terrorists against china -- terrace against china -- terrorists against -- terrace against china. e.u. leaders are expected to approve a brexit transition deal with the u.k., but there is less action expected with carney said to hold on rates and guidance. i am francine lacqua in brussels. we are looking at brexit. michael mckee in washington, d.c., he is snowed in. we are looking at the fed and what you heard from the fomc, and of course looking at mark carney and inflation. ,ichael: an awful lot going on but the big story in washington was the snow. all towns shut down yesterday, except for the fed. -- the whole town shut down yesterday, except for the fed.

francine: you have the inside scoop on the fed. let's get straight to the bloomberg first word news. taylor: president trump is set to carry through with threats against china. today, the president will announce $50 billion in tariffs against china. a number of u.s. companies believe it could hurt the economy and believe china is ready to retaliate. congress is playing beat the clock with a budget bill. last night, congressional leaders released a spending plan for the rest of the fiscal year that increases the defense budget and provides money for fencing on the border, and the opioid crisis. congress is trying to avert another shutdown. bank has the central heightened policy in step with the federal reserve.

the pboc increase the cost of short-term loans to lenders by five basis points, and the move is a normal reaction to the fed rate hike. theresa may as warning allies to be wary of russia and dispel the kremlin spies. she is sharing secret intelligence about the nerve agent attack on a former spy attack on a key ally. she expelled russian diplomats who she called undeclared spies. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. michael: thank you very much. we want to get you started on the markets, because everybody should be dressed in red. you are looking at the german ten-year yield, up a little bit right now. it has been down significantly throughout the day because of bad auction and bad pmi.

the euro area march pmi just came out, 66 from 58.1. you can see -- i can barely read this board. let's look at the canadian dollar. reports that nafta might go through, so the canadian dollar is higher against the dollar. francine: we are getting a little bit of news out of the euro area. we will speak to the efl general director later on. i'm looking at the managers index, a great way of looking at private consumption and how private economy grew. that may have an impact on the euro. that in any kind of ecb reaction further down the line. jay powell's dovish deadbeat. the fed raised rates and maintained its projection for two more hikes this year.

investor attention has shifted to another story out of washington, president trump's plan to hit beijing with $50 billion in tariffs. joining us is martin lueck and alexander stubb. us.k you both for joining , i will start with you out of courtesy. are you worried this could impact european companies? are the terrace bad news for everyone or is this a game the u.s. could win? alexander: to be quite honest, i think trade wars are always bad news for everyone and for companies. in europe, we are free traders and we believe in free and liberal trading. that is why the european commission has exclusive confidence over the matter and we have our four freedoms, because at the end of the day no one benefits from trade protectionism.

francine: it is not really spooking markets. what would spook the markets? martin: definitely introduction of tariffs to china would trigger retaliation from the chinese side, which would hurt probably the u.s. agricultural sector and then again, there is the question towards the extent that that will hurt the relationship between europe and the united states. i think investors would become worried about the impact on those companies that are most exposed to exports around the world, and if you think continental europe, you can think luxury goods makers in southern europe as well as the industry in central parts of europe, so there is something to be worried about. once this sort of trade war end to we need to put an at least the early signs as soon as possible before it escalates

and before markets react negatively. -- is anybodydy in europe talking about joining in with the u.s.? i have talked to a lot of european officials who agree with the president that china cheats, but does anyone else want to do something? martin: so far, it has been too attractive for european companies to be in business with china, so nobody has said a word. we have known for a long time , has not ais not so lot of scrutiny on intellectual property, so there is something that european companies need to think about. generally speaking, this episode of trade war's looming could be actually the start of a finding toward fairer and more balanced trade system around the world, which will include the china also obeys more to the rules regarding intellectual property.

, think there is even a chance albeit not a big one at this stage, but a chance of a positive outcome. michael: how does this affect the central banks considering what to do? the fed raising rates yesterday and talking about a steeper ascent of its yield curve, but no impact on the ecb or the bank of england because they are meeting today. alexander: i think first of all, a former politician and banker in the european investment bank should take a quite long distance from any speculation on interest rates. europe is back and the european economies are doing better. i am sure the ecb will use discretion and act accordingly. just a little bit to tag onto the trade issue, we used to try to build a multilateral trade frame network within the wto, and given that is not in the cards we are seeing bilateral trade agreements.

the european union has been progressive on this, trade agreements with canada, japan, india, etc. i would like to try for all countries and parties involved, including china and the u.s., to abstain from unilateral moves on trade because that will just create more mayhem. alex, is there something that the europeans can do to temper this? is there a person that can try and take the situation down a notch? alexander: i think they already are, as far as i know. there has been a delegation in this past fewr days led by the swedish commissioner for trade, and she has been extremely good and had other ministers with her. i think they are trying to do everything in their power and under the radar screen, because one of the problems is when you

start discussing these issues in public, your positions get stuck. i think everyone is working on that. wahlstrom is in washington and she was asking for an exemption from the steel and aluminum tariffs. , is theres not get it a major impact on european companies or is it a small enough set of tariffs that we do not see any real long-term selloff? alexander: first steel and aluminum, it is not too much of damage that needs to be repaired. the mistake the e.u. could commit would be to go for really strong retaliation in the sense that it has already been offered. i think the e.u. should go for an approach and say, you introduced these tariffs and we know that on average european tariffs on u.s. products are higher than the other way around, so let's talk about it.

it was a u.s. decision to walk out of the ttp agreement, not a european decision, so tariffs what have been included. let's go back to this point and negotiate a better and fairer trade agreement before we retaliate. that would be the better approach. this is back to the question, what could the europeans do? they could be more deliberate in it, tryingy react to to calm it down and find a fairer trade solution. you also need to win over the u.s. public, because we know that for president trump has artie entered into pre-election mode and election campaigning mode, and this debate is probably part of that. michael: it raises an interesting question. if you are talking about the european strain to get along and do more negotiation rather than retaliating, how that -- how do you sell that to european people? martin: i think the european

public is very well aware of the fact that europe has always been a region that very much exposed to foreign trade, global trade really, and built the united states and asian region, which has become much more important of late. i think this would be quite easy to sell if you tell the public in continental europe that european tariffs on u.s. products are higher than the other way around. then we might find a fairer solution, including a fairer solution with the chinese, who might not be treating our intellectual property correctly. this would go well with the european public as a whole, i'm quite convinced. it is easier to sell this to the european public rather than the american. michael: martin lueck of blackrock and alexander stubb are staying with us. an exclusive conversation with jyrki katainen, european

commission vice president for jobs growth investment and competitiveness. this is bloomberg. ♪

taylor: this is bloomberg "surveillance." facebook ceo mark zuckerberg has broken his silence. he outlined steps the social network is taking after cambridge analytical gained access to the data on the social network. critics are underwhelmed and lawmakers are demanding zuckerberg testify before congress. investors in tesla spent $2.6

million to a short elon musk will stay around for the next -- to a sure you on musk will stay around for the next decade. it takes on ambitions to turn tesla into one of the world largest companies and you could make more than 50 but that he could make more than $50 billion. blackberry adds another brand to its ownership. jaguar agreed to license blackberries technology. they will work on a new info-payment system -- int fo-tainment system. that is your bloomberg business flash. francine: let's get back to our guests, martin lueck and alexander stub. martin, give me a sense of what the market is looking at. if you look at pressures around the world, is there a canary in

the coal mine that will tell the markets when something ugly turns? or do we need to wait for the statement? martin: i think we are in a mode in the markets where we are not 100% risk on anymore, so the markets have become more shaky after the experience in the early days of february. markets are much more sensitive. much more sensitive to any negative news. you can see that when the first news of a trade war, the looming trade war or introduction of tariffs came out. this could be a trigger. if these tariffs were to be introduced in the next couple of days, or president trump announced them tonight, and then the chinese were to retaliate right away in the field of soybeans, for example, this could have a negative impact on the market. we still have the ongoing

discussion to what extent is inflation coming back, which in my view is the $1 million question this year anyway. what do the central banks do? we have this ambivalent reaction of markets to the fed decision last night. we will have the ecb in focus over the next couple of months, so there is a lot of smaller things which probably would have not moved the needle, but this more shaky market could lead to at least a temporary selloff. we need to be more aware of the small things that could be moving here. michael: we have some breaking news. cecelia maastricht was healed does here to locate -- negotiate. e.u. officials tell bloomberg the e.u. expects to win exemption from the import tariffs. it may be that the threat to europe is going to be much less than the markets think. let me go to alexander, and ask you, are the markets may be

overreacting to headlines at this point? does donald trump scare people too much? he throws something out there and the actual implementation is much less. alexander: i think the markets are probably getting used to donald trump tweets and all, and to a certain extent, i have not seen any overexcited market reaction at this stage. if the news you are pushing through that the e.u. gets an exemption is true, it shows you pretty much the firepower of the biggest trading bloc in the world. it is good the european union has exclusive confidence on trade and has a lot of muscle to negotiate for half a billion people. we have to wait for that news and see how the markets react. the markets have a tendency to be sometimes rational and sometimes irrational. francine: that is very unlike them. alexander stubb and martin lueck

will be with us. a two-day meeting in brussels beginning today to discuss trade in light of the metal tariffs which come into force tomorrow. breaking some of the headlines coming out of the commission, joining us for an exclusive interview is jyrki katainen, the european commission vice president for jobs and competitiveness, and the former prime minister of finland. -- becausetalk about we are getting breaking news on the tariffs, do you wary european companies will be affected? mr. katainen: of course we are. we have good opportunities now to solve the issue or actually, down the problem. .-, down the problem according to cecelia maastricht, there is prostrate -- prospects

for starting negotiation's with the united states authorities to address the metal tariffs issue. side but wee on our are not sure whether they always matter. francine: what can you do? mr. katainen: first of all, we try to avoid a trade war. if nothing else helps, then we -- we set higher standards to certain american products and we will go through the wto. right now, our priority is to avoid all of this and that is why the trade commissioner had a fruitful meeting to washington, where they discussed with trade secretary ross on the opportunities to calm down the situation and start negotiation's. right now, it looks a bit brighter than a week ago. francine: i know we want to talk about sustainability. the concern is that governments

are instructed by tariffs instead of focusing on sustainable growth and financing. how are they prioritizing? mr. katainen: the e.u. is always united. we may have differing views but we are always united. opportunitys a big to hold the financial industry around the globe. create ants to enabling environment for a financial sector in order to shift the financing decisions circular,urrent qamar more sustainable. that is why we came up with proposals a week ago. francine: which i will talk to you in a second. do you think most e.u. companies will be exempt from the tariffs? if the chinese retaliated against the u.s., can you attract investment in europe?

can you see a benefit? mr. katainen: it is absolutely, the e.u. must get exemption because we have internal market. we cannot accept that some countries are treated better than others, because it would destroy our internal market. that is why the e.u. must be traded as a trading bloc. retaliation is always very bad for everybody, so in trade war's there are not winners, there are not losers. the losers are normal citizens who lose their jobs. what happens if something happens -- too early to speculate -- everybody knows our procedure. we want to avoid a trade war and do not want to harm any of our trading partners. we are the most open trading and investment market you can find. francine: how much of the time at the commission is spent to talk about tariffs or the

relationship with the administration, finance, or brexit? is it one third, one third, 1/6? mr. katainen: tariffs are kind -- it is an issue right now. we allocated human resources to solve the problem. thebigger issue is per development of a business environment in europe, and that is why sustainable finance is a mega issue compared to others. brexit of course is very unfortunate, but in terms of how much time it takes in every day commission life, not that much, because we have negotiations on behalf of the e.u. and the commission for things like sustainable finance, artificial intelligence, defense, security,

and this kind of stuff, which and yearr trade europe will be a better market for external investors. francine: what do investors ask of you? do they need something more concrete or more investments on government? is that the only way to get the private-public to have real teeth? mr. katainen: looking at all the sustainable investors today, they are normal. us, we needd to transparency. we need a category or classification of what is really sustainable, because they do not want to invest in projects which are green washed, for instance. they want the e -- e.u. to create externally what is real investment. we had a high-level expert preparing our proposal, and many

of the ideas. it was an industry stakeholder driven process, and i am pretty sure it is positive. francine: if you are a government, if you are france or germany, you need to create infrastructure and sustainable finance means you need to put money up front. how difficult is that to get done when you are trying to fight fire with brexit? you lose maybe exports from the u.k.. basically, you where to invest your calculating returns, etc. sustainable in the long term, sustainable is investments to the coal sector, so that is why from a business perspective, there is no difference if the

fundamentals are right. it would increase security amongst the investor community, that if they want to invest in sustainable projects, they can be sure it is sustainable. francine: how can you make sure that the money goes in and people take it seriously? are inainen: consumers dissent. you have seen the same thing happening in all parts of business. have begun to ask more sustainable projects and services, and want to include financial services in the picture. consumers are in the center, but also the financial sector itself seems to understand clearly if you do not do anything, the climate change will cause a lot of harm and will change the business, not only financial but other businesses, and will lead to a bad situation.

withins a changing will the financial services, that something must be done, and the question is how to do it? francine: speaking about financial services on brexit, which you make an equivalency, how much will the flexibility of the commission showed toward the u.k.? mr. katainen: this is a question of the future relationship. when we negotiate with a country on trade agreements, we have to calculate. ,n our current trade agreement financial services does not play a major role but of course the u.k. might be slightly different. it is too early two assess what role financial services plays in our trade agreement. the future trade agreement within the e.u. is the first ever done by anybody where we from the the situation

current situation, because normally trade agreements tends to create a regulatory environment for business, but this is different. francine: in the u.k., they say if we do not talk about it now it actually delays it and you lose that bit. mr. katainen: we are negotiating all the time. onerol agreement is number and the transition agreement is number two, and once those have been done, we can negotiate on future trade agreements. lots of work has already been done. francine: thank you so much for joining us. we will have more from brussels throughout the day. he is the european commission vice president for job investment growth and competitiveness. i am going to head off to moderate a panel and hand it back to you in london. over for theake next hour and a half with my

coworker, michael mckee. martin lueck set, and alexander stub. that is your successor, isn't it, just speaking to us? what do you make of what he had to say? alexander: i agree with everything. i was his successor. we are good friends and i think we both agree the greatest job title in the world is asked prime minister. -prime minister. it was nice to see him, and the line he is pushing is the european commission trade and i think he is correct. two wondering why you have finish prime minister's. could it be linked to the fact that the u.n. ranked finland as the happiest country in the world? guy: would you agree? alexander: of course.

guy: i feel like we are leaving martin out. i hope you are happy, even if you are not finnish,. what did you make of the basic thrust of his conversation that the european union working together will get more done been working on their own, which is different from what we are seeing in the united states where everybody is divided? martin: one of the biggest strengths, and the reasons of existence for the european union is its unity on trade. testament lot of within the european union that europe, every single country, albeit possibly relatively big in the european context like germany, france, and the u.k. as well, these countries are pretty significant within this region,

but they are too small to participate in the big game between the trade blocs, asia and america as a whole. it is a strong perception in europe that we must work together and not allow anybody in the world to divide us, and to really put a wedge between us. as long as this is the case, speak with act or one voice, and that will be to the benefit of europe. this is why it is so hard for example, for the united states, when it comes to tariffs to divide european countries or any other attempt. this is the strength that has come out of the regions of the europe -- of europe since the early 1950's. guy: let's talk a little bit about u.k. february retail sales data. rising .8%. nation ofh

shopkeepers is also a nation of shoppers, it appears. something for the bank of england to think about. martin, let's talk a little bit about the division issue. what is interesting is that david davis spent a lot of time in europe capitals and not in brussels, and the reason is pretty obvious, divide. is he capable of dividing europe? martin: he is probably trying hard and has done a real roadshow. he has been to every single capital of the remaining 27 countries. the question is, how can he achieve that? then you need to look at the european union -- european incentive to remain united. if there is anything that you cannot allow at this stage --

the e.u. cannot allow at this stage is an exception where anybody is trying to tariffs it. if the e.u. were to allow that at this stage, anybody else would follow. the french say, we want this, and the german say, we want that. this would be the beginning of the end of the european union. this is the line of defense, which is the reason i believe it is not very likely that he is successful in dividing the e.u. guy: is the e.u. the last asked amongng -- bastion bilateral is in? alexander: i think it is a pioneer and an attempt to pull sovereignty on a level which nationstates have never done before, which to come back to the david davis question, i have never seen the european union as united as it is now. guy: is trump making it easier for them to come together? alexander: one is trump and the other is brexit.

a lot of people understood at that stage, leaders and general public as well, this is going to far. ,he negotiating position someone like david davis is doing a good job but it is difficult the cause when you enter the club with its rules, you exit the club with its rules. a lot of the 27 member states want to make sure the u.k. is not better off outside than inside. i think the luxembourg prime minister put it well. right now, the u.k. is in the e.u. with a whole bunch of hawk outs and later it wants to be and later itt outs wants to be outside with a lot of opt ins. alexander stubbs and martin lueck are staying with us on bloomberg "surveillance." first, the first word news. special counsel robert

mueller investigated jeff sessions last year for misleading lawmakers about his contacts with russians. according to people familiar, the probe was authorized by the ,ormer fbi deputy andrew mccabe who was fired last week for misleading justice department officials. rested up prosecutors the pressure on nicolas sarkozy, placing him on and fishel -- on official negotiation. the probe is linked to allegations that muammar qaddafi funded his 2007 campaign. pedro public is in ski has resigned after two years. he had promised -- but he faced a growing number of government scandals. he has denied any wrongdoing. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg.

guy: thank you very much. facebook's ceo mark zuckerberg has broken his silence on the latest scandal, causing the companies shares -- company's shares to plunge. enough.say it is not then there is the russia factor and its meddling in international politics. following the poisoning of a former british spy on u.s. soil, they are calling for allies to expel russian spies. with us our martin lueck and alexander stubbs. will anyone listen to the u.k.? does it matter that the brexit story is unfolding as this story related to russia happens? the u.k. is wanting the security

story to remain as strong as it always has done. we are a nato member. the e.u. is a political and trade construct and the nato is a security construct. >> should they listen? yes. guy: will they? >> yes, and they already have. you look at the statements coming from virtually every member state and e.u. organizations, and this is an example of why we need each other. this kind of action cannot be prevented if you do it alone and that is why you need to do it together. theresa may has been right to push it politically with other member states and to make clear the u.k. should have a special relationship with the european union. guy: how should europe treat the facebook story? hereve plenty of elections and will have plenty going forward, in which facebook will be a major part. alexander: this is a wake-up call -- martin: this is a

wake-up call. i have been saying this for a long time. we need a new code of conduct, ethics on how this will work, the way on which big data is treated and encroaching today is mind-boggling. the individual was to be protected from the state. who is being protected from data mining? no matter what the story is, this will be the game changer, and i hope people look seriously at international legislation on how we deal with data. michael: that is what i want to ask martin. do we see tech companies around the world start to get regulated more heavily, and then the value of their equities falls? this is definitely not exactly good news for the tech sector as a whole, because alex was saying, this will change the

way this -- we think about using our data in the world, especially social media, and what facebook has done, or was done through the availability of data from facebook was not so much different from what facebook has been always doing, i.e. using the wealth of its data in order to do advertising for many companies around the world. basically is the business model of facebook and other companies. this time around, it was misused for political reasons, which puts it into a different perspective. this raises the question as to whether we want to continue this way, do we want to freely offer many details of our private lives on social media? the question goes to the regulator -- the regulators want to rein that in? the answer to my second question would be yes, probably yes. as we have heard already, or is

something can about how to put more taxation on companies that are using tax havens. there is much more willingness in the political sphere to rein in tech companies a lot more. we may have seen the peak of the freedom which tech companies can use, and therefore also the freedom of the amount of revenues they can generate through their business models. my cautious answer to your question would be yes, this could be a major impediment for tech companies going forward. michael: this could not happen at a worse time, because the european union yesterday introducing a measure to tax them on their cross-border product x -- cross-border products. do we see tech companies in the crosshairs of revenue services of various countries? martin: to be honest, i would put this about tech companies and the original of the business

and location of the headquarters , i would put that more in the political context as one potential answer the europeans could give to possible trade tariffs on industrial products like steel and aluminum. it is not a done deal yet. it is one line of thinking in the european union. where could we hurt american companies? it is not an idea that is really thoroughly thought through until the end. i think we are not there yet, however -- and by the way, this is one point where not all of the e.u. countries agree. ireland has an interest in keeping tax incentives for tech companies. this is definitely not good news at all for tech companies more generally speaking, and if and when other things come on top like the current issues of facebook, this is definitely

negative news for the sector as a whole. stubb andlexander martin lueck are staying with us. on your commute, tune into bob moon and karen moscow on bloomberg radio. can be heard in washington, d.c., the bay area, all across the u.s. on sirius xm radio. ♪

michael: good morning, i am michael mckee in washington, d.c. guy johnson is with me from london. donald trump is set to announce about $50 billion of tariffs against china over intellectual theft -- property theft

violations. in response, the ministry of commerce has cautioned against taking measures detrimental to both sides. emma o'brien joins us from beijing. everyestion everybody, question -- every ceo wants to know, what will china do in response? is the $50 billion question, isn't it? , including today's news of this potential trade tariff package, we have had only words from the chinese, very little by way of action out of beijing. the commerce ministry saying that china will take all necessary measures to defend its interest and really emphasizing that any action by the u.s. will not only hurt china, but u.s. interests too, which is a pertinent point given how

intertwined economies are and how active companies are, and contingent on the economies of each other. you really want to know what people are saying might happen tomorrow once this comes down. obviously, asian will have very -- beijing will have various plans in place. the areas people say they might target, agriculture, exports from the u.s. of alfalfa, pork, sorghum, maybe even soybeans. the soybean trade could have blow back for china as well. they could act on the tech companies active here, apple, intel. the could be repercussions for multinationals and u.s. companies active here, in terms of getting government procurement orders. there is a big list of what they could do but what they will do is up for debate.

guy: that is the point i want to come in on. $50 billion sounds like a lot of money but i have heard numbers as high as $100 billion, and i have heard that anything below $60 billion, even the scale of the trade that exists the chinese are unlikely to suck it up and move on. bute may be some effect, very small and the response would be very small. emma: i think you are right. $60 billion was the number bandied about about a week ago, so this $50 billion number could be a sort of compromise, a signal to the chinese that, we need to do this for our constituency back home, but we are not going to go as far as we could. reaction --eet the mute the reaction from beijing. i think there will be some

repercussions, because they do not want to lose face on the global stage and they do not want to look like trump can bully them around and tell them what to do. guy: emma o'brien joining us on the issue of where china goes next. martin lueck of blackrock and alexander stubb will stay with us. tv is one way you can access more functionality around what we are doing. you get the video stream, the charts, and also the i.b. function as well. that is all available on tv . ♪

guy: i am guy johnson in london, michael mckee in london. let's get back to our guests, martin lueck and alexander stubb. we have been talking about trade war. if we get into an escalation here, is it europe, is it germany that has the most to lose? martin: amongst the larger trade nations in the world, i would say yes, but there are a couple of other smaller nations that have a large share of gdp

generated through exports that are running significant trade surpluses. if you were to have an outright european relations toward america and china at the same time, we could see a very serious damage in continental europe in the first place, where we definitely have some countries very exposed the globe -- to global trade. you mentioned germany. the chemicals industry, the sheena ray, -- machinery, and electrical goods, where you have between two thirds and three quarters of those respective industries exposed to exports. you would definitely have europe as one of the main victims, if you like, and germany in first place. guy: my colleague was talking to the boss of bmw yesterday who was telling matt about a

,onversation at the white house trying to explain bmw is the biggest exporter of cars from the united states, not to the united states, which is something that is being done. martin: they have a plant in spartanburg, south carolina. guy: they may be expanding upon that. does europe have to decide which sphere of influence it is going to become more entwined with? does it have to pick washington or beijing? does it have to be that binary? >> i do not think so. we are seeing a power vacuum being formed. the united states with donald trump cannot lead the world because he is very unpredictable and basically rejects globalization. if europe takes the role of the global leader, europe can decide a little bit, play the game in both directions.

we are the biggest trading bloc in the world and i think we can do a little picking and choosing on the valley -- picking and choosing. on the value side we are with america but perhaps on the business side we will mark -- work more with china. guy: i wonder whether the u.k. do they look to establish closer ties with the chinese while china maintains good relations with the u.s. as well? >> to be quite honest, and i say this with all the respect, the u.k. is still quite a small part in terms of the global economy. if it was part of the european union, it would be huge. if we look in terms of blocs, the e.u., china, and the u.s., you cannot compare. a lot of it is going to depend on at what stage the u.k. can

start doing work outside of the premise of trade inside the e.u. right now. michael: let me ask you, because the bank of england meets today, what do you expect from central banks going forward? any reaction to the trade wars seem? -- theme? martin: not yet. thisnk the outcome of all is way too banged open for central banks to react. we heard from the fed last night that they had not incorporated escalation on trade into their forecast adjustment, and i think the bank of england and the ecb and others would be well advised to do the same for the time being, because there is still a good chance of all of this remaining rather subdued and having a moderate outcome relatively. with regard to central banks, i think they will continue to normalize the monetary policy,

still recovering from the financial crisis. the u.s. central banks obviously is the most advanced and the bank of england, and later the ecb will be on that path. this is the major trajectory i would expect for the time being, undisturbed by the trade issue. guy: martin lueck -- michael: martin lueck, thank you for joining us. also, alexander stubb, thank you for joining us. markets are red around the world. stocks are lower going into this thursday morning. stay with us on "surveillance." this is bloomberg. ♪

michael: this morning, it is war -- trade war. president trump

will announce millions in trade sanctions against china. the fed's new chairman raises rates, but is he a dove in hawk's clothing? the bank of england decides is the governor a dove in dove's clothing? mark zuckerberg wants to be friends again. this is bloomberg "surveillance." i am michael mckee in washington, d.c., guy johnson with us in london. guy: an interesting day, plenty to think about. trying to digest the reaction to jerome powell. turning to the reaction function of mark zuckerberg as well could be an interesting thing for the market to think about. michael: he is being very un-friended by a lot of people these days, but we are good friends with taylor riggs. taylor: the european union thinks it has dialed down the

risk of a transatlantic trade war. they say european trade commissioner cecilia maelstrom was hopeful after talks in washington. the e.u. had threatened to impose tariffs on u.s. products. president trump is set to carry againstwith threats china on intellectual property. he will announced $50 billion in tariffs against chinese products. a number of u.s. companies warned the tariffs could hurt the economy, and china is ready to retaliate. congress is playing beat the clock with a budget bill. angressional leaders released 1.3 trillion dollars spending plan for the rest of the fiscal year that increases the defense budget and provides money for fencing on the border with mexico and the opioid crisis. government spending runs out tonight.

in china, the central bank has heightened policy in step with the finance -- federal reserve, increasing the cost of short-term loans by five basis points. the move is a normal reaction to the fed rate hike. theresa may is warning allies to be aware of russia and expel the kremlin spies. is sharing secret intelligence about the nerve agent attack on a former spy with key allies. she expelled 23 russian diplomats who she calls undeclared spies and she wants allies to do the same. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. an awful lot for investors to take on board, and right now the markets are taking on water. futures down significantly, european stocks lower, asian stocks for the most part lower.

bond yields are lower around the world as well. take a look at the second board, german ten-year note yields is down by more than 6%, disappointing manager numbers. -- and young on the see soybeans and the canadian dollar reacting to trade news today. michael: i am going to take you -- guy: i'm going to take you to some individual names, redick rising sharply. is it walking away from participating in pfizer's consumer division auction, leaving jfk as the prime acquirer? the market loving that story. -- is a company that prince money and passports. this company, british company is not going to print the new blue

british passports. ironically, it will be a french company. todles bank, i want highlight that because it is one of the reasons europe is trading down as much as it is, and the bottom one, naspers, this company holds a significant stake in tencent. confirming it will sell 190 million shares of tencent disappointed it market -- the market yesterday. this business owns around one third of tencent. with facebook, this on the back of the live interview with mark zuckerberg yesterday, the stock .s trading down by 1.7% interesting times for mr. zuckerberg. michael: yes, it is indeed. let's get back to our top stories, jerome powell's dovish debut. rates as expected and maintained a projection for

two more hikes this year, but investor attention shifting to another story in washington, hitident trump's plan to beijing with $50 million in tariffs. we are joined by kevin cirilli and and the current. -- enda curran. the question is not what trump's will do, it is what china will do in response. what are you hearing from the chinese? enda: that is the big question. they have been subdued and their response to mr. trump as he ratcheted up the trade tensions. in truth, we do not quite know how they are going to respond. we know a probe going to one of the agricultural imports from the u.s., sorghum, they have made noise, but a critical question is will they try to

defuse these by giving the u.s. some concessions, or will they immediately go for a full-scale retaliatory reaction which deepens the trade tensions? we will not quite know until the full details of the tariffs are announced today. michael: that raises the question of what the trump end game is. we know he will put the tariffs on and does not like the trade thecit, but what is it chinese could do to solve the problem? kevin: the anticipation is that try to have will targeted retaliation in red states, and that could pose significant political risk for the republican party as well as the president's reelection efforts as this goes on. we sell that type of coordinated response from the e.u. which got an exemption to the last round of aluminum tariff increase, but the president double down.

has come outdustry significantly against the action the president will take today. companiesike, big across the board urging the white house to reconsider. they really feel this is something they campaigned on and they have to actually do. guy: my understanding is that this number has gotten smaller and smaller. it was 100 and went to 60 and is now 50. what does that depreciation in valeant of the tariffs -- in value of the tariffs imposed tell us about the nature of the response washington is helpful for? enda: it is still a material number we are talking about. different figures have been levied, but let's see what comes out today, but if we are talking $40 billion to $50 billion, that is roughly 10% of the trade deficit. that will have an impact on chinese exporters, no doubt about it. the concerns are that china

might start targeting u.s. imports in return, and they are targeting orders of u.s. goods, for example boeing airplanes, and might charge does target chinese investment into the u.s. even if numbers are varying, it would have material impact. end, it is going to have a material impact and there is likely to be some kind of a response, can you walk me through whether or not the --minum and steel story was can i join these two stories together? was the first one designed to create positive influence around the world? talking about europe possibly getting a pass on europe -- aluminum and steel, at which point your may be plays ball when it comes to the ip story. are these join a ball? kevin: they are.

the point about the retaliation effort that you could see, that has a lot of businesses in the united states uneasy as a result of that. the treasury department, as well as president trump, the administration, has really put forth this sense of trying to call their bluff. i think europe really was getting that exemption and yesterday on capitol hill, testifying before the house ways and means committee that those types of exemptions are signaling that potential there might be a lot of tough talk but there is a lot of negotiation. michael: i cannot let you go without asking about one more. there is always one more story in washington, facing another budget deadline. the government shuts down tomorrow night in the u.s. is something does not happen. they put together this omnibus

spending bill that no one has a chance to read, the president does not like. will this pass? kevin: republican leadership is really pushing for a short-term stopgap measure, the sticking points being funding for the wall and project gateway, this $900 million tunnel from new jersey to new york. republicans in new jersey particularly pushing for that, and they feel that the president is not getting behind it because chuck schumer has held off appointees. this tug-of-war, kick the can drama in washington, we survived the snowstorm so maybe we will survive another potential government shutdown. michael: kevin cirilli, the busiest man in washington, and enda curran, thank you for joining us. a lot to keep on top of. coming up, we will speak with egos president clemens fuest. this is bloomberg.

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taylor: this is bloomberg "surveillance." let's get the bloomberg business flash. mark zuckerberg has finally broken his silence and outlined steps the social network is taking after cambridge analytica data access to data. andics are underwhelmed lawmakers are still demanding zuckerberg testify before congress. spentors in tesla have $2.6 billion to inshore elon musk will stay around for the next decade. shareholders approved what may

be the largest compensation deal ever. it is pegged on ambition to turn tesla into one of the world's largest companies. elon musk could make more than $50 billion. like barry added another major brand to its portfolio. jaguar agreed to license blackberry's technology. blackberry has deals with ford and qualcomm. that is your bloomberg business flash. michael: thank you very much. turning to our top story, working intentions shifting from a rate hike to the threat of a global trade war. the european union it will be exempted from tariffs on steel and aluminum. re:ing us now, abraham rub rahbari and lara

rhame. we thank you for coming in this morning with all of this going .n i want to start with central banks and the fed. the central bank making a decision today, the fed yesterday. the one person who did not want to talk about trade wars was jay powell. is there anything that will affect the economy enough that the central bank or ecb or bank of england will have to worry? lara: i do not think we see an economic impact in the short-term from these really explosive trade headlines and negative trade headlines. i think what becomes really important is the feedback loop. traditionally in the last several years, we have seen the fed be hypersensitive to market volatility. in 2015 they wanted to raise rates, but they backed off. now, they seem like they are more set on their course.

they have their forward projections. they are more confident in their ability to raise rates. by 2020, they are talking about overshooting the neutral rate, so they seem fixated on being more proactive. i think they are going to be more tolerant of market volatility, and i think that is why we all need to be really paying attention to where we are in the business cycle, this late stage of the business cycle is historically fraught with higher volatility. michael: we are looking at futures that are lower across the board in the u.s., european stocks lower, bonds up with yields down. is the trade war possibility something that investors should be concerned about? $50 billion some like a lot of money, but in the context of a $17 trillion u.s. economy is it not that big a deal? ebrahim: i agree with lara.

the prospect of a $50 billion penalty, if you like, and a potential standoff between the u.s. and china, that might be an outcome that markets might find relatively easy to deal with. i think we are dealing with nervousness around this topic, and that is for a variety of reasons. the markets have to think about these. think u.s. actions will be just the first step. the key question will be, how does china react to what we may be learning today, and what kind of a reaction will that have on the u.s. and other economies? inevitably, we will run into a day or a couple of days of volatility around these announcements, but my suspicion is if we get the confirmation of what we heard over the last day or so, that is something that will not keep us occupied too much. guy: i want to mention the fact

that steve wynn, is breaking related to wynn resorts, steve wynn cutting his stake in wynn resorts to 7.8%. we are getting a further break in that relationship coming through, and we will have market reaction later on. the market is a discounting mechanism. it is hard to understand how you discount a trade war, how you price it in. do the havens have a greater premium and this process? mi buying a few more yen in the margin? when do i discount this into my portfolio? ebrahim: at this stage, the haven movements are not as obvious as we may have seen in other times, partly because one, the most obvious haven, the u.s., is intimately involved in these situations, and similarly japan, is also potentially

affected from the chinese angle and through other more wide and extension of trade is desperate extensive trade issues. -- invested -- extensive trade issues. the focus is on what specific companies and countries could be affected so it is more of a micro story than macro. guy: why am i not seeing a big move in bowing this morning? can the markets not get its arms around what is going on? bowing looks like a prime -- boeing looks like a prime candidate. why don't i see that kind of reaction at a stock level? ebrahim: i do not have a full answer, but some of the candidates would be one, this is is -- is to some degree and expected development. could be a beneficiary in

this trading of european versus u.s. purchases and could also be a fairly easy victim. since the chinese wanted to threaten the u.s. with some fairly easy forms of retaliation, boeing would stand to lose. ebrahim rahbari and lara rhame are staying with us. we will come back in just a minute. we will check quickly on the market, and it is not a happy picture. futures are lower by about 6/10 for nasdaq and s&p futures. this is bloomberg. ♪

guy: guy johnson in london, michael mckee in washington. good morning, everybody. let's talk about what is going on in germany, related to what is happening in the wider world and the trade story. german business confidence continuing to drop, suggesting companies are certain dampening optimism. the problem with upswings is you start to create bottlenecks, and that may be a factor behind the data we see rolling over. if oh -- ifo clemens fuest is with us.

armany is heavily geared as trade nation and the multilateral trade world we live in and would suffer if we saw a trade war. are you seeing that reflected in your data? clemens: yes, we are. companies tell us that the current situation is still fine, but they are worried about the next six months. it is mostly companies in manufacturing that are worried, and the story is clear, they are worried about tariffs and the trade war that may happen and that would have a heavy impact on the export oriented companies in germany. guy: would a slowdown in some ways -- and obviously this is not 100% true -- there are bottlenecks emerging in supply chains, companies are hitting speed limits in terms of the levels at which they can operate. what impact is that having? we do not see strong

bottlenecks yet. in some areas, companies find it hard to higher, that is true -- hire, that is true. capacity constraints and prices are rising, but prices are not rising so quickly that we would say bottlenecks are dominating everything. of the euro, we have seen a strengthening of the euro. is the strongest's currency having an effect? -- strongest single currency having an effect? clemens: it is a symptom of the improving economic situation in the eurozone. it is not like other trade partners devaluing their ofrencies, it is strength the eurozone and it is not a problem for german exporters. when we think about parity to the dollar, that would be at

something like $1.30, so still below parity. so far, the strengthening euro is not a problem for the german economy. michael: how does the german government play into sentiment? he finally have a government in place. is that one of the reasons we are not seeing a big drop on concerns of trade wars? clemens: i do not think the formation of a government has a big influence here. uncertaintyre was about whether there would be a government, but what the government now does is not revolutionary. there is an increase in spending in some areas, but there is also a growing tax burn so the growing balance does not change, not like the german fiscal policy is becoming more expansionary. the impact on the current economic situation is very limited, i would say.

it is more about the trade war. michael: i will ask you to speculate or extrapolate your results. are we looking at an index and sentiment that has peaked, and we will now see it slowly decline? have we gotten to the best we are going to get out there? clemens: that is very difficult to say. in thesome sectors german economy, particularly the domestic sector, are strong. strong, and we see a worldwide recovery. we see a worldwide improving business conditions, so that outlook is positive, and we might return to higher levels. is the tradeoming war, so if it comes to a major trade conflict, that may change things, but i think we are not there yet, especially the

european government. trying to talk to the u.s. government and avoid a major conflict. the chinese situation is also tricky. china is a very important market for the european exporters well, so there is a risk. i would not say the situation has peaked necessarily. there is a risk, but things may still go well and turn to the better. michael: can you put it in economic terms for us? how closely is the index tied with what we will see from spending in the future from german businesses? clemens: we see that german businesses are spending more, investment is increasing. this is precisely because companies are not hitting capacity constraints and are making plans to hire more and spend more on investment.

this shows there is some basic optimism still there, and this is going to push the economy further. guy: just a final quick question. we have a situation that is beginning to involve dust evolved between the european union and russia, being led by the united kingdom following the poisoning attack in wiltshire. how exposed -- or are you worried, are you getting a sense of german business, as the trade war started to ramp up again, this would be something that is under pressure? what is the feeling of german businesses about trading with russia? german companies would there isee more trade some fragility overall. the hope is that the conflict with the u.k. is something that might be over now.

russian relations will remain expectations are not very optimistic, the overall volume of trade with russia is not so important but in terms of is aical stability, russia looming risk, no doubt about that. guy: thank you very much indeed. he is joining us from munich. still whether this is the citigroup head of macro economics and the fx investment chief. a quick question about germany and its position globally. in 2008, germany was heavily exposed to any kind of downturn we can see in political trade. if you were looking around the arld at potential victims of global trade war, how high would

germany be in that story? and a large manufacturing economy that includes the u.s., germany, china, all of these is not as-- the u.s. economic but financial. dependencies on these large multinational companies doing well. our financial markets depend on it and our economies depend on it. when i look out at germany, i positive,t this robust growth we had last year and that has and reflected in global financial markets. two months ago, we would have thought these markets were unstoppable and these economies were raging forward, everything looked rosy. it's remarkable that has changed so fast and i think it speaks to of policy risk and the power of these destructive headlines. michael: we talk about the globalization of business but

most is mrs. in the united states do all their business in the united states so it's a ready closed economy. are we talking about actual economic effects on business going forward or is this a matter of an attack on confidence that will cause people to pull back? 500, you look at the s&p fully 40% of the revenue of those companies comes from abroad. i think the upside surprise we had last year in growth in the eurozone and japan really helped to improve our profile of the large-cap companies. as for as the economy goes, you are correct, we are more insulated. consumerok at the u.s. which is driving our economy, sentiment still looks strong. on when we are focused

looking for business investment furtherbolster growth and we see the green shoots of business investment now, everybody has raised their forecast based on hope that businesses will invest more. when you have suddenly the global growth environment looking more uncertain and global trade looking more uncertain, i think it really throws those concerns into high relief. you are head of global macro economics for citigroup. the globalin is outlook? jay powell cited strong global growth as a reason the fed has steepened their curve. are we seeing some peaks or is this just a pause? >> i think it's a bit of both. q1 that we hadin a couple of minor breathers. froms have come down

where was last here in the u.s. positive, global growth is likely to be pretty robust across most regions over the next year or longer. are closee time, we were expectations have caught up with those prospects. we have gone through a long cycle of upward revisions in growth and earnings forecasts. i think we are pretty close to the end of that process and that may be the case in europe. calculusrs some of the that you were talking about earlier. when will the fed be cutting rates and will it be the same time as the ecb will exit its extraordinary stimulus from the last two years? for the time being, we know the fed on this side of the atlantic is pretty steadily moving ahead with normalizing

policy and i think it will continue until quote unquote, something breaks. the ecb is bent on being extra cautious and being reactive irma trying to exit and that's because of a different perception of risk. that means the ecb will be very backloaded. my guess is that we have significant risk of a downturn globally and the u.s. in the next two years. time when thehe ecb gets serious about raising its policy rates. the first hike may come in mid-2019 or later. michael: let me follow on that. a great question. when do we think the u.s. will peak in growth? when do we think the fed will see peak interest rates? do they go too far and start is on a downturn? >> cut rates to where?

when we think about what the fed should theres, ever be a downturn one day, they will cut rates heavily. we are not anywhere near the range were i think that would be considered effective. the fed will keep going and they are switching from do no harm mode. they are switching from party planner to party police. they are trying to think more proactively about inflation and growth being so far above, underlying potential growth. i think we have steady rate hikes through this year and next year but the outlook for 2020 is so cloudy. part of that is because we are at this very mature stage of the rate hike cycle. michael: i think we should let our publicists know this is the

first program to talk about the fed's next rate cut. i don't think anybody has talked about that. we will be back with our guests but first, let's get to bloomberg first word news. taylor: in the last few minutes, president trump is tweeting -- crazy joe biden is trying to act like a tough guy. threatens me for the second time with physical assault. moving on to trade news, special counsel robert mueller investigated jeff sessions last year for misleading lawmakers about his contacts with russia. the programs authorized by former fbi director andrew mccabe. sessions fired mccabe last week. in france, prosecutors have

ratcheted up the pressure on former president nicolas sarkozy. they placed him under formal investigation for illegal campaign finance. it's like to allegations that the late libyan leader helped fund his 2007 campaign. haseru, the president resigned after less than two years rather than face impeachment. ending graft and government but faced corruption scandals. he has denied any wrongdoing. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 140 -- 120 countries. this is bloomberg. michael: thank you very much. joe biden said he would have beat up donald trump for his comments about women, sparking the presidents tweet this morning. hasworld's biggest brewer set up goals for sustainability. jason kelly sat down with the ceo of a be in bed and asked

about growth in mexico. ab in bed. >> not only the domestic market is doing well but the export side of the business is doing very well. >> people love mexican beer. >> i think mexico has a lot of things that appeal to people and mexican beers are connected to locations. there is a lot of good escapism. there are a lot of things that mexican beers connect to and consumers think are legit for those beers to carry the kind of position in their minds. >> you talked about the strength of adviser is brand globally but it's been tougher closer to

home. what do you need to do in the united states to boost those brands. this year will be important for budweiser. and the world cup in soccer that's the year were budweiser normally grows from where it is to a new plateau. it stays there afterwards. it's a very strong brand. values,es a lot of the big in the u.s., option to have music, alife, sports, lot of american iconic sports and music so that's something that travels really well across the world. does it still travel well

within the united states? what do you need to do to ensure its place in the american domestic --? >> in the summer, we put on an american label and that's something only budweiser can do. it's been around since 1876. it's been a business in the u.s. for more than 160 years and it's actually started in 1852. we have 22 breweries and have a commitment to invest further in systems, adding capacity and investing in innovation and new packaging. it's a very active market for us. is there more to come in terms of the way you position budweiser? april, 2018, next month, we will have budweiser

brewed with renewable electricity. on the package, we will have a , it will be ated battery with 100% on it which means all the what was are sold here will be brewed with 100% sourced energy from renewable sources. because it our commitment is to have that on a global basis, for all our beers, we will have 100% renewable sources. budweiser will carry the flag for the world. it's our global brand. different brands carry different flags. it's about getting access to water in communities were water where some people spend the whole day getting water to their families. beer you buy, you

allow people for five years of water. we have already helped one million households. ab-in bev.e ceo of we will be back with our guests. on your commute, tune into bloomberg radio. the snow in central park, how gorgeous this morning? this is bloomberg. ♪

guy: welcome back. whether bound in watching, d.c. mark zuckerberg has broken his silence on the scandal. they are being investigated whether cambridge analytica stills hold information obtained from a third party. critics say this is not enough. the russia equation and the meddling in international politics is following the poisoning of a former spy on british soil. prime minister theresa may is calling on allies to expel russia spies but is paying attention and is europe paying attention? let's deal with the tech angle. >> i would give mark

zuckerberg's appearance a three. if he had done this two or three days ago it would have been better. too late and there has been a lot of silence and not much public presence from the company what they are doing and what they make of all the problems. guy: he seemed to try to play the victim. i'm slightly stunned by this as a strategy. postsot of their blog was were put up yesterday pointing the finger at a lot of other people. it was not addressing part of the real key problem which is how all of this happened in the first place. he included a timeline of events but he is not addressing the fundamental problems within the company, at least that's the view of some of the analysts. what happens next? what do they have to do?

he hedged the question of whether he will appear on capitol hill. some have said one of these people has to go and appear in front of washington politicians. do thatnd a lawyer to job would be a pr nightmare. they need to be seen to be doing this. of course he is the right person to do so. collins has formerly -- has formally written to zuckerberg to give evidence on the issue. we have had calls for him to on the continent as well so everyone is expecting it to be mark zuckerberg to appear before these committees to speak. anything less than that i think will be seen as a bad step.

michael: thanks to our european tech editor. are our twos guests. tech and put it in the context of the fellow -- of the federal reserve yesterday. jay powell thought that the fiscal package that congress lead ton january would additional business spending that would raise productivity and therefore raise potential the growth rate of the united states. what do you think? is it likely or possible? where do we go from here? >> and spending is helpful especially when we are this late in the business cycle and labor constraints are starting to appear throughout our economy. isiness investment to me sort of the one way out. needs what we are going to

to see to propel our productivity forward. what you spend on matters. broad-based infrastructure spending is badly needed. we see that in a wide variety of urban communities. we see it in our lower broadband penetration versus other developed countries. i could make a long list of things i think we need to spend money on. when it comes to policy makers, i leave it up to the individual investor to decide if they think policymakers will make the smartest decision. forecasting,is this is the trouble, the gdp is clear. to those dollars will hit the economy. how it amplifies throughout the next several years is really dependent on whether or not productivity gets enhanced by the spending. just need to see the right

implementation of the right strategy. it would improve my productivity if they invested in more airport plowing. when you talk to company analyst for citigroup and they look company by company, are they giving you any indication that companies are anxious to spend money because of the tax bill or does the cost of capital not matter much to them? >> clearly, we are seeing companies saying they are going to use some of these tax reductions for additional investment. i think they have to say that to some degree. tax cuts are pushing against an open door. i think that will help generate investment but i'm fairly skeptical in general that we will see a major impact on investment and productivity a bond -- above and beyond what we

would have seen over the next year or two. and it comes at a large cost. u.s. situationhe today, at the very least, it's unusual at this level of unemployment and a creates some questions about the future of and when things get tricky. i want to bring in my single best chart. this relates to boeing. it down a little bit right now. of volumeot a lot going through this but there is some. i can see the missed price on the s&p or the dow. you may see some kind of reaction in boeing today on the downside. this would relate to the tariff

story that we are watching carefully and possibly the reaction from the chinese. this, the trade story is going to dominate today. as we workrom now our way through the u.s. political process, will we spend a lot of time thinking about how this was a red herring or will we be in the depths of a trade war? how will this escalate from here? >> i don't see it escalating significantly over the next several months for several reasons. as we get into the midterm elections, there may just be pressure to focus on the positives, the tax reform, the things that the government perceives it has done right over the last year. pipeline ofat the ande cases coming through

the department of commerce, there is not a significant pipeline be on these issues. of course, the speed and depth of retaliation is going to determine a lot of this. talkedly, countries tough and then implement more softly. i'm expecting that will continue. it's for the benefit of whenbody, particularly global economies are still doing well and looking to keep forward momentum going. back in switzerland year,s, earlier this steven mnuchin talked about the possibility of a weak dollar. if you look at how the u.s. can position itself going forward in his trade story, isn't the weak dothe center of it all? >> i think the dollar angle is complicated and there are couple of aspects. over all, but questions on the

currency have been confusing to this administration. the stronger dollar policy of previous administrations were about low barwin costs for the treasury and they would like to maintain that. in the current environment, is the risk of trade wars rather than currency wars that are the bigger risk. could come time, we back into a situation on the trade and currency side in the next downturn were things escalate more sharply than over the next 12 months. i don't see the risk of mass evacuation. thank you for joining us, this is bloomberg. ♪

>> this was a major breach of trust and i'm really sorry this happened.

spates -- zuckerberg speaks but wall street doesn't think it's enough. the white house plans to unveil tariffs on china worth 50 billion dollars making markets jittery with uncertainty. david: welcome to bloomberg daybreak. we made it despite the blizzard. alix: he is totally taking a victory lap. it's very pretty, like a christmas card. alix: you are right, i was wrong, the last time i'm going to say that. tone to theoff market right now. dollar-yen is weaker as you see safe havenmove into buying. a similar story across the