caused by monetary policy. the way i was taking about this is if the pizzeria around the corner from your house or apartment cannot play it -- cannot pay its employees tomorrow, it is because the pizzeria has been shut down by interest rates can only do so much, central

liquidity conditions. but, fundamentally, this is coming back to a physical problem rather than a monetary problem. romaine: the dow jones down about 3%. the s&p. composite finished in the red. into the green at the close, about 0.2%. the only real sector was actually consumer discretionary, but it was a pretty lopsided victory. namesof the semiconductor actually moving significantly higher, up about 10%

index was your outperform her. a lot of names that people think could benefit from the stay at home, work at home environment. netflix, intel, a lot of those names. of course, to the downside, we see some of the names in the

travel and tourism spacelike marriott, down about 6% on the day. as far as the treasury market, we continue to see some buying. 10 year yield 0.795. the bloomberg dollar spot index is still higher on the day. 10th street day of games -- of gains on that index. still with us, jack manley. joe weisenthal, scarlet fu, still in their bunkers somewhere. jack, when you look at the market movements, what is being priced in here? >> what is being priced in right now, i think, is a whole lot of fear. everybody who is listening right now i am sure knows at least one person that is really afraid of what covid-19 means, either from a health perspective, economic perspective, or capital markets perspective. what i don't think markets have priced in just yet is what it will actually look like in terms of those earnings expectations. that is why i think there is probably another shoe to drop once we start hearing numbers coming out of corporate america. scarlet: six more days of the first quarter, then 14 days before jp morgan it wells fargo kickoff earnings. can we rely on what we have seen in the past, a slew of pre-announcements where companies give some kind of guidance? or are we going to get more silence, because this is a moving target and a lot of these companies are not even fully operating. jack: i would like to think that silence is not an option in situations like this. all eyes are on the c-suite to see how we are dealing with these broader problems. i think everybody out there can acknowledge that this is a moving target. if it would not surprise me, you do start to hear ballpark estimates in terms of how this is affecting short-term business, but also some

reiteration of confidence in longer-term growth prospects. we came into this situation without any clear over extensions or imbalances in the economy. with the exception of multiples looking a little bit rich, nothing really fundamentally wrong with the equity market either. if we believe that there is a recovery coming down the apeline, then sort of reiterated sense of confidence in those longer-term numbers i think is going to go far in terms of dwelling investor concerns. joe: you mentioned earlier that maybe we have come to the end of some of the selling. one may have been able to say that last week but then you had another terrible week after that. we often talk in terms of timing. but, are there areas of the

market, certain beaten-down sectors, certain areas of credit that are just so distressed in their trading right now that you don't have to worry much about timing because they are giving you such a margin for error relative to some notion of valuation? >> as long-term investors, we know that we have to be willing to take risks. when you combine that with the interest rate policy not just here but around the developed world, seems to point to lower interest rates for longer, we have to be invested in the stock market. right now, with multiples as low as they are, for a longer-term investor, things are starting to look more attractive. in terms of certain sectors that could make sense, technology is a perennial favorite, very clearly proving its use case right now as almost all of us are dialogue and from our --

mark dialing -- almost all of us are dialing in from our bunkers. we have adapted pretty effectively. there is not in a lot of disruption at least in the kinds of businesses that we are in. streaming things like services, music services, video games. tech i think continues to be a growth story. it is only becoming more important, not less important. another area where there should be some interest is financials. banks have performed extremely poorly recently. they are basically priced as if we were already in a recession. the longer-term story, ironclad balance sheets at these banks. the odds of a financial crisis-style meltdown, increasingly low.

cases safen some haven assets. you combine that with a relatively good buyback yield. from a yield perspective, financials can actually look relatively attractive. those are the two areas i would say have longer-term viability. romaine: before we had the meltdown over the past few weeks, we saw investors, portfolio managers sort of nibbling around the edges. looking to real estate and other areas. ored income, even a safer less volatile return than equities. i wonder if you see that trend continuing once we get through the worst of this, if this will all be about the normal equities, fixed income. jack: it may take a couple of

months for us to get back to normal, but i think that is the direction we are getting forced into. you are still looking at a long-term interest rate environment of around 2%. you are barely beating inflation in most of the bond markets. when you look at what is going on around the west of the world, even more bleak. i think we have to look to riskier assets. the public equity market can make sense and does make sense if you are looking at those larger cap, higher quality names. we are increasingly looking toward real assets like real estate, infrastructure, transportation, and if you're willing to take the liquidity risk, there is an extremely healthy coupon, 6%, 7%, 8%, thegs unheard of in most of

equity markets. i think we will continue to see it happening in the future as more and more money moves into private assets. the yield environment is just so attractive in that part of the investable universe. scarlet: that is something to look ahead to when things start to look or normal. you have these interest rates, in this case at zero. low interest rates have really encouraged companies to borrow money and buy back their shares. you mentioned earlier financials being attractive because of buybacks. buybacks arehat politically poisonous, perhaps, because president trump's comments about the buybacks did not necessarily lead to investing in building facilities and ringing back more work to the united states. what does it look like when a key source of demand will no longer be there?

jack: i think that will be a sector by sector story. arere right, things political right now when it comes to buyback activity. i think that is where the oppo-taco problems come into play. most of these big banks are not going to really need any government assistance, at least not right now. we are out there spending money, taking loans, buying houses, the economy keeps turning. stock my don't think is the end of the world for these companies, because they will not be doing it on taxpayer money. you compare that to some of these businesses that make it a bailout, then i think buybacks become politically unfeasible. frankly, i think that makes sense in the near term. continuelong run, we

to see investors having to put your money somewhere. if you look at a world where cash is barely yielding you anything, that somewhere is going to increasingly be the equity market. it is the place where we are being cornered into. it may not be the most compelling argument, but it is sort of the hand we have been dealt. i still think there is quite a bit of support from the equity market in the long run. the immediate term, the big question, what does the fiscal package look like, is it big enough, will have to take another whack at the apple sometimes in the weeks ahead? what about the virus case count that we expect over the next several weeks to absolutely surge in the united states. it will be very grim. even in the best scenario. thethe market recover with

overwhelming intensity of the bad news on the human tragedy front that we are likely to get over the next few weeks? >> it is going to be tough, but it is going to be tragic, you are right. you never like talking about these things while divorcing them from the human component. i like to think that the market is a forward thinking instrument. it is see and how we are a few weeks behind in terms of infection rates and as a result, a few weeks behind in terms of recovery rates. we kind of know where this is going. at least we have historical precedent to actually look at. you look at what is going on in major metropolitan areas. new york is not the only place really shutting things down. we should start to see the effects of social distancing come through in a big way.

if new york state is the epicenter of the outbreak in the u.s. and the entirety of new york state is locked down a, hopefully we start to see new caseloads fall. if we don't see new caseloads fall, i think we will see the mortality rate fall. the reason the mortality rate is so high right now is because there are a number of cases that are unreported. either because you think you have a mild cold or you think you may have it, but you don't want to go outside, you don't want to put additional stress on the already stressed health care system. you would rather drink some chicken noodle soup, get some bed rest, watch some tv, and let it low over. morgan's jack jp manley at the start of what is sure to be a satisfying week. what did you miss is up next. what you cannot miss for tomorrow's trading day. this is bloomberg. ♪

♪ romaine: live from bloomberg's world headquarters in new york, i am romaine bostick. i am joined from my cohost, scarlet fu. joe weisenthal will join us a little later in the hour. scarlet: the question is, "what'd you miss?" stocks slumping but they come off their lows after congress fails to pass phase three of the stimulus or survival bill. we are looking at stocks

starting the week on a down note. romaine: let's talk about what happened in the markets today. we have to start with the fed. creekr and ceo of morgan capital management joining us now, as will should only bostick. theously, the big news of day was the fed coming out. to a certain extent, it kind of waited into political territory the expansiveness of what i guess can only be called qe4 at this point. do you think with the fed is doing is enough to at least sort of tide us over until we get a little more help from the fiscal side? qe4 -- we needom to qeit from qe4 infinity. i think the market called the bluff a little bit.

fedof the challenges, the is kind of in a box. the market is calling a little bit of bs, saying, wait a second, you said that a week ago, now we are talking multiple trillions. the markets did not like it and ended up going down. kind of a tough situation. scarlet: we know everyone is waiting for congress to act and come up with some kind of package. in the meantime, the fed is doing what it can to ensure liquidity. how desperate would you say they are for cash at the corporate level by companies, not just big companies but small and medium companies. >> you hit on the biggest question out there, which is can liquidity solve a solvency problem? i was talking to a friend a week ago and she said she was looking

at the treasury market and there were no bids. we are starting to see that leak into commercial paper markets. you are also seeing a problem in that hedge funds with lots of leverage are needing liquidity. in your point is really spot on. what about businesses that are now shut down because of the national lockdown that are going around of cash? the average restaurant i think has 17 days of cash. they have already been closed for a good part of that. leadash crunch is going to to some other real problems over the next few weeks. >> we have been listening and waiting for congress to take some action. meanwhile, the fed pulling out on resident action. what are the risks to the federal reserve pulling out so many stops at this point?

again, really important point. history tells us that there is a cyclical nature to markets and the business cycle, and in that ebb and flow of business activity, the central bank andlly reloaded the gun raised rates to slow the economy down. this time, they never did that. they never increased their arsenal. i think we are finding they are in a very tricky position today and that they do not have the normal ability to cut rates. they try to that. so they have said, what about doing more qe? it is like any drug. the first time you administer that drug, it works really well. the second time, a little as well. the fourth or fifth or sixth time, you need a lot more of the

drug to get the effect. i think this is what we are seeing with this problem of qe infinity. this is i guess probably looking a little too far in the future, but with all the measures the fed has implemented, we went through madeperiod were the fed attempts to normalize rates. i wonder, do we sort of have to accept the fact that, structurally, what we get out of monetary policy now is just going to be lower for longer if thatower forever, the idea the fed's role, we will have to structure our thinking around that. mark: you guys ask all the great questions today. these are perfect. we are just turning japanese. that is what is going on. japan is 11 years ahead of the united states demographically.

we have demographics of a bad demographics. every day, 10,000 people in the u.s. turned 65. it turns out 65-85-year-olds do not spend as much. productivity goes down, spending goes down, saving goes up and you have the problem of debt. too much government debt, too much corporate debt, too much individual dad. that leads to deflation. we have seen that in japan. q qe.ried to say no more they call it qqe. they said they would not buy any more bonds. today, it is 100% of gdp on their balance sheet. the u.s. is at 20%, we are going to 100. we are going to have to monetize the debt. scarlet: thank you so much, mark yusko, founder and ceo of morgan

creek capital management. coming up, pharmacy giant rate eight joins forces -- giant ride aid joins forces with the white house. we will hear from the ceo. this is bloomberg. ♪

guest addicting the next recession will be the world's first service recession. joining us by phone, gabriel massey. why quickly, explain to us this would be a recession unlike anything we have ever seen before. >> it depends on your view of

recessions. for me, businesses and households will get pessimistic and cut back their spending for that is usually stuff like durable goods. households will drive their cars longer, maybe they will not buy a house. most of those recessions originate in things like durable goods. because of social distancing in this recession, people will stop doing services. that makes a big difference because services are very labor-intensive by their nature. when you go out to eat, you are involved with a lot more humans than you are when you buy a car. we have a lot more employees in the service sector, so we will see a hemorrhaging of jobs. joe: we already know that we will see the biggest initial jobless claim in history this thursday, absolute obliteration. what does the different nature of this recession tell us about

what it is going to take to come out of the recession? somewas just running numbers, looking at how many employees you have per $1000 of spending. for durable goods, about 4.4 employees per million dollars. for services, about 15. three times as many in services. so we will see a huge hemorrhaging of jobs. in terms of the recovery, one thing that is so different about services is that you don't have inventories. durable goods can build up inventories and make sales when it recovers. if your favorite restaurant is shot, the customers will come back and they may not get that signal to reopen. i am very pessimistic about how fast the recovery will be. joe: thank you so much for joining us. ♪

♪ scarlet: pharmacy chain rite aid will be joining the white house covid-19 working group to start allowing testing. a pharmacy in philadelphia will feature testing for first responders and health care workers. the ceo, heyward donigan, joins us now by phone. thank you for taking the time to speak with us. it is great news that you will be offering first responders testing. do you see this as step one to be able to offer broader capabilities to the general public?

heyward: thank you for having me on. it is really early days. it is amazing how fast we were able to work with the white house and our team to get this up and running. we just launched our first public test site in the parking lot of one of our philadelphia rate eight -- philadelphia rite aids. we have been working with them to try to get testing into the market. we are ministering these tests as we speak. they are currently available only for health professionals and first responders. so we are all trying to prioritize the critical community resources. these are the people that will be working with the sickest. is for all ofan us to expand where we can. this is really a pilot. so we will learn a lot today, tomorrow, and over the next few weeks.

we are also obviously interested in providing testing once commercially available testing is in the market. testing in certain states today. we are hoping that as they identify tests and make them available, that is something we can do as well. scarlet: we look forward to that possibility. clearly, your local pharmacy is more critical than ever these days. it is essential for health care services and groceries as well. we know that one of your competitors, cps, plans to hire 50,000 people to increase demand. tell us how you are managing the increase in demand at your stores. >> we are definitely going to be hiring more. we are going to be forming swat teams that can go from store to store, whether it be front and

clerk's or pharmacists and tax. we want to hire in our stores but we also want resources that can go from store to store. we do see that, from store to store, it will have needs and may be different on different days. we don't want to be just hiring within the stores but rather having teams that can rotate. of course, our distribution centers are crucial and we are hiring there as well. we do not have a number at this point. but we are on it, as everybody is. romaine: we have some breaking news here out of the u.k. ordering its citizens to stay home except for essential region -- essential reasons. prime minister boris johnson saying that nonessential travel must stop.

he also says the police have the power to enforce the lockdown. he says the u.k. will close nonessential shops in this lockdown. basically, boris johnson, who had hinted that this could be the next step for his country, saying that the country is in a lockdown except for "essential reasons." i want to get back to our guest, heyward donigan, ceo of rite aid . when you talk about how your stores are positioning to handle we have seen a lot of companies that have had significant online presences have actually seemed to do pretty well here to address these needs. i am wondering what the digital strategy is for rite aid for some folks who may not feel

comfortable coming into stores. goodness, we have been focused on building out our e-commerce business. we still have a lot of opportunity and upside. we have built extra capacity and bandwidth before this all happened. our e-commerce volume has now peaked to 10 times the highest historically. that has not abated yet. the volumes are very high. i think as you pointed out, a lot of people don't want to go to the stores. if they have an option, they will look at it. we are also offering free home delivery during this crisis. one thing i want to point out, in addition to e-commerce, free home delivery, we also have a significant drive-through presence. 50% of our stores have drive-through's. so we see a high volume of

people coming through the drive through, and that is a good option. i think we are a really good indicator of how this is all going to play out because, right now, write eight more than any other pharmacy is in the nation's top hotspots and we are also in the locations where the virus is sure to materialize more significantly, new jersey, pennsylvania, and virginia. we have been in the middle of this for weeks now, starting in seattle, then california, now new york. so, we have got some pretty good indications of how this might play out and how this might affect both our in-store and e-commerce. romaine: we only have a little bit of time left here. you're relatively new as the head of this company, taking over last year.

obviously, this was a company that had gone through a lot of changes. there'd been some attempts with regards to m&a activity. with regards to some of the long-term plans that maybe you had when you took over last summer, how many of those plans have been put on hold, or is there sort of a pathway for you to seize on some of those strategic options going forward? heyward: i did not anticipate this, but we did roll out our long-term plans last monday. we do not anticipate any meaningful impact on those plans at this point. we are working in earnest to do everything we can. i do think maybe construction of our new store exteriors and signage might get delayed, but if it does, we don't anticipate it will be more than a few weeks.

most of our plans can move forward and are going to move forward in earnest. we were not planning for a big launch on the retail side or the pbm side. i am pretty optimistic. at this point right now, we have to run the business, we have to take care of our associates so they can take care of our customers, and we have to try our best to keep ourselves tolthy in order to continue do our long-term work. romaine: so great to get your thoughts. glad you were able to join this program. hopefully we can hear from you soon. , rites heyward donigan aid president and ceo. let's get a check of the first word headlines. mark: encouraging signs out of italy regarding the coronavirus pandemic. -- accordingases

to data from the civil protection agency, new cases rose by just under 4800 cases, nearly 700 fewer than the day's previous day-to-day increases. the number of deaths has also slowed for the past two days. health authorities say they need a few more days to see if a positive trend holds, including in northern lombardi, italy's hardest hit area. the british government is tightening restrictions in an effort to slow the spread of the coronavirus. prime minister boris johnson ordered people to stay home. he said nonessential travel must stop it canadian prime minister justin trudeau says enough is enough. go home and stay home. the prime minister says staying at home is every canadian's duty and the government will enforce

it if necessary. seeing people of in the sunshine in large groups is extremely concerning. -- he also said the decision by the canadian olympic committee to not send athletes is the right decision. he made the statements after his sophie see -- his wife tested positive. democrats are refusing to advance senator mitch mcconnell's $2 trillion stimulus plan. the 49-46 vote, with 60 needed. leader mcconnell said, "why are the american people still waiting?" he accused democrats of pushing unrelated "wish list" items. democrats say certain provisions in the bill don't go far enough. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than

2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪

♪ the past few weeks, as the world was gripped by panic over the covid-19 coronavirus, latin america looked unscathed. but now, the virus headed toward that region and many medical

nationals are worried that the rate and speed of it could leave the region unprepared. joining us, shannon o'neill. thank you for taking time to be with us here today. i am just wondering, by all measures, latin america has had good head start. to see what happened in asia, in europe, in the u.s. and north america, how prepared are these countries in central america, south america, for now what appears to be coming their way? there have been very different reactions from different governments. some of them took that advice and immediately started shutting their borders, closing the airports, having citizens isolate themselves. peru, argentina, others. mexico, their president being rather nonchalant, telling people that it has not hit yet

and maybe will not come. very different approaches from the leadership down there. faith in theheir government in brazil and mexico when the leaders seem to shrug it off and act casual, or are people in those countries taking cues from neighboring countries? any kind of walling yourself off doesn't really work if there are some countries participating and others letting their borders be pretty porous? >> you have started to see other people again to react. the business community is reacting. other politicians, opposition politicians and governors. the head of sao paulo, they have shut down the city even though brazil itself is not shut down. what the citizens are thinking, especially in brazil.

for, when are famous they can't go outside, banging their pots. people are trying to get the president to listen to the international community. people see the international news. romaine: so what does this mean for the economy? several economies were already on somewhat shaky footing. obviously, argentina has the debt issues. andr nations like venezuela some of the central american nations, already seemed to be having trouble getting their arms around any sort of recovery. how much cushion to these countries have to be had by this economically, and what is going to be the outcome down the road? >> latin america was, before this hit, the region that was going to be the slowest region in the world. as you are mentioning, venezuela

and argentina and recession we do see a really uneven capacity to respond to this. there are some countries that have pretty lower debt to gdp ratios. you look at peru or she lay, or mexico, where they could expand, especially in a world of very low interest rates. you have other countries with no capacity at all. argentina is trying to renegotiate debt with international creditors. they have a challenge. some of these countries are not going to be able to stimulate their economies in the way we are talking about here. another challenge, a big portion of these countries workforces work in the informal sector. they are not in offices, not in jobs that are registered with payroll. they don't have social security numbers, those sorts of things.

tothe government is trying reach these people in terms of trying to help for a stimulus payment, it is hard to reach big percentages of these populations. scarlet: shannon o'neill, fantastic summary. janet o'neill is with the council on foreign relations, their latin america specialist. let's turn back to washington and the response. we know the senate has failed once again this afternoon to get a massive stimulus package through. that has republicans and democrats negotiating with the treasury secretary. let's bring in josh, our bloomberg news white house reporter. what is the state of play? is mitch mcconnell still intent on introducing this bill and putting it to a vote today or tomorrow? >> nancy pelosi is saying she is going to propose our own will,

and that will raise fears that we get into some sort of dueling bill scenario. we saw some reheated actual debate on the senate floor today. so, the temperatures are running out and democrats are accusing republicans of tucking measures in that don't have accountability. saying it is absolutely needed given the existential crisis this represents. trump,: with regards to has he commented at all on the senate bill as it stands now invoiced either support or objection to it? >> he seemed more or less on board yesterday. we will hear from him in about 45 minutes work an hour. i should say that we expect to hear from him. we will see. one thing he pushed back on was stock buyback's.

he wants restrictions on companies that get -- call it a bailout, a loan, aid, whatever you want. he does not want them to be able to turn around and buy back stock. mcconnell's in proposal. mcconnell was sort of in the eye of trump a little bit yesterday. overall, he is expressing confidence they will get it done. he is certainly not threatening to veto. scarlet: one thing that bloomberg has been reporting on is that the president seems to be changing his tune a bit when it comes to social distancing. the is now considering perhaps relaxing that directive. can you give us more insight? josh: yes. this is a crucial thing, coming from a lot of conservative circles, that the economic pain

has already or will soon outweigh the health risk, and they want trump to as of next week signal a of the economy for healthy people to be able to go back to work under certain conditions. they say the u.s. economy cannot stand to be idle for too long but this would be against the direction other countries are going. the u.k. just imposed a three week stay-at-home order. the canadians are moving in a similar direction. if trump starts lifting things off, i think he will face widespread pushback from health officials, including potentially has own white house health officials. romaine: our thanks to josh wingrove in washington. this is bloomberg. ♪

romaine: i am romaine bostick in our new york studio. scarlet fu has been hosting from her basement. joe weisenthal, i am not sure where he is. joe, we usually don't have our don't miss this segment without you here. so we are doing things differently. what are you watching? joe: we got that extraordinary package out of the fed this morning. it did not have a huge affect overall. but if you look at what it targeted, it did. oflook at the etf which is high-grade investment quality bonds, huge rally today. asentially, the fed acting something of a backstop for high quality investment grade companies to issue debt. if you think about the crisis at hand overall, what we are seeing

, the defining aspect in the extraordinarys dash for cash. everybody wants to hold liquidity anyway they can. investment grade companies having trouble issuing debt. we might see some improvement at the margins when you see that type of etf rally in. , easing with the strain on cash. there is still a huge demand for cash. margin calls everywhere you look, things like that. but at least for some of the companies in good shape, maybe some liquidity beginning to ease some of the strain. not enough to lift the market, not enough to reverse the economy, but the actions having some impact perhaps on corporate liquidity. scarlet: every little bit helps. to know joe weisenthal is to

read his twitter feed, and vice versa. what has been the big debate that has unfolded on twitter that caught your attention today? joe: great question. a lot of people picking apart the significance of desperate people talking about, what is going to be needed for this fiscal bill, assuming it gets past, to work? we really need something on the employee side, checks come some sort of mechanism to make sure that the small businesses of america do not get obliterated so that when this health crisis is over, there are companies that can restart. if companies get destroyed and go out of business, even if we eradicated the health crisis tomorrow, there would not be companies to go to work. it is critical that it allows the base productive critical -- base productive infrastructure of the country stay intact well

we are doing our best to flatten the curve and eradicate the virus. scarlet: that is where the federal government comes in with the stimulus bill. joe weisenthal joining us from austin, romain from new york. good night. ♪

emily: welcome to "bloomberg chang iny," i am emily the san francisco area currently sheltering in place. we are awaiting the daily press briefing at the white house. we are told that attorney general william barr will be there today. it is scheduled to start about a half hour from now. another down day for the markets yet again despite the fed's unprecedented moves.