♪ caroline: from bloomberg world headquarters -- romaine: three stocks up for every two down. the text slump continues. caroline: while we continue to focus on stress on the big cap space, there is also significant stress among middle and small businesses. we have to highlight it, this is crucial.

and social distancing measures have disproportionately hurt the smaller businesses. just this week, companies filed or are on the verge of filing or group c. if they can't -- filing for bankruptcy. if they can't survive, how can smaller businesses survive? it is an extraordinary divergence between rich and poor, small and big. so many companies forced to shut down due to regulations or activity. meanwhile, the larger chains in the world online players big retailers who make. new york sports club, century 21, lord and taylor, virgin atlantic. an extraordinary divergence happening right now. an unbelievable amount of inequality being compressed into a short amount of time.

romaine: if you look at those names, a lot of them are consumer discretionary names. if you look at where the bankruptcies have been happening and in what sector, you get a better sense. obviously, the first thing to go with regard to spending is going to be the discretionary items. you've seen that come down. -- 22% making up a big of bankruptcies. you are seeing energy going down. that probably has a lot to do with some of the debt levels that those energy companies had. i used to love going in there and getting eight croissant. joe: we have great coffee. caroline: i know you like a duncan. this is something we're going to be focused on and we were yesterday. economicsureate in

talked about this impact on smaller businesses. >> when they go out of business, it really is out of business. business, theyl have to start over again. we have to be much more attentive to the small businesses that have a better program for small businesses than we have for big business. caroline: we worry of course about our favorite eating out haunts. joe: i want to bring in a bloomberg reporter who covers bankruptcy. thank you so much for joining us. we looked at some of the names like new york sports club, other companies that have gone out of business. how much in your view is this largely accelerated the demise of entities that were not thriving well even in the precrisis environment? >> that's a great question. it can be defined by the

beginning of the pandemic. the retailers that have filed thus far, a lot of those companies and the energy companies, those ones had enormous debt loads that were already burdensome. the pandemic was really the thing that tipped them over. when we saw neiman marcus, j. , a lothe early filings of them might have come even if covid-19 had not happened. a lot of them had been a result of large buyouts. then, we have seen pressure across a number of industries. with retail, it is the amazon effect. consumers shifting behaviors. if you don't have an online presence, that's going to hurt you. serena --ok at the fitness arena, with the pandemic, it is keeping people at home. people are changing their habits. their buying bikes that fit in

their homes. a lot of them are limited from showing up to the gym because the doors are closed. with that sector specifically, it is intense pressure. that being said, debt was a problem before the pandemic. a company like town sports which is the owner of new york sports club, that has a loan coming due in november. because of the closures and because of their financial strains that they are experiencing now, they are really not going to be able to meet a lot of the expectations or the goals that they had in mind for 2020. some folks, this wasn't completely about debt. when we heard about century 21 basically shutting down disappointing a lot of tourists here in new york, there was a sense at least the way they characterize it is that this also had a lot to do with not being able to negotiate better rent deals.

you're hearing this from restaurants as well. i am curious as to whether them of these companies going into bankruptcy do have a viable way to come out if they can restructure the terms of some of those contracts. >> they absolutely can't. century 21 it's not in that camp. they are closing down. they sued several of their insurers so it wasn't necessarily rent that they were blaming all of their issues on. they referenced that they weren't getting the type of insurance policies or coverage that they needed to get through the pandemic forcing them to close. they will be closing. yorker, a company like new sports club, they are going to use restructuring to remain in emerges and hopefully healthier and be able to reinvest in the business so that they can improve their club, get members back, open the doors debt and not only cut your

but be able to reinvest in the business. they are looking for new capital. a you had mentioned, rent has big thing to do with restructuring. they are going to renegotiate with their landlords to try to get rent reductions at their for fitness,ause restaurants, retail, these rent high beforerobably and now it is becoming too burdensome with many locations closed, unable to even bring in business. caroline: you talk about and report on the companies we have data on. romaine has reminded me that we are going to get a lot of companies we don't even hear about. some of them will just shut and never come back because they can't even other filing for bankruptcy. bother filing for backup seat. -- bankruptcy.

>> it's a disproportionate system. we often focus on the big names that would be recognized by a reader. whoe are mom-and-pop shops just decide to close their doors and not use the court system that the big players go to. an expensive process. lawyers cost money. time and aa lot of lot of businesses have to decide do i have that amount of time and do i have the finances to hire professionals to help me get through a restructuring? romaine: well said. we want to talk a little bit more about the smaller companies that she was just referencing because a lot of them are feeling the pressure. tens of thousands of restaurants and small retailers are closing their doors.

talk more about this coming up shortly. this is bloomberg. ♪

♪ romaine: today, we are focused on the pain felt by small businesses. it is especially being felt in the restaurant industry. you have been keeping a close -- close eye on this. the central issue is that all of these in person services businesses really got hit hard. if you look at the opentable

data to see the recovery, the white line is national. at blue line is new york. neither is anywhere close to precrisis levels. margin thatthe thin they already have. this is a real issue or a huge share of the economy. -- a real issue for a huge share of the economy. one company has managed to get a better rent deal because of its power. restaurant -- high-end restaurant that is still open. restaurantsut small ? they can't negotiate the way larger ones can. joe: i want to bring in a cheap

economist to talk about this. he is also the co-owner of a ling l.a. bar and restaurant in pennsylvania -- of a bowling every -- bowling alley bar and restaurant. back to seeing a normal recovery? >> we have seen a slight increase in revenues as people are more comfortable coming out. we have also been doing outdoor stuff. we were doing that before. take out has increased. we are up to the exciting level of 28% of normal revenues. caroline: wow. managing to make ends meet. i am interested about how you make ends meet in terms of when you see small businesses, we are talking about 25% opening indoor diming in new york. everyone becomes jubilant. does that help with the margins being so slim?

>> note. you don't open a restaurant with the financial model based on 25% occupancy. it just doesn't work, it just doesn't work, doesn't make sense. especially in the restaurant industry in a lot of businesses, they make a lot of money during the peak hours when they are really busy. even if you go out on wednesday or thursday and think this doesn't look so bad, it's really the peak hours when people are going to come out. people can't come out because they won't have the crowds. losing the peak hours, you lose a lot of your revenue. this is not how these is this is are meant to be run. it's not the models that they are based on and it doesn't add up. to thosewith regard businesses, how do you track that? joe started off showing opentable data which is a way to track the visible businesses out there. with some of the small

businesses, they disappear and you hear about it from your neighbor or the get boarded up. does that show up in the statistical data that would allow us to get a better's is -- better sense of how severe this is? >> the good news is, it will be measured. the bad news is, by the time we measure it, it will be too late. it is tricky. business failures and business openings are only measured with a lag. it's going to be months and months until we know what is happening right now. we are operating in the dark, which is scary. we don't know how many small businesses have failed. you know when you try to do your own survey of small businesses, it's tough. how do you reach people who have closed? you call their business owner -- business number were they used operate and nobody is there. we don't have a great sense of this. when you look at the ones who

are temporarily closed, it's close to 20% based on census looking across. idea how manyany have permanently gone out of business. joe: obviously, we have seen the failure to get a further stimulus bill going. no extension of the program. sector smallervice employer restaurant bowling alley bar, what would be the key thing that you would ideally ine to see in a package terms of sustaining the economy? be, fromference would eight small business owner standpoint and a financial standpoint, we would like to have a lot less strings attached than last time.

ppp was short-term, but it wasn't meant to address a long-term problem and that's what were facing. half of small businesses think it's going to be six-month or more until things get back to normal. if you look at the hardest hit sectors, it's rihanna for. we need something that's going to address long-run challenges. what we should do is large, long amortization low interest loans. give small businesses a 30 year loan with a small interest rate of maybe 1% and they can do what they need to do. ppp was a lifeline, but it came with a lot of constraints. it was limited in how much it could help. caroline: when you look outside of agreements in the u.s., is anyone doing it better in terms of supporting smaller businesses? are you hearing anecdotal evidence of how they're making it work? >> the very best thing we could have done for small businesses

is to do a better job at fighting the virus. i guess looking at the data for countries that were more successful, i would bet their small businesses are doing a lot better than ours. at the end of the day, it's about the virus risk. that's what would have been the most important to help small businesses. nowerms of what we can do after the damages been done, i'm not sure that any other countries offer a better model. some of them are going whole wage replacement. we have seen in this country a very targeted problem. and concentrated in specific companies and specific industries that are doing face-to-face business. we have been in this long enough that we can say who is in need of money, who is hurting? we don't have to rush the money out the door and let everyone get it which is the ppp approach. instead, we can do a more

targeted, going after the face-to-face businesses that have seen significant revenue decline. that's what i would focus on, something big and targeted. joe: we are going to ask you to put your economist hat on next. that is after the break. this is bloomberg. ♪

♪ caroline: today, we have been focused on the pain for small and medium-sized businesses. coming up next, we will talk about the pickup and demand for goods and services. look big picture at the cpi, definitely worth seeing a reversal of that massive deflation or inflationary shock that we got in march. the reversal of everything we saw cpi coming in

higher-than-expected. it is a bounceback. we are not at levels that we saw precrisis, but it is faster than expected kind of like much of this. it changes the story once you look at what is really driving it. romaine: you mentioned the court, it was up 4/10 of a percent. apparently, a lot of it came from people buying used cars. you take a look at the chart we sense.t gives you a a lot of people are buying cars. i wonder why. this is a reflection of the prices, not just the volume of cars read. it shows you how spending is shifting. people are spending money, there is an economy, but it is

shifting to other goods and services. back.bring adam -- a huge chunk of it was used car prices. from an economist perspective, what do you make from a number like today? don't think it told us anything we didn't know. we knew the market for used cars was tightening down. people are spending a lot of money in grocery stores. prices have firmed up their. the only thing i look to inflation is are we avoiding eight deflationary spiral? that appears to be the case. that is good enough. we are so far from full employment and a tight labor market that i am just not looking to inflation to be a super meaningful indicator right now except to show that we are

not in a downward deflationary spiral. there are too many measurement problems especially back in march when you had so many outlets you couldn't even get to. if you could get there to measure prices, do you really trust it. i'm not putting a whole lot of weight in cpi right now. romaine: do you put more weight on the labor market statistics themselves? if so, what do you divine from them so far? >> we have certainly seen a bounceback. there is no denying that. it is decelerating. we have added more than a million jobs which is good news. but we are adding fewer jobs every month and we are a long way to go. the unemployment rate is confusing right now. 8.4% still useful, but the doesn't even include people who have stopped looking for work.

if you had a job in march and you're not looking for work right now, you're still relevant to the labor market. if you throw in misclassification and people who have stopped looking for work, we are still a 10% which is massive. the labor market is still at the peak of the great recession. , we areook at payrolls worse than we ever were. if you look at the labor market, it is so strange to look at where we are now and to think it is time to declare victory and take your foot off the gas. this is still worse than it ever was at the peak of the great recession. caroline: with the fiscal foot seems to be hovering and not doing anything. what about monetary? what can the fed do? >> there's nothing more the fed can do.

they cut fast and early. their stance on monetary policy in terms of being willing to tolerate little bit of overheating. there is not much the fed can do right now. people need cash in their pockets. is this is need cash in their pockets. argue for the fed to stay where they are for now and talk about the need for more fiscal policy. caroline: who knows maybe someone somewhere on capitol hill. it is been great having you over the course of the show. thank you for speaking so openly about your business and the economic data. tune in next week for our special coverage of the fed decision. much jay powell speaks to the need for fiscal stimulus. romaine: he's has been trying to pass this baton for a while and doesn't seem that congress is picking up on it.

the question is what if anything can the fed do? joe: what are you looking -- caroline: joe, what are you looking for monday morning? joe: shares of nikola. lumbar technology is coming up next. -- bloomberg technology is coming up next. ♪

♪ >> welcome to bloomberg technology. a volatile week comes to an end after a five-month rally, tech shares sputtering. microsoft down on the week as the tiktok deal nears a looming deadline. we have learned that