face up to this challenge. Then we have a fed that has a shortage of tools. Really the told, cracks of this matter is to be much more effective on the Public Health side. Alix im going to ask you an unfair question. Nomination, im wondering if her coming onto the fed will make what you are laying out more difficult or easier . That dr. I suspect shelton is going to end up having relatively level little influence on the fed. Views, she is pretty far outside of the conversation. Todayhink that there was a not bad in the new , expressedthat was alarm about the possibility of dr. Shelton being on the board. I dont see her as likely to have much influence. The case i worry about with her is, you dont want to have the fed seem politicized. It, but theyicize always come to it with, we are going to try to do the best we can whether we are democrats or republicans, that is checked at the door. You dont want dr. Shelton to play that same role now and if we have a change in administration, you dont want to see her change her attitudes just because the occupant in the white house has a different already affiliation. That would be very negative for the fed. That is my biggest concern. I dont think that her views are going to have enormous influence , because the conversation is very different from the views she expresses. Francine thank you so much for joining us today. Bloomberg opinion, must and former minneapolis fed president. We will have plenty more on u. S. Economy. We will also talk about transport. Airlines continue to grapple with demand. We speak with gary kelly about how the airline is aggressively changing its plans. That is next. This is bloomberg. Francine live from london i am Francine Lacqua, with alix steel in new york. This is bloomberg markets. Southwest airlines is adjusting its flight schedule to match demand as coronavirus cases climb. The airline does not expect air travel to pick up until there is a vaccine or treatment. Joining us now as Southwest Airlines chief executive officer gary kelly. What is the one thing, apart from a vaccine that you need to get people back on the plane . What would it take for me and alix to feel safe on a plane . Is it air quality . Gary i think we got all those things in place. I think the main thing that is holding back travel is the purpose. You dont have events, dont have sporting events, you dont have large gatherings. You have quarantines in certain states and it limits the ability for people to do something when they arrive. That is the main thing. I think the air travel component, airports, the airplanes, we have significant safety protocols. You asked about the air quality. The air quality on an airplane is like a hospital. There are filters that capture 99. 97 of the particles, including pathogens in the air and it is recirculated every several minutes. It is a very safe environment. Dealingive terms we are with a pandemic and there is clearly risk. Are you mentioned you aggressively adjusting flights due to this lack of demand. The cash burn about 23 million. What is aggressively adjusted . Gary it is just not business as usual. In a normal year we have a very trends, onon bookings. Its not that volatile. Now we are in an environment that it is almost like we are starting our business from scratch. We had very strong bookings in place for the Third Quarter at the beginning of this month. Over the last several weeks with the spike in covid19 cases we have seen the bookings slow down dramatically. We have also seen an increase in cancellations. We had assumed that more people would be traveling relative to the Second Quarter and therefore we have added a lot of flights. We will need to go in, and according to historical norms, more aggressively for back on some of those flights and try to get the supply closer to demand. Francine how much of those pullbacks will be forever pullbacks . Our business meetings not going to be in person anymore or are a percentage of them, you will have to leave planes grounded forever . Gary great questions. I firmly believe that we will get through this. This too shall pass. Things will get back to normal. A lot of people say that angst will never be the same again, well never is a really long time but i do agree with the concern in your question, which is i think that we have to be paired prepared that to get back to 2019 traffic levels will take a long time. Business travel is almost nonexistent. The people traveling or more leisure oriented, so we are and weg very low fares just have to be prepared for a lowfare environment and do our best to react when demand comes back. Then we can put more capacity in place. We are very much in a, lets execute, lets monitor the results, and then we will have to adjust. So, very heavy management. It is very tactical compared to what we are normally used to. Alix at what point to those tactics have to be involuntary layoffs . Gary at the point where you just dont see a path to positive cash flow. Right now we are pretty far away from that. We were on a good trend in june, where i could see a path by the end of the year where we were breakeven cash flow. Then i think you could relax a little bit the concern about layoffs, pay cuts, and if it cuts, all of those recoding and steps. Draconian steps. We dont have interest in pursuing those until at least the end of the year. We will have to monitor it is literally everyday. Everyday we are monitoring what the demand is and considering adjustments. We are very active in trying to stay as much as we can on top of this. Francine how many seats do need to filter breakeven and how many of those seats to be Business Travel . You were asking about the air quality and one of the things we are doing in addition issuperb cabin air quality we are not looking the airplanes full. We are open seating, but that means all of the open seats will be unoccupied. That is a two thirds load factor. Thated to be somewhere in 60 70 load factor to breakeven on a cash flow basis. Load factors are not half of that at this point, but we got. Lose to 50 in june at some point we will have to begin filling the middle seats to hope to breakeven. We are not going to book the middle seats until the end of october. Alix it is a really rough layout you are laying out for us. Talk to me about government. Have you talked to officials in the white house . Where are you going to get the extra funding if it comes down to that . Are i dont think where we , you know, speaking with you today is a surprise. Actually, our second order results are better than what we expected if you go back to the end of the first quarter. There is nothing really new in that sense. We need the pandemic to be crushed, so people can begin to regain their confidence. The federalth government all the time. The cares act was instrumental in getting the country stabilized in the face of a very serious recession. Our Balance Sheet is very strong. Billionraised over 17 in financing this year, which is well beyond a normal year may be 1 billion, just to put it in perspective. We have plenty of cash to csu through years of this turmoil. For this anded investmentgrade credit ratings, all of those things are in place. We have a low cost structure and i think most importantly, we need customers. We are a trusted brand and a strong brand and offering a really good product. All of that will be key. Tookine in 20 seconds, he quite a lot of money from the government. What happens when that money runs out . Do you think some of your competitors will have to go bankrupt . Gary that is a small part of the financings we have done. It is a small part of the 17 billion i mentioned. That money wont run out, that is in our cash accounts. Youve got to manage to make it to breakeven cash flow. This cannot make it indefinitely without bankruptcies. I think it is anybodys guess and individual companies become healthy again. We have got what we need to see our way through and credit goes to all of the people at southwest, they are working very hard. Alix we really appreciate the conversation. We would love to followup with you in a few months. Gary kelly, southwest ceo. This is bloomberg. Alix we do have some news for you. Steve mnuchin says the white house and the senate gop have a fundamental agreement. Francine, it is difficult to find out what is going to be in this package, but it seems a done deal that there will be a package. A payroll tax cut will not be in the cards. Nonetheless, this obviously key to any sort of stabilization. I dont think we are in a Recovery Time yet. Francine i think there will probably be debates on whether a stimulus is better than no stimulus, but then if it does not actually have a payroll tax cut, that would be problematic for the president. Speaking of the white house, we saw this flaring up of tensions between the u. S. And china. We are still waiting for the chinese response. We understand that they would probably close down a consulate, all consulates are difference. If they close one in hong kong that would be dramatic. If it were somewhere smaller, that would have different significance. Alix it feels like the red the rhetoric overnight from china is, it was going to be pushed in the ball is in the u. S. Court. Dont make it worse, dont escalate, ball is in your court, which i thought was interesting. Francine the other problem, and we were speaking about with one of our government reporters, president xi has this fiveyear ,lmost reelection, and for life and it seems like from now until then he may actually ratchet things up and take aside with many countries to act strong domestically. We see him squaring off with the u. K. With the premier league. Coming up, tesla posts another profit. We talked tesla, next. This is bloomberg. Breaking news on the stimulus deal in washington saying the aid would include wagereplacement at 70 replacement at 70 . It doesnt rule out future relief. Ifwere trying to figure out that fall short of expectations . There was a rumor of a half trillion. The democrats wanted a 3. 5 trillion plan. We will have plenty more on the stimulus, and we will have any impact it has on what the fed does next. Tech earnings are rolling out. Twittericrosoft and reporting results. Heres Abigail Doolittle with around up. Abigail there is a tale of two stories between these tech giants, microsoft trading lower twitter is higher. Microsoft beat top and bottom line estimates by double digits, but their Cloud Business disappointed. Revenue, butd ad their daily users group. As for the Cloud Business for microsoft, it is moving in the wrong direction over the last several quarters. But what is amazing, investors are disappointed by the Cloud Business. This idea that that is disappointing is stunning, but on a down sequentially yearoveryear basis, so investors selling off the stock. Up more than 30 on the year. As for twitter relative to that daily user growth, the second time we are looking at a record in a row. In the june quarter growing by 34 after the march quarter. It looks like the lockdown on the shutdown very positive for twitter as folks want news and entertainment. Looking ahead to after the ballot, we are looking at the intel reporting for chip companies. In topodel to grow both and bottom line estimates. What could be interesting about skyworks is they are an apple supplier. Will they give any color on apple, which reports next week . Francine looking foward to find how they are doing during the pandemic. Thank you, Abigail Doolittle. One Company Managing to stay profitable in the pandemic is tesla. The stock up nearly 300 this year. Getting a boost after it reported positive earnings for a fourth consecutive time. Path to open up the s p. Joining us is the Research Founder and chief executive officer and has a price target of 87 pershare. What do you want to see from tesla to buy the stock . Is it having is it a matter of having it grow faster . That think it is a company is benefiting significantly from regulatory credit. 420 quarter, they sold million in regulatory credit, which is a benefit versus a net income. If you exclude those regulatory credit sales, the most recent was has tesla made money . It is a company where their revenues this year this quarter are down yearoveryear. , if you looks peak at their total revenue in the First Time Since<\/a> march last week. Joining us now Narayana University<\/a> of rochester professor of economics and former minneapolis fed president. He recently wrote a bloomberg piece that talked about what the fed can do in times like now, in particular when it comes to inequality. What should they be doing and what help should they be getting from washington . Narayana thanks for having me on. I think the fed should be doing all that it can to stimulate the economy in the current setting. That will further their current mandates in terms of trying to get inflation back up to 2 and trying to lower unemployment from where we are today. Unfortunately, i see unemployment rising and not falling. Even with that stimulus. The point of my piece was, that would help on a third mandate, which has been proposed by the biting campaign, which is to shrink the gap between blackandwhite unemployment. I think that is a valid goal in and of itself, but then the pursuit of that actually would be beneficial for the economy because that cap tends to be low when unemployment is low. Francine good morning from london as well. It was a great piece. You lay out what you think the fed should also target, racial equality. How concretely can they do that . The, you know,nk the fed has one tool, Interest Rates<\/a>. By, if the point is that it paid even more attention to the employment mandate than it to furtherd do more blackwhite equality in terms of lowering the gap. The reason that cap tends to be high is only because unemployment itself is high. To haveed is willing easier Monetary Policy<\/a> to become creed about it, i think if you look at 2015, when the hikes,tiated the rate overall unemployment might look low, but if you look at the gap, that still was high. Ok there ishat, another reason on the table where you shouldnt be tightening policy. Alix i wonder how this plays into the conversation with real yields. The last time they were this low we were in the whole qe infinity world. I wonder how much more qe infinity are we going to need to realyields the slow and to yields sink even lower at this point . Narayana i think the fed is going to be doing what it can to push real yields even lower. Yields, hegerterm know, the challenge right now as we saw Unemployment Insurance<\/a> claims come in today, the u. S. Economy is under severe challenges. I think those challenges come our one source, which is public has not been what it should be. As a result we see this surge of cases around the country. Deathsnately a surge of now. Until Public Health<\/a> is where it needs to be we are going to have significant challenges and the fed is going to have to do whatever it can to provide support. Francine what do you think should be in the next stimulus bill . Do we have a good enough understanding of the pressures the u. S. Economy is going through and are all sides going to Work Together<\/a> to make sure in the stimulus it safeguards the weakest points . That the i think challenges are that you were going to be facing a lot of people who are jobs. You want to provide support to them in terms of spending. And youve got to provide, even if you havent lost your job might be worried about losing your job and that is going to lead you to cut back on spending. Youve got to provide as much support as you can to people who are in a state of losing their jobs. I think continuing the cares act, that 600 benefit, is a good starting point for congress to be looking at. You know, i think you dont want to be thinking about this through the lens of the lockdown phase in april. We want to be thinking about this as, some aspects of the economy are going to be open, surging, and weve got to stimulate spending so that those boards of the economy can take up the slack for the other parts that are not going to be able to. Alix you raise a good point. We have seen Companies Take<\/a> money from the government for these grants and then lay off people anyway. Toquestion is, what is going make people spend . Savings rate keeps going higher. It doesnt feel like whatever bonds the fed buys that is necessarily going to make someone buy more clothes. Narayana i think we are seeing positive forces in car purchases, i think we are seeing otherve forces in interestrate sensitive sectors. Is an unusual recession, but still i think the same forces are going to be at work. People are going to refinance, they are going to have more money in their pocket, that is going to allow them to do more spending. People are going to be more willing to buy a car, my house because Interest Rates<\/a> are low. All of these same forces are at work. The problem is you are fighting against a much larger tsunami of a recession than even then we faced back in 2009. For animal spirits to really take hold, do you also need chief executives to feel a little bit better and is that in lockstep with the consumer feeling better and shopping . Is it a different fabric that makes a chief executive give wage increases or spend on . I expect ceos are looking at the same World Consumers<\/a> are and that world is driven by covid19 and, importantly, by the Public Health<\/a> response. Isrything in the economy really about Public Health<\/a>, Public Health<\/a>, Public Health<\/a>. Backt to get back to to, weve got to have a more Effective Response<\/a> to covid19. Without that we are facing missing normas session every shock. Enormous recessionary shock. Our congress is extremely divided. It seems difficult for them to face up to this challenge. Then we have a fed that has a shortage of tools. Really the told, cracks of this matter is to be much more effective on the Public Health<\/a> side. Alix im going to ask you an unfair question. Nomination, im wondering if her coming onto the fed will make what you are laying out more difficult or easier . That dr. I suspect shelton is going to end up having relatively level little influence on the fed. Views, she is pretty far outside of the conversation. Todayhink that there was a not bad in the new , expressedthat was alarm about the possibility of dr. Shelton being on the board. I dont see her as likely to have much influence. The case i worry about with her is, you dont want to have the fed seem politicized. It, but theyicize always come to it with, we are going to try to do the best we can whether we are democrats or republicans, that is checked at the door. You dont want dr. Shelton to play that same role now and if we have a change in administration, you dont want to see her change her attitudes just because the occupant in the white house has a different already affiliation. That would be very negative for the fed. That is my biggest concern. I dont think that her views are going to have enormous influence , because the conversation is very different from the views she expresses. Francine thank you so much for joining us today. Bloomberg opinion, must and former minneapolis fed president. We will have plenty more on u. S. Economy. We will also talk about transport. Airlines continue to grapple with demand. We speak with gary kelly about how the airline is aggressively changing its plans. That is next. This is bloomberg. Francine live from london i am Francine Lacqua<\/a>, with alix steel in new york. This is bloomberg markets. Southwest airlines is adjusting its flight schedule to match demand as coronavirus cases climb. The airline does not expect air travel to pick up until there is a vaccine or treatment. Joining us now as Southwest Airlines<\/a> chief executive officer gary kelly. What is the one thing, apart from a vaccine that you need to get people back on the plane . What would it take for me and alix to feel safe on a plane . Is it air quality . Gary i think we got all those things in place. I think the main thing that is holding back travel is the purpose. You dont have events, dont have sporting events, you dont have large gatherings. You have quarantines in certain states and it limits the ability for people to do something when they arrive. That is the main thing. I think the air travel component, airports, the airplanes, we have significant safety protocols. You asked about the air quality. The air quality on an airplane is like a hospital. There are filters that capture 99. 97 of the particles, including pathogens in the air and it is recirculated every several minutes. It is a very safe environment. Dealingive terms we are with a pandemic and there is clearly risk. Are you mentioned you aggressively adjusting flights due to this lack of demand. The cash burn about 23 million. What is aggressively adjusted . Gary it is just not business as usual. In a normal year we have a very trends, onon bookings. Its not that volatile. Now we are in an environment that it is almost like we are starting our business from scratch. We had very strong bookings in place for the Third Quarter<\/a> at the beginning of this month. Over the last several weeks with the spike in covid19 cases we have seen the bookings slow down dramatically. We have also seen an increase in cancellations. We had assumed that more people would be traveling relative to the Second Quarter<\/a> and therefore we have added a lot of flights. We will need to go in, and according to historical norms, more aggressively for back on some of those flights and try to get the supply closer to demand. Francine how much of those pullbacks will be forever pullbacks . Our business meetings not going to be in person anymore or are a percentage of them, you will have to leave planes grounded forever . Gary great questions. I firmly believe that we will get through this. This too shall pass. Things will get back to normal. A lot of people say that angst will never be the same again, well never is a really long time but i do agree with the concern in your question, which is i think that we have to be paired prepared that to get back to 2019 traffic levels will take a long time. Business travel is almost nonexistent. The people traveling or more leisure oriented, so we are and weg very low fares just have to be prepared for a lowfare environment and do our best to react when demand comes back. Then we can put more capacity in place. We are very much in a, lets execute, lets monitor the results, and then we will have to adjust. So, very heavy management. It is very tactical compared to what we are normally used to. Alix at what point to those tactics have to be involuntary layoffs . Gary at the point where you just dont see a path to positive cash flow. Right now we are pretty far away from that. We were on a good trend in june, where i could see a path by the end of the year where we were breakeven cash flow. Then i think you could relax a little bit the concern about layoffs, pay cuts, and if it cuts, all of those recoding and steps. Draconian steps. We dont have interest in pursuing those until at least the end of the year. We will have to monitor it is literally everyday. Everyday we are monitoring what the demand is and considering adjustments. We are very active in trying to stay as much as we can on top of this. Francine how many seats do need to filter breakeven and how many of those seats to be Business Travel<\/a> . You were asking about the air quality and one of the things we are doing in addition issuperb cabin air quality we are not looking the airplanes full. We are open seating, but that means all of the open seats will be unoccupied. That is a two thirds load factor. Thated to be somewhere in 60 70 load factor to breakeven on a cash flow basis. Load factors are not half of that at this point, but we got. Lose to 50 in june at some point we will have to begin filling the middle seats to hope to breakeven. We are not going to book the middle seats until the end of october. Alix it is a really rough layout you are laying out for us. Talk to me about government. Have you talked to officials in the white house . Where are you going to get the extra funding if it comes down to that . Are i dont think where we , you know, speaking with you today is a surprise. Actually, our second order results are better than what we expected if you go back to the end of the first quarter. There is nothing really new in that sense. We need the pandemic to be crushed, so people can begin to regain their confidence. The federalth government all the time. The cares act was instrumental in getting the country stabilized in the face of a very serious recession. Our Balance Sheet<\/a> is very strong. Billionraised over 17 in financing this year, which is well beyond a normal year may be 1 billion, just to put it in perspective. We have plenty of cash to csu through years of this turmoil. For this anded investmentgrade credit ratings, all of those things are in place. We have a low cost structure and i think most importantly, we need customers. We are a trusted brand and a strong brand and offering a really good product. All of that will be key. Tookine in 20 seconds, he quite a lot of money from the government. What happens when that money runs out . Do you think some of your competitors will have to go bankrupt . Gary that is a small part of the financings we have done. It is a small part of the 17 billion i mentioned. That money wont run out, that is in our cash accounts. Youve got to manage to make it to breakeven cash flow. This cannot make it indefinitely without bankruptcies. I think it is anybodys guess and individual companies become healthy again. We have got what we need to see our way through and credit goes to all of the people at southwest, they are working very hard. Alix we really appreciate the conversation. We would love to followup with you in a few months. Gary kelly, southwest ceo. This is bloomberg. Alix we do have some news for you. Steve mnuchin says the white house and the senate gop have a fundamental agreement. Francine, it is difficult to find out what is going to be in this package, but it seems a done deal that there will be a package. A payroll tax cut will not be in the cards. Nonetheless, this obviously key to any sort of stabilization. I dont think we are in a Recovery Time<\/a> yet. Francine i think there will probably be debates on whether a stimulus is better than no stimulus, but then if it does not actually have a payroll tax cut, that would be problematic for the president. Speaking of the white house, we saw this flaring up of tensions between the u. S. And china. We are still waiting for the chinese response. We understand that they would probably close down a consulate, all consulates are difference. If they close one in hong kong that would be dramatic. If it were somewhere smaller, that would have different significance. Alix it feels like the red the rhetoric overnight from china is, it was going to be pushed in the ball is in the u. S. Court. Dont make it worse, dont escalate, ball is in your court, which i thought was interesting. Francine the other problem, and we were speaking about with one of our government reporters, president xi has this fiveyear ,lmost reelection, and for life and it seems like from now until then he may actually ratchet things up and take aside with many countries to act strong domestically. We see him squaring off with the u. K. With the premier league. Coming up, tesla posts another profit. We talked tesla, next. This is bloomberg. Breaking news on the stimulus deal in washington saying the aid would include wagereplacement at 70 replacement at 70 . It doesnt rule out future relief. Ifwere trying to figure out that fall short of expectations . There was a rumor of a half trillion. The democrats wanted a 3. 5 trillion plan. We will have plenty more on the stimulus, and we will have any impact it has on what the fed does next. Tech earnings are rolling out. Twittericrosoft and reporting results. Heres Abigail Doolittle<\/a> with around up. Abigail there is a tale of two stories between these tech giants, microsoft trading lower twitter is higher. Microsoft beat top and bottom line estimates by double digits, but their Cloud Business<\/a> disappointed. Revenue, butd ad their daily users group. As for the Cloud Business<\/a> for microsoft, it is moving in the wrong direction over the last several quarters. But what is amazing, investors are disappointed by the Cloud Business<\/a>. This idea that that is disappointing is stunning, but on a down sequentially yearoveryear basis, so investors selling off the stock. Up more than 30 on the year. As for twitter relative to that daily user growth, the second time we are looking at a record in a row. In the june quarter growing by 34 after the march quarter. It looks like the lockdown on the shutdown very positive for twitter as folks want news and entertainment. Looking ahead to after the ballot, we are looking at the intel reporting for chip companies. In topodel to grow both and bottom line estimates. What could be interesting about skyworks is they are an apple supplier. Will they give any color on apple, which reports next week . Francine looking foward to find how they are doing during the pandemic. Thank you, Abigail Doolittle<\/a>. One Company Managing<\/a> to stay profitable in the pandemic is tesla. The stock up nearly 300 this year. Getting a boost after it reported positive earnings for a fourth consecutive time. Path to open up the s p. Joining us is the Research Founder<\/a> and chief executive officer and has a price target of 87 pershare. What do you want to see from tesla to buy the stock . Is it having is it a matter of having it grow faster . That think it is a company is benefiting significantly from regulatory credit. 420 quarter, they sold million in regulatory credit, which is a benefit versus a net income. If you exclude those regulatory credit sales, the most recent was has tesla made money . It is a company where their revenues this year this quarter are down yearoveryear. , if you looks peak at their total revenue in the Fourth Quarter<\/a> of 2018, their total deliveries, despite having another car in their lineup, was not a record this quarter. And we think the company is going to go back to hemorrhaging cash in q3 and q4. They aggressively recognize regulatory credit revenue that no one has yet purchased and they have not sold. To get in receivables s p inclusion. We think there is a lot of accounting. We think reality will resurge in the back half of the year. They are guiding their regulatory revenue down roughly 50 in the back half of the year versus the first half. This is noncash accountingbased revenue. Alix i was laughing when youre answering the question because after reading your research, what would make you buy the stock . Nothing. [laughter] what would make me by the stock is if they made a profit in their automotive business, but they are emerging cash hemorrhaging cash in the automotive business. Here is the reality. If you go back to 2011 in the u. S. , hybrid electric vehicles had some share. Shareave only gained 1. 3 in the u. S. Car market. In 2011, 50 2 market share, 2019, 70 rocket share market share. It doesnt matter to the numbers. Alix also, lets get back to the color on the call. Elon musk spoke about profitability. He said they dont care about making that much money. [inaudible] we are not trying to be super profitable. Demand is not our problem. Definitely not. We do have some production, supply chain challenges we are trying to go through now. Alix it does seem like he necessarily wants to make a profit, and investors dont seem to care. How do you square that as an analyst . Gordon look, there is no reality. The stock is completely detached from reality. Even though they said it will be still whatt is theyre sticking with. Pricesk in q3, they cut eight times this year. The most recent was this week. They cut their price for their car in china by 6. 1 , the model y. When it becomes clear to investors that they will not hit their delivery numbers this year, even with price cuts, this growth narrative will disappear. If you look at their numbers, they set their capacity per quarter was 345 thousand cars, yet they sold 90,000 cars. They are selling, you know, less than 50 of their total utilization of cars on a quarterly basis. So, the point is, this is a company that is supposed to have unfettered demand. They are supposed to have, you know, be able to sell every car they produce a me they are not doing that, and they have roughly 20,000 cars of inventory. What would get us to buy the stock . We think it will become clear to all these investors with the valuation that this company is not growing. If you look at their deliveries and revenues, they are not at record levels. They are declining. That becomes clear in q3. Francine is this a car company or a tech company . There are plenty of Tech Companies<\/a> that dont make money that dominate. Gordon this is 100 a car company. Tesla does not make its own batteries. Buys batteries from panasonic. In the Second Quarter<\/a>, of tesla was going to become a battery maker, they would be skyrocketing. The guys who make batteries who have batteries are spending multibillions on batteries. Germany outlawed them using that as a marketing term because they said it is illegal. Based on navigate consulting, tesla ranks dead last in autonomous driving technology. At selfdriving, you have to be at level five. Everyone uses radar. Radar is leaps ahead of lidar. There is a bunch of misdirection where people are assuming things that arent true. That tesla leads in full selfdriving, but they do not based on the experts. A lot of this becomes clear later this year. If they were going to start to lead, they would be investing in r d. They are a car company. Alix gordon, love talking to you. Thank you very much. Just to recap, Steve Mnuchin<\/a> speaking to reporters offcamera saying the gop in the white house have a fundamental agreement on the next stimulus bill, looking at things like unemployment, schools, wage replacement at 70 of income. The looks to be about a trillion dollars. They say direct payments in the bill will be the same as last time and that the bill would be handled in a tiered manner. I dont know what that means, but maybe it is about getting the money out quickly. This is bloomberg. Im alix steel with Francine Lacqua<\/a> in london. You had gains in tesla shift today, adding on to the momentum we have seen, and this is good news for retail investors. Tesla is a seven most held us is d joining casey, just to get your perspective. Everyone will hit you up for your data. How do you find out who is trading one and how frequent the updated is your data . Apiobinhood proviso public that gives a data directly. It is something anyone can access. I just read a software connects up to the api and pulled it down every hour. I pull the latest stock on their brokerage hourly. Stick with tesla for a second here. It is the stock of the day. It is a huge stock on robinhood. It is also the most shorted stock in america according to s3 partners. What are the changes you have seen in tesla ownership over the year . Casey so, over 2020, it has been a consistent rise and the number of people owning tesla on robinhood. That is due to the increase in robinhood accounts out there. Robinhood has seen a significant uptake in the user base. In the past before 2020, it was a very mainly reversiontraded stock. 20 20, people have consistently bought. I want to ask you about biotech. Given all of the data you have analyzed, what is been the most surprising thing for you during this pandemic . And that is in how people trade . Casey it is vary interesting that people will take multiple perspectives. There is not one core dynamic that decides the way robinhood users trade. In the pandemic stocks, there are a lot of people who will buy ailing rental car and airline companies, but at the same time, people invest heavily in the work from home stocks like zoom and slack. People are very dynamic and the way they trade. They will jump on news as it happens. People have their ear to the ground, trying to make the best trading decisions they can throughout the day. Alix casey, how much are hedge funds looking at your data . Have you heard a lot from them in terms of what theyre looking for among the smaller investors . Casey i have plenty i have gotten plenty of emails from hedge funds who are interested in the data, but i have gotten interesting individual investors themselves. There is a lot of interest from the larger firms trying to get a feeling for what the Broader Market<\/a> is doing. It is like a sensitive indicator. If you look at twitter sentiment, you can get an idea what people are thinking, but with robin track, you can see where people are putting our money, so it is a Better Direct<\/a> indicator. What is the flavor of the week . Casey there has been an increase in biotech and pharmaceutical action over the past couple of days on robinhood. Pretty good spread yesterday, pfizer was the biggest gains, probably because of its vaccine talks. There is a bunch of other medical Research Companies<\/a> and pharmaceutical companies that have seen an increase in users as well. It is a trend right now on the platform. Alix you are like 23, right . Casey i am. Alix props to you. What do you do after this . Are you looking to launch Something Else<\/a> on the platform that you can sell, or are interested parties wanting to buy . Casey i have people interested being involved in robin track. My main concern is keeping the site functional and providing accurate data for everybody. Algorithm to be made for hedge funds . Do you actually see patterns week in and week out . Or does it follow the news, as you say . Casey there are patterns and i know that there are people who have looked at the algorithms involving the data. At the end of the day, it is just another tracking sect. There is some kind of value in robinhood i feel. There wouldnt be that much attention. You dont get down to the second Realtime Data<\/a> from robinhood. You cannot really use it to do marketmaking. Alix do you expect retail traders to be trading when live sports comes back . We are getting questions from our audience about that. Casey it is a possibility. Part what we are seeing is unprecedented. Apps make it really easy to trade. Once people are in the swing of it, he may be something people dont want to give, but it remains to be seen. It is a possibility that people will move away from trading when things return back to normal, but at the same time, this could be a shift in the way trade is done in the future. Alix really interesting. Good to catch up with you. Great to have you back. Thanks very much. Lets go to the Steven Mnuchin<\/a> headlines. Saying the Senate Republicans<\/a> as well as the white house have agreed on a stimulus bill, looking at 70 wage replacement. We will break that down as these headlines are coming across. More on that next. This is bloomberg. Im alex deal with Francine Lacqua<\/a> in london. Whitec. Mnuchin the house and Senate Republicans<\/a> have agreed on a fundamental. Greement we saw the s p all the lows of the session with the dollars sinking to the lows of the day. There is some movement around his, but what do we know materially about this . No payroll tax cut. I was speaking with staffers on capitol hill, and they tell me the lighthouse has completely thrown out the payroll tax holiday from being included in this round of economic stimulus. They do not feel they have those from the Republican Caucus<\/a> in order to garner that over the finish line, however, the Treasury Department<\/a> and the president are suggesting that this might be another issue they take up in the fall and a potential for the amount of economic stimulus, but they are up against the clock. They know they have to get this done. This is a giant step in the right direction for getting this across the finish line for republicans to be on the same page as leader mcconnell and president trump. Francine kevin, 1 trillion is different from 3 trillion. What physical number are we going to end up with . Tom what you were kevin what you are going to see a summer in between. Biggestthink the hurdle, francine, coming into this morning, was whether or not leader mcconnell and Steven Mnuchin<\/a> were going to iron out so many of their differences. We were covering this story as a triangulation of sorts between president and leader mcconnell and speaker pelosi, but now it is republicans and democrats again. The democrats are urging for their to be regulatory assistance for the educational sector as well is underserved communities, while republicans are saying they would like to see tax credits for the private sector in order to incentivize businesses safely bringing folks back to work. By the way, what is coloring all of this this morning as the payroll im sorry, the jobless claims numbers, which have increased the First Time Since<\/a> march. Bill we learned the relief will be handled in a tiered manner. Do you have any insight on what that actually means . Kevin the tiered manner was at the urging of several Top Republicans<\/a> in the senate who wanted to see a more targeted approach to helping individuals who need the Financial Assistance<\/a> immediately. So, the conversation in conservative circles as they dont want to write a blank check to individuals and not provide an incentive to be able to return to work when it is safe for them to do so. Looks atd approach companies and corporations, particularly those businesses that have really suffered the most from not being able to open and whatnot, and really being able to target them specifically because that was the biggest concern. From someone like conservative senator, a deep conservative on economic issues, for someone like that in others, it is tough to sell to them they want to give away this money. By having a tiered approach, it was an easier pill for them to swallow. Francine kevin, when we have a better idea on what we will end up with . Is this a matter of a breakthrough coming quickly, or is it weeks at least . Kevin we will see the opening bid later today. Leader mcconnell would like to get this out as well within the next couple of hours. Ultimately, the working timetable is for next friday, week from tomorrow, for this to get over the finish line, but now that republicans are on the same page, they are going to have to get to a deal with democrats and they are a world away from that. Alix for many, they need to know what they are doing by friday in terms of the stimulus. Kevin cirilli, thanks a lot. Really great reporting. We will keep you posted. Jobless claims rising for the first month this week since march. Covid case is still rising. Florida posted a Record Number<\/a> 170eath among residents, three. They had cases of 2. 7 from a day earlier, so the number of cases coming down, but the death toll still spiking so the worst is not over. We did see jobless claims in california spike as their state goes into another lockdown. Francine in the u. K. , we looked at our number that tells you how many people are infected by one single person. It has to be below one before they start quieting down. Another report from the worst government saying they lack an economic plan with dealing with the government. Add anotherlso does layer of criticism to Boris Johnsons<\/a> government in the handling of the outbreak, including it failed to get staff. Protected andhave a contingency plan pandemics and the u. K. Have always been in the top four to five risks. They are arguing they should have a contingency plan. Brexit talks are ongoing. It does not look pretty. They are going to negotiate, but it does not look good. Coming up, we will talk to mobius capital founder copartner on his thoughts on brexit and his thoughts on gold. Do you want to be buying . Will break that down and we will break that down. 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