francine: the wizard to the bloomberg first word news. takesesident trump aggressive actions against russian literature today, announcing the expulsion of dozens of diplomats in response to a former russian spy living in the u.k., the move all but backlash fromate put in. the u.s. treasury secretary says he is optimistic. foxnewsuchin told

besides are engaged and productive conversation. less with the president announced measures against china announced $50 billion for punishment against intellectual theft. >> we are having negotiations with the chinese to see if we could reach an agreement. as the president has that, we want to cut the trade deficit with hundred billion dollars over the next year and eliminate force joint measures and we are having productive conversations with them. i am cautiously hopeful we will reach an agreement, but if not, we are proceeding with these tariffs. ed: in barcelona called protesters have flesh with police over the arrest of the leader. exile inen living in brussels, but was arrested in germany and could be sent back to think of his trial. he is been traveling around europe, pressing the case for catalonia defendants. we'll climbs to a two-month high

as saudi arabia intercepted ballistic missiles by force in yemen. the missiles were intercepted above riiad and in other cities. rising geopolitical risks could lead to two supply disruptioni supplyld lead to disruptions in the middle east. vladimir pushed off set around 27 people are missing and the fire started on the top floor of the winter cherry mall, but the cause was not immediately known for its criminal investigation has begun. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. ludlow. this is bloomberg. francine: let's start with trade and the markets as u.s. futures point higher after steve mnuchin said he is optimistic of a deal with china that would avoid the tariffs byof

president trump. our reporter tom mackenzie spoke to some of the world's top business voices about the impact of tariffs at the chinese development forum. >> at this time we do not see financial markets being overly impacted by this protectionist wave. think if this keeps growing, it could be very disturbing. issue, and have an gdp, whichn global we are watching very closely. >> i do not think trade sanctions need to have a large impact on the global economy, but a psychological impact of the degree of friction right now could be serious for markets. >> the problem is, there is the

large distraction of beliefs and when both sides believe the situation is different with huge mistakes like trade wars. >> china has responded very modestly, given the potential itsons it has as disposal, given counterweight of tariffs. there's plenty more to come if the u.s. chooses to stay with this, um, reckless policy. francine: what does this all mean for markets and what does it mean for investment? joining us from our london studio, the global chief investment officer at state street investment advisers and the specialist of active investment in europe. rugby markets pricing in now?

-- what are the markets pricing in right now? >> i think they are still trying to hope that the trade war is avoided. i think markets are still optimistic. we are overweight in risk assets, but are worried about the left tail risk, but at the moment i do not think that is priced in with any degree of certainty. but, what exactly is the main worry, that some kind of trade wars cuts down gdp growth significantly? or, just that u.s. investments in china will be hurt? i th -- >> i think there is a top-down concern it will hurt gdp growth. thegot to worry about bottom-up story. they are not disconnected, but in the end, earnings growth will be affected to the extent that you begin to nick into the freedom that companies have had by introducing trade war rhetoric. and beyond that, the actual tariff barriers.

francine: can a trade war be avoided? >>, yes it can. the difficulty here is the complete uncertainty in which we are faced with. given that the people in the white house don't seem to know themselves where they are going. investors are left with the nervous feeling that there is not much of a leadership and there are random decisions that are taken on a daily basis, which can affect things -- important things, suggest trade and that is quite worrisome. do not forget. we are on what -- the ninth year of a bull market in the u.s.? so, you are starting to get to a point where there is not that much oxygen left. there's not much room to maneuver in terms of valuations. and we had lsaast year a

market that ignored the randomness that was created by the white house by focusing on the tax cuts, which was a great thing for corporate u.s. this year we are left with the bad side of things. francine: but give me a sense, is it a buying opportunity? you are primarily invested in europe. is it a buying opportunity of off even more. or if it is in europe, it is beginning of a downward trend? >> it is difficult to say whether the recent market jitters are a turning point. i still see our bearings quite strong in europe. i still see economic momentum. it is always very difficult to forecast when the turning point is. i think the market has shifted in terms of regime. we have gone from a low vol to a higher vol regime, which,

again, would not be surprising at this stage of the bull market. we prefer to be in domestic southern europe, which has a lot of factors going to it, which are unrelated to the global economy and global trade. rick, what does this mean for your investments? are you constructive on the selloff? or are you worried because of the lack in volatility that there would be this turning point for the market? >> most recently we have made small changes, but frankly, not the kind of big picture risk level we have taken money out of europe and into emerging markets. but we certainly have not hit the geo risking button and if you look at the market regime indicator, it is still under a normal regime, and that is a balance of things, like implied

volatility on currency, fixed income markets, as well as equity. that tells you that convictions are extraordinary, though the vix is up. maybe the catalyst is what companies like you having in their guidance at the end of the first quarter, and of the second quarter. the curios thing is, if you look 's, they think ceo on balance that protectionism is good for them, which is an odd thing. though you can understand it perspective,vidual though we know it is a bad idea at the economy perspective. francine: let me bring over to my charts, the six month treasury yield in white. we will put this out on social media for those listening to us on radio. , it is basically shows you is no longer the only asset with only u.s. investors. you can see the treasury bill yields more than the s&p 500 for

the first time since 2008? what does that mean for your weightings. rick: it doesn't mean anything goodur weightings, the news. preferred aoduce yield, that is a hell in thing for markets. i think there was a danger that the credit markets were becoming overheated, or have become and then you get back capital decisions made by companies because they finance so easily, but in terms of the u.s. you patient, the short and versus the premarket does not make a difference. francine: thank you both for joining us. both stay witgh us. we understand that china is said to be naming the pboc party

chief, meaning he will have, in insurance, ahank regulatory role. it is more difficult to say as to what that means for your investments in china. plenty coming up, including debt deluge. the u.s. treasury will issue a record number of nodes this week. could this be a blow to the bond goals? later today we will be speaking to christine lagarde. next, after 11:00 a.m., the said aramco chief executive, coming up later today. this is bloomberg. ♪

francine: economics, finance, politics. this is bloomberg surveillance and i am francine lacqua. we will be speaking with christine lagarde later this morning. here is ed ludlow. ed: uber has agreed to sell the southeast asian operations to grab. grab will acquire all of uber's operations in a region of 620 million people, including food delivery service uber eats. the u.s. ride hailer will take a 27.5% stake in a combined entity and the ceo will join the board of the singapore-based grab. gunmakers m into and was forced to chapter 11 bankruptcy productions. a deal had already been negotiated with lenders that would cut debt by $700 million and inject $145 million in new capital.

remington's fortunes took a hit after the election of donald trump, a self-proclaimed "true friend" of the gun industry. says the's ceo company has yet to be contacted by swiss authorities over a broad investigation over the copper and gold mines. during an exclusive interview, the sebastian jacques says $1 billion expansion remains on track. >> we have had no contact whatsoever. as much as you through the press. we should not forget that it was at a time when rio tinto had .ess than 10% stake i do not know much about the income. ed: that is your bloomberg business flash. francine: thank you. the world's biggest debt market

is about to be inundated with an unprecedented wave of issuance. the u.s. treasury will option about $294 billion worth of bills. and the largest ever state of supply. a potential moment for traders gauging the treasury market, trade bound. to be what does this mean? what is the appetite for these options mean for the market. lacaille.ack to rick i know you are focusing on europe, but is there a correlation between the appetite treasuries and investment in europe? >> bearding markets cannot i normally goes on in the u.s.. we have seen since the beginning of the year when, the u.s. catches a cold and you know, we have issues in europe. and so, i cannot imagine that

the european markets would be correlated to the u.s. the european markets have seen more of a global beat of play because when you look at most embassies in europe, there is a lot more of international earnings in their. then domestic earnings. -- earnings in there. than domestic earnings. francine: what is your take on this treasuries? are you buying into them. we think u.s. treasury's could be quite close to what you need in terms of real yields. keep in mind, the likely growth rates. real yields that are approaching 7500 basis once, maybe close to \ cyclical peak and we do see a lot of demand for long-duration assets. i think we do see this big strategic demand and we are quite comfortable having long-duration asset within the u.s. fixed income as a hedge. francine: let me bring you over to my classy yield curve.

this is the yield spread between the five-year and 30 year treasury yields. but it back to 2008. does it creep back up again? how far does it go? reporter: it reflects current economic conditions and the fact that we have had a fed tightening of the short and come i think it could travel a little bit further north. you know, that can several centuries ago to get a proper perspective on markets. and hopefully, this offer some sort of yield premium for the duration. it is a think, appropriate. but i think the strategic command we are seeing for a very long-duration asset does not seem to be going away anytime soon. i think that will really weigh on the long end of the yield curve and support the idea that these could still be a pretty good hedge. francine: why did you make of jay powell's testimony later?

our last week. are we on track. does he seem to have a handle on what is going on. he thinks there is a better chance of getting it now. get drawnt want to into much. the dot plot is changing. it isthink sometimes interpreted as hawkish. i do not think it was hawkish, just reflecting current convictions to china, which are pretty boy and. blackknow there is a cloud hanging over the world economy, but for now, i think the growth rate and the upward revision in those projections is realistic, not a hawkish sign. do you think he was more hawkish and what does this mean for mario draghi's policy.

the ecb is concerned that europe does not go up too much. joseph: you are right. i think the ecb is worried that kitchenls i put in the will fit. this has got to be a little bit of a break in terms of them getting more hawkish. look, europe is behind in terms of the economic cycle, is behind the u.s. so, we are still talking about exiting qe here, not about hiking. we are a couple of years behind the u.s.. francine: i have a trade weighted euro chart. we write of that to 1994, because that is how rick likes his charts. what is the optimal level for the year awaited trade weighted basis. is not going to harming.

i think we have got two forces at work, the carry trade, which could suggest you have a strengthening dollar, but i think that has been a little bit overwhelmed by the improving story in europe, in terms of the economy, which i think more people at the beginning of last year. we think there is a risk that the bureau could be a little bit stronger and the pressure on corporate earnings could become at least as great as it is now. companies have dealt with that now. but that is one reason why we favored emerging-market equities over europe. francine: thank you both for joining us. richard lacaille and joseph oughourlian. he iss bossa says becoming increasingly concerned about a trade war between china and the u.s. speaking to bloomberg at the chinese develop before him in the u.s., he says the effect on markets has been minimal so far, but he fears things could

escalate with potentially, greg theynsequences start to get concerned. for the time being, the numbers are modest. with respect to the impact. we have seen the declaration of these tensions on a bilateral basis. so, while at this point in time we do not see financial markets being overly impacted by this protectionist wave, i do think that it if it keeps going, this could be very disturbing. selloff on friday was severe. why would the price is not have been flat inside the trump administration. click said the end of the day, it is always good to understand our surroundings. it shows you the corrections that are coming and as a

consequence of those announcements. with the time being, i am still going to remain on your side, we have got not -- to pay attention that it does not escalate. and create retaliations. and particularly, if it goes beyond china and the u.s. and starts to touch more other countries in the world, that would be problematic. we are ahead then comes talking about positioning. >> for the time being, we do believe that doctors find a place to be. all be where diversification is still the name of the game. food scandal.r and looking for the scandal.

that was sergio ermotti and tom in china. do they get help to purchase and are policies, slowly turning to normalize? or are you concerned about the trade war. the banking sector, i think i have seen people reprice u.s. banks on the back of policy changes. and anticipated deregulation people obviously have made -- many people think europe could be next in terms of relief and the banking sector. issue for banks, particularly in europe is the economy doing better. we are looking at better performance in the italian economy, and france as well. that has improved things what significantly. i think we have got a ways to wait and i would agree there are a couple of years behind in europe before i get an

appreciable change in the yield .icture we have become a boost to europe and there is a similar story in japan. richard you so much, lacaille. much more on china next. we will be back with richard lacaille. up next, catalonia's reality check. monthsader who spent stay with russian forces. this is bloomberg, when we are live from berlin.

retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. francine: economics, finance and politics. this is bloomberg surveillance and i am francine lacqua in l ondon, where we will be speaking with christine lagarde on europe. here is ed ludlow.

ed: donald trump has promise to take aggressive actions against russia and later today is likely to announce the expulsion of dozens of did the math in response to the nerve gas it has had on a former russian spy living in the u.k. . do not give the details to putin's government. president trump tries to maintain a good relationship with the russian leader. steven mnuchin told fox news that big sides are engaged and productive conversation and last week president trump announced areffs against us that intellectualith property theft. >> as the president decides he wants to cut the trade deficit

over the next year $100 billion, we want to eliminate forced technology and are having very productive with i am cautiously hopeful we reach an agreement, but if not, we are proceeding with these tariffs. d: investors shrugged off concerns over geopolitical risks. that is after saudi arabia intercepted ballistic missiles supplied by forces in human. the saudi arabian state television center was shot down over riadd. in russia, 53 people have died during a shopping spree. vladimir said that 24 people are still missing. the cause was not immediately known. the criminal investigation has done. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i am ed ludlow and this is

bloomberg. thank you. protesters took to the streets of barcelona yesterday after catalonia's former president was arrested in german. his attention has been hailed by blow for hisisive blow fo appointments. let's take a look at what the latest risk could mean for investments in the region. joining me here is richard lacaille from state street global advisors. thank you for sticking around. but how big a deal is this? germany arrested him and decided to send him back to spain? >> germany has put themselves into the middle of this discussion with this arrest. that actually have had before and during that court, we decide whether we can continue to detain him.

,he process with the expulsion that can play out over days, if not weeks. we are still a long ways away from knowing whether germany will sign it back or not and we are likely to hear from the government today when they have the daily non-press briefing, that they will allow this to play out. this is a political issue as well and the government has put themselves right into the conversation. and there are political decisions that have got to be made whether to extradite him or not. so, we will be waiting to see how this plays out in the coming , first of all, whether they actually took it today. what happens after that. covering thisen closely, thomas blow-by-blow, which took a long time for germany's government. mental angela merkel's state right now? issue worried about populism? >> i think if you are the german

chancellor, you are most concerned about potential trade wars. germany is a huge exporter as everyone knows, and it was very considering -- after the government was formed, she's in her key allies in the to washington, and he was quite successful in playing a role in getting the trump administration to back away from the potential tariffs on steel and aluminum. for the eu. i think that is where you will see your priorities. the economy.nto as is trying to clean up and has been beefing up that industry as a result. is a big topic for the german government. chinese investment in germany. on the other hand they are concerned about the intellectual property rights. those are the areas where i think you will see a lot of focus. and then you have brexit and the eu and hopefully other things.

francine: joseph, you are quite bullish on southern europe. are you worried there will be more political risk? and the child sweater, that is a break. >> i am not as critical of the food you want -- of the peugemont risk. most of the leaders are behind bars. or in exile. , they just need to recompose the leadership there on the event. at some point, we also need to see a new leadership in madrid, dealey can finally cut a of some kind. and in terms of italy, i think what we should do over the weekend in him is just so bad.

the agreement between the five star and the app open for the lower and the upper house. it is very much. anythingthink it means thea coalition between couple parties. the five-star movement is still very much a left-wing southern -based movement. i am glad he actually talk to you about his feelings. there is one, large great majority in the southern part of italy. they do not have much in common. they do have one thing in common though, they are both clearly against is fairly. they would be more the official tax cuts.

it is horrible. and we are imposing revenue for everyone. an advanced -- francine: talk to me about spreads, right? iamb am looking at italian versus spanish yields. and this is the spread that we see. i brought it back to 2016, and you can see the yield widening >> the central bank talking about removing some of that stimulus. what does it mean for yield spreads. do you go out and purchase a bank, like you have done in greece, or do you buy some of the sting. it is not connected. >> when you look at yield spreads, they were quite impressed. there are movements between spain, italy, portugal area in thers will choose periphery, some bonds over others. depending on the political

climate. and economic news. at the other thing i came home -- as youted mentioned greece, one very obvious play has been greece over the last year and a half. where there is still quite a lot of field confession to go forward. on any of your take the field? do you like southern europe in any way, shape, or form. we do and the bank of stumps to some extent, but when we think about yield spreads, the short-term opportunity looks interesting if you have it -- if you have a very short term lengths and i think that is supported by the economic story. welle economy is doing enough, obviously love the political risk tends to go away for different reasons. but if we are going to have political risk, we need to be well diversified. in the we look at emerging markets, where there is a lot of

risk at the individual company level. but you are awarded for the local currency government bonds, whereas in europe, you're chasing the same spread. and maybe from a longer-term perspective, the risk reward trade-off is not particularly attractive. this is the chart you are talking about. just charted italy because of what is happening during the election. in white with the stocks of hundred think the blue. >> facebook is a big topic and they are meeting with facebook executives today. this afternoon, the justice ministry here in germany. and russia, of course, we're waiting to hear what the response is going to be. we have heard there will be something coming today,

potentially partnering with the u.s. and potentially not. clearly, that is an area where the chancellor will be focusing on and she knows the chancellor very well. francine: chad thomas, our bloomberg germany bureau chief. and it thank you to richard joseph oughourlian. former prime minister calls once again for a second referendum. later today, we will be speaking with christine lagarde, this after 11:00 a.m. u.k. time. this is bloomberg. ♪

francine: good morning, this is bloomberg surveillance and i am francine lacqua. the speech later today, the is expectedsperson to say parliament will decide what happens next if the final agreement is voted down by lawmakers. nwhile, tony blair has renewed his call for a second referendum, allowing the electric to make a final decision. kendrys in may find the support she needs to deliver -- can theresa may find the support she needs to deliver her final judgment? we are joined by richard lacaille and joseph oughourlian.

it seems labor is the force to prevent this no deal brexit. what are they doing? >> parliament is trying to promise a meaningful vote on the brexit deal, not a no deal. so far, they are saying that parliament will be able to vote what they bring back from brussels, or follow the risk of the u.k. falling into this no deal scenario. if parliament rejects the deal, then they decide what would be the path ahead. there are several options, one could be seeking the new deal. it is one that one could imagine a few tory remainders, those tory rebels supporting this. that is very much where they fight back is right now. it is in parliament.

it is in the middle there. and there are you know, probably a majority for some kind of soft brexit. francine: if you -- just in -- he istimelines, if saying is the prime minister is defeated, it must be up to parliament to say what happens next and not for the executive. how much power does this take away from theresa may just with negotiations? argue thatit would it would weaken her negotiating options. it would be in europe's europ interest. if it gave the u.k. a bad deal, it would be rejected. and you can imagine the u.k. extending its relationship. the labour party in the past has said they do not want a second referendum because it would encourage europe to offer the u.k. a bad deal and you could imagine it would play into that. there is a certain amount of

momentum at the moment around the remainer fight back. you have finally, an organization of these grassroots organizations and the speech from tony blair today. the point he makes is interesting. whatkes a valid point, ever you think of party politics. that the u.k. is going to leave the eu before it knows what its future relationship with the most important trading partner is going to be and he is trying to hammer home that point. the vote that parliament is going to get is not going to be meaningful because it will not include a vote on the future relationship. and that is because the eu's position from the very beginning is that we are going to get a deal, but it will only be a commentary on the future relationship. francine: rick, what does this mean for your investments in the

uk.k.? do you stay away from the pound or hedges some of your losses? rick: the pound is cheap on the metric.any other it has recovered very sharply. the question is what happens beyond the political reality? way.ould continue this it might have gone a little bit past its short-term best because although the transition deal -- of some sort, the amplitude of the drumbeat seems to be getting louder. about things like a referendum or of a conditional noted in parliament, which would create, if not chaos, a protracted period of uncertainty because parliament cannot negotiate. governments can negotiate. if you do have that vote against, is that really in sterling's price right now. i doubted. francine: ok, i am looking at a

pound volatility charts. you can see it was brought back in early february of 4017. rick what would it take to more volatility on pound overall. a lot of traders are saying, not even northern ireland, ours a could provide for further turbulen. is that right? there are things outside of brexit that could cause more sterling turbulence. i think the northern island resurgence of challenges could definitely spark a much greater degree of volatility in sterling because that is one of the more intractable challenges from a sort of economic perspective, of the political complexion the negotiation is more significant than thinking about the next potential government and the u.k. francine: and on the flip side,

if you look at all of it, does it impact actually, europe? does it impacted significantly on the other side? does germany have the most to lose, hence your bet on southern europe? rick: it does not really impact europe. brexit has become a cloud with u.k. assets, with the currency or stocks. domestically related stocks. for the rest of europe, if anything, the brexit strengthened the political leadership in continental europe. there is a strong religion should now between france and germany. and i think, as often happens you are surrounded by threats, when they are coming from the used with russia we have seen this recently. the threat of brexit and that spreading to other countries, the threat of donald trump and the trade war. i think that has brought

results fromronger the political leadership in the heart of europe. hthank you all for joining us. coming up next, we will be speaking with christine lagarde and we speak about the growing influence of activist investors on some of europe's biggest companies. this is bloomberg. ♪

francine: economics, finance and politics. this is bloomberg surveillance and i am francine lacqua in london. let's talk about the growing influence of activist investors, which has become difficult to ignore it for some of the biggest european companies. jes staley pointed to some of the biggest bank investors. i'll elliott's advisors came closer to breaking up. this follows the resignation of the company chairman after throwing its weight behind the $11 million offer for

engineering firm kn. , josephth me oughourlian. you to make it clear, are an activist investor, or do you look at activist investment and say, this is what we should be doing for this company? gone activist in a number of cases where we felt that there was an inadequate government. they were many issues clouding the decision-making at the company. and that by going activist, we could improve things significantly for all of the shareholders. francine: do you look at tors?nies, secoto do you go for weak management?

oneph: we focus primarily cheap stocks. is the addedhere benefit of the potential restructuring, significant restructuring. in southern europe, where we have invested most of our money, we find a lot of situations where the government structure is inadequate, still very far from the best practice. many conflicts of interest between controlling shareholders and the team of investors. that gives rise to opportunities. in our view. francine: ok, opportunities where? i know you are looking at greece. anywhere else? joseph: yes, we have been active in italy, spain and greece, you mentioned greece. we have had an issue with the way deutsche telekom, which owns , 75% of the company, with the

way it is running the company. the governance of hellenic, which we think is inadequate. we have had issues last year with a group within spain. we have changed the entire management. and i think things have improved quite dramatically since then. has been ali, there number of situations where the hadrolling shareholder has a conflict of interest with the rest of the shareholders. francine: joseph, thank you. we will have plenty more on that. joseph oughourlian still stay with us, from amber capital. coming up next, tom keene joins us from new york. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. francine: steve mnuchin is

helpful a deal can be reached with china. futures point higher. traders geared up for a record week in treasury actions, $300 billion worth is up for grabs. and we speak exclusively with the imf managing director christine lagarde on strengthening the european architecture. that's up in the next hour. this is bloomberg surveillance. i am francine lacqua. tom keene is back in new york. we left off the conversation on traiffs and grtrade. what this means for world growth and stock markets. rick: i am looking forward to that and peter navarra will join us on bloomberg surveillance on radio later. where else could you get christine lagarde and peter nabarro together in one show? francine: only on surveillance,

tom. here is taylor riggs. taylor: the u.s. president mostd trump will take the aggressive actions yet against russia today, likely to announce the expulsion of dozens of diplomats in response to the nerve gas attack on the former russian spy living in the u.k. this comes as trump has attempted to maintain a semblance of the constructive relationship with the russian leader. steve mnuchin says he is optimistic of a deal with china that would avoid the imposition of tariffs orders with donald trump. he told fox news that the sides are engaged and productive conversation. last week the president announced measures against china with $50 billion as punishment for alleged intellectual property theft. >> we are simultaneously having negotiations with the chinese to see if we can reach an agreement. as the president has said, we deficitcut the traded $100 billion over the next year and eliminate forced joint ventures, forced technology and

we are having productive conversations with them. i am cautiously hopeful we will reach an agreement, but if not, we are proceeding with these tariffs. taylor: investors as runoff concerns over geopolitical risk for oil, even after saudi arabia intercepted ballistic missiles fired by forces in yemen. the missiles were shot down over cities.d other in russia, 53 people have died at a fire at a shopping center in a siberian city. around 27 people are still missing. the fire was reportedly started on the top floor of the winter cherry mall, but because was not immediately known. a criminal investigation has begun. emma ross-thomas -- global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm taylor riggs and this is bloomberg. equities, bonds, currencies and commodities. our data check on bloomberg

surveillance. 27%.es a bid up dow futures up, 2.18. euro with a bid. dollar weaker. on to the next screen please the vix elevates to the average of 20, to 23.04. we will show that chart in a moment. the 30 year bond now back to 3.00%. the yen we're watching through the 105 level. and i have got to put the turkish lira here with that 4 print we saw a couple days ago. we saw a set of numbers three bloomberg terminal a couple hours ago. francine: i am so glad you put the turkish lira on there. we spent a little time on it last thursday and friday and it to continue we need

watching. we are looking at the rebounding of u.s. equity futures, hoping for stabilization. european stocks are up a touch as well. i guess there is a little less concerned that the escalation of trade tensions will turn into something very ugly. i am also looking at yen slipping back from the strongest levels in 60 months and the advances we saw on friday, tom. the market look at now. this is the down two hundred day moving average and we are back to the corrective stage. down from january, history close of 1929 and 1987. we are at a correction at the 200 day moving average, through it now. right here is one approximation of a bear market, 21,800. we are nowhere near that right now, but that gives you a sense of where we are on this monday. francine? francine: tom, this is what we are looking at and we are trying to look at things differently. stocks are no longer the only asset worth owning for u.s.

investors and that is according to a friend of the show. this is what hilary clark made in terms of a chart for me. it looks at the six-month treasury yield in white and in blue you have the dividend yield. you can see they are crossing for the first time in about 10 years. we will push it out on social media for our radio listeners. uilds yielding more than the s&p 500 for the first time since 2008. u.s. futures are pointing higher after the treasury secretary steve mnuchin says he is optimistic of a deal with china that would avoid the imposition ffs ordered by president trump. tom mackenzie spoke to the chief executive about growing trade tensions at the developing forum in beijing. >> we see this on a bilateral basis, potentially escalating

and it will not be good for business or growth, or geopolitical tensions. while at this point in time we do not see the financial markets being overly impacted by this protectionist wave, i do think that if it keeps going, this could be very disturbing. francine: traded talked jitters remain and the u.s. treasury will auction $300 billion worth of debt this week as well. joining us now is the global head of fx research at hsbc. stephen, do you believe a trade war can and will escalate and what does that mean for yields? >> well, i saw the headline was that is a change unless week. and in the space of a few days, we seem to have gone from war to truce. this has always been a possibility. that something would happen.

but it strikes me that the real story going on is in the economic data and elsewhere. i think this is a distraction from some of the more enduring themes in markets and is so, i am not that worried about this. mean, this is a distraction, but can it turn ugly? i guess the markets were a little bit anxious because you do not know how the chinese will play at or what the trump administration will do next. is it actually shave off gdp? steven: i am thinking about it from a bond perspective. i was not asking the question in response to what happens to equities for credit. for me, if you look at the main bond markets with u.s. treasury's, if you reduce the growth expectations, it will pull yields down presumably.

if there was any short-term inflationary implication, upward pressure, it would be seen as transitory by the main central banks. so, in my mind, it is just lower yields, not higher. and it is not really good for the overvalued risky asset markets. i would start with credit, where it is tight and the markets are vulnerable. and i would continue with equities and in some cases, i would spread to emerging markets. it is not good for risky markets. spoken with david blanche flour at dartmouth in the majore is camp. he does not agree with the path established by the fragil centrl banks. when you listened to jerome powell the other day, michael mckee there, what did the chairman get wrong about the

level to higher rates. is tightening on three fronts, lifting weights, shrinking the balance sheet and via the arrival of liquidity within the treasury bill market. they are sucking up the private sector interest rates. it is 10 years since we have seen a decent yield on cash, which means most people are remember is,ung to or they are too old and have forgotten. you can see in the forward market how many fed funds, rate are, but hikes there you cannot see the behavior at those points. i ask you, what would you sooner or 50 basiscash points in your current account at one of the american banks? up.s are going to will you get this tightening of financial conditions that is all happening and it is not obvious in the headlines and in the main

industries. to me it is a vicious tightening of financial conditions going on. francine: there is the underlying theory that mr. major just walked through. within this is the idea of four rate increases. what will it do to the 10 year nominal yield. steven: it is just not going to happen, is it? as far as i am concerned, each rate hike is stable -- the idea that they just high three or four times is ludicrous. we will see what the world looks like at the next hike, if it even happens. you can see three or four hikes in the forward, but you cannot see what will happen to the private sector or financial conditions, or what will happen somewhere in the world. to me, we are underestimating the risk of something happening and the fed having to stop. they might stop because the

dollar rallies quickly or because the market falls quickly, or economic data could get soft. so, the curve is completely flat. it is inverted in the forwards. we will talk about the flattening of the yield curve. it is already telling us that it has inverted in the forwards. ioer rate, they take the treasury bill yields up to where the treasury notes are. as it stands at the moment, the curve is steep between bills and notes, but all that is happening is the bell curve is moving into line with the soft curve. to me, they have got to be very careful because we could be on a tipping point anytime now. it strikes me we are very late cycle and there are a lot of late cycle indicators around. francine: steven major, thank you so much. we will get more about this end cle and possible

tipping point. coming up, an exclusive conversation with the imf managing director, christine lagarde, 6:00 a.m. in new york and 11:00 a.m. in london. this is bloomberg. ♪

reporter: uber has agreed to sell the southeast operations to grab. grab will acquire all of the operations in a region of about hundred 20 million people, including food delivery service uber eats.

in return, the u.s. ride hailer will take a 27.5% stake in a combined entity and the ceo will join the board at the singapore-based grab. gun maker remington has filed for chapter 11 bankruptcy protections, saying it has liabilities of $11 million. this would cut $700 million and inject $145 million of new capital into the company. remington took a hit after the election of donald trump, a self proclaimed true friend of the gun industry. 's ceo says the company has yet to be contacted by swiss authorities over a bribery investigation related to a mongolian copper and gold mine. jean exclusive interview, sebastien jacques says the expansion remains on track. >> we had no interaction

whatsoever, so i am learning what you are through the press. and we should not forget that it was at a time when rio tinto had less than 10% equity stake in what was called primar private ownership. taylor: that is your bloomberg business flash. president trump is poised to take's most aggressive action yet against russia today. he is likely to announce the explosion of russian diplomats in response to the nerve attack on the former russian spy in the u.k.. president trump has vowed to maintain a constructive relationship with president clinton. joining us now from moscow is gregory white. he is the bureau chief in moscow. great to have the on the

program. what exactly will the kremlin say? how can we be sure that this nerve gas is instigated by russia. theory, is it 100% russia? just ar: hello, there is few days after this attack this month that could have only come from russia. the kind of nerve agent used in this case was one that was developed in russia in the 1970's and 1980's. it has been highly secretive. it was leaked in the early 1990's from some factors of telling the story of it. the british have been consistent all along that this could only have come from the russian side. that is a view that has been picked up by the white house, as europe,other capital in is instantly the russians who are the only ones who contest that argument.

there was even a case in the early 1990's where some of a similar agent was used in a mafia hit in moscow apparently, all of the details of that remain secret. francine: gregory, donald trump wants a constructive relationship with vladimir putin, but at the same time he needs to crack down on it. how does he strike that balance? gregory: that has been eight have challenge for the trump administration and we have seen back and forth between positive language from donald trump and last week he called putin to congratulate him on his election win, something his advisers told him not to do, something other leaders from the west avoided doing. it has been hot and cold. it is something that has been a common factor over the year of -- the year that trump has been in office. this is one of these waves where it looks like it is going to be eriod.tive p

tom: can you tell a diplomat from somebody who is going to be expelled? the people that are expelled, are they like real diplomats, or do you just know as a journalist that these guys are not diplomats? gregory: sometimes it is a little transparent when there are people whose activities do not seem to fit. there are cultural attaches which is a cover for some kind of espionage. but often, it is hard to know. the question arises, if they to conspire, why were they allowed to stay. it is part of the nature of statecraft. this is what embassies do and people understand that during times of tougher relations they get tougher. it is not something that you can immediately say right away. presumably though, there is a list. tom: we just got a email from john in coventry, england. he says, what does this mean for

the world cup? is that the so-called from car that mr. putin has, that he can play the world cup card against these countries? british havear the said that officials are not going to come, but they are still defending their team. the fans are likely to come, though it sounds like the numbers will be smaller because of logistic issues. that is leverage other countries could use if all major european issues countries who refuse to defend their teams, alleging safety concerns, they could rain a parade on the russians. but otherwise, i think it is a -- that is going to go on. and in the context of the relationship, this will be another one of these events -- like the sochi olympics back in 2014, a sense where the west was trying to spoil their big day. francine: thank you so much, bloomberg's gregory white from

moscow. stephen white is still with us. you were talking about a tipping point and the end of the cycle. if there is a tipping point, what happens? and is there a catalyst? or is it just because you say we are at the end of a cycle, that the tipping point could be near? even; you can never see them until afterwards, francine. i would make the point that you could look into the economic data, or you could look at some kind of corporate event, or sovereign event as being a catalyst. i just do not know. all i know is that we have a confluence of indicators that a re suggesting we are fairly late in the cycle. you could not have said this a couple of years ago. you would be completely wrong, but the valuations are what would concern me right now. all i know is that when i looked at the rates market and i looked at sovereigns and we started

talking about u.s. treasury's before, i think they are priced correctly for the path of rates the fed says it is on, which does not make them rich. if anything, they are on the cheap side. i have got toind, then go to look at credit, equities and e.m., and see if the valuations say the same thing. it i think in this reward, favors us being in a more cautious strategy at the moment. francine: steven major, thank you. airlines and flying from australia to london back in 1935. qantas airways has just done passing a hours, major milestone. the direct passenger service between the continents puts the european financial sector closer to the capital of europe's

mineral wealth. joins us now on bloomberg surveillance. nobody has ever thrown direct passenger services between australia and europe before. is it a sustainable? alan: absolutely and you are right, it is the first time ever that australia and europe have had a connection and what we are seeing is really good forward lows. we are seeing a really good response from the business sector and letter traffic. we are happy with the initial performance of the service. francine: ok and how do you measure success? is it about money or advertising, or both? alan: i think you get a combination of everything. at the end of the day, we are an airline. and international has always, in my mind, been a little more difficult with domestic operations. this service looks like from day one will make money.

and i think it has grabbed the public's imagination and we have seen immense media interest in it. we have seen this be in the top three news stories around most of the countries around europe. we think we have gotten hundreds of millions of dollars off of the free publicity about it and that shows you there is a big public interest in it as a consequence. i think that helps us strongly with the economics of the service going forward. australia is a long distance away from anywhere. the distance. had this is a good indication for us that these long-haul operations will work out for sydney and melbourne when we get the aircraft technology, the flight corrected from london to new york. these are the initial days of this service, very good so far. francine: -- there were seven stops in 1947 to get from australia to the north.

now the kangaroo will jump in one stop. it is different in economy. what will you do to differentiate economy with the realities you really do not want people walking around the cabin. they are paying the economy rates, but you have got serious biological conditions on these long flights. going to do to help the economy passenger? alan: quite a lot, we have space, only 236 seats, and the competitors have over 300 seeds. there is a lot more room for every class, including economy. we have been a study with the university of sydney to work on improving people's well-being on these long flights. so we have got a recommended diet. a recommended drink regime. we have got yoga before you travel in perth.

we have worked on the lighting on the aircraft to help people get sleep. we've also in addition, the aircraft, the 787, the air-conditioning and altitude values. tom: this is what i want, alan. qantas to do the shuttle from new york to washington. alan, you know what it is like to turn an airline around, but you are not emirates are working out of chicago o'hare. but you are out in the middle of nowhere. how will you develop the theater system you need to make this economically feasible? alan: in the u.s., we do fly direct from san francisco to melbourne and sydney. we have a huge operation in los angeles, new york and dallas. we do connect to partner networks like american airlines

in dallas, los angeles and alaskan in san francisco. we have a big partnership with emirates in dubai to connect with the network across europe and in china, we have china east and their network. it is the way the aviation industry works, you pick the best partners and work closely with them. plus, with the superlong aircraft, we will have more direct services to more locations. if we get the aircraft that can fly from sydney to vr, you can fly from chicago to washington dc and give people more choices when flying to direct. francine: you have also had options to purchase another 45 free liners. when you see the extra 45 being added to the fleet? alan: we want to show we can make money out of this perth-london service. we then want to build off of what we are calling the australian hub and have the

service from perth to germany. we also have six 747's, which we have got to retire at some stage and again, we believe that the 787's will be good for that. we will be looking at the possibility of exercising some of these options throughout this year. they come up one by one and there is plenty of flexibility regarding the right time to take them. it all the pens on making sure we have the right case to make sure the aircraft will start the new services. francine: but you are betting so big on china and asia. how concerned are you about this global trade war impacting your business? alan: i think everybody should be in business, generally. we know that having open trade between nations has helped with air travel, has helped with freight. it will have a dampening

interest, but we think that we, like all i businesses, are watching this with interest. we wonder what this will do to the downing economy. at the moment, we are doing really well because we have strengthened the economy and the global economy is going very well. that is an indication that we are linked to global activity. francine: very quickly, tell us about the global opportunities. you are considered a national carrier, but i believe you are not. how does the future of qantas into british carriers and other major companies? alan: it is really hard for a major mergers to occur. are publicly listed. we do not have a government shareholder. we have only got the institution. we would love to be able to consolidate. but there are restrictions

because of the way the air travel system works. if we could emerge in the region , we would be interested in that, but what happened in the united states and europe has to occur in our region first, which is that single market is allowed to operate and we have restrictions around and when that occurs, i think it will happen. we are a bit away from that. tom: thank you so much. we look forward to doing a week from sydney at "bloomberg surveillance" here. alan joyce is with qantas airways and just invited us to sydney. in new york city with first word news, here is taylor riggs. taylor: donald trump is poised to take his most aggressive actions yet against russia today. he's likely to announce the expulsion of dozens of diplomats in response to the nerve attack on a foreign russian spy living in the u.k. u.s. treasury secretary says he

is optimistic of the deal with china that would avoid the imposition of tariffs ordered by donald trump. steve mnuchin told foxnews the sides are engaged in productive conversation. last week the president announced measures against china of at least $50 billion as punishment for alleged intellectual property theft. >> we are simultaneously having negotiations with the chinese to see if we can reach an agreement as the president has said. we want to cut the trade deficit $100 billion over the next year and eliminate force joint ventures for technology and we are having productive conversations with them. i am cautiously hopeful we reach an agreement. if not, we are proceeding with tariffs. taylor: protesters in barcelona clashed with police after the arrest of a former catalonian leader. he had been living in exile since the declaration of independence last year. he may be sent back to spain to

face trial. oil has raised earlier gains as investors shrugged off concerns about geopolitical risk even after saudi arabia intercepted ballistic missiles filed -- fired in yemen. the missiles were shot down over riyadh and other cities. 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. tom: thank you so much. peter navarro with us later on bloomberg radio, on "bloomberg surveillance." i will be doing that with jon ferro. comingot madame lagarde up later. sbc. us, steven major of h madame lagarde and others have to deal with a unique european experience. how does hsbc synthesize or askedout what mr. draghi

to do and the ramifications on the original monetary policy of europe? stephen: we know we've got monetary and currency union, but we haven't got the full fiscal and political union and i tend to frame this to say if you think euro currency will continue to prosper in the coming years, it's fairly inevitable that some steps are made toward the fiscal union and i think that is quite the going on and you can see the agenda led by the french government and some agreement with the german government. you've got some challenges in italy near term, but none of them i think really threatens the e.u. project. for me, you have got to build that into your forecasting one or two years out. you have this positive momentum in terms of the euro. i know people tend to look at

the noise in the current news and think differently, but in my experience, all of this political uncertainty is something you would want to petition against and it's normally an opportunity to invest. there is a long string of positive stories, spain was upgraded today, greece is near to exiting the bailout, portugal was the story of last year. you had the momentum in france, the recent german election, and people only really want to look at the bad news, which has been italy. tom: do you believe europe will escape negative rates? steven: i think the probability of the ecb not hiking this cycle is much higher than it was a few months ago and already quite high. in answer to your question, there's a meaningful chance that the rate hikes, if they happen at all, won't go very far. we are at -40. it would be nice to think the

ecb could try and escape negative rates next year, but it is conditional on the data. how can we possibly know what the world looks like next year? lostpect we've already some momentum, the forward-looking indicators are rolling over. could you imagine a confluence of events such that this time next year the euro somehow is stronger versus the dollar and the data is weaker and the inflation rate is nowhere near target? it is hardly a good time to start hiking rates. for me, it's a meaningful possibility, tom. tom: how do you filter in, in london, at the hsbc desk and all across europe, the many fiscal stimuli of the trump administration. we got a tax cut, fiscal stimulus 1, i believe we can calculate a fiscal stimulus 2. is that discrete to the united states or can you bring that to an e.u. analysis? steven: when i give my answer to

those budget deficit and supply related questions for a treasury market, i sound like a heretic. the reality is looking at empirical evidence for bonds of 10 year majority or longer, it should not matter that much. there has been a budget deficit expansion over the next two years of about 1.5%. if you role in all the tax reform and other fiscal listening, etc. 1.5% is large loosening in a short period of time. it strikes me that it's not going to impact the 10 year rate has this stimulus will wear off in the next one or two years. the question is whether the fed is going to change anything because of this policy and so far it looks like they are not going to. your question was pointing to other parts of the world. the fiscal position in europe

has been generally a lot healthier, more of the concern is on the private sector debt building up in some other countries, i think. i don't think what is happening in the u.s. -- very late cycle, it's suddenly a single for other -- signal for other countries to do the same thing. francine: let me bring you to my chart. this is the spread between the italian and spanish 10 year. is this where you see the most risk in the coming months and this is one chart aria draghi looks that -- mario draghi looks at or do thus -- does he just care about euro strength or non-euro strength? steven: relatively speaking, this shows italy is cheap compared to spain. spain is a good benchmark for italy, based on that chart. spain has been its own path of convergence with france in the last 6 months. it may be the case that it's unfair on italy to make that

comparison because a lot of the relative cheapening of italy is down to spanish performance. we have tracked this same spread for quite some time and it has, as you can see from the chart, it is quite possible it's getting to the cheaper end of the rage. -- range. it may be that spain itself is getting a bit rich. in terms of the risk in italy, i get it. you can see what happened with the election results, there is a fair bit of polarization. ultimately, there is not a threat to the -- project or in terms of italy's membership and that is what really matters. i will be looking more to be a buyer on weakness and if you look at some of the long -- longer waited spreads for italy spreads forighted italy, -- 4% in the last 6 months. it strikes me that people are

looking at this market a bit more like me, trying to look through the noise and look past the near-term political events. that is why i tend to look at forwards.-weighted i think italy is looking a bit cheap. francine: because we are speaking to christine lagarde, i want to get your thoughts on something that is closer to her heart, she is here to give a push for euro integration and focuses on three things. she thinks the capital markets union is the essential, improved banking union, and more fiscal integration. will we see any of these even in our lifetime? steven: you are seeing progress toward all three, i would have thought. what really matters, i think, for the health of the euro as a toward currency is steps a fiscal union. it doesn't have to be full-blown, it just has to be the right direction of travel.

progress been some toward banking union, but most of us will tell you there's a long, long way to go. .t least the start is in place it is very important for the success of the euro and the whole of the project for the momentum to continue. it is impossible to do all of this in a very short period of time. it will take years or decades. tom: right. that sounds like what madame lagarde would say as well. mr. major giving us a wonderful briefing before our conversation with christine lagarde. afterwards on trade and on the game theory of ross navarro, we speak with dr. navarro, peter navarro, the white house national trade director with us. jon ferro and i will quiz him closely on aluminum, steel, and china. we are watching the markets -- deutsche bank week this morning.

-- weak this morning. futures up 31 points. this is bloomberg. ♪

♪ this is the bloomberg business flash, i am taylor riggs. uber has agreed to sell the southeast asian operations to grab. grab will acquire all of uber's operations in the region of 620 million people. in return, the u.s. ride hailer will take a 27.5% stake in the entity and the ceo will join the board of the singapore-based grab. remington has filed for chapter 11 bankruptcy protection.

a deal had already been negotiated with lenders that would cut that i about $700 million and inject new capital into the company. remington sports took a hit after the election of donald trump, a self-proclaimed "true friend of the gun industry. " -- trade war could have an impact on global gdp. john sebastian -- made the comments during an interview with bloomberg at the china development forum in beijing. tradeare concerned about war we are watching it carefully for this reason because of the consequence on the global economy. if we step back, china and the usa are great trading nations. i hope and i believe that common sense will prevail at the end of

the day and i hope both the countries sit down together and work out their differences. are we concerned? the answer is yes, but i believe common sense will prevail at the end of the day. the next 35 to 60 days will be essential in that regard. taylor: that is your bloomberg business flash. thank you so much. u.s. treasury secretary steve mnuchin said he's optimistic of a deal with china that would avoid the $50 billion of tariffs ordered by president donald the pboc in beijing appointed a high profile banking regulator and xi jinping ally as party secretary. with us from hong kong is enda c urran. this at pboc mean? is takingan the pboc a little bit more seriously kind

of the regulatory environment? enda: good morning. it's probably a little bit different to conventional arrangements in central banks. very financial -- experienced financial regulator. he is also very well politically connected and has this job as being the party rep, so to speak, which is an important spot on the political pecking order. the governor was appointed last week then completing the trinity of china's economic management. these three guys together will be the three people they are really -- to really keep an eye on in terms of looking or direction signaling where china's economy is poised over the near-term and medium-term. it kind of feels like xi jinping

has a top team together now after the party congress, this is the team he wants to bring forward. francine: do they play any role in these tariffs and trade or is it really at the top? is it the president who decides how he deals with president trump? there are certainly roles for economic officials. was sent to washington just before his promotion to diffuse tensions, so he is the vice premier in charge of economic policy, so he will have a say in this. i know there will be technical advice from other agencies, commerce, the central bank, and others. ultimately, it will come down to a political judgment call, which would be at the head of government level. they will certainly take advice from elected leaders and others. tom: let me bring up a chart of dollar-yuan.

what a leg down. that's a stronger yuan. i will put that out for bloomberg radio. is the government watching the renminbi or are they oblivious to the currency? enda: absolutely, i think there are two angles on that. the weaker dollar took pressure off the yuan and they are happy about that because it took pressure off capitalists and political pressure off them from the u.s. accusing them of being a currency manipulator. the issue now is that it's pretty strong, so there's a feeling of adding some weight on the exporter story. if we want to go down the trade war route, there is the feeling that it is an option that could be on the table for china. it would be a risky one and some of the nuclear option.

the ambassador to the u.s. and china said on bloomberg on friday, he said all options are on the table. certainly, tom, you would have to think it would be in their toolkit. tom: thank you so much. steven major is also with us. we want to show a dollar chart and let stephen do his inner -- steven do his inner david bloom. this shows the new dollar weakness. within the yield market you live in, do you care about david bloom's world, do you care about dollar dynamics? steven: i think that chart is aite telling, so it must be 16%, 17% moves since the beginning of last year and that is all against the dollar. it's not the same against the euro, for example. clearly, there has been a revaluation versus the dollar,

but not such a move versus the euro. that definitely is a negotiating chip, isn't it? with currencies, there are two sides. you mentioned the yield side in the u.s. as we were discussing earlier, u.s. t-bill yields are a key factor in play here. meanwhile, you've got very big short positions in the dollar currency. we cannot rule out the possibility that you have a dollar rally. whether it is a turn in trend or a short-lived rally is something else. i know that david and the team are thinking we are getting nearer to a positive move in the dollar. those short positions and with the yield, it's all possible. tom: let's continue, steven major with us from hsbc. francine lacqua in berlin and i am tom keene. stay with us.

madame lagarde in the next hour. this is bloomberg. ♪

♪ tom: "bloomberg surveillance." francine lacqua in berlin and i

am tom keene in new york. we look forward to francine's conversation with madame lagarde. but look at a little divergence. i can do that with the wb screen. it's a lot of information. tough to see on tv, but all you have to know is turkey with an 11% or 12% yield and switzerland right next to it based on price change with negative point -- -.20%. of hsbc foroutlook em sovereign debt? steven: we have had a bullish call for the last couple of years on em. in terms of hard currency debt, this is sovereign's denominated in dollar or euro, that market looks rich compared to the local currency debt. there is already some changes coming through from outside.

we actually think the sovereign's in hard currency looking on the rich side. as we go into local currency debt, it has to be said that if the story i gave you earlier about a move toward risk off is to come to fruition, that it cannot be good for em. one of the factors that has been delaying any kind of correction dollar.ess of the u.s. there are so many events coming up that we should start worrying up -- worrying about. you've got elections in places like mexico in july and it's always possible to know -- impossible to know what the trigger or catalyst will be and i think we have to show humility, we cannot call that. the dow you asians in em in some cases are looking a bit more stretched -- valuations in em are

looking a bit more stretched. tom: mr. major is with hsbc. we have a terrific set of interviews, conversations to get your week started. peter navarro will join us on bloomberg radio, "bloomberg surveillance." we will do that in a few hours. james glassman with us on the american economy and fiscal stimulus. --ore that in the next hour the international monetary fund managing director, madame lagarde on france and europe and on america's fiscal future. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. tom: futures find a bid, the turkish lira does not. the ramifications of trade wars

to come reverberate through the global financial system. on the future of her france, her europe, and a mercantilism president of the united states and -- in this hour, madame lagarde. twin deficits to come, james glassman of jpmorgan. good morning, this is "bloomberg surveillance." world live from our headquarters in new york. francine lacqua in berlin with madame lagarde. madame lagarde is focused on europe this morning. francine: she is. she traveled here to berlin on purpose to give a speech on european immigration. she basically says this is the time to pursue further in the -- immigration. a closer union of euro area countries would counter rising populism and protectionism globally. we will focus on that and tariffs and trade with madame lagarde. tom: maybe with a strong euro

over the next year according to steve major of hsbc. here is taylor riggs. u.s. president donald trump is poised to take's most aggressive actions yet against russia today. he's likely to announce the expulsion of dozens of diplomats in response to the nerve gas attack on a former russian spy in the u.k. trump has tried to maintain a semblance of a constructive relationship with the russian leader. the u.s. treasury secretary says he's optimistic of a deal with china that would avoid the imposition of tariffs ordered by donald trump. steve mnuchin told foxnews the sides are engaged in productive conversation. the president announced tariffs -- measures against china worth $50 billion as punishment for alleged property theft. >> we are having negotiations to see if we can reach an agreement. we want to cut the trade deficit 100 billion diet -- $100 billion

over the next year or it we are having very productive conversations with them. i am cautiously hopeful we reached an agreement. if not, we are proceeding with these tariffs. taylor: oil has erased earlier gains as investors shrugged off concerns about geopolitical risk after saudi arabia intercepted ballistic missiles in yemen. the press agency and state television said the missiles were shot down over riyadh and other cities. peopleia, at least 64 have died in a fire at a -- in a center in a siberian city. local residents said a winter cherry building was packed with children and parents at the time of the blaze. witnesses said the fire alarm did not go off and staff did not arrange for the evacuation at the mall. 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. tom: futures again up 34. let me do a data check. the euro through 124. the vix, 22.51 and a giant two figures this morning showing the bid to the market and the yen 105.10.now francine: this is what i am looking at. it's a similar board to yours. i am happy you looked at the vix. i am looking at a rebounding in u.s. equity futures that seems to be offering hope of stabilization. shares in europe and asia are also rising as investors' fears of escalations of trade tensions begin to ease. advantaged with a

conversation with madame lagarde and then peter navarro. first, we need a briefing on the swirl of economics and we do that with james glassman of jpmorgan. dr. glassman joining us on jobs day as a fixture of our jobs day coverage. you are in northwestern where you took your phd and you need to explain mercantilism to the class. how close is america to a mercantilist believe? -- belief? james: i think we are focusing on a protection of intellectual property rights. tom: then why are we going after steel and aluminum? 55%s: we have exempted like of imports. i think this is an effort to get a conversation going and i am encouraged that there is a discussion behind the scenes. i think tariffs are a clumsy way to deal with the issue and that

is why the markets are scared because it reminds them of trade wars in the past. i think if this focuses us more on finding some resolution of intellectual property rights, that's the main issue. by the way, that has been a complaint our business community has been talking about for a long time. people say when you go there, you find your stuff copied and it shows up somewhere else. i don't think people are going to see this as a reason to hold back and be cautious. i think they feel like this may move things forward. tom: i want to know if jpmorgan and the combine -- whether it's jim glassman flying around talking to jpmorgan clients or -- in the shop. are you guys marking down make america great gdp numbers because of this trade stuff? james: not really. it's a concern, people are worried about where it could go, but i think the u.s. economy is in great shape and it's giving

the fed the ability to go slowly. it is helping to develop economies to move. we are pretty bullish about the performance of the economy over the next seven years. there's a lot of stimulus in the pipeline and the question is, can we handle it? i think so. francine: you are not concerned of the u.s. overheating? james: i am not concerned about it. i think we have folks out there looking for jobs and i think despite the numbers, i think productivity performance will be much better. if we are maxed out and unemployment is as low as it can go, why are we getting job numbers every month 180,000, 200,000? there is hidden employment in the u.s. economy that is being pulled in by better performance. we still have a million young people who dropped out coming back slowly. we have about 5 million people working part-time involuntarily. i think we will start to see

immigration pick up as well. francine: what does that mean for what the fed does next? are we going to see three or can they handle 4 rate hikes this year? james: i think -- i don't know that it matters. interest rates needs to be higher and i think that's why the message is constructive. he would worry if the fed said we need to move interest rates higher. it's only natural if the economy is going to be doing better and apparently the fed agrees all the stimulus in the pipeline will be happening. -- wrote "against the tide" on free trade. if you were sitting with president trump, what would you counsel him on the path forward given his belief in ross navarro? james: i would say of course there were abuses. the bigger picture is the process going on, developing economy rising is creating

tremendous opportunities for americans. yes, there were abuses, but the more we can help asia get on their feet, there living standard is about 10% to 20% of our living standard. the more we can help them do that, the more we benefit. economists is a sign the world is waking up and it's all on even, but it represents opportunity in the future and i think most businesses see that. francine: thank you so much, jim glassman of j.p. morgan chase is staying with us. coming up, an exclusive conversation with imf managing director, christine lagarde is in berlin to talk about further euro immigration. we will ask about that and tariffs. this is bloomberg. ♪

♪ francine: good morning, everyone. this is "bloomberg surveillance ." imminenterns of an global trade war, the imf managing director have -- has urged europe to pursue further immigration. a closer union of euro area countries would help counter rising populism and reductionism. to encouraged euro members pull contributions and establish a rainy day fund. i am pleased to say we are joined by christine lagarde here with me in the berlin studio. as always, a great pleasure to speak to you. has european immigration been so slow? christine: i would not say that. in times of crisis, they eventually moved very fast. in euro area was clearly

incomplete and needed to be strengthened. they put up a firewall and reinforced the banking system closethink they came to accountability, but it's still short of what is needed. they need more trust, accountability, and i think more to the point, they need to really strengthen three thanks. , twos the capital market is the banking union, and three is essential capacity that will signal to the rest of the world that they are shoulder to shoulder together and they will face the next crisis with the rainy fund we are locating. ,rancine: on those three points it has been in progress. it's in the making, but will we get a real capital markets union and banking union in our lifetime? christine: in your lifetime, yes. in my lifetime, probably so. om's,me's -- in t

certainly. capital markets union are getting very close. i do not think they should set their aim at closing and competing the job only when the bankruptcy law has been harmonized between the member states because that will take a long time. targetsuld set a few that would operate as a common basis, a common platform. many elements are there already. need to go a little bit further. i think it is particularly the case given what's happening on the other side of the chana, -- channel. the fact brexit is going to happen. what is the transition period and what will happen afterwards? i think it is important that the euro area be joined properly operated capital market union. banking union might take a bit

more time, but i think there is one component where i believe the members are almost there and that is this common fiscal backstop in case of bank resolution, which would be very welcome because of a bank falls, then the backstop has to be able to operate if needed. it's great to be a bit more gradual, but i hope it will happen on this issue of the common deposit insurance mechanism, where if a bank falls, then the deposit it is protected by a mutual fund actually financed and operated by the banks in order to protect depositors. it be thathy will much more difficult and is there a lack of commonality against european member states because the cron has to focus -- macron has to focus at home and merkel just won elections after months of -- and brexit? christine: the political

situation is a big component. i would say germany is now out of this coalition time and hopefully able now to operate and move forward as germany is capable of doing when the contract has been set, which clearly has been the case. i think president macron's is clearly indicating he will -- he has been active on the international scene as we have observed. if these two countries can set their mind to reforming the euro area, if they can carry with them some of the other players, including the netherlands and italy, whenever that government is formed, then they would be real helped to move forward. francine: how soon can they move forward? i know you have been saying by autumn, but if nothing has been done, does it mean it takes a back step? christine: the reason there is urgency is twofold.

there will be a next crisis because that is the way it works. it's better to act when the sun is shining and you can fix the roof without too much problem. is next year,sage you move to european elections and that is going to preoccupy everybody, they are going to focus their mind on who is elected to do what and blah, blah. i think there is a window of opportunity from now until june when they agreed to deliver proposals. i would say until the end of the year is really the window of opportunity where they can give signals, set objectives, agree on principles, and leave it to the operators of technical teams -- whose job it is to actually build and construct what they have agreed. francine: how much are trade tensions distractions and the

reason for existing was back in the 1930's to be against trade war. are we back to square one? christine: the reason it was set up to was -- was to provide financial stability. last decade in the that trade was a major engine -- major engine for innovation, connectivity, lower cost, particularly low income families pretty much around the world. that is the reason we believe that trade openings and trade benefits for all our critically important and dealt with in the forum that were set up by the united states around the world, which is the wto. while there can be bilateral talks and understandings and we have seen a resurgence on those between various members including the latest amongst andcan countries, the wto

the lateral form is actually adequate in order to address disputes and concerns about fairness, reciprocity, freedom of trade between members. they need to be addressed in that forum. francine: do you worry it will have an impact on the economic forecast you will release in a couple of weeks? christine: where the impact as far asost critical the confidence is concerned. as far as confidence is undermined by a repeated pattern of challenging the rules and principles under which business has been operating and we are seeing it. the business leaders are saying we want tority, understand where we are, we need to organize our supply chain. if we are in limbo as to what

tariffs are and what the next move will be, it is a problem. it is not so much the impact on the euro -- 0.03% of gdp in a particular country because that is what we are talking about when it comes to steal and aluminum, but it is the mere principle of -- nevermind, i will deal with that. , businesses, investors, consumers all want to know exactly what the rules of the trade are going to be. francine: is there a region that would suffer the most out of this uncertainty? such as chief executives not knowing how the supply chain would be hit? christine: it varies enormously. i would say overlarge corporate that are organized everywhere, that are supplying everywhere and sourcing everywhere would be impacted. europe and germany where we are at the moment, beautiful setting -- many of the small and

medium-sized companies in germany are organized with the supply chain -- with trade with other countries and assembling and identification and creation of valuing in many places. i think business in general would be affected. francine: you wrote in the blog in january that actually germany should rebalance their books a little bit. we are speaking to peter navarro later on and he is saying that same thing in different words, but kind of the main message. how can you convince germany to change their economy a little bit james: christine: i think -- a little bit? christine: i think germany is moving in that direction. we have repeatedly said a rebalancing is in order and that, in particular, the current account deficit is not justified at that level. they have a certain account deficit that is legitimate, but

not at the level of seven plus i am pleased to see there is now more understanding that it would be good and beneficial for germany to actually invest more. germany has always saved a lot. it is a big saver and very high savings, much higher than investment. it's time to rebalance by investing more and there are many areas where investment can be made whether it is digitalization, childcare support and centers, maintenance and sometimes development -- i think there's a lot that can be done. francine: one final question before we get back to europe on the possible more expelling of russian diplomat spy that you -- -- diplomats by the e.u. -- doesn't -- we imf

have not measured the impact. it is clear when there is good alwaysnce -- it is propitious for trade. goods -- is trade, actually can help, but i don't want to comment on the russia specific case. francine: final question on the -- i know a lot of leaders are watching at the moment. do you think there will be movement on further immigration in the next couple of months? christine: i don't think there will be movement because of my speech. this is a contribution to the take the we hope will euro area further and deeper and i was encouraged to see that france and germany through chancellor merkel and president macron have committed to deliver

proposals that those two would agree upon by the june council meeting. they were expecting to deliver for this council meeting in march because of coalition talks, it was made more difficult than chancellor merkel who could not focus on that. i'm encouraged to see they want to deliver by june. francine: thank you so much for giving us a little bit of your time. that is christine lagarde joining us from berlin. i will hand it back to you in new york. tom: with us is james glassman as we listen to a delicate conversation with metal lagarde. the reality for the united dates is huge imports. the president says those imports are evil, bad, dumping. madame lagarde indirectly alluded to, it's about the strong america. parts, stuff from

consumption china, don't we? a strongs, but we have america. we are very integrated, we are an important engine for what is taking place in asia and other developing economies and when we strong, they don't quite have the resources to buy as much from us as we buy from them. that is a temporary phenomenon and that tells you we are going in the future where we are going to get much more markets. -- at assume lipton or imf and we will be at the spring istings -- the word de jour reciprocity. what is reciprocity? we have more competition around the world so reciprocity, we take action and other people react to it. importantat is an

check and balance on the process because whatever your view of trade deficits is -- if you realize whatever action you take, there is a repercussion, we hear from both worried about the trade deficit. we are for trade -- free trade, but fair trade. there are abuses in traded situations. that's what happens when you have an imbalanced development underway. there is such huge opportunity down the road -- if asia's living standard can raise to of the consumer markets will be three times what they are today and that is what all of our business is no and that is why everybody is engaged in the process. we understand it's moving and there are abuses, but there's a lot of opportunity. tom: get the chart up here. this is my chart of the year. it's only march? it has got to be my chart of the year.

twinabbasids, at -- deficits, add up the two trade lines buried -- trade lines. we are worried about it down the road, but we are not doing anything right now to make the issue better. we are hoping tax reform has a big impact on the supply side as well. if it doesn't we can boost the economy's underlying growth rate, we can saw -- solve the problem. tom: we heard from madame lagarde. what a different tone from peter navarro. you know him from ross navarro. i will quiz him on the game theory of american trade. retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. tom: good morning. "bloomberg surveillance." francine lacqua in berlin and i am tom keene in new york. let's look at something going right through to weakness.

turkish lira, you can look at with dollar. here we have it versus e.u. and it has gone to record weakness versus e.u. this is euro turkish lira and that's a log chart, so it's got acceleration out as well. this is maybe a canary and a coal mine on the trade wars, but it also has a lot of domestic issues as well. it is something actually we were watching thursday and friday. i think in general we need to spend a bit more time on emerging markets and turkey and their relationship with the e.u. and the rule of law in general. tom: very good. let's get the first word news in new york with a monday briefing. taylor: u.s. president donald trump is poised to take's most aggressive actions yet against russia today. he's likely to announce the expulsion of dozens of diplomats in response to the nerve agent attack on a russian spy living in the u.k. trump has tried to maintain a

semblance of a constructive relationship with the russian leader. the u.s. treasury secretary says he's optimistic of a deal with china that would avoid the imposition of tariffs ordered by donald trump. thee mnuchin told foxnews sides are engaged in productive conversations. last week the president announced measures against china worth $50 billion as punishment for alleged property -- intellectual property theft. >> we are having negotiations with the chinese to see if we can reach an agreement. we want to cut the trade deficit $100 billion over the next year and eliminate joint force ventures with technology and we are having productive conversations with them. we are proceeding with these tariffs. taylor: in barcelona, protesters have clashed with police after the arrest of a former catalonian leader. he had been living in at 50 in brussels since last year's

declaration of independence, but was arrested in germany and may be sent back to spain to face trial. 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. >> thank you so much buried joining us in wash -- thank you so much. joining us in washington, kevin cirilli. i am going to speak with peter navarro in a bit. what are kudlow and bolton going to do to push back against the simplistic economics of ross navarro? convey, drag -- can they drag the president over to a consensus view on a can -- international trade economics? kevin: i think it's interesting they align wilbur ross with peter navarro. i would argue that perhaps secretary ross is a bit more to the middle then peter navarro.

you are right in the sense that there has been this realignment in terms of the economic minds inside 1600 pennsylvania avenue. i think they saw this a bit with what went on with china last week. pullback to the middle. you saw steel and aluminum with regard to exemption. now something like 70% of the markets are going to -- could qualify for exemptions. let's wait and see whether or not there will be any more carveouts with regard tom: to china. i am going to avoid the stupidity of the 60 minutes last night. what we need to do is look at chaos? in the white house tim o'brien writing in bloomberg view, mr. o'brien is more authoritative on -- president's finances and than anyone breathing today. the president had been dispensing wisdom the president did not want to hear. the role should probably be

named national security buddy or national security whatever. they should also know it's not their job to provide advice. what are you looking for this week from the chaos at extreme hundred pennsylvania avenue? kevin: who is staying and who is going? who is in and who is out? if it is the legal team or the cabinet, that has become the dominant storyline. i want to stay away from all that gossip from last night. what is interesting is it could potentially prove more legal trouble for president trump -- michael:. separate from the gossip in terms of should bob mueller look to even target michael cohen, the president's personal attorney. presidenton told the know, the number one prestigious goto lawyer in washington hung up on the president -- who is going to be the sharp guy to help this guy with mr. mueller?

i don't see that person. kevin: president trump feels it's president trump. if you look at everything that's happened, talks with folks who work with the president, they is someone who historically in his career has always felt that he is the best attorney in chief and that is what you are seeing play out as well. francine: how does the president deal with vladimir putin? he needs to send a message of strength or disapproval of what happened in the u.k., but also wants to keep him kind of on his side. kevin: i think today you might hear some developments in terms of what could be coming or a response actually to russia. you have seen in the past couple of weeks, with regard to the sanctions the treasury department put out, i don't think that was it. i think you could see more and you could see it as early as today. tom: thank you so much.

have an interesting week in washington. kevin: it's always interesting in washington. tom: he is our chief political responded -- correspondent. we continue with politics. he is the one everybody invites to parties in new york city. not james glassman of jpmorgan. economics, boring. the british consul general to new york is here to give me my wedding invitation to the meghan soiree. where are we with the brexit update? you have a different view than so many in london. called brexitcess mess because we are making progress in conversations with our partners. we confirmed the agreement about the transition pure. and the european commission has tied lines for the next phase in the future partnership, which i

think sets out a clear path to establish the future deep strategic policy we all want. tom: i want to get to this observation on brexit. when i go around manhattan out of every consulate, there is people lined up out the door trying to stay in america. -- the seeing flows eagerness to go to the united kingdom and stay in the united kingdom? has there been a shift at the consulate in population dynamics? antony: i think there has been a massive of attracting amounts of investment and business to the united kingdom and that continues. there's another survey out overnight saying of 110 cities in the world, london is the most competitive attracting venture -- this remains a very attractive proposition for the u.k.

we have to work hard to establish the next phase of the relationship and track investment. tom: the president is going to throw russians out of the country today in support of the prime minister and the united kingdom. how can the united kingdom support the president in a trade analysis, trade discussion? what do you need to see out of 10 downing street to assist the president where the united kingdom would like him to be on trade? >> i think there's the bilateral discussion with the u.s. through something called a trade investment working group that met for the third time in washington last week and addressing a whole series of issues between us as we go forward. most important, the dialogue between the e.u. and the u.s. and trade commissioner mantra -- was talk -- and the trade commissioner was in the u.s. i think the bottom line is we are engaging at all levels and we all have a shared interest in a global economy that is open,

that benefits both the u.k. and the u.s. and norma sling -- enormously. francine: how does it go forward? are you worried now with labor having a second proposition theresa may is not strong enough to negotiate directly because she is not seen as the ultimate person that says yes or no to the deal? antony: i think it's very clear that prime minister is the person who says yes or no to the deal. it is her government negotiating with the e.u. and her government who achieved agreements on withdrawal at the back end of last year and implementation last week and we will continue to go forward with a clear to go shooting authority. -- i think the prime minister will negotiate a deal that we have made clear will come back to parliament for a vote.

i don't think there is any doubt that it is this government that will negotiate and bring it back and we will win the vote in parliament. francine: all right, antony phillipson, if you were to pinpoint the two main sticking points to trade. it's very difficult to see come a year from now when the e.u. needs to break up with the e.u. -- u.k., it's difficult to see what trade deals that you could get. how long would it take for the u.k. to have a deal with the u.s.? are we talking 10 years like it took canada to do? antony: we have begun discussing with the u.s. while being conscious of our obligations of a -- as a european member states how we might take forward our discussions with the u.s. that will continue to build momentum as we get toward march next year when we leave the e.u. the agreement makes clear we can negotiation & agreements during the negotiation period.

what exactly that agreement looks like and how long it takes will be a matter of negotiations. there is a very deep and quite obvious political commitment on both sides to doing this deal. tom: let's come back with the british consul general, antony phillipson. and we will talk about brexit. francine has wisdom on that. jim glassman is with us as well. your morning briefing on radio coast-to-coast, bob moon and karen moskow. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." uber has agreed to sell its southeast asian operations to grab, withdrawing from yet another fast-growing region. grab will a crier -- will acquire all of uber's operations. in return, they will take a 27.5% stake in the combined entity and -- will join the board of grab. anothergreed to buy company for about 135 euros a share, that's 42% above where the supplier of natural plant extracts closed in trading friday. the deal values the company at around 20 to 22 times earnings. -- says the company has yet to

be contacted by swiss authorities. in an exclusive interview with john sebastian jocks, he sets up -- john sebastian jacques, he said the expansion remains on track. >> we are watching trade carefully for this reason influence on the global economy. both china and the usa are great trading nations. i am sure that they understand the rule of trade in creating wealth and living standards and therefore, i hope and believe that common sense will prevail at the end of the day and i hope the two countries sit down together and work out their differences. are we concerned? the answer is yes. but i believe common sense will prevail at the end of the day. we will see what happens in the next few days will be -- 30 to 60 will be essential -- days

will be essential in that regard. tom: i really want to talk about what james glassman sees around america within his travels. instead, we will go over the pacific. we have spoken to the chief executive officer of qantas airlines earlier. antony phillipson was the representative for the united kingdom to the republic of singapore and now holds court in new york in a very different stewardship as counsel general. we continue with him here right now on asia. it is amazing to me to see the new qualcomm, that experiment on from lord patten and the british ownership. when you with your tour of duty, when you look at hong kong, how does that translate to new china? how do you look at hong kong amid the new efforts of president xi? antony: going back to my china in singapore, we saw hong kong as a vital location for the u.k.

, including in terms of insight into what was happening inside china, including inside key markets developing that were driving chinese growth to the north. the story moves on. tom: the story moves on. in what way does the story move on from the changes in the united kingdom to in hong kong? antony: the reason i say the story moves on is the global economy keeps moving on at pace. i think the key point if i may say for the u.k. is to use all of our strategic partnerships whether in singapore, hong kong, the rest of china or the u.s. to build a story for the future. tom: does president trump's trade strategy risk of the things moving on, the delicacies represented by that border with hong kong? antony: i would not say it

risks. i think it poses a new dynamic and a u.k. and european partners have made the view clear on the issue on steel. the way to do it is through multilateral action. --the 301, we have concerns the e.u. has expressed concerns about issues around tech transfer and protection in china. that's a question of how you deal with it. we are believers of using the wto dispute resolution mechanism. we are not so sure about unilateral tariffs, but we will wait to see the proposal from the administration. we need to maintain the dialogue -- francine: i have a viewer question. isoften hear that the u.k. attractive, but isn't it because the u.k. is still in the you --

e.u. and as soon as the u.k. leaves every point of attractiveness has to be reconsidered? antony: i would certainly agree that over the past few years and decades we have made a big part of our name -- narrative has been the fact that we are the gateway to europe. the prime minister's own words are that we are leaving the e.u., but not leaving europe. the implementation period will make sure there is no cliff edge in march of 2019. there will be a period of continuity and certainty for business during which we will complete the transition to a future economic partnership and which i would expect we remain heavily engaged with the e.u. including if you look at the guidelines published by the -- to the commission by the council of 27 on friday. it talks about a free trade area and the chancellor and prime minister in recent speeches have set their ambition. i do not think we are leaving europe.

are a whole host of other issues that will continue to make the u.k. an attractive location including rule of law, english language, time zone, and a highly regulated city of london. tom: and a wedding may 19 as well. thank you so much, antony phillipson. --will come back with jim jim glassman of jpmorgan on america. this is bloomberg. ♪

♪ tom: good morning, everyone. "bloomberg surveillance" from new york and berlin. single best chart, which has to be the market after what we saw thursday and friday. roll it over right back down to correction as well. basic idea being where is the bear market, the doom and gloom of a bear market is 27,800 on a their market. jim glassman with us, and you are optimistic as you travel across america, aren't you? james: everywhere you go, you see construction cranes operating.

have seen the coastal regions of the u.s. economy and texas really come back spectacularly. what's happening is it -- the cost of living is getting more expensive in these areas and you , nashville,, provo austin, there's a reason -- chattanooga. there's a reason they are doing better. a lot of folks are beginning to move in. tom: that is domestic final sales. does trade just do away with that? does trade diminish domestic final sales so we get back to a less than trump america? james: i don't think so. recovering economy drives imports and helps to pull every buddy else up. we do not benefit as fully as if the borders were closed, but i think we are benefiting from the world around us that is also growing. it's hard for people to see this because they tend to think trade

takes jobs away from america. the truth is we are sure as economists that trade is creating a lot of new activity and jobs for americans. if you are a chief executive and you have a supply chain and you look at talking tough on trade, it must help your humble spirit. does that put a dampener on u.s. gdp? james: i don't think so because the business community has been complaining a while -- for a while about technology being stolen. is theywhat they see see a clumsy effort maybe trying to figure out how to address this respect for intellectual property rights. i don't think it makes businesses more nervous, i think it makes them may be more encouraged that we are going to see more progress on this. i think it is the opportunity they see that drives their ideas. tom: jim glassman, thank you so much.

we will continue on bloomberg radio. francine, what did you learn from madame lagarde? francine: i learned from her that she is here to try and basically spur european politicians into action to make sure they really focus on the banking unit -- union, capital market union, and a fund for rainy days. she says growth is ok in the -- in the e.u., so now is the time to come together. i think that's a powerful message. tom: coming up, we drive forward the international economics discussion across all of bloomberg. peter navarro, i will quiz him closely. this is bloomberg. ♪ retail.

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the market coming back from last week when investors ran away from whisk -- risk. and cautiously optimistic about reaching a trading arrangement with china, perhaps ending the trade war. and the chinese central bank not only has a new governor, it has a new official to oversee the governor as the top banking and insurance rater is named. welcome to "bloomberg daybreak." i am david westin. julia chatterley with us. better feeling in the market. julia: i was about the said, getting up. and as he rightly said, optimism in the market. let me take it to what we are seeing. happier monday for the european investors, talks are higher by half a percent, bouncing of levels not seen in a year.