shares drop as investors show concerns over weakening profitability despite record sayers in the first quarter -- record sales in the first quarter. the treasury is set to sell 20 year debt, while the u.k. sells negative yielding debt for the first time in history. shapiropeak to tom about rapid changes that will transform the real estate market. welcome to "bloomberg daybreak" on this wednesday, may 20. i'm alix steel. in the markets, equity futures in europe were pressured. targetket is digesting results a little less favorably. the big news overnight is the u.k. actually selling negative debt for the first time ever. that sets the stage for investor demand in the 20 year auction here in the u.s.

time now for our top market moving news from our new york team. joining me bloomberg opinion columnist brooke sutherland. what were some of your key takeaways? brooke: i think what is interesting is target talks about first quarter comparable sales being up, but nearly all of that was from digital. digital comparable sales were 141% in the quarter. those sales come at a cost. they are more expensive. the natural supply chain dynamics of delivering products to homes rather than having them purchased in-store is more expensive for target, so you are seeing that market squeeze. clothes,ren't buying where target gets more of a higher profit margin. they were buying food any essentials. is this a structural shift?

are people getting so used to ordering online that they will continue to order these items? they did also callout market share gains, which is key. given amazon logistics troubles, are you going to be seeing customers rediscovering target and walmart, some of these longer-lasting stores where they can get their items? it does appear we are seeing that based on targets results today. yesterdayalmart relayed about $900 million for covid-19 related expenses. have we seen that within target, how much more it is costing them to do stuff like help clean their stores or promote safety? brooke:brooke: you are seeing that. that is part of the increased cost. reporting earnings today. it is less than what walmart and home depot have called out. not clear exactly why there is that discrepancy. their same-store sales were

significantly higher than what we saw from home depot yesterday, 11 point 2% compared to 6.4% at home depot. havedepot did say they may left some tales on the table because they canceled their spring event to limit the number of people in their store at any given time. it will be interesting to see exactly why there was such outperformance, but you are seeing those expenses across ofse retailers in terms investing in their employees, giving them extra bonuses. they are continuing those into the spring months. whether or no those -- whether or not those continue into the summer quarter will be a question going forward. alix: on the investor call, they said they don't have a read on the u.s. consumer. in some ways, that is not surprising in terms of when we reopen, how they will continue to all onto that market share and how they capitalize on it, when they are looking at adding

fresh food to drive through services. brooke: exactly. walmart yesterday said they saw a second wave of spending as people got stimulus checks, but as this unemployment situation sinks in, are we going to see consumer demand stick? are people still going to be buying these items? the second wave helped fuel sales of apparel. items like that are higher-margin. if people stop buying that and stick to the food and other essential items like cleaning supplies, those are lower margins. it gets to how long-lasting is this margin situation, and if it is a structural shift over the long-term. alix: thanks a lot. really appreciate it. let's turn to the broader economic landscape. fed chair jay powell and treasury secretary had testimony yesterday before the senate banking committee.

i wanted to callout the risk, which was the risk of longer-term damage to the economy, and that is what i was doing. i said we may need to do more, and congress may as well. mckee,ichael international economics and policy correspondent, has more. i feel like that really encapsulated the whole reopening versus stimulus conversation that is developing in dc. michael: it is hard to get a lot of drama out of a virtual hearing, but maybe it was the divide between fed chair jay powell and treasury secretary steven mnuchin, and the way they were questioned by republicans and democrats. powell making the case that we need to do more for the economy because it is going to be a slow recovery, and what we need to do is bridge the gap and keep people functioning, keep business is open until then. stephen mnuchin not is constrained. he is a political advocate for

the administration. he said what we need to do is reopen the economy as quickly as possible, and that will take care a lot of the problems, but we are going to use the money you gave us in the c.a.r.e.s. act wisely and help people out of much as they can. there was talk during the hearing, questions about the c.a.r.e.s. act and how it has been used, particularly about the main street lending program for medium-sized businesses that isn't running yet. he said it should be up and running by the end of the month. later in the day, i spoke with the boston fed president eric rosengren, who is running that program, and he said the problem is the fed has no experience at setting up a program like this because it is not something that can be easily characterized. individual decisions on credit worthiness, and the fed has to figure out a way to incorporate that into their programs, but they think they can do that. powell and mnuchin up on the

markets -- up on capitol hill yesterday, talking about what is going to happen next. powell said it is going to be a long and slow recovery, while mnuchin said it could come fairly quickly. both of them leaving out the question of what happens next with china, and whether or not the u.s. relationship with china is going to cause problems going forward. there are some who think, with the president's pivot to blaming china, that is going to cause people to start flooding the united states with more money as they begin to think it is going to slow the economy rather than stimulate it. we will see what happens there. mckee -- so much, mike thanks so much, mike mckee. here is where we stand globally on coronavirus to set the stage for the rest of the conversation. brazil reporting a record day of infection, now the world's fastest-growing virus hotspot pirate -- virus hotspot.

that is leading president trump to consider a ban on travelers. country mayy the have avoided a second wave of infections. they are also reopening some schools. infections in india are also rising at the fastest pace in asia. officials are worried a cyclone threatening the east coast could make matters worse as some areas need to be evacuated. coming up, more of your morning news, trade and analysis on the markets in today's first take. this is bloomberg. ♪

alix: time now for bloomberg for stick. joining me is bloomberg's michael mckee, and stuart kaiser, ubs equity derivatives strategist. it seems like daily, the swings we are seeing in the equity market are picking up again, maybe over 1%. what do you make of the price swings we are seeing? stuart: good morning. i would say we are reasonably positive about how the market behaves, but probably a little bit concerned about how quickly the market has moved higher, and if the markets are appropriately discounting some of the risks

that chair powell identified over the last week or so. one thing i would highlights, it is easy to fixate on s&p 500 and where the nasdaq is. they seem to be pressing a much stronger recovery. but if you look at small-cap, high-yield, how european markets have traded, those have rebounded quite a bit less. i think that is also sending a bit of a signal that while people are buying stocks, they tend to be buying larger, high-quality, safer tech, safer earnings growth type of stocks, whereas other parts of the market, if you section off that bit, seem to be pricing in something a little bit less excited about the markets. so we are paying attention to what is happening in large-cap, but being aware that other parts of the market are not pricing that degree of recovery at. alix: bank of america had a note encapsulating just that, saying mostmost into student --

institutional investors believe this is a bear market rally, but bigger bubbles could lead to larger shocks. you could definitely point to some of the large-cap cap tax for that. what is going to tip the scale? there is definitely a stay at home stock play. how do you not buy them? stuart: in our view, if you are hedging the market, you probably just want to be hedging in small caps. we think that part of the market is much more exposed to the credit and growth risks that could arise if this economic slowdown persists. to your point, the folks that are buying large-cap tech, the findings, however ash the fangs -- the faang's, however you want to phrase that, they were probably able to buy at a reasonable discount when they could. our view would be if you are concerned about another pullback, you want to be hedging the market in the areas most exposed to that.

from an index perspective, we would target small-cap as a way to do that. alix: and if you are hedging the market in terms of bonds, maybe you are going to go buy u.k. negative yield auction today. michael: the bonds come of the three year note reopening's at a negative yield for the first time, and that has pushed down to just about zero. they traded briefly bozo -- briefly below zero, just a few basis points above it. talk about negative rates in the u.k. being fueled by not just talk from some of the numbers of the bank of england suggesting they need to do that, but also inflation in the u.k. at 0.8% on a year-over-year basis, the lowest since 2016. people are beginning to think that is a possibility, even though andrew bailey has pushed back against it. he is testifying later today to

parliament. we will hear what he thinks about not just the possibility of the bank of england doing it, but now the implications that may be part of the yield curve might be trading negative. alix: here in the u.s., we get the 20 year auction. where we price all of that? michael: it looks like it will come in at a yield of about 1.2% , and there will be decent demand for it. there's been a hole in the yield curve because the 30 year was ,uspended for a number of years so there is decent demand for it. it had been a weird stepchild , but at this0's point, people think it won't be a duration issue. it is taking up space that isn't being filled right now. we also note it is a 20 year

bond selling $20 billion worth on may 20, so somebody at the management desk at the treasury department had a sense of humor. alix: cool, i made a really cool error there. when you take a look at asset allocation, there's two schools of thought. one is that there will be enough demand. the other is that you will end up seeing a steeper curve because the fed isn't actually buying all that the government is actually issuing. which camp do you wind up in, stuart? stuart: there's probably a timing issue that plays into that. it looks like he will have negative net supply of bonds locally, so in the near term, i don't think you are going to supply/demand issue that will push yields higher. how's this gets don't with sometime in the future i think is a separate question. if you look back at what happened when the fed began to shrink balance sheets finally after the financial crisis, that

can create a little bit of volatility, both in equity markets and bond markets, but at least in the near term, we don't see the supply and demand theme being a risk for bond markets. the other thing that seems to be happening in the markets in terms of rotation is a reopening bid. is there a reopening trade you need to either be hedging, putting on, watching for? it feels like that is what is leading to all of the news today in terms of rotation. what do you think? stuart: i think the debate that a lot of investors are having is sort of win do i buy cyclicals to get ahead of whatever the shape of the recovery looks like. our view is that is happening, but it is happening in a slightly different way than in the past. typically, the cyclicals trade. it is people buying transportation or capital goods stocks. right now, unfortunately those would not screen as the

preferred high-quality. so we are seeing clients narrow down the investment universe come the things they believe are higher quality or safer stocks. but within that smaller universe, trying to pick the stoxx have the most cyclicality. so people are getting a bit more cyclical. they are just trying to do it in a very selective and cautious way. we can see that in a lot of the ways that we track the cyclical trade. if you look at this sector neutral, i.e. across all sectors , whether that be highly cyclical or more defensive sectors, you have migration into more growth sensitive stocks, but those deeply cyclical sectors i mentioned earlier have probably not performed as well as you hoped. so i think we are seeing a very gradual migration into these cyclical stocks. it has just been very cautious and very selective in terms of how it has been implement it. i think that likely continues for the time being. alix: i feel like that points out the market sensitivity to things like steve mnuchin and

jay powell yesterday talking about the sort of dichotomy, that we reopening get growth going, versus we need more stimulus to support because things might not work out so well. when you are talking markets, you kind of have to differentiate. they are trading on all of the news, the moderna effect over the last couple of days. we had a vaccine, and markets with soaring. and maybe we don't, the doctors are skeptical, and the work it's closed down. oil markets are rising because people think we are going to reopen and get going. e is you really don't se peopled market because don't think we will reopen with a lot of growth. look at which different market you are talking about in terms of who is

thinking what about where we are right now. alix: how does that feed into the u.s. versus europe, and tombs for of -- in terms of who has the right play? how are they looking at that? stuart: mike makes a really good point in terms of different assets responding to this news very differently. our view has also been that because of policymaker impact on fx and bond markets in particular, equities are going to be much more responsive to that new slope and much more responsive to the information. so we do think you are better off expressing views and equities because we think equities are more free to move in response to the news. u.s. versusthe europe trade, i think it factors back to what i mentioned earlier, people being very cautious. i don't think we see a whole lot of u.s. investors very excited about going to europe and trying to add another layer of toplexity or uncertainty on

of the trading they are doing. so it is people probably seeing a little more of their region right now, or just focusing on the u.s. exceptionalism of large caps. i am sure people are sniffing around those trades because if we do get a pickup, there tends to be a lot of operating leverage in europe, and you could have margins move quite a bit. germany in particular is also very heavily levered to china, so you have that proxy. but i think where we are now, people have been very cautious to step outside their comfort zone. when you are in the u.s. and saying i like u.s. equities to begin with, and they are 20% to 30% below where they started, it is still very attractive in the u.s., so there is not necessarily that need to go outside the u.s. equity markets to find large upside opportunity. i think we are seeing at a little bit. people are sniffing around.

but people are kind of staying close to home. alix: thanks a lot. really appreciate the conversation. we will have more in the next hour on europe and what it is doing to try to protect the overall economy. i will have an exclusive interview with valdis dombrovskis at 8:00 a.m. in new york, so don't miss that. any charts we use throughout the show, go to gtv on the terminal and check it out. gtv . this is bloomberg. ♪

ritika: this is "bloomberg daybreak." the turnaround for rolls-royce has been derailed by the coronavirus pandemic. they will cut 70% of their 17% ofce, about 9000 -- their workforce, about 9000 jobs. shares of lenovo rose the most in almost a year. the company says its core personal computer and data center division should resume revenue growth this quarter. the world's largest pc maker reported revenue in the latest quarter dropped a smaller than expected 10%. goldman sachs is a reopening seven of its european offices. staffers must complete a health survey and wear masks in communal areas, and when entering and leaving the building.

meanwhile, citibank is saying thanks to its employees. they've been told they can take this friday off. those who have to work will get an extra day off later. that will be your bloomberg -- that is your bloomberg business flash. alix: thanks so much. let's stay on bankers. check out this headline. partners email at pgt that gives an example of how demanding hours can be when you are that world. that we might talk about worklife balance and support for your employees, check this out. someone responded that they were in that the time, and a senior banker suggested this wasn't acceptable, i verily saying, "i sleep average five hours or less. i the same for my peers, especially on livedeals." i can kind of see both sides. you, i'm working,

should be working. but on the flipside, we are all working from home, and it is not fun. much more coming up. we are breaking it down. target, what you want to do with the retailers, structural margin changes. ,e will talk to cole smead smead capital management portfolio manager, coming up. this is bloomberg. ♪

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and a team of experts - here for you 24/7. we've always believed in the power of working together. that's why, when every connection counts... you can count on us. ♪ alix: this is "bloomberg daybreak: americas." i'm alix steel. market sensitivity very much

related to what is happening overnight related to a treatment or a vaccine. s&p futures able to stage another rally, coming underway with s&p up i about -- s&p up by about 29 points. the u.k. government was able to sell gilts for the first time at negative yields. those are maturing in 2023, bringing down the short end of the curve into negative territory as well. the curve in the u.s. is a steepener kind of story. watch that as we head into the 20 year option at 1:00 today, 1986.rst time since looking at how we can maintain that steeper curve as yields feel confined to a range. brent and wti still staging a rally. many analysts are now saying, let's slow down. it is a little bit overdone. we want to give an update on what is making headlines outside the business world. lots going on. ritika gupta is here with first word news. ritika: president trump and republican congressional leaders are betting that states

,eopening will stir the economy standing firm against another round of stimulus. senate majority leader mitch mcconnell says there is only one way out of the crisis, america has to grow again. white house economic advisor larry kudlow says no one can confidently invest in chinese stocks. he says chinese companies are not transparent. they don't "meet the norms, the regulations, the usual signs." consumer prices rose just zero point 8% from a year earlier. the prospect of consistently low inflation will fuel speculation that the bank of england needs to take more action. that could intensify that debate over taking interest rates below zero for the first time. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta.

this is bloomberg. alix: thanks so much. target shares are now up by about 0.3%. earnings sales crushed estimates, but profit margins got squeezed, so what does this mean for an investor of the stock? cole smead, smead capital management president and portfolio manager, joins us now. is always great to catch up with you. your biggest take away and question for target after the quarter? cole: it is kind of amazon-like numbers. sales growth was awesome. at the same time, the margin got squeezed. i think of households that have gone there like they would other places in their life to kill etc. whileoods, other stores might have been shut down or had a fewer number of goods. target has been that place to go for those households. the only problem is with the economy where it is, the kinds

of products they are buying are not the highest margin tickets. this is not a christmas season at target, for example. that being said, the transition from being the target that everyone thought of to being a click and collect retailer, they dominated that story. they have shown and proven that this year. the question is what will that do for them at the economy comes out of lockdown. alix: intensely awesome. i am totally stealing that phrase. how do you look at the margin story? using this is a structural or cyclical margin shift, and does that make you change how much you want to be allocated to a stock like target? cole: that's a great question. this is just a short-term phenomenon in their business because the fact that households have attached their brand so well, that is all that really matters. is the 35-year-old household with two kids one to attach to

their brand? they have successfully shown that. i say that because there are a lot of people that doubted whether that 35-year-old household would want to be going to target, click and collect, etc.. i think it is a short-term phenomenon. at the same time, we have gone a long way from the summer of 2017, when no one thought their business was going to do well and everyone thought they would be crushed online, to now, there's quite a bit of confidence in their stock. i would rather be buying the property that their location is at right now that i might be buying their stock in comparison, and we have been buying some mall reads as an example of that. the tangibility in these places look more attractive than some of the stores. wait, you have been buying mall reads? cole: correct. alix: so how -- why? j.c. penney filing

for bankruptcy, closing a lot of stores. macy's is having trouble. cole: there's so few places to go. let's go back to the target allocation as to why. we could have had the same conversation about target three years ago. a big box retailer, and if they can't make that transition, so on and so forth. now we are in a predicament where, to your point, there are big losers and big winners. a lot of the big losers in that space have been class c and b locations, strip malls, etc. the kind of places high school kids are going to want to go this summer to reconnect are not those places. that is what i mall facilitates. it is a community meeting place. i don't have to wonder if people are going to want to come back to that. it states that have already reopened. the three biggest categories are

entertainment, apparel, and travel. two of those you can get at a mall read. you can't get those other parts of the economy. iswas reported that amazon looking at buying some of j.c. penney's stores. ok, well, are you kidding me? why wouldn't people understand the value to the tangibility of these locations, while amazon has been rumored to be doing that? i think the market could get turned on its head in terms of what the physical location is going to facilitate coming out of this, versus, assuming that lockdown is just going to be our lives for 20 years. alix: so what other opportunities do you see not necessarily in that space, but related to lockdown won't last forever? aery opening trade -- reopening trade. cole: if you are an online retailer fighting for time on someone's phone to get in front of them and get your product

sold, which many of them are, though there's been some drop off that has been pretty consistent, that is very expensive right now. that is the only way to directly attract customers in many places of the country right now, versus , our digital ad spend is getting way too expensive. next tould you go acquire a customer for certain types of products? a walk-up location is the cheapest way to do that right now for certain retailers. warby parker, they are a of itful example of them is cheaper for them to acquire by foot then by mobile. [indiscernible] -- experience, and that is tougher to do online. alix: really interesting take, cole. talking to you for

that counterintuitive pickup take. thank you very much. coming up, we are going to stay more in the real estate market. is urbanization dead, or is there still value their? we will talk to one big name behind some key investments, coming up next. this is bloomberg. ♪

ritika: this is "bloomberg daybreak." after more than a century, johnson & johnson will quit selling its talcum based baby powder in the u.s. and canada. the company faces thousands of lawsuits alleging that it had cancer risks in the powder. juries have hit johnson & johnson with billions of dollars in damages.

take a number of precautions once it lets employees back into offices, starting in july. bloomberg has learned the social network will limit customers to 25% capacity. workers will be put on multiple shifts in be required to undergo temperature checks. i'm ritika gupta. that is you bloomberg business flash. alix: thanks so much. j.p. morgan betting big on single-family rental homes, more than doubling the size of a joint venture with landlord american homes for rent. here to give us more insight into that sector, tom shapiro, gtis partners president and cio. gtis partners invests in real and management. the big question i have coming out of this for real estate, is urbanization dead? his everyone going to move out of new york, and no one is going to live here? thomas: thanks so much for

having me. i think there is an urbanization trend that has been happening, but has started to reverse over time. is of the things about covid think covid is the great accelerator. i think it is accelerating a lot of the trends that were already in the works. i think certainly, as people think about the way they live, the way they play, the way they work, people are very much concerned about their physical space. i think people learned being in a small apartment is not necessarily the best strategy under covid, and as people will probably work more from home, i think people are worried more about their physical space. so i think what we are seeing before, a trend away from urbanization and towards the suburbs, i think that is only accelerating now. certainly in our homebuilding and single-family rental businesses, we are seeing an unbelievable amount of activity. we are really quite surprised. we thought things would really trail off and we just haven't seen it.

we have seen pretty normalized numbers for both home sales and rents. keep us in numbers of the strongest they have ever been in our suburban projects. alix: that is interesting. what about any sort of defaults, nonpayment's? thomas: if you look at where the standards are right now, around 88% of households and apartments paid full or partial rent through mid-may. our numbers are in the high 90's. i think the big difference between those is that we focus mostly on b plus, a minus properties. i think where you're seeing defaults is mainly the affordable housing sector, as well as workforce housing. one thing we have to realize is where we are and what is propping things up. the unemployment situation is obviously unprecedented, but so is the government response. aboutouseholds was heaved 17 times normal wages with the stimulus check, and about 1.2

times normal pay for 26 weeks. median household is now taking more money staying at home right now, but this has an end date in august and september. those are propping up the numbers of who is actually paying the rent. so i think that is what we have to watch for in the future. april -- people said april is going to be a disaster. now people said may because they ran out of money. but given the government stimulus, people are having money and paying the rent, so we have not really seen a loss on that at all. when we think about task, we entered the year believing the expansion was in the late innings. of course, no one pretty good there would be a pandemic, with the lowest on the limit numbers since the great depression. we have been really focused on the impact of the shut down and the longer-term scars this may leave on the u.s. labor force, and the way workers and companies use space. one of the things we are really if people are

watching the job releases and hearing that most losses are temporary. this is really a self-reported designation. this islly worried that wishful thinking. after 2008, so that is one thing we really have to be focused on is how many small businesses are going to come back. half of the workers and half of gdp comes from all small businesses. i walk around manhattan. and i just got a note from one of my favorite bakery and say what shops that they are not going to return. that is what really worries me. how does that downstream effect real estate and the ultimate effects? that isthat is -- alix: such a great point. we are also hearing about things like contact tracers and

temperature takers the warehouse equipment, all of those things as well. walk me through how you see the commercial real estate market evolving versus the opportunities you can get into based on the emerging job landscape. thomas: the numbers are massive. we are talking about 40 million plus job losses now, and sure, we need contact tracers at other jobs as well. eventually the economy will write itself. i think we have to focus on two areas. one is what are the short-term effects of this. if the government keeps stimulating, perhaps we get through that in some way. and of course, what are the long-term implications? how people are going to live, work, and play, and what changes are there going to be in the sector. we are focused on three opportunities and the way to invest on three themes. growing down risk

and leverage. certainly, we are being very deliberate in which asset classes we think will have secular long-term tailwinds that could grow even in a recession. if we sort of break it down into different sections, hotels are a sector that have been hit especially hard, and realistically, hotel demand is just not going to come back until there's a treatment or vaccine, and our view, which means this will really be a prolonged slowdown. industrial is the clear winner here. it was becoming the winner before. so what was already happening is just happening faster than it was before. there's obviously strong demand that forces retailers to invest more into online capabilities. people are buying more on amazon. it is just a truth. i mother, who hardly ever used amazon, she is using again. will she want to go back to the store? i agree, people ultimately want

to get back and socialize, not just in their homes. i am not a big believer in the mall sector. i think it is like catching a falling knife, and i think the mall is an old phenomenon that is not going to last. but industrial is something we are really interested in. if you think about it, one of my own people working with me just withouta new car stepping into a dealership. i thick it is going to focus more purchasing online. we actually just greenlighted yesterday a 1.2 million square foot industrial development. why would we develop it in this market today? we are still seeing absorption in the industrial sector, and costs have cut down, so it is about 7% below. given that interest rates are almost nil, we think it will take longer to lease up.

we added an extra year to the schedule of what we think it will take to lease, but we think long-term, it will make for a very good investment. offices are super unclear and what the impact of covid will have. one of the trends with before was having these group work areas, and the way people were singing of working in an office. i think wework was a very good example. we could say a lot of negative things, but we work had this collaborative culture, and people liked it. post covid, are people going to be comfortable in these open layouts? in our own firm, we are finding we can work very efficiently from home. work two oroing to three shifts from home> -- from home? i think that is how most companies are going to restart, with an a team and a b team.

residential, which has really been a huge focus of our housing is for sale surprisingly strong, and much stronger than we ever really thought. salestinue to see decent loss in our home building. we are worried that under limit reaching double digits, consumer could be afraid to purchase, but that has been offset by super low mortgage rates right now. shelter-in-place has been the catalyst for some prospective buyers to pull the trigger. their families, but they need more space now. alix: no kidding. [laughter] thomas: i know. i've got my three kids and their three significant others living with us right now, so we have quite a full house. alix: that beats me. we have to leave it there. we have to take a short break here, but i would love to get you back to delve into more specific opportunities. tom shapiro of bti s -- of gtis

partners, thank you. more on reopening economies, what it means for asset allocation. coming up on this program, moderna shares continue their drop from record highs following a negative stat report on its covid-19 vaccine. more on today's trucking treatments, coming up. -- today's trucking treatments, coming up. this is bloomberg. ♪

alix: time now for tracking treatment, we relook at the latest of elements in the race to solve the covid-19 health crisis. the focus today is a new cluster of cases in china showing the virus could be changing. joining me is sam fazeli, bloomberg intelligence senior pharma analyst. how typical is it for a virus to change, and does it hurt big pharma and their quest for a vaccine? sam: good morning. it is very typical for a virus to change. that is entirely the way that

they develop different versions, so it is not surprising that there are changes. we have seen changes before. it is important is whether the changes are going to impact either the severity of the disease or our ability to treat the disease, especially for vaccines, going forward. but we see a little bit of a silver lining in the news we just heard from china. alix: what is the silver lining? sam: if you look at it, it seems to suggest that the patients who have this new virus, or a slightly different version of the virus, have potentially milder disease in terms of how long they remain a symptomatically, which is out of the problem. but also, when it comes to the it is kind of in line

with what a lot of people expected. these are resistant to mutate in a way that makes them less troublesome. if that is true, if that is the case here, that would be good news. alix: the good news that has been confusing for the markets was the madera vaccine, the study on monday, and then the subsequent results. when a market investor is looking at these vaccine trial ,esults, it is not a binary right? there's some nuances here. sam: absolutely right, especially when the company has nothing apart from words. no numbers, no data points for us to analyze. what we have seen from some other companies such as astrazeneca, where there was any will study that he could start analyzing. here, we're just going by words. so it is very surprising to me that people took it too

seriously. this is great. love catching up with you. we will check back in tomorrow for the other breaking news for the vaccine and the virus. sam fazeli of bloomberg intelligence, thanks a lot. coming up in the next hour, an exclusive interview with valdis dombrovskis, european commission vice president come on a potential eurobond. we will break that down. this is bloomberg. ♪ staying connected your way is easier than ever.

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americas" on this wednesday, may 20. let's take it right from the top. >> each of these retail stories is different, and target is up. first quarter comparable sales being up 10.8%, but nearly all of that was from digital. digital comparable sales grew 141%. alix: the focus for investors now turns to the fed minutes and treasury's first 20 year bond auction since the 1980's. >> there's the risk of permanent damage, and we are conscious of the health issues and want to do this in a balanced and safe way. alix: treasury secretary steven mnuchin warns of permanent damage to the economy, and reiterated a similar message to lawmakers at a gop lunch, we republican sustained unified on opening up instead of another round of stimulus. >> i think they are are very

much hoping that there will be a pickup in the second half of the year. i think in gdp terms, there will be a pickup. i also think that unfortunately, the labor markets are going to be pretty weak. alix: president announces rules for coronavirus farm aid, and says the u.s. should consider terminating trade deals that would see the u.s. import cattle. >> the president feels it could have been curtailed or restrained, or may be stopped earlier, and that has become more important than the trade deal. he didn't say he was walking away from the trade deal. tries tory kudlow distinguish between the virus and trade as the relationship deteriorates. michael: something put the president's pivot to blaming china, that is going to cause people to start flooding the united states with more money, and it is going to slow the economy rather than stimulate

it. alix: demanding that the panel of democratic members pursue the testimony of the world organization of health director. meanwhile, china goes on offense, condemning the u.s. circuitry of state mike pompeo for referring to taiwan's leader as president, and vowing to take necessary countermeasures in response. some breaking news, emirates is reportedly looking to cancel final five 380 orders. they are in talks with airbus over the status and the terms for the a380, and we are also looking at including options like payment deferrals, etc. airbus stock not really reacting , but it just shows distress the airlines are under and how it can trickle down to boeing and airbus, as well as the suppliers. in the overall markets, the feeling is that equities are still holding on. in europe, equities are still a

little bit mixed. i do want to point out what is happening with the dollar. that is weaker. coming online, and the u.k. actually sold gilts with negative yield for the first time ever. that is all percolating within the market as well. brent and wti continuing their monster rally. many say it is a little too far, too fast. we also have a earnings coming out as well. target did beat on the top and bottom line, but it was a margin conversation that is now percolating within the market. that stock is still up by about 1% in premarket. it was down earlier. moderna we are tracking with any updates on the vaccine, and lowe's also had blowout sales. let's get more with art hogan, national security's market strategist. when you get the headlines on vaccines, for example, or treatments, how do you look at that in relation to the

underlying earnings numbers we are seeing in valuations? obviously had a market over the last couple of months, and certainly recently come of that reacts a lot more positively towards news on the epidemic, and news of either therapeutics or vaccines, than they do in the disastrous things and the economic data that has been terrible. the good news is we are making progress. the bad news is we get ahead of ourselves on that progress. moderna was a classic example of a company that has done a good job. they were first out of the gate and getting testing, but it was confined. they have to go three much larger phase study which starts in july. the good news is we are making progress. the bad news is we get excitement over the progress some of these are making. alix: how do you do the stay-at-home versus reopening stock trend? if you do stay at home, your

play is it target, but you're dealing things -- dealing with things like structural profit margins. i certainly think you can have a barbell approach to play both, and understand that targets miss on margins had to do with what people are buying it target. they are clearly going to have that change when we reopen a bit and people start buying more things like apparel. i think that is going to be true of most of the retailers that reported over the week. i think can play a barbell you have the then stay-at-home technology stocks that have done very well on the other end, but are more cyclical in nature. i would suggest perhaps industrials and financials on the other end of that barbell. what we have seen over the last 30 days, which is very encouraging, is that mid-caps and small caps are outperforming the s&p 500 on a 30 day basis,

and outperform almost two to one with the russell 2000, up about 7% over the last 30 days. the s&p 500 up a little more than 3%. the rally is broadening out quietly, and i think that is important as we move forward and we start to see the economy open backup. does that also come with increased volatility as we have stops and starts in reopening? the market is looking at a binary, whereas the reality is less so. alix: do you think we can -- art: do you think we can get any more volatile than this? it is amazing to me. if you look back over a month, it looks like we haven't gone anywhere. so i think we are going to continue to react and overreact to headlines, as you mentioned, whether they come from health care companies producing therapeutics or vaccines, or they just comes from things where we are disappointed over how long it is taking washington to get to the next round of fiscal support.

so the volatility is certainly going to be here, but if you step back, look at how much we have advanced in the last 30 days, we are virtually in a trading range, but it is just a very volatile space to be in. 15% below the highs, and that is probably where we will be for the rest of the first half, so don't be surprised if we end the first half at or about where we are right now. alix: do you think there is a bias to the upside, an excuse to rally? or is it equal. art: the narrative seems to be much more negative than the assets. it feels as though there's many more people, especially last week, we had a parade of conscious commentary coming from legendary investors, talking about how this is the worst environment they have seen in forever, and really making a point of the fact that the market is gone too far, too fast, and valuations don't make any sense.

all of that is defensible until you think about the market being a forward pricing mechanism, and looking toward the next six months, not looking back at the last three months. think that's what investors are looking at here. dusty third quarter look better than the second quarter? we would argue that that is the case. the market has done a fantastic job of performing well in a market where news gets less bad. looks athe first half lot better than 2020 did. -- the first half of 2021 looks a lot better than 2020 did. alix: this might be a silly question, but what is sentiment like? what are emotions like with market for dispense -- market participants? it often seems like that will be a bigger driver day-to-day. alix: it is amazing -- art: it is amazing how conscious

sentiment still is. everyone seems to have remained shellshocked at that level, versus acknowledging that since that level rebounded some 25% off of those lows, this incremental good news in the offing. i would argue that fiscal and monetary support is good news. i certainly think the incremental good news we get from health care companies working their way towards a therapeutic and/or a vaccine along the way is good news. investors are still in that things can get worse, we need to test the lows sentiment, that circular argument that becomes the echo chamber that has investors staying on the sidelines. i think there were a lot of people taking their chips off the table, and unfortunately, the dust never really settles. we have been advising investors

to stay here, and member that all of the 11 global health epidemics we have gone through over the last 30 years have seen markets in a better place six months and 12 months down the road. this is likely going to be the same. alix: art, we've missed you here. really good to catch up with you. thanks very much. coming up, an asteroid-like economic hit. that is how european commission vice president out a stump ross president valdis dombrovskis describes it. this is bloomberg. ♪

alix: the european commission

just unveiled country specific recommendations for member states to help their economies recover. commission vice president valdis dombrovskis said coronavirus hit like an asteroid. very visual description of the economic damage. does the 500 billion euro that german chancellor angela merkel and emmanuel macron of france agreed to fix that hole? if you look at: the situation in the european economy, and just a few months .e had a major turnaround three months ago, the economy was growing. all eu member states were growing. unemployment was at the lowest level in decades. what we have now is all eu

members states in a deep recession, unemployment increasing, so clearly we are facing major -- [indiscernible] [no audio] -- a recovery plan, and european commission intends to unveil its proposal on a recovery instrument next week. in that case, it is clear that we need an ambitious response

with a strong and frontloaded investment component. alix: do you expect all 27 countries to ratify the agreement? probablyovskis: well, just an institutional correction here. european commission will be the one posting forwards proposal, and this proposal is going to be put forward next week, so the exact size and modalities of the proposal are still in preparation, and will be presented in the next week. but by doing so, of course, we take into account the input we are receiving from member states, including the franco german proposal, but not limited to that. we are also receiving proposals from other member states, and of the end of the day, as you say,

we will need to find consensus among all 27 eu member states, but all number states agree that we are facing an exceptional situation, and we need to react strongly and in the spirit of european solidarity. alix: can you give him be some insight in terms of what you plan to propose for loans versus grants that could really be that sticking point? mr. dombrovskis: in any case, what we are going to propose is a substantial increase in headroom of eu budget and european commission raising money in the markets through common borrowing, and this money being provided to memory states both in terms of loans and grants through eu budget programs. but as i said, the exact size

and modalities is still a work in progress. there is still a week to go, and the european commission still continues to work on this. this how do we get out of asteroid-sized dent with loans? inevitably, that is going to the weaker countries, and they can't repay it. how do you deal with it? mr. dombrovskis: well, that is haswe need a response which both loans and grants, and there is going to be a strong grants component. we are also devising a response in a way that will be linking investment in structural reforms with guidance we are providing to eu member states through the european semester, where we coordinate our macro and fiscal policies. but in any case, what is an important element

we will be raising money for the eu budget by common borrowing at the eu level, done by the european commission. it has never been done at this scale in the eu before, so we recognize that we need to face this problem jointly, and we will be doing it also through joint borrowing. alix: many are calling that a hero bond in disguise, and some wind up pointing to bank stocks that didn't really rally on that news. what does that tell you about investors and markets in terms of if they believe it is going to work? mr. dombrovskis: well, first of all, eu has already mobilized substantial crisis response.

i already mentioned 3.4 trillion euros, and more is to come. then, once again, what is important in this case is that we act together and in a coordinated way, and we are major novelties in terms to finance this crisis response. whether we call it hero bonds, corunna bonds, recovery bonds, i debated,is all can be but it doesn't change the underlying structure. we will be financing part of our crisis response through the joint borrowing. you were on with me, we talked about the possibility of acquiring equity stakes in struggling companies.

do you have an update on that in any way in terms of how big it might be, how you manage it, if you even like the idea anymore? indeed, this is one of the proposals we will put forward as part of our recovery plan, a so-called solvency , toort instrument, indeed support investment, among other companies' equity, but mainly in an indirect way. in any case, what we need to recognize here is that we have recently made more flexible our state aid framework, so both temporary state aid framework, which allows more flux ability from ember states to support their companies. but they must recognize the number state possibilities to support their companies differ.

there are countries in southern lower level overall of economic development and incomes like in central and eastern europe, so we need to support also investment, and support for those companies, and to help level the playing field with the help of the solvency support instrument. alix: last question, how quickly do you think the euro area economy can actually recover to precrisis levels? well, actually, if we managed to get the pandemic under control, we expect a quite swift recovery in the economy. our spring economic forecast expects 7.4% recession in the european union this year, followed by 6.1% growth next year. so as you see, it is quite a

rapid recovery, but it is of course based on certain and confinement measures we are currently having are limited to the first half of the year. any second half of the year, they are gradually eased and lifted, allowing economic activity to resume, and under this scenario, we can expect a quite strong rebound of the economy. so what we are trying to do in between is, and a sense, preserves the productive capacity of the eu economy, to support our companies, to support people's incomes, and if we managed to do it in the current crisis, the economy can actually rebound quite strongly once the pandemic is under control. alix: we will be looking forward to some of those proposals also for next week. thank you very much, valdis

dombrovskis, european commission vice president. this is bloomberg. ♪

alix: the debate in emerging in washington is recovery versus more stimulus. that relies on some of the current programs that still need to be unveiled, as well as tweaked. so how are they doing? deutsche bank has been tracking the impact on small businesses in the u.s.. here's what they found. in the hospitality sector, well over 50% say they have missed scheduled payments for rent utilities or payroll. 10% have missed scheduled payments. almost 80% of small businesses have asked for aid from the government paycheck protection program. a little less than 20% haven't asked for any financial assistance. part of that may also be some tweaks. the majority of those loons turn into grants if you want abusing

the majority to protect the payroll, but what if you need to pay utility or rent? coming up, splashed back to the 1880's -- coming up, flashback back to the 1980's. the treasury will sell 20 year data for the first time since 1986. i will break that down with mark cabana of bank of america securities, coming up. this is bloomberg. ♪

alix: this is "bloomberg daybreak: americas." soggy but s&pts futures climbing.

up 36 points. the dow jones up over 300. visibilityany real into the end of the year. we are watching euro-dollar, a broadly weaker dollar story. a selloff emerging in the bond market. 10 year yield down two basis point. meanwhile, the u.k. was able to sell debt with negative yields for the first time on record. big news in the market when you get the fed minutes. before that, at 1:00, the 20 year bond for the first time thee the 1980's with initial offering size of $20 billion. that blows away calls for 12 billion to $14 billion. joining me as michael mckee and mark cabana. mark, what are the key signs will be looking at at the 20 year offering today? mark: want to see how much takedown there is from direct to

indirect investors. if there is a high dealer takedown that means may be tepid. that is something the treasury does not want to see. the treasury is testing the waters for demand. we hear clients will be interested. if it does not come that cheap, they are not super interested. we hear mixed things about how much demand there would be at the 20 year point. if you see dealers takedown the first offering, that suggests the security was rich for investors blood. a high demand, given the large size being offered. alix: when you say price, what does that imply in terms of yield? see whereill have to the issue comes and where it clears. the wi indication of where it 123,be as route 122,

somewhere in that range. we think it is priced reasonably fairly at these levels but we still need to see how ultimate investor demand shakes out. the first timeor in a long time to issue debt at this point in the curve. it will be up to the auction staff to let us know how much demand there is at this price of this part of the curve. skepticaly i am still there will be overwhelming demand at this part of the curve where we sit right now. alix: all of that has led to steeper yield curve. i wonder when you are talking to fed officials, how they look at it? michael: they are looking at the treasury to decide how they want to fund the deficit. this is a bit of an experiment. they have been talking about bringing back a 20 for some time and the bond market people have

been very lukewarm about it. they will see how it goes. it is going to affect the yield curve in a way that would make a difference because the yield curve is not affecting the idea we will have a significantly stronger economy ahead. not much of a risk premium, even though number the number it is not that great. i do not think the fed is that worried. it -- weet 18th in would get a kink in it. i'm not sure to be affected all that much. that why we have seen the steeper curve and can we handle it? mark: you have seen the curve steepen a lot since treasury came out with their announcement to issue so aggressively at the back end of the curve earlier. i think you're absolutely right. expectationssupply

below the market out of the water in terms of what had been expected. things like treasury secretary mnuchin has been clear he wants to take advantage of what he perceives as relatively low interest rate and extend out and capture that yield in terms of financing for the government. he has done so quite aggressively. certainly more than market participants had expected heading into this event. as a reflection of that, you see the back end of the curve steepen out by 10 basis points since this announcement. the market certainly can handle it. it is a matter of at what clearing price and how cheap the treasuries need to come versus other benchmarks like ois or libor. we've seen a fair amount of cheapening in the back end of the curve and steepening as well.

that is generally reflective of the preference treasury has to try to turn out quite aggressively. michael: i am wondering if there is some demand out there? the 30 was interrupted from 2001 to 2006. the also runs that would fit into that category are limited in number. fill?re a hole to mark: there are questions about demand. questions about why they discontinued the 20 year, they would tell you they saw trade relatively cheap to tens and 30's. there is not sufficiently strong demand at that part of the curve. there is a hole between these points. you can make a case that intentions and insurers to try to match their liabilities have a good demand at that part of the curve. things like that is what treasury is trying to cap right now.

-- trying to tap. we will see how treasury traits in terms of where it is today and outperforms relative to 10 and 30 to try to get it sense of how much investor demand is there at this price and is treasury bringing in a different buyer base at the 20 year point limit would if it issued more tens and 30's. treasury clearly believes there is an untapped buyer base. we will have to wait and see how the issue comes and where it clears the secondary market to have a better sense for how robust that demand is. conversations been among some of your peers that said the treasury -- the central bank is not buying all of the debt the treasury is issuing. overall we will have a deficit, we will need other investors to buy that debt. we are nowhere near monetization. what do you think?

that as fare with as the run rate goes in terms of the amount of debt issued between now and the end of the year. we do not think what the fed is buying will be sufficient. net couponking at issuance around $150 billion a month. on average, that is generally where the number is if you look across the month. what we have penciled in in terms of fed purchases is only route $100 billion. there will be a need for private-sector individuals to pick up some of that excess , never mind the excess bill supply at the front end. i expect they will be flexible in terms of adjusting the purchases to accommodate treasuries issuances and ensure

long end interest rates do not selloff, certainly not enough to constrain the economic outlook. that is one of the things i will be looking for in the fomc minutes today. how is the fed thinking about their asset purchase programs and when might they begin to shift them away from buying only to preserve market functioning versus buying to provide economic stimulus. that is what a lot of treasury market investors are keen to learn. in the absence of that, we see the fed dial back the amount of purchases they are doing. we do not know what the end point is. to give us clarity around that would be helpful and i hope the minutes at least open the door to that today. talk to fedyou officials all day every day. you have any insight into how they are thinking? michael: they are thinking they will need to do it but not when. the fed does not know when we

move from triage to actually stimulating again, when the economy starts to grow again. that is when they would look to add additional stimulus. as long as the markets are moving, they are holding their fire. because the minutes were three weeks ago and so much as happened in such a short time, i am not sure you can get a clear picture when they think something will happen. they talk about doing it, but i do not know if you get a timeframe yet. alix: enjoyed chatting with both of you. andmbergs michael mckee mark cabana of bank of america securities. we want to give you an headline -- an update on what is making headlines outside the business world. here is ritika gupta with first word news. [no audio]

alix: we are having some issues with the audio. i will pick it up from there. coming up, it is not your mother's retail. how tech is changing the way we buy.ed -- we shop and that is coming up in today's bottom line. if you're checking out charts, go right to gtv on your terminal. all of the terminal charts we use throughout the show. this is bloomberg. ♪

ritika: this is bloomberg daybreak. after more than a century,

johnson & johnson will quit selling its talcum-based baby powder in the u.s. and canada. the company faces thousands of lawsuits alleging it hit cancer risks in the powder. johnson & johnson's has got many of the verdicts reduced on appeal. shares of lenovo rose the most in almost a year. the company says it computer and data center divisions should resume revenue growth. the world's largest pc maker reported revenues drop a smaller than expected 10%. the target ceo says there is no -- there is growing concern about the discount chain profitability after first quarter growth margins fell. more of target sales are coming from lower margins and household essentials. one bright spot, online sales soared more than 280% in april. i am ritika gupta and that is your bloomberg business flash.

alix: thanks so much. time for bottom line. we take a look at companies and sectors worth watching. we will focus on retail and how the sector is fast tracking its tech evolution. joining me is kay koplovitz, springboard growth k founder and chairman. there investment include real year -- they have 21 women founders. she has also been on the board of liz claiborne and cates bait and was the chairman of usa networks. always great to catch up with you. it is a dual question, one is the future of retail, and two is do you see any value investment as the economy is still shut down? i think we are looking at a retail sector that will be changed vastly as we go forward. companies that have moved more aggressively to change the way they interact with our customers

are going to be winners in this environment. eventually some of the investments we saw, one of the companies springboard capital the realted in his ofl, which is sustainability high-value, luxury goods. the downturn in the economy has affected the company, but it is in a good position to regain as stores open up, as people go ,ack to buying luxury goods they are well-positioned to be a winner in that economy. alix: how does it evolve? on the one hand the realreal in new york was starting to open up stores in new york. i imagine that is looking different now. what would it look like if we were able to go out shopping tomorrow? realreal has three stores

open and a fourth one on schedule. they are online. they collect luxury goods from people who have them. one of the important things that has happened during the coronavirus shut down as they have created -- they screen the products virtually and have them picked up curbside. that has been a benefit, learning how to do it differently, get the product into the marketplace. that is quite different. retail stores are going to be very slow to open up. they are opening in different places, but people have to feel comfortable going into them. i know retailers are making a big effort to control the number

of people who are in the store, have their staff in the stores, have masks, do a lot of cleaning, take all of the upper conference they are supposed to take. they will also have more of their product online. that is why i say is not retail. a lot of innovation that comes out of something like the fashion labs we launched seven years ago, it is about the technology that is changing retail and brands for the new consumer what does that entail? things like artificial ar.lligence applied to visualization of in-store buying phone or can see the take a tour of a store and click buy as if they were in the store.

it is a real way to present fashion and retail the people. that is an innovation. contactless check out is fast becoming an essential for retailers. in place by grocery stores and so forth but it is coming to retail so people can pass the cashier line, check out using technologies like future proof retail, which is a contactless and cashierless check out. there are lots of things happening that are changing the in theple will shop future. the companies that are moving quickly in this area and have adapted for the technology are the ones that are going to be the winners. alix: in the meantime, as we are transitioning, does that mean an

investment you have made like the realreal needs more capital to survive or is this creating opportunities to help fund these technology companies that can help facilitate the ar and the vr in retail? kay: the realreal is a publicly has $300any and million on its balance sheet. it is well-positioned to survive this period of time. while it has been difficult to shut down the warehouses to only 10% of use because those are the requirements by the government, they are prepared to wrap that up and have instituted new technology inside the company while they have been going through this time. they are in a very good position . they do not need to raise new capital according to what they have said publicly. investing ins of

any sort of retail tech startups or any technology startups to help make retail transition, are there any opportunities right now out there? kay: there are a lot of private companies that are building the technology. when you talk about publicly held companies, i think it is a different story in terms of who is doing things that might change. you look at a company like paypal that is instituted a lot of ways of making payments. a company that has seen a change during this coronavirus period, somewhat of a reality check, but there well-positioned to accelerate when the consumer comes back and starts buying more things they have been which as you know with target, a switch more to food and essentials and away from

some of the other retail items like clothing, accessory, once we go back to a more normal pattern, companies will benefit. alix: good to catch up with you. think you very much for the insight. i cannot imagine a tour of bloomingdale's on my phone. that would be very cool. kay koplovitz of springdale enterprises. rock isp, when a beating stock, it might be good to stick with the rock. that is next. we will bring that to you. this is bloomberg. ♪

alix: time for technically speaking. mike mcglone of bloomberg intelligence joints me now. i have your ingenuity talk about a rock beating stocks. favorite line of the morning. troublesome if you want to be betting on a stock rally.

mike, it looks like we are having some audio problems with your phone. you are breaking up. let me check in on the markets to see if we can get you back. overall, european equities are soggy, but in the u.s. we are holding onto that rally. dow jones off 280 and s&p futures up 33. in the bond market, we are watching the long end of the curve with twenty-year issuance coming from the treasuries for the first time since 1986. what the demand will be behind that. the purpose been moving steeper in anticipation. i also want to zone in on the u.k. because they were able to sell bond offering for the first time with negative yields because inflation decelerated at the lowest since 2016. all of that wrapping in and putting the spotlight on andrew

bailey as he testifies to members of parliament at 9:30. he keeps pushing back on negative rates. to some like the market extent also might disagree as well. in the currency market, you are also seeing a weaker dollar story evolved, with the exception of the cable rate as the euro winds up pushing higher. in the commodity market, something relatively similar, you still have a 2% move for wti as well as brent. gold, we were just going to start talking about that. down about $.60. we were still at 1744 as asset classes with different sensitivity when it comes to headlines. i think mike mcglone is back with me. we were just talking about gold and stock and different asset classes moving to different headlines. talk me through what you see. mike: if you take gold divided by the s&p 500, which we show on the white line, it is notably

outperforming with increasing fed balance sheet. our chart in blue shows the fed balance sheet around 31%. gold has the upper hand versus fed. it is the old mantra. do not fight the fed. it usually means gold is doing better. that is what we show on the chart versus volatility. alix: which is all about the balance sheet, for example. mike: right. the fed balance sheet, debt to gdp, and key driver for gold is stock market volatility. that is what you see in this next chart is the 50 week average of the vix bottoming to the lowest ever and starting to kick higher. gold versus the s&p 500 is also outperforming. alix: have to leave it. ♪

w?w?uhió'ñó ♪ from new york city for

audience worldwide, good morning. the countdown to the open starts right now. 30 minutes away from the opening bell, bouncing back from yesterday's losses. s&p 500 futures positive or than 1%, up 34 points on the s&p. in the bond market, here's the state of play in treasury. yields advancing two basis points to .71%. the dollar showing weakness against all of the majors. euro-dollar positive .4%. even the yen advancing. there is your price action. here the big issue. reopening. his reopening alone sufficient stimulus for this economy? >> there is only one way out of this dilemma. >> there is a risk of permanent damage. >> a risk of lasting damage to the productive capacity. >> america has to grow again, open up again. >> we have every state doing some form of op