across all major indices. that was met pretty quickly by a wave of buying around much in a straight line. all of the indices in the green. around 25000ight and change. s&p 500 back over 3000. the nasdaq also higher. of course, this outperformance we are seeing in small caps once again speaks to something that taylor and sonali was talking about earlier. when you are looking at a breakdown of who won on the s&p 500, the financials today. the bond market, particular flight to yields going higher. consumer staples and real estate

up there. want to therefore get more of a take from state street global advisors managing , quantitative equity, olivia engel. where do you said when it comes to some of the more beaten up overall names? are they more of a risky bet? should we be looking into the smaller caps? olivia: i think insurance is a good play because it is valuation. the risk emerged during the crisis and now looking a lot less because of the fed action. if the fed is looking to buy and support, that is probably good for them, and brings the risk down substantially.

i guess there is a big difference between liquidity and solvency. the fed can create liquidity but can't actually force the economy to generate cash flow. there still is a limit to what the fed can do to keep companies solvent. romaine: that is a great point, and something that i think gets lost on a lot of people. i am wondering, specifically with your quantitative hat on, as you try to chart the strategy for your team, do you feel you are getting a clear enough read from the market data as to the true risks of a true valuations out there? that is a great question. is best thing we can go on

the long-term view and experience that the fundamentals of a company is what matters most. when markets start to focus on things getting far away from fundamentals, we think that is the opportunity to focus more, which can mean that things become a little uncomfortable from time to time but we think that is much safer and reliable as an investment strategy. i would say that the risks right now and that playbook of how to navigate the day-to-day is extremely challenging no matter what models you deploy, even short-term market sentiment is changing depending on a lot of different macro -- our most reliable way to get go forward risk-adjusted returns is to keep the fundamentals in focus and definitely not ignore them.

taylor: there was a lot of talk in 2008. i am wondering if this time ants can outperform, thehe signals are clear, if fundamentals are intact given the massive stimulus distorting a lot of these markets. >> i think time horizon matters. view, the better the fundamentals matter. year 2000s in the when anybody focused on fundamentals was made to question whether fundamentals mattered at all. we all know how that ended. caroline: we do. olivia, last question, is the u.s. still the be all and end all? olivia: the u.s. has got some

great fundamental underpinnings drivers of performance growth. we still see a lot of good opportunities in u.s. equities, particularly in the health care sector. health care and tech have true cash flow driven earnings. distinct evaluation opportunity and also sustainability of the earnings. we think it is much more solid in the health care sector. topline revenue and bottom-line earnings come health care and tech, you can't find a better market than the u.s.? engel.e: olivia that does it for "the closing bell." "what'd you miss?" is next where we will be joined by carlisle's david rubenstein and the moderna ceo. this is bloomberg. ♪

♪ caroline: from bloomberg's world headquarters in new york, i am caroline hyde. the markets staging a comeback. we were off by 2%. the s&p 500 closed up. federal reserve once again adding some exuberance to the market. and, that is despite the fresh outbreaks. some states questioning the reopening while pharmaceutical companies continue to raise for rate vaccine. leadership life. david rubenstein joins us with

the modernity ceo. all that and much more coming up. romaine: u.s. stocks resuming the rebound. heretle bit of a selloff earlier in the day. concerns about a potential second wave of the coronavirus. becoming one of the biggest concerns of the market. >> market bottoming tends to happen in three phases. more significant and quicker than i think many of us expected. >> the markets have clearly been buoyed by a massive amount of fiscal and monetary stimulus. if you add it up in the u.s., over 40% of gdp, and markets will be looking for more. >> the size and pace of fed balance sheet expansion will put a floor under global equity markets. >> in the near term, volatility could be back in these markets

until we see cases start to compress again. romaine: let's bring in the investment strategist at allianz investors. we saw markets had a pretty significant knee-jerk reaction to this announcement by the fed that it would start buying individual corporate bonds. i am wondering, how surprised where you buy this announcement and do you think it will matter in the long run? >> text for having me. never a dull day. i think we were down about 5% last week in the s and p. the news today certainly added a floor to that pullback. more broadly, the fed has been supportive of credit and equity markets. but we have also seen this trend of elevated cash on the both in theost -- institutional space and in the retail space. what that really does, when we

do get these pullbacks in the 5%, 10% range, a lot of these players that have perhaps missed some of these rallies are looking to get again. we saw that today is the risk reversed quite dramatically. we were down this morning and ended up up. i think we will continue to see similar patterns. elevated volatility. but that will be looked at more opportunistically, broadly. caroline: what are the opportunities? economy in bets of an reopening? mona: since mid-may, we have had this rally really brought an out, driven by these cyclical reopening story stocks including sectors like the airlines, hotels, parts of the energy complex, financials, etc.. thehink that going forward,

sectors will still participate. but we are saying, as you get your opportunities tactically, it is important to keep in mind some of those longer-term secular growth themes as well. area of technology like the 5g cloud, fiber. retailcare, than online broadly. all areas that we think are not one-year stories, but 3, 5, even 10 year stories. taylor: i think the game changer today came at 2:00 p.m. when the fed talked about buying individual bonds. should investors be surprised with the amount of cloud, the amount of weight, with the headline. is that helpful, i guess, for investors to be aware of that? it is interesting. certainly, we saw its of that in

the 2008 crisis as well. but it took time for the fed to get all in. in this crisis, the fed has not only come all in, but at a speed we have not seen. they have already committed to unlimited qe, moving the race to the zero bound indefinitely, or at least through 2022. bond buying, municipal bond buying, it always comes down to what more can they do? fed outnews pushes the of the risk spectrum, going from buying etf's to individual securities. of course, they have not made that move towards buying for example equities. clearly, as they push themselves more out of the risk spectrum, more supportive of assets broadly. keep in mind, the fed really has gdpin close to 30% of u.s.

into the market in terms of their balance sheet thus far. romaine: we won't get into some of the criticism of that. i'm curious to your thoughts as to this idea of the fed does not really have to follow through early, it just has to convince the market that it will follow through. doingch is this the fed what it says it will do or just being able to predict or have confidence that the fed has the capability to do what it will do? mona: it is partly the latter. jerome powell has been consistently committed to making sure that credit markets are moving smoothly. inhas also been consistent supporting broadly the economic recovery. he is clearly doing what it takes to put that in action. i think he realizes now that his commitment to doing so does help support markets. it has opened up a lot of investment grade and high-yield markets.

but even parts of the fixed income beyond that as well. i think it is important for the fed to make sure the credit markets are moving smoothly, operational, still liquid. that is a key goal for him. is it going too far? we like the retail investor space -- more like the retail investor space? mona: we have seen a broadening of participation in the investor phase over this period. more people are at home, in front of their screens, and more people can participate through online brokerage firms like a robin hood program. perhaps you could argue that it is beneficial in that there is more participation in the equity market. now, the fed does provide an

interesting backstop. they can come in midday, make an announcement, turn the sentiment in markets pretty broadly. caroline: do you think they did that on purpose? [laughter] mona: the timing was certainly interesting. had they come in mid-thursday when the market was down, it may have looked more questionable. but, today, we were in an orderly kind of sideways move. i don't know if that was their purpose today. but i think broadly they have also noted that while they can support the financial markets, they can certainly not support the real economy. perhaps we are getting more of that as well. caroline: always wonderful to have your voice on with us. taking this through the day's trade, but also the week, the month. thank you very much. coming up, we will take a look

at the latest on a covid-19 vaccine and when experts think one will be available. this is bloomberg. ♪

♪ romaine: welcome back. you are watching "what'd you miss?" we have been talking a lot about the race foray vaccine. stocks have rallied over the past few months on anticipation that that vaccine might be coming. taylor: we have a great chart to

illustrate that. theeasingly, it is companies developing vaccines, antibody tests, that have really been the big out performers in the market. but, a vaccine may look different than what we think it might be. there is a new report that a vaccine may prevent symptoms of us getting really sick but it may not stop us from catching the virus. off.elcome dr. wayne k dr., there is a vaccine that maybe does not prevent us from getting it, is that still effective to you? wayne: sure. just as background, i think the audience has to understand that that is how vaccines actually work. for all of the license of vaccines that we have, they work antibodies, and

those antibodies are going to ensure that we don't get ill. a, it is very hard to have bar of a vaccine that is going to prevent infection. what you want to do is prevent disease. caroline: is that going to be effective enough? of,e got the question mark it is important that it does not spread. but if we all know that we are not basically going to get the disease, does it make people too complacent -- too complacent, taking off those face mask, and they will still be infecting others. wayne: i think you have to take a step back and understand that unprecedented effort here in the vaccine field to be able to make a vaccine against

this virus in the next 18 months. we have at least 100 of the experimental vaccines in development now. the animal models have shown us that in the majority of the cases, there is potential efficacy. so, i think it is a little early the leadingof candidates have just entered into clinical trials in the past couple of months and we don't have all of the data yet into people, so i think we will have to wait a little bit of time to get that. romaine: the lay people like myself, we are looking to this as a potential panacea, a way people can go about their daily lives. i wonder if you can draw some parallels for me, if at all, about the flu vaccines that we get every year, this idea that every year, scientists have to

go back into the lab, tweak it. is this what it will be like with a covid-19 vaccine, should we get one? wayne: at this point, it is a little early to say. influenza is a lot different in that the outer protein of the ,irus is really hyper variable which means that it changes its code. that is the reason that each year we have to get a new vaccine. casedeal in the influenza is to have universal influenza is effective against all strains. this virus, it is mutating, but it is mutating extremely slowly. we don't think we will have the same kinds of issues that we have with flu. taylor: i am trying to find the positive silver linings in all this. i'm curious, we still get a

theine, new stove at infection but it prevents me from getting the full symptoms. does this help with herd immunity because we have the antibodies in our system. that be seen as a positive here? wayne: i think, if we get a vaccine, it is going to be extremely positive. it is too early to say if the vaccine is going to be effective in terms of a complete and utter block of the infection, or it is going to allow a little bit of the infection and one is not going to have the disease. either way, it is going to be a tremendous benefit. the the key frankly to ending of the pandemic. you're right to remind us that vaccines are often not

made in nearly the short timeframe. also, it is very rare that a vaccine is 100% effective. are there any iterations that your most her -- most hopeful of in terms of some of the work we are seeing in the u.k. or in america. how are you feeling about this development? i am extremely optimistic about a lot of things in the vaccine effort. i think we will get a vaccine at the end of the day. the issues for me, will it be 80% effective, 60% effective, 98% effective? we don't know. is the protection going to last for over a year? we don't know that either. is the vaccine going to work as well in some of the populations that are really at risk of this disease like the elderly? if you take the case of the influenza vaccine, those are not

working as well in the elderly. the annual efficacy of that vaccine is on the order of 50%. i think with this one, we have to do a lot better. romaine: when we started off for your introduction talking about some of the stocks that had rallied on anticipation of a possible vaccine, there is a lot of concern in the public that this vaccine sort of needs to be put out in a way that is cheap, accessible, and that it needs to be done globally, that we can't just have this sheltered in the borders of whatever country creates it. do you expect that we will see cross-border participation as well as some kind of movement to make sure it is affordable? wayne: i do anticipate that. this is an unbelievable exercise where it is a partnership of

academia, government and ngos. at the end of the day, as soon as we get a signal of the efficacy of the initial vaccine, i think there is going to be a shift in the thinking in terms -- you have institutions such as the world health organization where this is a principal issue. i am optimistic at the end of the day that we are going to have a vaccine. i am also optimistic that it will be -- delivered across borders. i am less optimistic it is going to work well in all of the populations at risk. caroline: thank you. up next, we discussed more about vaccines with the moderna ceo.

♪

withine: leadership live david rubenstein is underway with none other than moderna ceo stephane bancel. david: he is the ceo of moderna. welcome. thank you for coming today. you are one of the five companies that the united states government, through its national institutes of health, is backing to help get a covid-19 virus prepared and distributed as soon as possible. today, what would you say is the prospect for a vaccine to be prepared and ready for distribution sometime early next

year? think the chances are pretty high. i think where we got lucky, if anyone can use the word lucky for this pandemic, it is that the virus is not too complicated. hiv was discovered in the 1980's and we still do not have a vaccine. the scientific and medical community -- i think there is a high probability that several vaccines will make it to the finish line. it could be as early as the end of the year or early next year. david: what the government has done in this operation warp speed, to say to five companies, you are the ones we are picking because he think you have the best chance. astrazeneca,nson, merck, and also pfizer.

they are the ones. those companies, johnson & astrazeneca,k, they are giants in the pharmaceutical world. madera is a small company -- moderna is a small company, only 10 years old. how did you get here so quickly? stephane: we have a platform. a moleculeis we use --ween dna in your cells what we can do is we can basically use instructions.

these enable us to do actually nine vaccines in the clinic before this one. this is why we are going to grow so fast. startedhe company was , you werego originally recruited to go on -- one year later, they made you the ceo. was that your plan? stephane: i was at the time running a public company, a global leader in diagnostics for infectious disease. i was before at eli lilly. of moderna was the founder and ceo of flagship ventures. he approached me and was like, come on the board and help us

out. as i got to see the company and know the technology, i began to believe that it was possible that this company could be a big disruption to the entire pharmaceutical industry. ceo andd to resign as join moderna. by your accent, i can tell you are not from massachusetts originally. so you moved over, you are now headquartered in cambridge. in the biotech world, you have done a lot of publicity. you have raised more money. when you went public, in 2018, and evaluation of $7.5 billion, the highest valuation ever for a biotech company ipo. you had not yet had any fda

approvals for your technology. the fact that we are the platform. , if theyech companies get the product moving ,uccessfully to a clinic imagine which is the next product. useur case, because we either human dna, rna of a virus. basically, we are a technology company doing virology. our investors understood from an -- itday that it made would be either dozens and dozens or zero because it is a platform. david: it was analogized to microsoft. if you think about it,

all the biology is written in the code of four letters. software, zero and one. all instructions for every protein in the world, virus, bacteria, plants, mammals, humans of course. david: these are the letters from the genes. stephane: correct. so what we are looking at is how to make these into a drug. so you will make the protein that we designed in our factory. david: for people who have not obsessed over vaccines when they got their polio vaccine or maybe annual flu vaccine, it is about a $35 billion annual business. about four companies make 80% of all the vaccines. it is not considered to be a very profitable business generally because you make one vaccine per year and that is not

a great business. stephane: i think that is a perception that a lot of people have. three types of vaccines. people look at them together. -- public health, infectious disease in latin america, africa, europe. the prices is very low. then you have some very innovative vaccines. those businesses. a few examples. a vaccine against pneumonia. it is the number one product of pfizer. more than $6 billion. it was launched in 2000, 20 years ago. 50% ofre it is more than the margin and they are going to sell it forever.

david: so for people who don't really focus on vaccines manufacturing, distribution, and development, let's go through this. the polio vaccine i got when i was a little boy came through the discovery of dr. salk and also dr. savin. t or dead an iner virus from the polio and injected it into you. is that the theory? stephane: that is correct. david: why don't you just do that with covid-19? why don't they get the in art or in active virus and inject it into people? stephane: some people are trying to do that. first, you have to do a lot of work to find the right dose. it is not as strong as -- a lot .f optimization

virus requires a lot of time to get this work done. the technology is ok for healthy people. it does not work well for people who are immunocompromised. david: with that technology, the polio technology, the problem is that if you don't know what the could hurtis, you somebody. i read that you were sitting at a beach in france and you write about this problem in china and

thought this is something i need to work on. is that fair or accurate? i wasne: --stephane: having breakfast, reading the wall street journal on my ipad, and i saw this article about risk in china. because i have been working in infectious disease for 25 years and we have been partnering with .he division of nih a bacteria or a virus. around january 10, a sequence of a new coronavirus was put online. from that point on, we decided to get it to the clinic. david: you start working on this

and you have a lot of scientists. you said to the scientists, ok, we will solve this problem. go to work and call me when you get the solution. is that how it works? stephane: a bit more complicated, but yes, we basically agreed they should work on it. the nih team spent a few days looking at the genetic sequence. the structure of a protein of a virus. -- jointlydiscredit decided what vaccine we would design. so, niaid, the national institute for allergies and infectious diseases, part of the nih. so you realized you might have a potential solution but you then have to test them on animals i

guess first. did you test this on an animal? we did everything on a crash course. we made some material to do animal testing, which takes a few days. the product of a phase i, which took us 42 days, which is a short time in our industry. when they did the vaccine for sars, it took them 20 months. in this case, it took 63 days. what animals do you use? stephane: mice. david: so the mice presumably did not die as a result so you said, we will try it on humans. you issued a report not long ago

that said i think eight humans had received it and they seemed to be ok. is that right? stephane: 45 people went through a phase one, doing ok for safety. a few people at the second dose. neutralizing antibodies, this is what you look for. you can look in their blood through sensitive tech aches to do we have an antibody that will bind and neutralize the virus so it cannot replicate in your body? the virus has to use your own body to replicate. when you get too much virus, called a viral load. what you want in your body is to educate your immune system so

when a virus gets in your body, your body will be trained for a vaccine. the vaccine you are toeloping, is it designed mitigate the problems if they do get it? stephane: to prevent disease. phase three, the primary endpoint for efficacy, is prevention of disease. infection, but you get no disease, it is ok. nowsecondary objective is infection. youill of course prefer have no infection as well. but the number one priority is to make sure you have no disease. because most people die from disease rather than infection. david: how many humans are involved in a phase two test?

stephane: in case, 600. david: how do you get these 600 people? stephane: you select clinical trial sites, posted online at the clinicaltrial.gov website. people can look it up and join. all of those clinical sites will people,atabase of oncology for example, military base. say, we have this new vaccine, are you interested to participate? david: so why does somebody volunteer for ray vaccine if it is -- for a vaccine if it is experimental?

stephane: most people do it for the common good. some people do it for a bit of money. the money is hundreds of dollars, not a bounty price or something like this. most people do it for the right thing, to help society, help science. if you look at the state of , allowed for the past 5, 10 years. ago, 30 years ago. serious safety events. manufacturers. phase two will be completed when?

stephane: the data we are looking for for safety. i would say august, latest in early september. david: you get results you're happy with, do you have to ask the fda for moving to phase three? stephane: we need fda approval to move forward. what we do with the fda and manufacturer of the vaccine, we are moving to the next stage of testing -- we do not wait for efficacy. inse three should start july. two.arted phase we move as fast as we can because of the pandemic. david: how many people are in phase three? be 50-50 it will

placebo control, meaning 100 -- meaning half the people get the real vaccine. we will look at how many people will get infected. the 30,000 is very important us two things.s you could have hundreds of millions of people around the world. vaccinated with this vaccine. so safety is very important. two, we don't know where the virus will be. so byd people infected, doing so many people, we will have sites all around the u.s. in boston, new york, san francisco, so that we have enough efficacy regardless of .eography

the efficacy would be on a much phase threevid: would be completed by when? stephane: we could have efficacy data by thanksgiving, the best timeline. that assumes 50 more things go right. it is possible that we put out that efficacy data by thanksgiving. david: let's suppose you get the efficacy data by thanksgiving and it is good. with the fda say, let's go. itld they advise you to have out in the public then? stephane: making sure we are comfortable with the safety, efficacy. to give usdecide emergency use approval for people at very high risk.

health care workers, the elderly, people with comorbidity. benefiting those with highest risk before you can give it to the entire population. three other aspects i want to cover. is -- manufacturing, two three is distribute them. the manufacturing, the company selected by the national institutes of health, manufacture it while you are working on it, is that right? stephane: we are scaling up a processed and making products for potential use if approved. make asause we need to much as we can. , --e wait

david: that has never happened before, as it? stephane: no, because of financial risks. it is ok, you can distribute this to people, how many will you likely have by the end of the year if this gets approval? stephane: we are on a ramp to be able to -- $100 million already. david: will those go to people in the united states first or people all over the world? stephane: a partnership with one manufacturers of products in the world. in the u.s., moderna has a factory. we have a factory in new hampshire. should be up and running in july.

we should have enough capacity to cover the u.s. population. what we will do in europe, the swiss plant, is make product for people outside of the u.s. david: what is it going to cost people? who decides the pricing? will it be complicated and controversial whatever the price is? stephane: the price, we are so far focused on getting the price wherever we could safely. think other products before in this pandemic, those need to be sold at a fair price. manufacturer cannot give it away in the street but the --ufacturer has to commit the diagnostic companies to the

state,ent, federal, insurance. a typical product they would sell over virus. we have to make sure the vaccine is affordable, comparable to commercial vaccines. david: the government has provided you with lots of money to help you move this forward, so how will the government get compensated for what they have done to help you? stephane: that is basically the mindset that we have. we want to be very fair. the taxpayer money, we are very thankful and appreciate if -- appreciative for the help we got when it was very risky. david: the other four that are also getting money from the government, do you call them up every day and trade those with them? or is it a race to the finish. stephane: first, it is a race

against the virus, not a race against each other. the companies are talking together. we have a government. -- data and plans. about how me ask you iu are managing this process assume you can go to your office, do anything you want, you don't have to be at home, or do you work from home like everybody else? stephane: i spend a lot of time at home. i work at the office from time to time. i go back on wednesday. we are trying to reduce risk for people in moderna who have to be

in the office. people in the labs and factory who cannot be at home. we are asking people who can be at home to work from home as much as they can. could bring the virus into a team and contaminate the team, which would be really bad. what isessenger mra, unique is that it is a synthetic created,na that you you injected into a cell, and it is therefore less dangerous than a soft vaccine type of thing? stephane: we never give you a virus. we give you an instruction set in a molecule that we inject in a muscle. you enable one of yourselves to make insulin and growth hormone.

to read allre going instructions and make on-demand between, the s spike protein of a virus. it will show that protein to your white blood cells, immune system. antibodyng to make an so it is trained so that if you are infected later, your body will be trained to neutralize it. david: there is a first for everything but this would be the first time messenger rna would be approved -- caroline: what a great conversation. leadership live with david rubenstein, and it continues with stephane bancel. that is all for "what'd you miss?"

romaine: this is bloomberg. ♪ [ sigh ] not gonna happen.

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