francine: calling it quits. president trump's top economic advisor exits as the white house rolls out its tariff plan. rutgers on chinese investment in the u.s. global stocks decline with u.s. futures edging lower and the yen and treasuries gain as markets grapple with the fallout. and preparing for the protests. the reform program of mohammed bin salman will face the first test abroad as he visits london. we will speak with the u.k.'s labor foreign secretary.

this is bloomberg surveillance and i am francine lacqua. talk behindot of closed doors on tariffs and trade. let's look at the markets. mark: good morning. as you said, stocks are down in the first day of three. many are focusing on the resignation of the chief economic advisor. he is the globalist investors mulling the implications of stronger influence for protectionists. of stoxx 600 down by 1/3 1%. futures gaining marginally for the fifth consecutive day. the big event for the euro is that ecb meeting, which takes place tomorrow. elsewhere we have got the german ar unchanged, 67 basis points.

we did see the stock markets move down, and the yield has been the big haven currency of the day. crude oil is down by 1% today, falling for the first day in concernedons, about the intensifying global trade war sparked by president donald trump. let's get the bloomberg first word news with sebastian salek. the european commission vice president has confirmed the eu will react to the threat on tariffs. that comes as the block is expected to target 2.8 billion-year-old of u.s. goods. .verything the comments were made during an exclusive interview with bloomberg. we are assessing what our options are following our actions. wto rules, but it also

plays into the eu. tariffs will be proposed by the u.s. mark: the trump administration is considering clamping down on imports in america. according to people familiar with the matter, an investigation followed by the delivery will be expected in the coming weeks. tariffs on steel and aluminum has already ratcheted up global tensions and the crown prince's lighting perform program will face the first test today. he will meet with prime minister theresa may and the queen as he seeks to move forces from lebanon and qatar to one side, proving to be a reliable partner as britain seeks a new relationship after voting to quit the european union.

global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. this is bloomberg. francine: trade tensions are back in full focus as gary cohn quits after failing to convince the president to step back from state tariffs. cohn was seen as a leading voice for free trade and the administration, though this was not the first time that the >> gary, thi

hopefully we will be staying for a long time. >> if i was working for the president of the united states, who equated those marching for civil rights with white supremacists, some of whom had connections to the american nazi party, i would resign that day. >> look at the policies. look at the tweets, and now look at the people on the ground. they are top professionals involved with military, defense, secretary of state, secretary of treasury. the admission is to have a growth agenda. i a very excited for him. i think he will be a big positive. francine: how worried should investors be about a trade war and what is next for the trump administration, now that cohn is out. stephanie baker joins us for all things white house. investment office at ubs

private banking, so thank you both for joining us. stephanie, how ugly was it? were doors slammed? what can it mean for the trumpet thatruation if they cannot are illustrated unprecedented divisions within the chaos. donald trump says he thrives on competing visions and opinions and he likes to hear different views when he makes decisions, but it is hard to escape that longs a string in a movement. cohn selloff, so he will go ahead with these tariffs. but his departure removes a moderating force and a key thinker who have been the liaison with the business community.

it is unclear who is going to replace him. we are also hearing through our reporting about the possible site between barack obama, gary say overall, what can we donald trump measures of success . this policy is playing to his base. and he has responded to pressure from his trade advisor peter navarra. and commerce secretary wilbur ross, saying, you need to make good on your campaign promises .o these rust belt states this for him is sticking to his promises at a key moment, just six to seven months away from the november midterms, where several of these states are swing states.

the majority of the republican party has come out against these tariff measures. saying, this could spark a trade war. what is interesting is you have some democratic senators and representatives saying, it's not such a bad t hing. these democrats up for reelection in the rust belt states. >> jeffrey, will the threat of a trade war derail markets? are movingwhen you in that. this year, we have emerging-market bonds in currencies of course, there is the precondition that this is not as good not good

several names have been mentioned. , the cnbc contributor and economist and former adviser to the reagan administration has been muted as a possible replacement, but he is a free trade advocate, so it is hard to see how he could take that job. peter nabarro has been mentioned as a possibility. it the list of the economy is pretty short -- i don't think he has got, despite what he says, i do not think he has a long list of candidates lighting up. francine: i am confused. the market is very cool about it. they do not believe this trade war will escalate. but you could argue that gary cohn was the only handbrake to stop these tensions are escalating.

so, who is surrounding the president, telling him not to escalate this. ultimately, if you believe the iew, that being then, think the jury is still out there from the market's point of view. all of these political events and i think you know that is why we are seeing so much strength in the and right now. does it hurt. what are you doing for central-bank policy? they are from gdp points of view. of those things. if you look at nafta, the importance to the u.s. and canada and mexico. that entire region has supply times being disrupted. and again, given this is more tapping into the political fear,

central banks will not that will .rive inflation higher david: the announcement was overshadowed by the news that the u.s. is considering on clamping down chinese investment in the u.s. there was pressure on trump to pressure mexico and canada. re therer not that

is an economic challenge of there, it would be coming from china. will still you from the white house, stephanie, after i youone of those hats that but you be back francine: well, as you know, we have gotten conflicting signals from trump himself. as well as between donald trump and rex tillerson, where they well. does a protectionist regime go hand-in-hand with a

weaker dollar policy? that could be the intended ml of the administration, but i am not sure markets will be able to react in that way. when it comes to trade wars, first, we see the risk off across the board. they decide they will hang altogether interested in to rate trade. we still favor the slightly weaker dollar against the majors, but this kabul k things for sure. francine: thank you, senior writer stephanie baker. we continue the conversation on we also talked private equities. this is bloomberg.

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francine: economics, finance and politics. this is bloomberg surveillance and i am francine lacqua in london at the jpmorgan ceo conference. let's get back to the top story and gary cohn's departure from the white house and the threat of the trade war. global markets are thinking a little bit on that news, but how could it affect the equity and does it make the hunt for more attractive investments more difficult? joining us now, the managing director at the partners. thank you for joining us on bloomberg surveillance. overnight?e talks

if you have a global trade war or tariffs, is it easier to find opportunities in europe because people do not want to do business with the u.s.? >> it is difficult to tell and predict, as with everything at the moment. ay it will not have such a big impact. our industry has learned to invest across cycles. we have learned to invest across bearish events. and i believe we will digest it and move on. but do you see more money when it comes to fundraising, more money coming into asia from europe, instead of going into the u.s. seen this indeed. if you look at our recent fundraising, a large part of it came from asia. we have seen over the last 10 years or so and i expect this to continue. the fundraising last year was a record year in fundraising, more

than $400 million raised in private equity. our industry is currently sitting on close to $1.7 trillion of uninvestable. francine: and to what industries would you be looking out for ? do we expect to see providing optionalitye and to be a global business, that provides optionality's, which will be restricted into one single local market. francine: you were talking about the money out there and why are institutional investors so attracted to private industries? >> mainly because of the returns, which have been higher than investing in the public markets. and bonds, or other asset classes. our asset class has proven to be one of the best, if not the

best, in terms of generating returns for investors. this has been done on a consistent basis. managers like ourselves and our peers can provide consistent returns. seen to be able to navigate cycles. that gives more covert. francine: are you going back to where the opportunities are. are you looking at chemicals and health care? >> i would not say they are hot spots. health care is one sector we have been very successfully investing in in the past. generally, we are secular agnostic, very focused on certain sectors, but we do not focus is a federally on one particular sector a year or one particular theme. so, you focus on the assets? what are your top three priorities then? when some but he comes to you and says nikos, i am in trouble,

what are the first three questions you ask the company? >> i look at the growth in the market, the strength of the management team and i look at what is the potential of the business in terms of growing itself. we do not intended to let businesses that are in trouble. did you look at the country specific ones. does it make you less likely to invest. >> historically i would have said no, but given the events in europe, including the u.k. and the italian elections are a good example. we have had elections in france and germany. we have got to become more cognizant of the fact that the macro environment could impact our investment thesis. it mostly affects it when it

comes to local businesses or consumer businesses. local consumer businesses could be impacted. what is the biggest risk to the macro economy. that-year-old strength. strength?uro does that hurt you? >> we have a euro fund ours evles. the reality is, we invested both in europe and the u.s.. we tried to hedge in some cases, when we feel that the currency can get away from us, but it is very difficult to predict the currencies and very difficult to predict the markets. so, we try to focus on what we do best, which is investing in proper companies that we think we could make money from. stathopoulos,s thank you for joining us. to you.handing it back looking at the markets, the

numbers are down, but not as much as they were 20 minutes ago. anna: the e firm,action will be le,portionate and with a ru and president trump has accused the block of treating america unfairly. donald trump: the european union has been particularly tough on the united states. they make it almost impossible for us to do business with them and yet, they send their cars and everything else back into the united states. and they can do whatever they would like, but if they do that, then we put a big tax of 25% on their cars. so, they will not be doing it very long. mark: what does that mean for the u.k., sitting outside smoking a cigarette talking about post-brexit trade deals. britain is looking to the middle

east, hoping to form partnerships with saudi arabia. london today hosting crown prince mohammed bin salman.emily thornberry is the u.k. foreign secretary. she joins us now from westminster. we will be talking about the saudi prince's visit, but first, let's talk about france. we stare down the battle of a global trade were. i am very worried about this and cash oncerned that -- concerned about that -- mark: is this the time then, for the u.k. to be going it alone post-brexit, trying to forge individual trade treaties with countries, like the united states. might not this be the best time to go it alone and forge that path. i think the best thing for us to do is to remain in the customs union. ifple overlook the fact that

we leave the customs union we have to renegotiate all of the different customs deals that have been done between the european union and the rest of the world. we have to be negotiating all these difficult trade deals at a difficult time. >> when it comes to the customs union, the labour party put a servicesen it and the party. certainly in opportunity to disrupt the process when that amendment is put forward to the trade bill. do you see that is a big opportunity to disrupt the government and possibly throw something in the works when it comes to theresa may's administration. is one by which we try to look after the interests of britain. our number one priority should theobs and job security,

economy in the u.k.. anything that we do should be measured against that. and the red lines that the president has put down our things that have been contrary to britain's interest. is talkingover there over there. that is what we said there needs to be an interim arrangement. but also, we have to. we are looking after the economy. we need to have a soft order there and we can see no other way of proceeding than to remain inside the. or a customs union european union. one of the more interesting articles on the bloomberg today is the possibility of expanding article 50. pushing back the deadline to give mp and the country more time to decide whether or not the ultimate trade deal struck whatever isu.k. and a good one.

is it possible that article 50 could be pushed back. well, let's put it this way. we have had 21 months. in the conservative party is still fighting amongst themselves about what sort of deal they want to get. what do they achieve. they have achieved us a little. we have a lot of speeches talking in generalwhenever i mee european union, what does the government want. i have got to say, i am not able to help because they are very unclear about what it is they want to do. time is running out and we are supposed to be leaving the european union and we have got to get a divorce. the labour party laid this out. and now we will see what we think the government is agreeing to. we would need to negotiate what the final deal will be during that interim period. about sauditalk arabia, the crown prince arrives in london today. has a set itrnment

will raise concerns over human rights. and the war in yemen. but for you, that is not enough >> it is interesting that they will raise these concerns behind closed doors, but let's look at the fact. this war has been going on since 2015. there have been bombing raids by saudi arabia every night for a few minutes since the war began. there are children dying every 10 minutes as a result of diseases that can be fought. and yet, the saudi's continue to bomb civilian targets and they are also closing the ports, closing the airport and not allowing vital goods to get into yemen. it is the worst team in a crisis -- it is the worst team in a terry and crisis in the world at the moment and we play a part because we are sending arms to them. we are also supposed to be holding a pen at the security council and it is our responsibility to put a peace deal before the security

council. there was something drafted 18 months ago which was pulled from the table and we have not seen anything since. so, we are not doing our job properly in terms of finding peace. and we continue to sell arms to saudi arabia. at least on the face of it, it looks like the saudi's are responsible for breaches of international humanitarian law. on civilian targets. mark: shouldn't we be trying to the crownhe change prince is pushing forward? he is allowing women to drive from june this year. you have this target for the women to make up 1/3 of the saudi workforce by 2040. you have a move to develop sectors, health, education, infrastructure in tourism. shouldn't we be giving him the opportunity to paint his vision, to try and implement these changes? look, our relationship with saudi arabia is important. but friends should speak the

truth to each other and we should be speaking the truth to yemen, but we need to see within the round. on the leaders of saudi arabia, we are told they are reformers and of course, we should be pleased that women will be able to drive in saudi arabia at some -- they are able to drive in the rest of the world. we need to consider other things as well. what about the saudi arabia and funding of jihadi groups in syria? the premise to was beaten up and told he had to resign. what about the number of executions which have been doubled in the last six months? what about the fact, i think it was 30 or 40 of those members of the regime and held in custody until they handed over large amounts of money. we do have to see all of this as one picture and although there is a big pr exercise going on at the moment aboutreformer the pre

are a number of major blocks on his books. on north korea, according to south korea, it is willing to give up nuclear weapons if the safety of kim jong-un's regime is guaranteed. is this luster from the regime? can we take this seriously? we need to welcome forward movement. there is a gain. there is no military solution. it has to be dealt with. we need to find a political solution. any positive move from north korea ought to be welcome. before heard from them in the past, but they have not delivered. mark: emily thornberry, thank you for joining us.

still with us, jeffrey. we talked about geopolitics when it comes to trade and terrorists. tarfiiffs.d this point.itics at it is difficult to have a is tailored for a binary event. stressely, we diversification. your equities may suffer, but that is where your bond portfolio will come in. that is the time when the d correlation should come into effect. mark: take us through the various asset classes.

geoffrey the facts have not changed. valuations, no longer cheap. excessivelyt elevated. trade wars, north korea, could impact emerging markets. the fundamentals are healthy. we have added a position on the s&p and other trades.

negatively correlated. the yen has been benefiting. mark: thank you. wealth and management. francine. trade wartrump's threats have triggered global reaction. china, europe, and car dealers in america have said there will be no winners if we impose tariffs on aluminum and steel. joining me, the chief executive of soda stream. we woke up to this news, gary cohn leaving. the white house seems to be in turmoil, and torrents -- antara's -- and tariffs. everyone is talking about brexit. it does not change the fact the

oceans are getting polluted by plastic and our mission is to clean the earth from plastic waste, help people take tapwater, transformant to bubbly water without contaminating the environment. and this is your business proposition. you talk about sustainability, do you see chief executives shying away for making the planet better because they are dealing with tariffs and trade wars? what we do is we are committed to providing a green solution while serving our consumers and shareholders. if you look at our share price, that is the result of our business model. you are empowered to make it the

way you want. that is a win-win for the consumer and shareholders and the planet. need toief executives embrace that responsibility. work withdoes this your clients? is this why your clients by your products? does it work with your shareholders? daniel: we have tripled on our sale price. look how many households embrace our solution. we are the number one sparkling water brand. francine: is it because it is cheaper or because people want to save the planet. everything. it is the most sustainable solution you can find. it is fun. it makes a lot of sense. that is why we are the largest

sparkling water brand in the world. s won't hurtriff you? daniel: we don't care. we have to stay focused on what is important. the planet is going to hell. the consumer has been brainwashed by these bottle brands. drink taps unsafe to water. that is untrue. we have to change this. is the new smoking. it has to stop. i do not want to get distracted by tariffs and all of those things. the shekel has been strong. some saying it could be higher. what does that mean? daniel: israel is the most robust economy in the world. shekel ise -- the

very strong. those people, half are jews and half are arabs. we are also making peace. the shekel is strong. going to shift our manufacturing base because of the strong shekel. this one of your ways from sustainability? is this a priority? are not about managing the currency. if you look at our gross margin, it is at an all-time high. are doing well. sometimes you cannot hit the demand. we are doing 4 million right now.

we are doing well. we are not changing our is this model because of the shekel. francine: you may be interested in doing m&a. how much of that goes to m&a? offel: we started kicking cash last year. we have no debt. we are looking at possible m&a's . we are not going to do anything stupid. we are about putting bubbles in water at home. sometimes you want to flavor it a bit. 90% of the users who use soda , sparkling simple water. stupid would be going into new channels. francine: give me a smart m&a. daniel: technology that makes it quicker for you, instant water flavoring that gives you all natural, calorie-free solutions.

we are opportunistic about it. if there is anything to report, we well. located in israel. israel is the startup nation. there are many technologies under our nose. we are not seeking adventures. we are focused on what we are doing. 8% ofmany, we are in households. in sweden, we are in 20% of households. we do not need to get to adventurous. too adventurous. sometimes shareholders tell us to slowdown. sometimes a triple digit growth rate on the bottom. they say -- can you keep it up?

that is the plan. we do not want to go crazy, but we are just beginning. cansdea of bottles and belong to the past. you can transform tapwater without the waist. that is the future. francine: you have been chief executive for 11 years. are there plans to leave? daniel: do i seem tired? i am more excited about making peace and selling more machines and gas refills. francine: going into politics? daniel: not at all. soda stream is doing more for peace than any politician because we have an island of peace working side-by-side and i love that. that is why i get out of bed in the morning, to help the planet,

that is why i get up. francine: thank you. that was the chief executive of sodastream joining us. keep it here. we have plenty coming up on "surveillance." we will speak about risk in italy and the growth prospects. this is bloomberg. ♪

mark: you are watching "bloomberg surveillance." >> gary cohn is resigning as trump's top economic advisor. they leaving the post as prepare to impose steep tariffs. the dollar slid and stocks tumbled. -- has confirmed the eu will react to the threat of tariffs by the trump administration. target goodsd to

from t-shirts to motorcycles. >> we are assessing our options of our action. proportionate way within rules. it is clear the eu will need to react to that kind of one-sided if tariffs are going to be imposed by the u.s. >> global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. thank you. let's talk political risk in europe. our investors underpricing the situation? the election has set increased risk to its budget. joined by the chief executive.

i want to talk about your plan, but first, a look at the share plies -- a share price, do you worry there is going to be an italian discount? >> it does not seem like. year plan andfive have been on the road since. this last week, investors are giving us a lot of interest. surprised, meetings are long. they are asking for follow-up meetings. francine: this is before the election. matteo: we did 10 meetings yesterday. there is a lot of willingness to

understand the background and the story we bring to the market, which is a solid story. francine: it is very ambitious. how will you continue to grow revenue? the plan, by 1%. we are working on costs. that makes 10% growth. that makes the dividend very sustainable. the one way paid in the last two years was 80. it is not as ambitious as realistic and conservative. it is based on realistic assumptions. francine: will you going to technology, banking? if i speak to you in five years, how will poste be different? are focused on

technology. we are the number one payment player in italy. we are number one in the financial space, our payment cap and financial institution app has over 50 million downloads each. we believe that is space that will grow. a parallel channel. it will move into the branch. we will sell digital products with our people, helping clients in their digital journey inside the branches. is this inside technology, technology you build yourself? would you acquire technology from third parties? matteo: we build from inside. we have technology power with over 400 young guys focused on building applications.

client at the center of our plan. focusing employees in the right direction makes a difference. in five years, how much focus will be on banking? compared to today? slightly reduced because we are starting to issue more pnc insurance products. we are diversifying into pnc. i do not think we should go only financial. we should use our footprint, our -- to serve our clients on their needs. francine: you don't want to talk politics. would you be asking of a

new government? what should business leaders, whoever governs italy next? what do you need? matteo: very little, to be honest. francine: you need growth. matteo: growth, reform, natural things. anything else? integration with europe, does that make your life easier? matteo: companies have to do integration themselves. we are active at the european level, looking at the , at theive landscape same time, looking at the regulation. it is more helping governments do the right things in the sector. francine: matteo del fante thank you for joining us. that was the chief executive of

for aitaliane joining us conversation. we check back in on the markets as investors grapple with the widening tariffs fallout as gary cohn which the white house. ♪

this is "bloomberg surveillance." markets.ck on the stocks falling for the first day in three. the resignation of gary cohn causing ripples across markets. equities are lower. end, theing into the swiss franc lower against the dollar. the euro up against the dollar, gaining for the fifth consecutive day. higher since mid february. ,omorrow, bonds, commodities your final two columns. investors mulling the stronger

influence. this is the big stock story. look at the shares. this is the engine maker. shares up by as much as 15%, the biggest gain since 2004. deepeningledging to restructuring efforts after cost cuts help it overcome it years of earnings decline. shares up by 13%. mario draghi and his colleagues insulating these areas from global financial markets. we saw a difference in the yield performance between the german five-year and the u.s.

five-year. are we seeing conscious coupling between the two? have draghi taking his foot off the gas when it comes to qe? some investors are concerned the most popular trend following commodity trading advisors are ill-equipped to handle deeper declines. 6.4% integy fell february. the worst months since 2001. "bloomberg surveillance" continues next. francine will be joined by tom keene. this is bloomberg. ♪ mom you called?

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i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. francine: calling it quits. president trump's economic

advisor exits the white house, pushing ahead on the tariff plans. the trump administration reportedly considers broad curves on chinese investment in the u.s. global stocks decline as futures edged lower and treasuries gain on the trade war thread. markets grapple with the fallout. and preparing for the prince and for the protests. the reform program of saudi arabia's mohammed bin salman will face his first test abroad as he leaves for london. good morning. this is bloomberg surveillance and i am francine lacqua at the j.p. morgan conference in london. tom keene is in new york. tom, i think everybody is talking about possible retaliation for those trade tariffs. you have to ask yourself, with gary cohn gone, who replaces him ? tom: the replacement is the big

story this morning, the idea -- does the president go with someone far more domestic? suggest that mr. democrat -- or something like that. francine: tom, let's get to taylor riggs. taylor: gary cohn lost his battle over opposing the tariff s. cohn did not mention the dispute in a statement handed out by the white house, but according to those familiar with the matter, he could hours after a confrontation with the president over the tariffs. the trump administration is now setting sights on chinese imports an investment in the u.s. according to those familiar with the matter, the u.s. could clamp down on both to punish beijing for the elected theft of his property.

this could include limits on the country's investments in the u.s.. federal reserve governor lael brainard is sounding optimistic about the u.s. economy and is a suggesting that growth tailwinds could speed up the pace of interest rate hikes. for lael change brainard. since joining the fed in 2014, she has been the leading voice for holding back on rate increases. as you mentioned, crown prince 's reformbin salman program faces the first test overseas today. he will be in london for meetings with theresa may. it is part of the foreign capital aimed at furnishing his credentials as the leader in waiting. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i am taylor riggs and this is bloomberg. equities, bonds, currencies and commodities. all of this, call it the cohn factor.

it is an adjustment within range, not breaking any key support here right now. futures, -26 and dow futures, 314.ive they were much closer yesterday. observation curve flattening. the-year-old is way stronger, 22.23. now the next screen. the vix showing 40.30. i think the vix would be higher, maybe out towards 21. but no, a big 1.93% move and we have strong again, down to 1.5 105.60 this morning. i am down at bloomberg, looking at one of the news items today. ofs is one of the three days job economy. this was almost the chart of the year last year, the surge of american productivity and the

collapse of american productivity. this is the mystery right now among all of our guests. peter huber will join us next hour. will productivity follow a better economy, or will a better economy follow productivity? and now, how does technology pulled into this? productivity in america is not happening. francine: yeah, and i wonder whether that brings us back to the tariffs and what that does to productivity. back to the top story, gary cohn resigning as the white house economics advisor. steepre imposing the tariffs on steel and aluminum. joining us now from london, howard davies, the rbs chairman and also with us, the chatham house associate fellow. joining us.th for leslie, what do we know about

what the president is targeting, is its campaign promises, and it does that mean he is willing to jeopardize the stock market, but for the economy to achieve it? welie: the key thing here is have seen over the last 14 months, the president is going after campaign promises, but on this issue, on trade and tariffs , donald trump has been very committed to a protectionist agenda for a long time. we have talked about the way in which he differs from the republican party. i think this is not simply a whim are talking to his base. undoubtedly that is there, but this is a very significant move. i think it is likely to continue and remember, what we are seeing here now with the departure of gary cohn is this battle we have been talking about between the globalists and the nationalists -- you would win out? after steve bannon left the white house there was the feeling it would be the

globalists. there has been many long-standing issues with the president. but this one i think, was the straw that broke the camel's back. and he is gone. francine: do you worry about this trade war escalating? we understood from people from within the white house, gary cohn could've put the brakes on a possible explanation. and if you are worried about it, why are the markets remaining so calm about it all? i think one does have to worry about it, but the focus hasn't switched to europe and whether the european response will be a measured one. this will be another phase in trump white house policy that passes, i do hope they give this a bit of time over thehe experience last 15 months is stuff comes into focus in the white house and then goes out of focus again. i think if the european union

reacts aggressively, this could be very worrying. but the markets at the moment are hoping this is one of those electoral gestures. and that it will not lead to a lot of follow-up. howard, could morning. explain to us as an arch internationalist my the white house needs and internationalist. i see no evidence that mr. trump actually cares about a multilateral world, that he cares about free trade in any way. what is the value of another gary cohn within the administration? onlyd: well, there is not the white house of course, involved in american foreign policy. in addition, we have congress, but also of course, as we have seen in the financial area, the fed is engaged in a lot of international body. and in spite of some threats, the fed should pull out of the committee and all of this -- they have no intention of doing

so. i think it is important for the white house to have somebody who has an international focus, if othero know what the parts of the american administration are doing because other parts continue to be committed to an international approach to problem-solving. that is the good news we have got to cling onto. leslie, what is your study of the history of basically republican democrats, free trade and internationalists waiting out this president. that seems to be percolating within the zeitgeist now. we are just going to wait this guy out. what is the history on that? leslie: the history over the last 70 years has been over a commitment, ebbing and flowing to internationalism. i do not think we are seeing a out, butady waiting it a pushback from within the united states, within congress on this, for many corporate do not want to see this tariff or

an escalation and obviously, pushback from europe, from canada. and elsewhere. i think the structure of internationalism, the institutions, the array of inte rests there make it hard for the president to stay this course. donald trump have this sensibility, which is about not really caring, saying what was it yesterday -- trade war's are easy and not such a problem. but history would suggest that the foundations of internationalism have been built up. they are vested interests, and it will be very difficult to walk back without paying a very significant price. francine: leslie vinjamuri, chatham house associate fellow and howard davies stays with us. coming up from the jpmorgan ceo forum we will, be speaking with wpp' chief executives.

we talked to him about perfectionism, globalization and a couple spots of trouble he has had with his share price. that exclusive interview at 6:30 a.m. innew york, 11:30 london. this is bloomberg. ♪

taylor: this is bloomberg surveillance and i am taylor riggs. rolls-royce is promising restructuring efforts. the ceo helped the jet engine maker overcome years of earnings decline. underlying profits rose 25% in 2017, beating estimates. rolls-royce is looking to sell the marine division. the struggling film and television studio weinstein company could once again have to consider bankruptcy protection. a group is pulling out of the

deal to purchase the company cofounded by harvey weinstein. according to those familiar with the matter, they learned his liabilities were higher than previously thought. and the asset sales continue with hna. they sold the stake at parkwood hills and resorts. hna is targeting $16 billion. debtare trying to repay after spending tens of billions of dollars in a buying spree. that is your bloomberg business flash. francine: thank you, taylor. as tensions over tariffs oil over in the white house, the european union is assessing the option for recalibration. juncker will discuss this today. the bloc's reaction will be firm, proportionate and within

wto rules. still with us is howard davies. howard, when you look at tariffs and protectionism from the united states, does this go in hand with the weaker dollar policy? well, i think that it probably does. the typical u.s. attitude is the dollar as their currency, not our problem and the u.s. of ministrations have had the hands of policy on the dollar. but at the moment, i guess it is being seen to be a little weaker than benign neglect. and the u.s. administration is quite happy if the dollar is weak because it is focused on the trade balance to a degree which has not been seen with previous administration. yes, i think people are a bit concerned. in the u.k. be of, because sterling was week, i think there are your is within the eurozone that the strength of the europe. and what effect that might have

on the developing eurozone recovery. howard, how do you see -- what does protectionism or trade war mean for global banking? what does it mean for world growth. where do you see the weak spots. the issue really is whether we get an escalation of trade protection i is to measures such that people start to adjust investment decisions. at the moment i'm not at that point. there will be some direct impact on the particular areas which are targeted by the u.s. administration. so, we would need the bakers to but with a big impact, as we saw when we see this kind of thing in the past with the 20's and 30's is when people say, this is going to be a chilling effect on trade in general and therefore, that

feedthrough into investment. we are a long way from that at the moment, so i guess from a banker's point of view, what you are looking at carefully are companies that could have been affected in the short-term, but looking for any longer-term signs of whether that is having an impact on people's investment decisions because they think trade volumes might be falling in the longer term. this at the moment, this is still just that theoretical concern. i have not seen any evidence of that yet. tom: this goes back to your time at the london school of economics. which is the death of multilateral. is that what we are seeing, the death of a multilateral world. hesitate to call the deck at this point. the reports of the debt are exaggerated, i think, because there are many connections which the president does not directly address. at this point, i do not think we

this untangling of all the webs of american corrections with the rest of the world. we see no sign of that whatsoever. for the moment, i think people are taking a mature attitude interestingly in france, you have a president who is more of an internationalist than many of his predecessors. you have a switch the other way in europe. i find fascinating here is peter navarra could not get out of your class a couple years ago. what is critical here is the idea of retaliation and how europe reacts. what would you want mr. juncker to do with the president as a best practice for europe? >> in a perfect world, i would like him to do nothing and to and say, we tone

know trade war wars are damaging for everybody, including the people who begin them or, you buy him something to set the soup in front. but actions that could be taken if the president maintained his policy and did more because i to speakould be good for the principle of free trade. he is also a politician and will have to react. in some ways they will be pressure on him to do something, but i hope what he does is something as symbolic as possible. sir howard, thank you so muchh. public enterprises minister, look for that. soon. this is bloomberg.

francine: good morning, everyone and tom and francine here on bloomberg surveillance. i am at the j.p. morgan aco forum. let's get to one of the other top stories, brexit. chancellor philip hammond willie out his vision for brexit in a speech later today. his hand is supposed to say that the european union needs britain's financial services industry to remain strong after the withdrawal.

our davis is the rbs chairman and he is still with us. the what does that mean for the city of london. >> well, if it is just the equivalent that we have had so far, that is not great news because equivalences technically restricted to a small number of derivatives. it is not a very satisfactory arrangement. i think what we might well find ourselves arguing for is something that you might call enhanced equivalent. spreadr words, can we equivalent, which is a concept the commission understands, in two areas in which there is no equivalence in a formal sense of the moment and could you buttress that by some kind of

which then mechanism prime minister opened up during her speech on friday, where she somewhat blurred the red lines about the minds of justice. even with equivalent framer, there is still quite a lot to discuss and fight for. , theine: so, if you scenario you just laid out, this enhanced equivalence, it actually gets put in place. will it be enough to save banking jobs in london. i think that everybody in the city does expect that there will be some movement of activity. away from london into other parts of the european union, not just in one center, but through all. in a way, london has been in a way, dominant

that looks a bit odd and i expect over time, we will find some of that migrating back. the scale of that migration is that the sweet spot. then we have got a proposition for mutual recognition, which the commission does not like because that is where we came from, if fact, a but there is in i don't want to rbs, but weu at see it with every single european major bank. it is the same story -- give us time, give us time, give us time. the new leader mackenzie with a, pallone. you have got to do it now. what is the emergency for european banking, timothee vector in their performance, move the vector in their stock performance higher.

ill, specifically on brexit think the timeline is like this. we know we are leaving in march 2019. only about one year away, but we know there is a discussion about a transition, which we hope will be effectively a standstill. otherwise, the rules would not think that march 15 is agreed, then i think people people know they will have more time. the second question is, what is the new deal after 2020? francine: thank you, sir howard? that is the rbs torment.

♪ francine: good morning, everyone. if this is "bloomberg surveillance." new york.is in onto saudi arabia and the crown

london forarrived in meetings with the prime minister, theresa may, and queen elizabeth ii -- queen elizabeth ii. it's his second stop to burnish his potentials -- credentials on a test of his lightning reform program. for us.ie is live the problem is there's a lot of protestws because of what's going -- protests because of what's going on in yemen. >> that is right. we are expecting at least 100 or so protesters. not just yet because he first stopped with the queen. this afternoon he will be here. it's an interesting place for the u.k. because they need to address the human rights issue many say the saudi government is repressive as well as what's going on in yemen, controversies , this isn and qatar very much a business and political trip and there's going

to be confrontation with many citizens in the u.k. saying they don't believe the u.k. should have such a strong relationship. we will see protest today as well. much thein this is how west needs saudi arabia, that calculus has changed. do we need to talk to saudi arabia like we do the kings between? >> they are the biggest economy in the middle east, so i think the west does need to talk to saudi arabia. saudi's are trying to get foreign investment. the saudi just 5% of stock exchange foreigners invest in, just under that, 4%, they want that to open up. here in the u.k., they want to sign 14 trade deals. diplomats are signing about $100 billion in trade deals and a lot of this leads to the crown's 2030 vision where they are

trying to diversify beyond oil. so much of this trip, many are questioning aramco, when will this ipo happen? they said mid 2018, that does not likely -- look likely now. that is what he is here to do, drum up support and get foreign investors interested in the country as they diversified and sell 5% of their crown jewel, aramco. tom: thank you so much, amory -- anne-marie horton. taylor: president trump's top economic advisor has quit after inonfrontation over tariffs the oval office. president trump asked gary cohn whether he would publicly stand behind the plan to impose steep and aluminum.el gary cohn did not answer and quit hours later. he had been arguing against the tariffs. moon jae-in's wants to lower expectations for next month's

summit with kim jong-un. the south korean envoy who met trumpim will brief the administration. u.s. officials are skeptical kim is serious about suspending his nuclear weapons program. the trump administration stepped up its war on illegal immigration. california over three state laws officials say interfere with federal immigration enforcement and violate the constitution. the laws restrict state and local authorities from sharing information about undocumented immigrants with federal agencies. rest of the the northeast are bracing for another round of heavy, wet snow. as much as 8 inches could fall on new york and boston days after a storm in the same region left tens of thousands without electricity. the evening commute is expected to be a mess and hundreds of airline flights have already been canceled. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am taylor riggs.

this is bloomberg. so much. thank you back to our top story of the morning and gary cohn is resigning as white house economic adviser as the administration plans to impose deep duties on steel and aluminium imports. plantent donald trump's to punish foreign imports appears to gather force pretty inning us from jpmorgan london, it is nandini ramakrishnan. great to speak to you, especially great to speak to you at the headquarters of jpmorgan asset management. protectionism, possible global trade war, they are remaining cool. what a focusing on? nandini: it is important to remember fundamentals are strong . s&p earnings season was quite impressive.

if that is the backdrop, then are trade war's and tariffs something to focus on, it is very symbolic of maybe what the world policy might be going towards in the future, but implementation will take a while. we already have opposition forces in washington saying this is not the best idea. quite a lot of stuff that has to happen before this is applied. francine: are we going to see retaliation or a full on trade war? nandini: that is not in our near term production. because we are already seeing other politically bodies, the european union and other countries around the world adding we have leverage in this as well, we can apply taxes on tariffs on products in the u.s., it seems a little bit like a horse trading scenario. everybody will check everybody along the way. tom: it is march, it's time to check the allocation, have you

changed your allocation from 1231 -- 12, 31, 17. nandini: we still remain positive on risk assets and we like the global equity situation , in particular some emerging-market ideas with the tech story building for the long term. we are a little bit more neutral on europe versus u.s. trade, which would have been something we were strong about a year or year and a half ago. it's not because we don't the strong fundamentals, it's because the potential for the tax reform in the u.s. put through in december and the late cycle macro is strong as well. tom: let's link it into bruce leadingand michael -- with a subdued view of u.s. potential gdp. how does that cautious view of the run rate of the american economy fit into what you are doing and asset management?

-- doing in asset management? nandini: that is the big question come output gaps are closing around the world, especially in the u.s. where do we go from here? an increase in productivity. ime am even talking about that this morning. we need companies in the u.s. to invest. whether it is through technology, automation, assembly lines, whatever you have, that needs to come through. look at the data, the federal reserve surveys look strong, but the hard numbers of investment as a component of expenditure are lacking behind in u.s. companies on aggregate. we need that to step up and that could elongate the cycle. until we get that, the risk that has scared markets in the past month, that inflation and wage growth are going to squeeze , that will adds up if we do not see productivity boost. francine: how can companies

invest more if they worry about protectionism -- if they worry they cannot sell their goods or import something they need to manufacture in the states? how can they invest in their future? nandini: it is a tricky question because some companies -- foreign companies in the u.s. are manufacturing goods. u.s. based companies are manufacturing outside the u.s., it's an intricate web of where the producer elements are coming from in each leg. i think it will be a case-by-case basis. companies that have the ability to tackle tariffs will be the ones that stand up to this global environment a bit more. this is a true case of active management. some industries and -- within sectors and industries will be in better positions to handle crucial making it a thing to know the backdrop for each specific name in your basket or allocation. tom: we will continue from london. nandini ramakrishnan with us up jpmorgan asset management. coming up, the major issue is

-- in our make interview on the day on economics, finance, investment, the beverage of your choice come he is with campari, robert kunze-concewitz. looking forward to that. this is bloomberg. ♪

♪ good morning, everyone, this is "bloomberg surveillance." i am francine lacqua here in london. tom keene, as always come in new york. the trump administration is taking aim at chinese imports an investment in the u.s. according to people familiar with the matter. the white house may order a clapped out to punish beijing for allegedly to lecture property theft.

-- limits on investments in america as well. bloomberg's chief asia correspondent joins us from hong kong. how are the chinese taking it? is there a lot of talk about gary cohn leaving the white house and what that possibly means for china as he was seen as a bow of security to keep international trade going? enda: for sure. it's one of the biggest issues facing china. the reaction has been strangely subdued, at least in the official sector. we had chinese press reporting both sides agreed to avoid a trade war, but it looks like events are already moving since then. i think there are two schools of thought. perhaps china is willing to lie low until actual details on the steel and aluminum tariffs go through. at the same time, china will not take this lying down, they may be biding their time to strike

back and they can certainly retaliate if they need to. there seems to be a little bit of a holding pattern at the moment. francine: when do we know whether they do want to strike back? whether they retaliate? is there a timeframe on that or could that be weeks, months, or even next year? enda: xi jinping told president obama shortly after mr. trump's election that he would not be the first one to throw a punch, but neither would he take one lying down. if we get details on this ip probe and if the u.s. goes after , wech wider basket of goods start going down that road, then china might start pushing back in a big way and we know -- agricultural -- they could drop all u.s. goods and they could target chinese investment in the u.s. we don't seem to be at that stage just yet.

it will be interesting to see how china responds when details emerged. tom: is the man on the street engaged on this? there is some polling in the u.s. that shows these tariffs have remarkably mixed support even among the president's core audience and near zero per -- support among a lot of other people. what is the response from the people of china, the middle class, the professional class? i thinknk -- enda: there is a sense of caution and a realization that china has done well in the existing global order from the trading system we have had over the last decades. there's also view that if we were getting -- in the path of a full-blown trading war, there would not be any winner from that, china has a lot to lose, as does the u.s. i think there is a degree of caution. they are probably keen to avoid an escalation intentions going forward. thank you so much, as

always, enda curran. we are getting breaking news out of the e.u., the european union saying it wants to closest relationship in the u.k. they were meant to put out a paper talking about brexit and china. i am not seeing anything on china. the e.u. says it wants to offer the trade offer with the u.k. wants to take into account the u.k. will leave a single market and they also say the e.u. while leaving the customs union means trade will have friction. let's get back to nandini ramakrishnan with me here as -- at the jpmorgan asset management headquarters. when you look at these kind of -- rhetoric from that you, are they ready to negotiate or does it seem that -- i guess the u.k. government has taken a step closer to maybe leaving the red lines aside, but that you isn't yet ready to do that. nandini: i think it's a classic

negotiation tactic. it's certainly not in the e.u.'s interest to rock the growth we are seeing in the eurozone by making new -- too punitive a deal. it is really quite a lot of interlacing factors going on. when they are saying, do we want to have a very hard deal, do we want to not allow concessions, do we want to make a case of this? there is a fine line to be towed to get what is in the best interest of the e.u. francine: when they tell us they want -- e.u. wants the closest relationship with the u.k., what does that mean? nandini: i think it's a special relationship -- it was a country very close,hically, historically, has been in a single market in the past and would be a country that would have close links. the e.u. and the u.k. are there largest trading partners to each other. when you look at the import and export data for the u.k., the

e.u. -- by a longshot is the longest one. really, i think that means not taking it from scratch. if you are not building from zero up, you are taking the current existing relationship and ending that overtime. tom: across all of j.p. morgan research, is there a threat to the substantial dividends of e.u. multinationals? they just pay out more money dividend, maybe with a lesser dividend growth. is the real surprise out two years or five years that that dividend and that yield and a little bit of growth is really under threat? when we look at especially some of the income-oriented strategies and income-based investors that look for that dividend yield, the u.k. is the area where it stands out the most. companies on the whole, more on the continent, a little bit lower in terms of that comparison. how sustainable is that?

it depends on the cash flow, the can generateanies creative dividends have been a great focus with bond yields so low, particularly in the european space brady german bund yields have risen, but they will not be in the income category for quite some time given our view on the ecb and what is to come in terms of policy going forward. , thank you so much. nandini ramakrishnan with francine at black friars in london. we are going to drive forward that twin deficit conversation, trade yes and fiscal policy. jared bernstein, liberal democrat, someone conservatives listen to. look for that later today. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." i am taylor riggs. let's get the bloomberg business flash. spanish language tv network univision has scrapped plans for an ipo. that leaves billionaire backers without an exit plan 11 years after a leverage buyout. univision pulled the listing plan because of what they called prevailing market conditions. the producer of the movie "wolf

of wall street" will pay $60 million to settle claims the film was financed with stolen money. they were accused of siphoning money from malaysia's state investment fund. federal prosecutors argue so-called pharma -- martin shkreli could get 50 years in and conspiracy. he will be sent since friday for defrauding investors in two hedge funds and scheming the high control of a drug company he founded. defense lawyers argue he made -- that is your bloomberg business flash. tom: thanks so much. . want to show a chart i would like to show a chart on bloomberg. we do this in real time. we do charts in real time, trade weighted euro, thank you, toncine, for throwing this

me. beginning of the financial crisis in the middle and the us it is the euro has gone nowhere within a tight band. the really important idea here to go to nandini ramakrishnan is a narrow, tight band doesn't help country a or country q or country f within the fractious euro. let me cut to the chase with the meetings you have had, where does italy need the euro to succeed? tricky: this is a very question with a lot of political answers behind it. the euro, where it is now is not a detriment to the various countries in the eurozone. italy's problems are more within its own borders, why hasn't real gdp growth -- it has gone spain, whereas mediterranean counterpart, germany, france, of course, much higher cumulative gdp growth over that time.

there's a lot of reforms that need to be done, investing in companies, more efficiency, that is what italy needs to focus on. exports matter and that is where the euro comes in, but it's not crucial to any specific level of to progress italy and grow more. it's more of those internal projects that need to be fixed within a country. tom: what is the jpmorgan call on euro and do you need to invest understanding euro stability or do you hedge it out? nandini: for the euro, we see strength over the course of this year for a few reason. we expect the european central bank to reduce their qe program essentially down to zero in september when the current program of 30 billion euros purchase per month ends. we expect it to not go too far. we expect interest rates in the low, solicy to remain no touching the interest rates over the course of this year.

we look at the data for stronger euro and what that means for eps, european companies, and it's not necessarily the case a stronger euro has to bring down the euro strengthened massively in the dollar in 2006 and it still goes up. your chart is important because euro-usd, the levels are not as high. european exports actually more to emerging markets, china, etc. rather than just the u.s. that global element is really important. a+ for your, wonderful trade weighted euro chart. what will take mario draghi off piece? will he change message tomorrow? whether it is in his prepared a section or questions, he will have to it knowledge that. the real element is what is his checklist? unemployment is falling at a nice pace in the eurozone and we

have gdp growth expected to be 2%, 2.5% and that is the consensus. inflation is the stubborn element. why is core and cpi not rising? if that increases, he has a good chance, otherwise he has to monitor global tariffs quite a bit. tom: thank you so much, nandini ramakrishnan, at jpmorgan asset management summit in london. we've got much more to talk about after the summit as well, a much -- most timely discussion with sir martin sorrell on procter and gamble, the state of media. this is bloomberg. ♪

♪ tom: call of the cohn reaction. risk off as the risk increases

as they will be -- there will be no internationalist voice in the trump white house. no word on the welcome committee. will mr. cohn walked the red carpet at goldman sachs? friday is job stay in america, are the jobs that the fed independent of 1600 pennsylvania avenue? the creative destruction of it isve, the media world, exploding in this hour. martin sorrell on the eve of his destruction. good morning, everyone, this is "bloomberg surveillance" live from our world headquarters in new york. i tom keene with francine lacqua on the banks of the river thames . why are you on the river thames learning from jpmorgan today? francine: i am here because they executive emea chief forum officer. we have been speaking with great guests and they want to know whether the e.u. retaliates on

tariffs. we have heard they are expecting about it and we are -- thinking about it and we are expecting a paper sometime today. tom: you can see coming across the bloomberg right now, turkey leaving their benchmark rate at 8%, showing the difference in yields between the developed world and more challenged economies as well. let me do a data check. it's a gary cohn data check. we will have a lot from washington on the bombshell news. dow futurestive, negative, 320. they were worse yesterday afternoon and they are churning at this reduced level, but not through key technical support. euro, 1.2 434, stronger euro. next screen this morning. look for20.25, i will that to move higher and yen stronger. 1.0556. mr. cohn delivering a weak

dollar. francine: south africa's new president is being widely credited with enhanced task with storing -- with restoring confidence. his cabinet reshuffle saw the return of popular ministers who were fired by his predecessor jacob zuma. one of those men was dismissed by the finance ministry in 2017 and it caused the rand to sink to the lowest in 15 months. guy johnson is with him in cape town. guy: thank you. . am with pravin gordhan -- one of the biggest and we have been hearing so much about it in the news of late. how big of a threat are these state earned enterprises to the south african economy? pravin: they are supposed to be

a very important part of the economy. from a logistics point of view, they transmit. the others are relatively smaller on the margin. our key concern has been that over the past few years, as a result of deliberate choices in terms of board members and management and financial management in particular, the way procurement processes have been hijacked. these entities have put themselves -- got themselves into trouble and become a bit of a burden. we are now entering a period where the new president of south africa has set a new set of directions and imperatives which says that we need to get these entities to do their job and contribute to economic development and job creation,

they need to get the right teams and angement in place sure that their operating models make them reasonably financially,nt and another burden on the state. guy: a couple of minutes ago, theceo of -- described valance sheet from a banker of view, nightmare. do you, the chairman of the business, are you going to be in the job for 6 weeks, do you have your arms around even understanding the depth of the problems? pravin: i have been on the job for 4 days. i think we understand the basics, the level of debt for example, the revenue versus the cost structure, the complexity -- in itself, the number of staff they have versus what they actually put out. within the next few weeks, we will get on top of those the

numbers and what needs to be done. some of that has started already. the board has a new in term -- interim management team. some of the people who have been guilty of alfie since -- malfeasance. it is for other entities as well. change a strong wind of blowing through south africa, both government and citizens want to see these changes and see them quickly and if the choice -- that we make urgent changes quickly and then reposition some of these entities. i keep coming at this from a different angle, do you have any idea what -- how much money was misappropriated? the story is front and center in this area and people are trying to understand -- talking about contracts and so many different

aspects, do you come as a government, have any idea -- can you go back and look at any of the numbers and understand how much money was misappropriated? pravin: you cannot put a precise number to it. clearly, it might run into a couple hundred million rand. if you transmit the logistics enterprise in this instance and the purchase of locomotives, an entity made 5 billion rand of commission when local locomotives -- multiply that a few times and you get a sense of the number we are talking about. what is good is that this has now become an international , wherever these individuals are and wherever the money is, they have every intent to recover it. we: just to wrap this up, have been discussing how to get

the unemployment rate down here in south africa. we got a year to go until the elections. what do you think that number is going to look like in a year's time? pravin: we will begin to on the -- in placey some for the economy to grow and on the other hand, special initiatives where the private sector will absorb one million people over a three-year period into internships of some kind of -- one kind or another. there are initiatives like that operating with nongovernmental organizations. once confidence comes, we had 1.3% growth last year and we could easily see 2%, 3% in the next year or two and that in of itself will take us into a virtue cycle, which will improve job possibilities for young people. guy: i know you have got a lunch to go and we have kept you longer than we should have done, thank you for your patience.

pravin gordhan, back to you in new york. tom: thank you so much to you, guy johnson, in south africa. is cecilia speaking clearly, the e.u. line, she is e.u. trade commissioner and the basic idea, they will seek a wto response to u.s. tariffs, the "trump tariffs will damage transatlantic relations. we doubt the justification for trump's tariffs." she has an immediacy to it, trump may very soon sign off on duties. jonathan ferro has said recently, you really wonder about the cattle black -- cat ck here.e bla we are beginning to see official responses from the various blocks and from individual nations. this from brussels and the e.u.

trade minister. without question, the news of wildly --lthough even widely anticipated. kevin cirilli is in washington. i want to cut to the chase because of the time this morning, who will replace gary cohn? kevin: the names i have asked sources is just pure set -- pure speculation. i do not want to speculate right now. tom: we will let you. kevin: the name of the economic team that surrounded him are the likes -- i do not want to speculate because i think it's too soon. , but the speculation has to be around an internationalist. our global wall street audience wants to know if there's any appetite of the new trump circle for an internationalist or is it even feasible that dr. navarro would replace mr. cohn? kevin: that is the battle, who is going to have the president's ear, is it going to be the

globalist or the folks more in line with peter navarro? you are seeing that battle on full display with regard to trade policy. i spoke with a congressman last night getting reaction to this fallout from gary cohn's exit, who told me this is expected, number one, but that there is a group of republican lawmakers who today are sending a letter to the white house urging him to korea -- to reconsider the should trade policies. you heard reaction out of the european union. while this exit is expected, gary cohn will still go down as a casualty of this president's proposal on trade. francine: good morning from london. what will it take for the trump presidency to reconsider these tariffs? if we have retaliation from china, will that make president trump change his mind or if it has an impact on gdp, would that mean he would think of a reversal? kevin: yesterday president trump at the white house saying in a press conference that he does

not think necessarily a trade war would be that bad because the united states has such a deficit with these countries, so he is doubling down. the second point i would make the targetingt coming from the european union in particular on the, on republican leadership from minority leader nancy pelosi's district in california to speaker paul ryan's district and wisconsin, these types of responses have been really at the urging of this leadership to come out against it. that could there ultimately be a watered-down process? that could a beer more likely. -- that could appear more likely. the president already saying secretary mnuchin testifying on capitol hill saying, if you want car and don't want steel tariffs for nasa, you have to come to the table and make a better

deal. so: kevin cirilli, thank you much. last night, the midterm elections started. they started in texas, this -- le election, that one, joins us right now. greg, did the midterm elections start last night? >> i think so, i think the trade story is a big part of it. let me say quickly, i think the bottom line here is that nafta is now in grave jeopardy. i think there will be sanctions against china on intellectual property rights within days and i think retaliation is coming from a lot of countries. this story just got a lot worse. tom: will there be retaliation from republicans on capitol hill against of their president who is really a loan in the white house right now? greg: people forget this is the chamber of commerce republican party. paul ryan and mitch mcconnell. they believe in free trade.

they are now in open rebellion against the white house. am: within this, let's go to morning must read, timothy o'brien, the reigning expert on the finances of mr. trump before president trump writes a scathing note, trump doesn't have a best and brightest problem, we do not either because we have greg valliere with us. the president, we want top of the line professionals and this is mr. o'brien and here we are with boris -- i cannot pronounce it, anthony -- still cannot pronounce it, sebastian gorka, carter page, roger stone, paul manafort, and others have all come and gone. kushbn says --er -- ms. kuchner -- can he restock the washington

into april and may? greg: it's getting tougher and tougher. i think next is mcmaster. he goes soon. i think kelly goes. i think jared and ivanka goes. i think we will see a lot more people leave and soon. francine: good morning from london. who loses most? if china or the e.u. retaliates, the e.u. said it will be within wto rules, but how much does it hurt the american economy or the chinese economy? greg: we are in uncharted waters and that's the problem. it is a cliche that markets hate uncertainty, but it is a true cliche. , all jim beam, is it levis of these iconic american products? harley davidson, do they lose? i think they are vulnerable to sanctions. francine: all right, but when the president realizes this, would he not step it down a notch?

greg: there's one thing we have to remember, he takes his campaign promises literally. he wants to build a wall with mexico, he wants to crack down on trade abuses, these are not abstracts, these are things he tax cuts.n and he got i think on trade, he will not relent. i think peter navarro and hardliners will dominate and for the markets, we are in uncharted waters on trade. tom: do you have a clue where the polling is right now? i know we came off modest elections yesterday and folks' first reports from different pundits and analysts, david waterson and others say it was a mixed story, do you know where the president's vector is on polls right now? greg: it depends on where you look. if it is the suburbs of its berg or a big election in less than a week, this could -- in pittsburgh, this could work for the president. in milwaukee worried about

harley davidson or beer, that's a different story. if you look at the short-term election in pennsylvania, this could help the president. tom: exceptionally helpful this morning, greg valliere. with your timely first word news, here is taylor riggs. the trump administration is setting its sights on chinese imports and investments in the u.s. to u.s. may clamp down punish beijing for alleged theft of intellectual property. penalties may include tariffs on products and limits on the investment in the u.s. new york and the rest of the northeast are bracing for another round of heavy, wet snow, as much as 8 inches could fall on new york and boston days after a storm in the same region left tens of thousands without electricity. the evening commute is expected to be a mess and more than 1000 airline flights have been canceled. -- own prince's

faces a test today. he will be in london with the queen and theresa may, burnishing his prudential's -- credentials as king in waiting. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thank you so much. the news flow has been absolutely extraordinary. for our global audience, i cannot convey -- not the dysfunction, but the cacophony, the vibration of news the getting about 3:00 p.m. afternoon as we fall into the washington evening. all of this centers around economics and the stability of central bank institutions and the centered tendency here since early march, middlemarch, somewhere in the vicinity of late april and the important imf meetings. the perfect man to speak to is peter hooper up deutsche bank, their chief economist now.

we've got ecb today, boj today, you cannot tell me they work in a vacuum. they have got to be noticing what the president has wrought, the newly minted chairman of the federal reserve system. how would you propose ecb and boj adapt and adjust to this news flow right now? peter: yes. it has been an amazing number of hours here on the news flow. ecb i think is going to be cautious. i am not expecting a new signal toward further unwinding of qe at this point. that is coming, most likely, unless there are bigger risks on the horizon and clouds gathering on the horizon, the trade front of that will make them cautious. tom: you and every front rate, first ranked phd works with indifference equations. t=2, t+ 3 and on

we go. the human really -- reaction is delay everything and take in more data, isn't it? peter: we have had an uncertainty shock around trade policies, which i think is an important one. it is one that central banks are certainly want to see more development before they do anything. we are out of the realm of models right now. tom: that is key, that is a key statement. peter: the model has been off-track for some time. francine, sorry? francine: hi, peter. tom was acting about boj and ecb, but what does the fed do with this? peter: the fed is looking at a situation -- the economy is improving. we had speeches overnight. brainerd, little more dovish moving toward the center, that is an important development. seey growth doing -- they

growth doing well in the u.s., they see inflation showing signs of picking up and our expectation is they will begin to raise the number of rate hikes they are telling us they will be getting. that is the baseline. shockperimpose on that a betse trade system and all could be off. a year ago -- a little over a year ago we looked at the global outlook. things look good. there was risk down the list, trade policy. that risk has suddenly jumped. peter, talk to me about how it affects the animal spirits? we are expecting inflation to go up thanks to wage growth. if i am in texas, elsewhere, and i worry about what my company will do, do i still raise wages of my employees? could you see before of this

trade war, you do not see inflation picking up to where it could be stashed should be? -- it should be? we see is bluster to force changes abroad, we will not fall through with a major increase to tariffs, if it is limited to steel and aluminum, this will not upset the economy. of spiraling out of control if there is retaliation met with countermeasures and further countermeasures. if we go into the china situation, i think if we get into 301, significant increase on tariffs on imports from china , with retaliation from china and china, i think, so far has been taking this pretty calm lee tariffs on steel and aluminum, but a widening of this to a broader range of imports from china i think would

be met with retaliation. then you are talking about maybe some steelworkers doing well, but there is a lot of other firms and employees of firms that export that are going to be hurt. not to mention the potential , as you say, animal spirits. confidence is going to drop. it is telling that an initial shock last week to the stock market when this news came out was far more negative more broadly than it was positive for the steel and aluminum sector. tom: dow futures -323 right now contained. two figures on the vix, 20.41. peter hooper, i want to pivot to friday's jobs report. one of the great imports -- insights i have seen was carl, i believe he had a desk by the heater in the basement at deutsche bank and he said to me, 10 hours after the last jobs report, wage growth is suspect.

does deutsche bank believe in the good news wage growth we saw last month or do we need to be circumspect about wage growth and how it links into our expectations of inflation? peter: i think we could get a small negative payback on the wage story for the month of february, but the underlying trend is clearly up. the labor market is tightening the broadnflation -- spectrum of wage indicators has been slowly marching upward. tom: out over 3%, can you model morning in020 america? peter: i think we are in the high 2's at this point. i think we dropback maybe to 2.8 , but the underlying trend is up, no question. look at theen you tariffs and the possible trade

war, do you also think this could lead to a further, weaker dollar policy? peter: we have had an impressively weak dollar policy for some time and this is why -- i think it's a key factor underlying the dollar trend in the negative direction when you have a number of accra factors that should be pushing it up, a lot of fiscal stimulus, an economy that is doing well globally, but dollar weakness. -- really ano escalation of trade frictions here, all bets are off on the dollar. one factor, negative reaction to u.s. policies and an administration that is perceived as wanting a weak dollar certainly driving things downward. at the same time, we are talking about the potential for a significant slowdown in global growth if we get a really accelerated trade tension

situation. then risk off -- francine: how much, peter? peter: risk off moving into treasuries, moving into dollars could go the other way. sorry, francine? francine: how much could it actually hit global growth? peter: a number of studies have been done. if we had a full-blown trade war involving china, we are talking about a recession. we are talking about job losses in the millions for the u.s. and globally. yes, we might win in a sense that we get a larger slice of the pie, of the global pie, but the global pie will be much reduced. everyone loses in this situation and we are talking about substantial job loss potentially. for peter hooper with us this morning right now. the president has awakened.

i guess he awakens after the news flow. we have a trump tweet we will come to when we come back. right now we are going to go to break free come back and we will feature the president's first thoughts for the day. coming up, someone -- it's the interview of the day, not peter hooper of deutsche bank, we need to go to robert kunze-concewitz joining us of campari. this is bloomberg. ♪

♪ class is in session. the president of -- what a joy

to have dean hooper with us this morning. thanountry has lost more 55,000 factories, 6 million manufacturing jobs, and accumulated trade deficits of more than $12 trillion. last year we had a trade deficit of almost $800 billion. bad policies and leadership. must win again. make america great again. mr. cooper, help us out here. the president ignores flows to begin with, does the? guest: certainly there's many reasons for trade deficits. unfair competition somewhere on the list, but the fact the u.s. is running a sizable budget deficit, spending a lot more than we are saving on that front , the fact that we have an economy that is growing pretty

rapidly all this contributes to trade deficits. there are fundamental macro forces driving this. tom: the heart of the matter is we have weaker exports but particularly substantial imports. are those imports a good sign of a prosperous america? guest: absolutely. aggregate demand is growing. consumers are doing well. they are buying. there are very attractive products abroad. we export a lot, too. we are importing more than we are exporting to go. you will have to take a pop quiz here at 7:00 a.m. wall street time. with our first word news, taylor riggs. taylor: president trump's top economic the guys are has -- top economic advisor has quit over a discriminate over terrorist. president -- over tariffs.

president trump asked gary cohn if you would approve the proposed tariffs on steel and aluminum. the european union is skeptical of president trump's justification for those planned tariffs. eu's trade commissioner says they seriously doubt the u.s. wants the tariffs for national security reasons and doesn't think the action is compatible with international trade laws. south korea president moon jae-in was to lower expectations meeting withh's north korean president kim jong-un. to south korean envoys who met with kim will brief the u.s. administration. new york and the rest of the northeast are bracing for another round of heavy, wet snow, as much as eight inches on new york and boston, days after a storm in the region left tens of thousands without electricity. the evening commute is expected

to be a mess, and hundreds of airline flights have been canceled. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom, francine? francine: thanks so much. we are just getting some breaking news on the bloomberg terminal. buyer is ind that exclusive talks to sell the vegetable business. there's been quite a lot of movement in the agricultural business. bayer in exclusive talks to sell their testable seeds business to basf. let's change conversations. has suffered the worst stock slumped since 1999 last week after its chief executive outlook.he profit

the chief executive is here. he needs no introduction, really. guest: it was a tough year last year. we said it wasn't very pretty. just so we are clear about what happened, flat top line, down a little bit. margins flat. profitability slightly up. francine: overall, 2018 did not start as well as it could have. is that fair? guest: to be fair, it was ahead of budget, but down on last year. flat on revenues and down about 1% on net sales. we will see how the year pans out. when we look at the budgets for ,018, which we do bottoms up operating came in at about 1% to 2% in terms of net sales. we took it down because, given what happened in the last nine

months of last year, we want to be cautious. francine: i want stuck about the tariffs. it triggered a selloff and a lot --companies, not only to be not only wpp. with a possible trade war, how difficult will this year be? pyeongchang, viewing figures were down, but sponsorship and support was strong. with the world cup, we will see. what happened in britain does not bode well for the english team and the world cup. last but not least, midterm congressional's all buoy the advertising sponsorship market. in theory you should see more .rowth is therewe've see are two things really happening.

there's short-term pressure whilst the long-term changes taking place. no point in moaning about it. -- what yousaying have to do is alter your approach, your model. that's what we are in the process of doing. francine: but my question was does trade make it worse if we have a trade war? ,uest: clearly a trade war anything that reduces trade and activity, will make it worse. is gdp is forecast to be up in the top end of 4% as opposed to 3% last year, and you have a trade war, it will reduce economic activity and will make it worse, clearly. but the interesting thing about

our activity, if i look at the u.k., for example, in the midst of exit where uncertainties -- brexit where- of uncertainties are high, it was well up past its growing markets. why? it toe people were has invest in fixed capital, but were prepared to invest in advertising and marketing on the basis that next year, if life gets tougher, they could reduce it because it is a variable forecast. we think it is an investment, not a cost. uncertainty or volatility unusually has brought a benefit their. -- i'm not 100% convinced that a trade war would be that bad in the context is fairly. we might actually see increased investment. sorrell, you've got the upper right-hand corner of the ft this morning as procter & gamble walks a suppose

to billionposed dollars away from the advertising business. there's a smart article about and hulu's is basically tv's death. in five years, how will we consume advertising? guest: i am not sure what you are saying about png -- about p& g is correct. certain things will be taken in-house and they will reduce the number of agencies. reducing the number of agencies will actually probably be an opportunity rather than a threat , as far as we're concerned. there is a changing landscape, but as you well know, if you look at where we are distributing come our media book $75 bi -- is about

million. the biggest driver of our investment goes to google, about $5 billion last year out of the $75 million. the second-biggest was facebook, $2 billion. if you go back five years, neither google or facebook were in the top five. what we seen is a major change in the way we distribute our investment coming what we call media investment management, for our clients. it is now 40% of our business is digital. time, 60%, 70%, 80%, arguably everything we do will be digital. tom: this is absolutely critical. have we reached a tipping point where ads are invasive second by second in people's lives, where the young kids and even older

simply don't want to consume advertising? how do your clients adapt to that? guest: you are making a generalization. i know you like to go to the extremes, tom, but that is not true. if you advertise or target when a consumer is considering a purchase of whatever it is and choose the time in the moment, that applies to millennials, centennial's, people of my age, people of your generation, any generation. it is a question of just making sure that the ad or sponsorship or whatever it happens to be is targeted at the right time, the right moment, and in the right way. that is for the medium you are talking about, whether it is a large screen tv, a smallscreen mobile device, or whatever it happens to be. it is a question about the appropriate message at the appropriate time, and given the amount of data we have come out ,s an important qualification

and access to that data when you look at the growth of google and facebook and amazon and others, i see no reason why you should not be able to target in a much more efficient way. going back to what you said about procter & gamble, i think one of the things mark prichard said is the importance of targeting in the most effective and appropriate way. it is a question of being more precise on an individual to individual basis. tom: very good. sir martin sorrell with us this morning. don't forget, your radio briefing coast-to-coast worldwide on digital, "bloomberg daybreak." this is bloomberg. ♪

♪ tom: "bloomberg surveillance." with me, peter guber of deutsche bank. this goes to the productivity of the service sector and goods producing. the miracle alan greenspan identified in the 1980's and 1990's, and boy has this been a shock. does productivity lead to a better economy, or does an increase in an economy lead to better productivity? which way does that cut? guest: both ways, tom. productivity has been on the 7, 8, 9, 10he last years, since the crisis. it is beginning to come back now

because the labor market is tightening. firms are finding it harder -- finding ways to get workers, be more productive. investment is picking up. but is it -- it is a slow ascent. tom: here is the crux of the matter. did held thatrell a compressed type at some -- did held that a got -- did helvetica press type with some ad agency years ago. is that in your math? is that in the economist's numbers or do we learn that in 10 years? guest: that was a fascinating discussion. i felt targeted by the internet already come a pretty extensively. obviously they are doing a much better job of reaching customers. that is going to be -- it is got

to be productivity enhancing. it is probably a factor of underlying positive uptrends. tom: is better productivity good for my job or worse for my job? that is a loaded statement. guest: better productivity is good for your income. it may not be good for your job if productivity is labor replacing, if we are talking about machinery replacing workers. but if it is labor enhancing it can certainly be a plus. i think down the road income growth will be driving the economy. tom: they so much. right now a report from taylor riggs. taylor: bayer trying to sell off more assets in order to close that blockbuster purchase of months and 71st quarter. monsantoin the -- of in the first quarter.

they are in talks to sell their vegetable seed business to basf . univision has scrapped plans for an ipo. they pulled listing plans because of what they called prevailing market conditions. the producer of the movie "wolf of wall street" will pay $60 million to settle the claim that some of the money was financed --h mattel has released 14 new barbie dolls, all role models in recognition of international women's day. some of those our director patty jenkins, libyan chloe kim -- olympian chloe kim, and aviator amelia ehrhardt.

tom: sir martin sorrell in london with francine now joining me on the desk in new york. every spritz every older child is drinking when they go to europe for their your broad, it is his fault. he joins us right now. we have a producer who has so many spritzes. how does the spritz come about? everywhere in europe your product is in a kid's hand after it arduous four days of studying. first of all cut our product is in the hands of those who are taking age -- you are of tricking age. tom: of course -- of tricking age. >> -- of drinking age. tom: of course. >> not kids.

we rolled out, developed a model, and went to paint the world orange. tom: can you use the italian model in austria, and alabama? >> we do. we used it last year in the hamptons and it worked very well. tom: you went low market to go to the hamptons, right? >> [laughter] we are going to expand it. francine: good morning. we were initially covering the elections. i don't know whether you morning -- whether you worry about political uncertainty and whether that affect your share price, and about the trade war. we are talking about whiskey tariffs. what happens if we have one? guest: we've been operating in italy for 157 years. we've seen lots of things happen there. ,f you think about trade wars clearly we don't think anybody would win. consumers really wouldn't, and it would be tit-for-tat

back-and-forth and blow into something bigger. having said that, clearly we weld be impacted because export into the u.s., but on the other hand these are drinks which are specialties. if there are any tariffs, we will have to pass them on to the consumer, but we know people want to continue drinking negronis. have you look for growth elsewhere? is it africa? is it asia? guest: we are looking for growth elsewhere. probably much less exposed to asia because of our portfolio. our outflows are doing well

there, but really in the big cities like shanghai. this product or any other product, is the new 32nd d 15 seconds,nd a or is it something else? does the time function just squeeze down? >> i should declare an interest. we do work for bob and his colleagues for their products around the world globally. the answer to your question is, as consumers, media consumption habits change just like their product or service consumption habits change. we alter our approaches, too. if i went back five years, the digital part of our business was virtually nonexistent, maybe 6%

or 7%. now it is almost half of our business. you asked me about what is going to happen five years hence. it will dominate our business and punctuate or primary -- or permeate everything we do. if consumers spent three seconds 1.7hing a mobile ad or seconds, we will have to adapt what we do to take into account reduced attention spans or different responses. we will tailor what we do and the messages we develop to how consumers are changing in their media consumption habits, whether shifting from established and traditional print and magazines to mobile and internet, whether outdoor, -- you mentioned comcast and the fight over sky -- whether it is paper view --

-view or over-the-top like hulu. francine: how are consumer habits changing? if people are tricky more local, will you buy more local brands, or is it with your brand you will try and change taste around the world? >> people are extracting more local. people are dragging less, but tricking better. for most people that means imported brands. we are well-positioned from that perspective and a category perspective across all of the hottest categories, be it tequila, bourbon, dark rum, so we feel good about that. we do a lot of work with wpp, and yesterday we revealed a new campaign which they produced and will have all sorts of length. , we have party produced a 15 minute short movie you can go and watch.

you can really scale up and down the storytelling if you have a great idea. tom: when i look at this -- >> can i underscore what bob china, for example, where you have a middle class of about 400 million people. even more important is what that middle class is doing in terms of their spending habits. the chinese consumer, middle-class consumer, will pay more for products and services that say some thing about themselves that they admire and respect and value. whether it be in the auto business, drinks business, cosmetics business, it is more and more effective for premium ofa nation -- premiumization brands in china.

are doinger study we with google at the moment, those markets we are focused on are not the u.s. and western europe. they are asia, latin america, central eastern europe. tom: sir martin sorrell, thank bob asmuch, and we thank well. thank you so much for being with us again. markets on the move. that is the headline this n'sning of of mr. coh resignation. let me do a foreign exchange report right now. one of the markets with s&p down, and a, dow at 105.69,trong euro

getting through a one of 5.25. -- 105.25. the swiss franc as well something i am looking at. discussion and drive forward the discussion on bloomberg radio, on any guests scheduled to be with us. who would do that. it -- we will do that. stay with us through the day, particularly for our coverage on washington. don't forget, storms on the east coast. good morning. ♪

♪ >> i'm extremely happy doing what i'm doing. i have a once-in-a-lifetime

opportunity. that was then. this is now. gary cohn up as president trump's chief economic advisor, and markets don't like risk quite as much as when gary was still on the team. gone and threats of a trade war looming, the president needs all the good economic advice he can get. where is it coming from? and in the wake of a notes tariffs, reports are that the white house may be planning something much bigger directed specifically at china. welcome to "bloomberg daybreak." i am david westin here in new york state. my colleague alix steel is still done in houston. is going to be the question -- that is going to be the question. a whiteyou think about house and u.s. presidency without gary cohn and more ramped up trade war? i will be talking to joe kaiser,