U.S. Jobless Claims Jump to 3.28M, Virus Update

on iTunes, SoundCloud, or Bloomberg dot Com. You can also listen to our radio show weekdays at two pm Eastern only on Bloomberg Radio. Still with us is our own Vince Signarella, Bloomberg News Global macro Strategists, and we want to roll into the conversation Peter Chier, head of macro strategy at Academy Securities. He's joining us on the phone. Um from Connecticut, Vince, give us some idea of what you folks have been talking about on Bloomberg's on the

Bloomberg squat Box, Um, what are you hearing? Well, it's really interesting to see the momentum and the enthusiasm in the market to say we spoke about this yesterday. Mia Kalpa, I think I said something like if we saw a three million number of the markets like this. Uh, they liked it a lot um, even though absolutely most most traders think it's actually underreported. There was a lot of problems getting to reporting, especially on the website's jobless claims.

So next Thursday is probably gonna look even uglier. But we're one trader said to me today, He goes, we priced the We've priced the recession in the February, and now we're pricing the recovery. So markets seem to really be jumping way ahead of themselves. Um, you spoke before Mr Merphy came on about a roll off. Today it rolled off the highs a little bit. Um momentum lost when Italy reported a big jump in cases. I think

it was their rush for five days. Um. And yet again traders looking past that and telling me that that's just higher because they're testing more. So the market seems to want to buy this today. And you know, I don't stand in front of it just yet, but I do believe. Um, certainly there is going to be worse to come, and there will be other opportunities to get in if you didn't get into today. So Peter chair coming in here, h was reading your report from yesterday

with great interest talking about needing a bigger boat. I like the metaphor there help us understand sort of what that is and when we may need it. So I think I look at it from two different perspectives. One is what the set is doing, and the SAID basically went all in over the weekend and on Monday morning, and I think the entire market now believes that the

SAID will be responsive. I think when we look though at what is going through as the Cares Act, it's a little bit light in a few places, and I think ultimately, as soon as that gets passed, they're gonna have to start talking about a more CARES or a Cares Act to um to fulfill some of the needs. And I think that's what the market's gonna wind up needing. Yeah.

I do think what's interesting already the conversation Peter is you know phase four and phase five, and when we get on the other side of this virus, we're still going to need our companies and individuals are still going to need assistance on the other side of this. Yeah. I think we need really two things, and one is to make sure that people can make their payments and

get paid and live their lives. But it's going to be crucial to the returnaround that things don't get bogged down and someone missing a rent payment, and that involving lawyers or various other things. It's that aspect that they will make the turnaround when it comes time to do it much slower. So I think there's a lot of progress that's still got to be made in that front. In terms of how we're going to deal with miss payments, making sure people have enough so they don't have to

miss those payments. That's going to be I think where the you know, Congress in the Senate have to focus next well and quickly something like that, if you're not making your mortgage payments or something, then it becomes more of a financial potentially crisis, right if the banks aren't

getting the money that they're counting on. And this to me has really been what I'm calling a bottoms up problem where it starts with workers not being able to make their payments, which is very, very different than the financial crisis, which was largely a top down problem. So I think it's going to take a different set of circumstances to address it. But I do think we've got some room for the upside in the markets in the near term, um given where equity are given some optimism.

And again, you know, while the virus has been bad, so there are signs maybe that we can beat this. So build on that thought, Vince Signarella, because what I hear Peter saying and Caroline, I've been talking about this a lot over the past few days is the devil's in the details. Clearly that was one of the things that was holding up this stimulus or rescue package from passing the Congress. From an investor's mindset, are they is the market overall less worried about the details and more

uh concerned with sort of directionally what's happening. Yeah, I think it's a little bit of both. Again, One key to me was there were problems in the credit markets, and we kind of saw this rolling problem where started in high yield and emerging markets and moved along dated investment grade, and it was moving to that front end and it was really kind of coming up the system. Even commercial paper was struggling, which was the very front end one year and last when the FED came in,

it freed that up. So I think it took any sort of corporate liquidity crisis off the table. That's a big factor for you know, the markets, and I do think investors are being a little bit rational and you see, Okay, who's going to benefit from this? Who doesn't do well when this plays out? And some sectors frankly, just are so oversold if you look at it. The energy sectors doing okay today despite the fact that oil is going down again. Yeah, exactly, Vince, come on, and I know

you wanted to say something as well. I think Peter makes a great point, especially that bottom bottom up approach as opposed to the financial crisis. I think you know that what what everyone seems to be wanting to know for sure and hoping that the Washington doesn't move people back to work too soon, is getting the health part of the equation right. If we get the health part of the equation right, we know we're going to have

a poor second quarter. We know there's going to be some transition potential recession if we get another poor third quarter. But the general feel of investors and the people I talked to on the street is fourth quarter should turn this around, especially what holiday spending, and we should have a little zest in that the first quarter of next year should be good as well. You know, if you wanted to say pricing this with forward earnings, we're obviously

looking past potentially two quarters at this point. It may be looking a little too past. We're definitely going to see some ugly numbers coming up, both the unemployment numbers and bullets said we could see, which is amazing. Um. Yeah, So I was just one other thing. I think people are starting to talk about it. It's probably a bit premature, but what sort of true fiscal stimulus will we see once people are able to go back to work and socialize, and will we see a repay creation of some of

the supply chains. And I think that is actually gonna be an important factor. I think companies are going to reconsider what their supply chains look like, and maybe their supply chain should look a little bit like their customer base, and that could be a big boon to growth here in the third and fourth quarter in early next year. But we do have to be concerned about how steep this drop is, right because people out of work, it's harder sometimes to get them back to work, and I

do wonder about that. Peter just got about thirty seconds here yes. Again. I think that's why Congress has and the Sun has to act aggressively and quickly. And I keep trying to remind people Lehman was not a moment. Stock markets were up after Lehman. The stock market never recovered after the sales PARP vote. So I think it's important to get these things quick and pile them on on top of each other to prevent that downfall, because I do agree that psychological impact of the downfall once

it's too long is really hard to recover. Yeah, all right, we're gonna leave it there, gentlemen. Thank you so much. Vince Signarella, Global macro strategist for Bloomberg. Check that out on the terminal. Just go to your launch pad if you're on the Bloomberg and type squawk and Peter Cheer always great to catch up with you as well. We really appreciate your insights. Head of macro Strategy at Academy Securities.

Journey us on the phone from New Canaan, Connecticut. You're listening to Bloomberg Business Week with Carol Messer and Jason Kelly on Bloomberg Radio. Let's get into the medical side of this. Lucky for us, we have a great relationship with the Johns Hopkins Bloomberg School of Public Health. UH, you may know why. The Bloomberg School of Public Health is supported by Mike Bloomberg, founder of Bloomberg LP and

Bloomberg philanthspies. Dr Artro Costa Deval is the chair of the Department of the Molecular Microbiology and Immunology UH group. There he joins us on the phone from Baltimore. Dr Castatoval, thank you so much for spending some time with us. Thank you for inviting me. All right, so help us understand what we've learned medically about this and specifically, I know you're leading an effort around antibodies from recovered patients.

Help us understand what you're learning. So, UM, we are trying trying to get in plays an all therapy something that's been around for over a hundred years, which is that you can take the antibodies from people who recover and used them treat or prevent disease in people who are susceptible. And these antibodies that transferred by plasma. So what you do is you get people who recovered to donate plasma, you test the plasma for antibodies, and then you use that plasma on people who need it. So

how easily is it to do? I mean, obviously it was easy, we'd have it done. But talk to us about how easy in this current situation where we're we've got a health system that's being stressed, UM, just trying to take care of the increasing number of patients, especially in some of those hard hit cities be at New York, being on the West Coast, and elsewhere around the world world. So UM, So from a point of view of logistics,

this is something that the medical system knows how to do. Uh. The Food and Drug Administration provided UH her mission yesterday for his compassion to use. Uh. It is um going to put a tax on resources. But on the other hand, if you were to use it and for example, prevent people from going into the intensive care unit because they responded to the antibody's therapy, indeed, it could help alleviate some of the problems that are going on in the

current system. And so help us understand the timeline both of how it works, UM and how soon we may see it. So, if if a patient is able to get this therapy, how soon do you see them respond if they respond positively? Uh? Well, that will depend That will depend on the on the different infectual diseases. We don't know with coronavirus. So what I would say about this therapy is that it has a high likelihood of success based on history, but that we won't know until

it works because we're dealing with the new disease. So right, so it's it's the but yet yet it may be the only thing that we have immediately available. And and as to the logistics, Uh, the logistics complicated thing is you've got to locate people who are willing uh and more. And I will tell you that many people will be happy to donate. You need to bring him to a place in which I can donate the plasma. It needs to be tested for antibodies, and then that unit of

plasma can be used on patients in the hospital. So randomized control trials are the next step. Um, so how do we get that going? Is it already going? Well, No, compassionate use is getting going in New York City, and uh, I understand that there are recruitment efforts in some of the medical centers, and I assume that compassionate use will begin in a few days. The randomized control trials are critical to know the affricacy this. You really want to

know over the this works. You want to know how to use it, you want to know when to use it. And we have applied to the FDA for permission to do clinical trials, and we're working with the FDA, and once we get permission from them, I think the next step is to actually set it up. But given the large numbers of patients and the hospitals, and given the emergency that we're in, it's possible that we could get

information and efficacy in a very short time. What do I mean by a short time a few weeks rather than rather than your typical clinical trial that goes on for months of years and so one, it's sort of very specific question. If someone donates a plasma doctor costa of all, how many patients can be essentially treated with that one patients plasma at next? It's an excellent question, and it depends that you're using I think at a minimoonent's going to be one to want that is, one

person donates and gives it. But we have estimates that depending on the antibody available, you may be able to use treat two patients from one. However, if you were to break it down into UH and use it for profile access, that is, if you were to use it for preventing UH in the disease, you may need much moler amounts UM and UH. This is something that we will have to be worked out. But the important thing about antibody is that antibody always works best when given early.

So so one of the we don't really know how it's going to work on a compassionate used because inevitably those are very sick patients. But I think that the regulatory agencies have decided that you know, this may have a chance of working and and it's relatively safe. Therefore

compassionate use is appropriate. Dr Casa Devil. I am curious because I do feel like we're all the medical community, in particular Johns Hopkins, UH, you know, going after a lot of different things to try and figure this out as fast as possible. How do you as a medical community organized so that we're spending the time on the things that we should be to try and get this

under control, get their virus under control. Well, people are working very hard, and I think that we're trying to communicate and we're trying to figure out what other people are doing, and clearly in hospitals, the RICE Coordination UH, the hospital administration and hospital the institutional review boards no know what's happening. So I think that even though things have been done in the middle of a pandemic, I

think things are a lot more organized than one might think. UH. And I would point out to you that we have gone from talking about this to getting st a approval for Compassion using a matter of weeks. I mean, I think that that gives your friends of how rapid this organization is able to UH, to deliverance in some ways, some something that in ordinary times we have been very difficult to do well. We wish you only the best

of buck and this is incredibly important work. We're very grateful that you took some time to tell us about it. Dr Arturo Casta Daval is the chair of the Department of the Molecular Microbiology and in Unalogy at Johns Hopkins Bloomberg School of Public Health. Of course, that is supported by Mike Bloomberg, founder Bloomberg LP and Bloomberg Philanthropyes, wow,

I hope this works. Yeah right, it just sounds illogical. Alright, So good stuff to know you are listening to Bloomberg Business Week, Jason Kelly and Carol Master here with you on a busy Thursday after start of catching my breath here Carol, because it's been fast moving, to say the least, and we know it's been fast moving for the magazine. Uh, some really interesting coverage around Boeing, and we want to get into that with Joel Weber, the editor of Bloomberg

Business Week. He's on the phone from Brooklyn, and Jim ellis assistant man assistant managing excuse me for Bloomberg Business Week. He's on the phone from the great state of New Jersey. Joel, I want to start with you set this up for us, But is this is a classic Business Week story in

a lot of ways. Yeah, well, I mean, obviously there's been a ton of of just interest in sort of what's happening on the bailout front, and the company like Boeing is an especially interesting one because, um, you know, they're one of two companies in the world that basically makes all the planes that we used to fly on.

And you know, as everyone knows, like that was a company that also became embroiled in uh, you know, a major catastrophe and was under the gun for for a lot of that and then lo and behold, you know, if here it comes to coronavirus and it's totally throwing a wrench in all of it. So of course they've they've raised their hand as part of this bailout process. Uh you know at sixty billion was the number that

kind of came out. But they're not alone in terms of just being one of many actors that are suddenly um you know, raising their hands and actually asking for government aid. And that was sort of where Janella's came in on this, and we did sort of a big takeout in the business section looking at all the ways that the bailout moment is here and also that there's some resistance to giving bailouts to companies like Boeing. Jim, Um,

what did we what do we learn? Well? I think one of the things that was so interesting about taking a look at Boeing is that, um, uh you know, there's not a lot of question that um, you know, this is a business that has been slammed by the virus. I mean obviously, um you know, this is a business that supplies airlines. Airlines, you know, they contend on people to fly people are not flying, you know, and so basically they can't buy planes, and so a company that

sells planes is in a in a bad way. Now the issue though, is um you know, if there's this honey pot that Washington has to give out, should they be giving it to, you know, certain types of companies, and should they be giving at the companies with all sorts of strings, And should they be giving it to companies that a lot of people consider to be I don't want to use their bad actors, but at least people who have not often behaved in ways that a

lot of people in Washington have agreed with. And so Boeing became this very interesting thing to look at for a number of reasons. First, you know, they have UM. You know, in the past decade they've done forty about forty forty four billion dollars in stock buybacks. Now a lot of people say that that you know, has basically given money back to investors, didn't really sort of build the business per se on that. Now they've come up

and said, oh god, you know this is happening. Now we think that the auto that the aerospace business ought to have sixty billion dollars in UM and help now,

that's uh. And so a lot of people are saying, why if you've done in the past year, in the past years given back a lot of money that you should have maybe saved, and now you're coming to beg from us, especially after the behavior that sort of came out in the seven thirty seven MAX investigations that, um, a lot of people thought that they were a little um, you know, that they were not as following the program as closely as possible and that prob you know, that

program you know, sort of went bad and led to over three deaths. Well, what's interesting, Jim, is it I totally get this debate, um, but it's it's not just about Boeing. Boeing has a massive supply chain, and I do wonder when they're talking about we need a sixty billion dollar bailout, how much goes for them, how much goes for others? Well, Um, that is um a question

that still hasn't been answered. Um. The way this worked is that Boeing has uh, you know, said that that's that's what they think should go for the aerospace business. And let's face it, most of the aerospace business in the US is based around you know, Boeing and to some extent some other defense contractors, but UM, a lot of it would go to the people in the supply chain. But what's happening is that Boeing would probably be the

people who sort of decide who gets the money. Now they have um as they like to say they've got seven teen thousand suppliers and that the aerospace business supports about two point five million jobs in the US. That's a lot of jobs thick, it's a lot of manufacturing jobs. So UM people want to UM, you know, be right by them. But at the same time, people are saying,

shouldn't there be more transparency about where that goes? And currently in the what little we know about the real details of the package so far, it looks like UM two ways that somebody like Bowing could be supported. Number one is through the direct support that the package gives to well, indirectly they'll get they'll benefit from the airlines. It's gonna be probably about forty six billion for the airlines, but there's a seventeen billion dollar of set aside or

for companies that are affect national security. Now. Bowling is the second largest defense contractor in the US, and it also is the only uh major company in the US that can actually build a passing gru jet. So in that sense, a lot of people are saying that looks to be almost a little earmark, you know for Boing. We don't know that yet. We won't know it until probably um the money starts hitting out. But in this sense, we understand that they're they're they're not going to be forgotten,

let's put it that way, well until it does. Feel like one of the big questions as we go over the next few months and maybe even into one is who gets what and who sort of gets to maybe not survived, but who gets to thrive in the aftermath of all this. Yeah, I mean the and and the trough is like, once there's this much money flashing around, you can bet everybody's coming to the trought to take a turn. And you know, we're seeing it like cruise

ships because you knows, because you know. Is when I think Jim and I have talked about a little bit, and then I just continue to be really interested in one reason being, like you think about Nevada's role in the current political climate, there's a lot of a lot of voters that work in the casino industry, which happens to be a gigantic source and employment for people. It's

a huge service economy. So so I think, you know, the the number of industries and companies like we've only really begun to see the beginning, frankly, of all the companies that will start to raise their hands in the weeks ahead. Well, and it's interesting to guys that this notion that uh, you know, you think about the political donations and Joel, as you rightly point out, this is a presidential election year ultimately, and we know the way

politics work in Washington for sure. Jim ellis assistant managing editor for Business Week, overseeing the business section that Boeing story anchors the section in this week's issue. He joined us on the phone from New Jersey, and Joel Webber, the editor of the magazine, joines on the phone from Brooklyn. Carroll. You know, Jason, it's just these larger discussions that we're all having. I mean, you know, what's the responsibility of

a company. I mean, nobody could have anticipated this situation, but safe to say that Boeing has made some mistakes in terms of you know, where they got to the situation prior to the virus concerns and the impact it's having on them. At the same time, you can understand that, you know, when it comes to making planes, it's Boeing, it's air Bus, but Russia and China are eagerly eyeing

the global airline and airplane market. So um, you know, there's just none of these are black and white issues unfortunately, space for sure. Yeah, brother, journal now, but you let me drive. No, no, no no, honey, please the vel I want to drive, Just drive, baby. It's the questions drying. This is the drive to the globe community. Thanks on Bloomberg Radio. It is time for the drive to the clothes.

Back with us is Ryan Dietrock. He's senior market strategist at LPL Financial seven sixty four billion dollars in assets under management. Ryan joining us on the phone from Charlotte, North Carolina. So, Ryan, Jason and I were just in the New York metro area. Tell me a little bit about Charlotte, North Carolina, how you're doing personally, your family and just kind of what's the what's the surroundings like. Thank Carol and Jason, thanks for having me back. Yeah,

I mean things are probably similar, right. It is a ghost town. When you drive around, I mean, all of our neighbors just hunkering down. I go to the office sometimes, but for the most part, we are all just being very careful and staying to ourselves. And honestly, thanks for having me on this week and not last week, because there's a little bit of green to talk about, some good news finally, right, Yeah, absolutely, it's interesting to just staying with that for a second. Ryan. I am heartened

cantidly to hear you say that, Charlotte. Not that I want anybody to be lockdown, but you know, the sense that we are getting as we talk to people is that in different parts of the country, there's definitely a different vibe of a lot of family down in Atlanta, and they're you know, presenting sort of a mixed picture, uh, from what we're seeing here in the New York metro area,

where people are completely locked down. And I do wonder for Charlotte, given its hardcore, you know, sort of attachment to the financial industry and knowing how much is going on here in New York, if maybe some of that is dictated there it is. I mean, you're right, I mean, like with LPL work and US institution, we have to be open, right, I mean, people need access to their money. So it's a little different in our world. But again,

most other people are pretty much locked down. And my kids through up I just playing basketball lot during the day, so honestly, I don't think they are really too affected by there's no school and basketball. So talked us about some of your clients, and I'm assuming folks have been calling because yep, it may be up today, but still we're down a lot for the year. Sir Ryan, what is it that, uh, some of your clients are calling you about? What do they want to know? Yeah, exactly, Carol.

So I've done conference calls every single day with our advisors. Right, we got seventeen thousand advisors, and obviously they're all extremely concerned, but it's really awesome what not just our advisors, all advisers are doing for their clients during this incredible time of volatility. And the thing that we're saying is, hey, you know, as we're speaking, guys, the SMP is a fifteen per cent the last three days. That's the greatest three day rally since April nineteen thirty three. The flip

side of courses. We had one of the most vicious sell offs we've ever seen heading into this, And our friend is Frtigious Research, did a note. They found twenty five bear market rallies going back to the sixties, the average bounce cent So, you know, what do you all think by any means are we out of the woods.

We do think there's some positives we can get into that, but you know, this is kind of where bounces tend to happen, and you know, we might before we know it kind of be working our way back down as bottoms are processes, everyone's been saying for a while now.

And so you know, Brian, you have such a great historical perspective on the market, as you just demonstrated, you know, as you look back and you trying to understand this in the context of previous bear markets, previous downturns, previous real dislocations. Uh, how do you how do you get your arms around it? Yeah, it's tough to your arms around it, right, because this is the fastest bear market ever in only sixteen days, and the fastest correction from

all time hid all time low. So we've really never seen him quite like this. But let's compare to two thousand eight for a second. You know, that was a financial crisis. The first people to lose their jobs then were who rich bankers on Wall Street? To be honest, who's losing their jobs now? You know, it's it's the waitresses and a lot of people like that. This is a this is a business crisis that we have going

on now. And and another thing about two thousand eight, we really didn't know what the problem was until well after the fact. All we knew what stocks are going down. We know what the problem is now, right, it's the coronavirus and the uncertainty that it causes. But look at what happened today with the tragic you know, over three million jobs in initial claims. Well, now there's more certainty. We know we're in a recession, we know it's going

to be rough. Marketing needs uncertainty. But now you can remove some of that a certainty in the fact. Okay, that's why stocks her up so much. The uncertainty to a degree was removed with the positives of the fiscal stimulus plan that's obviously inching closer to um you know, being enacted here. So okay, so again, in terms of strategy, how do you approach it at this point? Because as you say, you know, finding a bottom as a process,

so we may not be there yet exactly, Carol. And like I said, we're not so sure to think about two thousand eight, you know, with major lows in October and then you made new lows five months later in March. That crash of eighty seven eventually didn't bottom officially until December. So the way with December of eighty seven, the way we're looking at this is we're using a like a playbook,

so to speak, a road to recovery playbook. And there's five things we're looking at, and I only get into all the details, but we're starting to check a lot of those off. So what we're looking at doing they simply rebalanced a lot of our portfolios. Right. Stocks have pulled back a lot, Bonds have been involnce to also, So we're just thinking simply rebalancing is a great opportunity for your average longer term investor, but also for longer term investors. I mean, stocks did just pull back thirty

four per cent on the SMP. The average pullback in a recession is thirty seven percent. And you know, so in that realm, I know, we bounced back the last few days, but we really think now could be a time potentially to add Could we have another fifty percent correction like we saw those previous two bear markets. Anything's possible,

we really don't think that's the case. So with this very quick record monetary policy couple with fiscals, so we're dipping our toe in rebalancing some portfolios and a couple more months will dip our town again. Kind of dollar cost average. This is um probably when we all look back in ten years, we'll remember where we were when we stayed home for a month. But hopefully investors didn't

panic and they used as an opportunity. Really and so, Ryan, what do you look at in terms of sources of information from a medical pers fact, you know, so in terms of like understanding the data to give you some sense of when this peaks or the outbreak and the spread. I mean, how hard is that to do at this point? Oh well, I mean it's very hard obviously for a

financial guy like me. That's not my specialty. But we we are using some third party resources and in our playbook, one of the things we're saying is one of the key things we need is case the new cases in US the peak if you look at history, we're probably two weeks away from that based on what Italy just did, and we think that's a key part of it. Could we have a vaccine that shows up over the next month or two, let's hope. So don't look like that's going to be the case, but the cases can peak.

Looking around other parts of the world. We kind of know that playbook, and there can be you know, as bad as the second quarter is going to be, and we've seen the numbers and they get GDP is what some places are thinking, we could also see a really significant pounce back on the third and fourth quarter, and that's kind of our base case here. Wow, all right, well, good stuff. Always good to catch up with you that

everybody's safe and healthy down in Charlotte. Ryan Dietrich, senior Market Strategies for LPL Financial, joining us on the phone from that fine city in North Carolina. Well, I love what his research said, you know, in terms of this bear market, putting it in perspective now worse than but remember, if you're in a recession, it can take longer to recovery, to recover, and that's what these bailout programs that fed stimulus.

This is what it's all about, our ability help hoping to kind of grease our ability to recover once we get through the healthcare crisis. Thanks for listening to Bloomberg Business Week. You can subscribe to the podcast on iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show every weekday at two pm Eastern only on Bloomberg Radio