guy: beijing retaliates though levieslion in tariffs, on goods from cars to soybeans. s&p futures sink. president trump continues his twitter tirade. white house insiders say it is not a target for regulation. stocks falling, nearly $50 billion over the last six days. race toed companies submit their gender data ahead of the timeline as the prime minister vows to tackle the issue. ♪

mark: welcome to bloomberg surveillance. traden about impending war sending stocks slower. down for the second consecutive day, 6/10 of 1%. the euro is rising against the dollar today, up by 1/5 of 1%. we have the eurozone inflation data, 10 a.m. u.k. time. towardslation inch the ecb target? above 63, holding above $63 and $.10 a barrel. coming up on surveillance, we will talk to our -- you can see him there from the oecd. pivotal research group

gives us his expectations for the quarter. let's get the first word news. trump. president donald says he plans to deploy the military to guard the border from mexico. he told mexican leaders he would abandon the north american free trade agreement without assurances of help to secure the boundary. he could use money allocated for the u.s. military to construct the border wall but he has been unable to secure congressional funding. in washington, white house insiders say there is no discussion of turning the power of the trump administration against amazon despite the president's twitter attacks against the company. people familiar with the matter are not aware of turning trump's tweets into action against amazon. the president of the san francisco federal reserve is heading to the big apple. john williams has been named the new boss of the new york fed. he's part of a new leadership

team. in the u.k., today marks the deadline for companies with at least 250 employees to report their gender pay gap. saysin's prime minister there is an 18% difference between women and men in earnings. theresa may says it is one of the burning injustices of gender inequality. the woman who police say went on a shooting rampage at youtube headquarters was reportedly a video creator who criticize the company for policies she claimed limited her audience. police identified the suspect was shot and injured at least three people before killing herself as nasim aghdam. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. mark: let's get straight to the top story.

the u.s. has stepped up its dispute with china, with proposal to levy 25% import tariffs on high tech items worth about $50 billion. china condemning the move, adding reciprocal tariffs of 106 u.s. products from soybeans to vehicles. s&p futures falling on the back of the announcement. a press conference is expected shortly. joining us more is the chief economic advisor of bloomberg economics. give us the idea of the levees that china has implemented in reciprocated to what the u.s. has implemented. >> i think the first thing to say is it is striking that china has moved immediately in response to this u.s. tariffs. it is a. period of deliberation from china and eventually they made an announcement. today, we had the u.s. announcement and immediately

china responded. we are still waiting for the details but it looks like soybean, automobiles and airplanes as well. some of the very big-ticket items the u.s. exports to china. mark: you have already written u.s. proposal on u.s. proposals aims to hit china's industrial ambitions without hurting u.s. consumers, but you say on those objectives, it will likely fall short. just elaborate on that. tom: what the u.s. is concerned about his technology transfer or forced technology transfer. they don't like it and the chinese policymakers opened up the door for their markets only two companies who share their intellectual property or technology. if we look at the list of tariffs it is aimed at products where china is tried to move up the industrial ladder.

it is not aimed at products which directly hit consumers, so we did not see shoes or textiles on there, for example. the trouble on the first objective is, yes, you can maybe lock china out of u.s. technology, but china can still have technology from the rest of the world. on the second objective, if you on intermediateo goods like machines, that will raise prices on goods as well and u.s. consumers will inevitably suffer as prices rise. mark: is china going to whether these tariffs from the u.s.? is it a small dip in the bigger ocean? this,et's be clear about the trajectory here is clearly pretty alarming. we have got the president of the united states talking openly about how trade wars are good and easy to win. following that up with a pretty

substantial move towards protectionism. $50 billion is not chump change. we have china, the world's largest exporter, responding in kind. these are not positive signals. againstame time, set the backdrop of this year magnitude of the trade relationship, $50 billion is significant but it will not turn the dial in terms of gdp. i think the signals are alarming, the trajectory is troubling but we need to see further escalation before people start dialing down their expectations on china's gdp growth going forward. mark: i know it is semantics but we have heard and used the phrase trade war. is this a trade war now between the u.s. and china? tom: yeah, this is semantic debate. i think, for me, if i had to characterize it, i would say we are going from a light skirmish

to a heavy skirmish. a trade war would have to be something that is dragging down the economic aggregate. dragging down export numbers, dragging down gdp numbers. we could go in that direction, we are going in that direction, but we are not there yet. mark: great to see you. thank you for joining us, tom orlik, chief economist for bloomberg economics. worried, alberto, about the latest escalation in this, we will call it a trade spat, we will avoid the war word, what are you worried about the latest escalation of this spat between the china and the u.s.? alberto: the numbers are small even though the signal is negative. if you look at the actual amount as opposed to the actual relationship, it is relatively small amount. beener, china for now has balanced in the reaction.they

have been quick but relatively muted. they have been proportionate and probably smaller than they could have been in responding. the worry is that this could array of further restrictions. the world and markets are not ready for this at this stage. momentum and growth have decelerated. there is more geopolitical risk across eastern europe, the other parts of the world. we are not ready -- it is not what we need across markets. probably, markets tend to overreact compared to the size of the measure that we are seeing so far. china is still very balanced when it comes to responding. mark: the market reacting and it is obvious. stocks are falling, bond yields are coming down. money into gold as the yen is rising against all 16 of its peers.

these are playing out as expected. >> they are to a degree and we are dealing with short-term noise versus what the longer-term destination is. as your correspondent said, this is a tit-for-tat exchange at the moment. i would say if we can reach some accommodation between the u.s. and china in the next few months, that is fine. it if we go on from here and points from left to right, obviously that becomes a lot more concerning. mark: who is going to say we are going to reach an accommodation between china and the united states? that is what everyone will be hoping for. alberto: i think they are taking a long-term view rather than playing the populist card. one consequence of this, we think, is that we talk about safe havens. the u.s. dollar and u.s. assets are gradually going to lose safe haven status.

it will not happen in the next three months, but as protectionism escalates and the federal reserve is hawkish and more issues of federal treasuries to fund a fiscal stimulus, investors want alternatives. mark: what other alternatives? is the world running out of safe haven assets? alberto: ultimately, the damage is going to go to the u.s. treasury. debt, -- european we have seen very muted reaction because people want, investors want alternatives in the form of other government bonds. alternative is american market bonds. let's remember emerging markets are increasingly the savers across the world, sitting populations to develop their own bond market as china is doing. investors have been putting capital into russian bonds, brazilian bonds, chinese debt

and japanese debt as well as europe. there is a shift of capital away from the u.s. as a result of the potential trade skirmish escalating. mark: is that right, would you recommend the same sorts of moves? shift moving away from the u.s. as the haven country of choice for some of these alternatives that alberto suggested? perspective,our it is probably a little too soon to say that the u.s. is about to status butfe haven it will be best to hedge your bets. i'm less enthusiastic about emerging markets. some bundsk having in the portfolio will be no bad thing. i suspect there will be some buying of gold. mark: yes, gold, the classic haven. alberto and julian staying

with us on bloomberg surveillance. bloomberg users can impact with a chart using the g tv function. wonderful function. catch up on key analysis for future reference. gtv , do not forget that. up next, president trump is wrapping up his attacks on amazon. will be administration take action against the tech giant or will the battle be confined to tweets? we will discuss. this is bloomberg. ♪

♪ mark: economics, finance and politics -- this is bloomberg surveillance. check out what is happening in the markets today at the wait

for this tit-for-tat we are seeing between china and the united states. this is our wonderful function which encapsulates the markets broadly. stocks falling today. germany stocks down by 1.3% and exports -- the smi. broadly. stocks falling today. sweden, norway stocks lower. money moving out of the dollar. look at all of these currencies rising against the green. the yen is a haven of choice, as is often the case on days like this. look at the commodities space. look at the price of soybean sweden,futures, down by 3%. china will levy 25% tariffs on imports of 106 u.s. products, including soybeans, automobiles, aircraft in response to proposed american duties on its high-tech goods. let's talk technology. president trump has continued his attack on amazon, sweeting the company is costing the

postal service and the american taxpayer massive amounts of money. the online retailer shrugging off the comments, posting its week,t intraday gain in a in due in part that reports of the white house not actually discussing taking action against week, inamazon. webb.bring in alex alberto and julian are still with us. are they out for amazon or not? alex: it is on the table but there is not a huge amount they can do to will them. from a legal perspective, what are colleagues reported, there was very little trump is planning or able to do. the one weapon he can wield is contracts. there is a big contract coming up for cloud services. aws, amazon web services, is the biggest player in that space. there is the risk that trump could were that contract elsewhere. they also reported on tuesday he

had dinner with the ceo of oracle and that is the big rival, one of the big rivals in that space. trump hascriticism said surrounded the u.s. postal service. does amazon cost the u.s. postal service massive amounts of money? in trump'sy truth complaints when it comes to that side of the equation? alex: no. there is no argument that more in trump'sbroadly, the u.s. poe charges too little for its services as a whole, but the revenue, they are having big problems with revenue before they signed a contract with evans on a couple of years ago. their losses have decreased. amazon pays the market going rate and has an agreement with the service. trump complains this is custom the u.s. taxpayer money. it is in the open market. the one problem -- two problems,

they have to provide a service to every u.s. also which is costly and they had big health care obligations for retirees. those are the two burdens on the u.s. postal service. mark: time to buy tech stock? alberto: not yet -- julian: not yet. not surprisingly, the tech sector has had a good quarter overall and consequently, it would not surprise me if we go into the second quarter and see more profit taking from some of the highflying names. also, let's be honest, i think people are going to worry about the sector and there is going to be a lot of discussion. tweets from donald trump about amazon are one thing, but when you face european regulator will be key at looking at google and possibly imposing regulations. i think, although longer-term, i think all of these names will be fine.

in the short-term, you can see a lot of volatility. mark: how do you see the selloff we have seen? is it a symptom of a broader malaise? i think the context of very low interest rates, resulting in very high multiples. without any price tag in terms of taxes or regulation. if you think about the facebook issue around privacy, but generally speaking, the issue of tax around europe. google, amazon and facebook, they are all paying a very low amount of tax, unlike other businesses like financials or corporate square regulators have been focusing a lot more. in the environment where politics needs a bigger bottom line to fund -- to fund services, to fund health care, to reduce inequality, these companies are a sitting duck. they have not been regulated.

there is another issue which is the one of monopoly. and a lot of these companies have become a monopoly in their space and absorbing any small competitor before they become a threat. is this good headlines for the stocks that sell at very high multiples, but produces cap edition and productivity. if you want to keep the economy growing at a good rate, the companies that create more jobs on the small startups that grow. if they get absorbed before they become a threat, opportunity goes down. there is an untied issue on top of the tax issues. mark: jeff bezos, will he be losing sleep over this? 55 billion over six days, there was a rebound yesterday. alex: $55 billion of something like $800 billion. it is not insubstantial, but a couple of tweets are different from actual substance. i interviewed barry diller last year and we were talking about

the tweets related to cbs. he said if your company cannot sustain a few tweets, you have some profound underlying issues than what the president might be saying. mark: it is a new dimension in the trump presidency. it is something else that shareholders have to take into account. julian: absolutely, and it is not going to go away. he wakes up in the middle of the night and starts doing this. you never know what you will come into in the morning. in all honesty, i think the much wider concern that we have as shareholders is regulation and obviously the fact that the valuations are pricing and not quite first -- perfection, but they are not cheap, but they have had a good run and a bit of profit taking -- mark: moore declines to come? alberto: some are vulnerable. you think about facebook and the business model that is built

across potential privacy issues. threateningtially to become a monopoly across retailers. google as well for the same reasons across search engines. these are vulnerable business models. tesla as well. the only one that probably has a more stable and long-term expansion across emerging markets is netflix. but across the fangs, i would say this is one of the more resilient ones. i think the valuations have been too high for a wild and -- while and generally speaking, we are in a world where wall street and silicon valley has taken a lot of the gains. main street has not. both a very tempted to rebalance this. mark: alex webb. julian and alberto stay with us on surveillance. tesla investors were given some risk by from recent turbulence. the carmaker stock closed almost 6% higher after it reported

first-quarter production numbers for the model 3 sedan lower-than-expected. not as bad as analysts feared. selling investors it will not raise equity or debt this year. joining us now from frank for is tom, bloomberg's transport editor. are investors assuaged when it comes to the need to raise year? or debt this tom: well, they are relieved by the statements from tesla yesterday. assuaged, i don't know. the stock is still trading more or less at a one year low, although we did get the nice bounce yesterday. year? there was good news on the practical front, the real-world front where production of the model 3, which is their mass-market vehicle, mass-market oriented vehicle, reached the

2000 barrier. also, in quarterly deliveries, ended up being the top-selling electrified car, beating also plug-in hybrids and whole electric models in the state. that was the good news. say that heusk did was not going to have to go to equitykets for debt or beyond normal credit lines. the jury is still out on that. mark: tom, is there a credibility -- in the past, mr. muskthe jury is still out on th. has proven to be overly optimistic when it comes to the trajectory of the model 3 production. is he being optimistic? is he being optimistic about the need to raise money? what is the credibility issue like right now? tom: that is the question

because in the past -- a year ago, he again told investors that he was not going to have to raise money and then he ended up going to the markets for extra funds. the cash burn, basically, if there is no replenishment, he could run through two thirds of the cash this year and he has got projects not just with ramping up production of the model 3, but he also has longer-term projects that are starting production in china in a few years. mark: thanks a lot, tom, bloomberg's transport editor. "surveillance" continues. ♪

mark: mrs. "bloomberg surveillance." china will levy tariffs

on american products in response to american duties on high-tech goods. matching the scale of proposed u.s. tariffs, the charges will apply to $50 billion of american airport -- american imports. there is going to be a joint briefing any minute now. deploy thep plans to military to guard the border with mexico. he has told leaders he would assurancesta without on help securing the boundary. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. mark: trade tensions the focus

of global markets. industries that might be affected by tar s -- by tariffs. down, gm, ford, caterpillar, all trading lower today. the escalation of protection is rhetoric between the world's top two economies. soybean futures down by 3.7%. china said it would levy 25% tariffs on 106 u.s. products. automobiles, you saw those on the previous page. chemicals and aircraft, you solve those on the previous page as well.

rise. stocks decline. the dollar declines as well. is replacingams william dudley. a banking advisor gets a supervisory role. williams takes up his post on the 19th of june. andl with us, alberto gallo julian chillingworth. we have this chinese news conference taking place now. tariffs,utlining the the levees i was talking about. the vice finance minister and vice commerce minister are

speaking on tariffs. listen into that and monitor the headlines. gallo's piece. you said markets are not prepared for the end of stimulus. it runs into the elevation into the new york fed head. what is the risk? that is the question you are posing. alberto: what we think is we have helped fragility across markets. if you think about what qe has done, imagine an economy with a lot of rain every day and people are sad, they do not consume.

create a day with different weather, lots of sunny days in the market. people start -- people stop preparing for the worst. as a result, markets tend to be polarized. , but you havesun five days of bad weather which are hurricanes, the distribution of outcomes is more bipolar. you have a few days of technical crashes. we had around seven flash crashes since 2008. some of them are accelerated by feedback loops. are products that sell when the market goes down. the issue is regulators have not been focusing on this. .ew exceptions

central banks have been focusing on commercial banks, where the fulcrum of the last crisis, they have been fighting the last war. today, we are worried about risk in markets. , but once normalizing the ecb and boj start normalizing, a lot of these traits will suffer. as a result, you have negative reflexivity. q1 has been seen as a deceleration. that has been due in part to the volatility that has been happening in markets. that means escaping low interest unlessap that we are in, regulators six this fragility and markets. mark: are you prepared for the

end of qe infinity? julian: we have been preparing for the fed to begin tightening. tighten untilot next year. the boj after that. albertowith the point is making. we are entering a different era, where we have been through a long period of relaxed monetary policy. it will cause volatility and markets. trades people put in place under low rates and low volatility will come back to bite them. will become more volatile. possible, because of the feedback, full policy normalization is not happen? that that is -- alberto:

is our long-term worry. if you think about when the next crisis could be, it could be five years. we are late in the cycle. you could have a slowdown. ecbe do you think the refinancing rate will be? orthe crisis is in 2020 or 1%.t could be .5% that leaves little room for the ecb to stimulate. the only bank that could have a buffer could be the federal reserve. the risk is monetary policy cannot do much as it has done in the last crisis. the ball will be in the court of politicians, which is more risky. some of the political choices being advertised are extreme,

especially by the populist parties across the european countries. mark: when it comes to the fed, it will be most likely for the fed to get its rates high enough. what does it mean for where the 10 year yield should and could end up? julian: i would not be surprised to see it slightly overshoot to 3.5. that is where we see the resting point. that is where they will be aiming. currently, the u.s. economy is looking buoyant. the market will worry the fed is behind the curve and they have to react in extreme fashion. .ark: gentlemen, stay there

we are watching this conference taking place. ministerice commerce talking about levees implemented today by china and the united states. economicchina and u.s. ties are win-win in essence and they do not want a trade war. the finance minister said the trade war is a lose lose for china and the united states. dialogue to solve these disputes, china never submitted to external pressures. they want to solve trade issues in constructive ways. we will continue to monitor that. we are seeing a flight to safety. safety being the yen, gold. stocks are falling. companies are being targeted by auto for, whether it is

companies, it aircraft manufacturing companies, boeing, caterpillar, trading lower. u.s. futures indicate a decline to the magnitude of 1.4% to the s&p. soybeans have been targeted. you have all sorts of industries on both sides of the equation that could and will be hit by this. red is the predominant color across markets today. you can follow along with the latest on the terminal. this is bloomberg. ♪

mark: you are watching "bloomberg surveillance." you have this press conference in china in the wake of this levy spat taking place between the u.s. and china. the vice finance minister and vice commerce minister are speaking about tariffs. if you want to follow this, keep an eye on it on your bloomberg. we will monitor it here on "bloomberg surveillance." a look at inflation at the top of the next hour. prices exclude -- likely to be

unchanged. that may not stop ecb policy makers from moving forward. andtill have alberto gallo julian chillingworth. , from 1.2.estimate a far cry from the ecb's target. should mario draghi and his qeicymakers unwind qe, end in the final quarter of the year? it will happen, but it will be dovish. the key in europe is the deposit rate. the issue we have is we have lost momentum in the first quarter. in part, what is happening in china with the u.s. does not how

desk does not help. how do you revamp momentum in an economy in the middle of expansion? see big fiscal stimulus coming from germany, even though the new coalition is pro-austerityless compared to the previous one. we see a slower turn of investment and consumption. with initial hope to get much closer to 2% at the beginning of 1.4%,ar, we are around this means the interest rate hikes will be slow for the ecb next year. there is the issue of going 19, new boardd of members, the ecb could get more

hawkish. normalization is slow, keeping bund and paris feel -- bund and peripheral yields low. value..k. stocks offer not everyone is saying that. view, having seen an awful quarter from the leaving stock,- from the leading there is a lot of negativity around brexit, particularly from foreign investors. they pay a lot of money out of the u.k. terms,tive valuation they are looking better than they were for some time. two toare taking a three-year view, this could be an entry point. ,e believe sterling is cheap but in the short-term it will be

volatile. weakness in sterling would not be bad for the ftse 100 oversee earners. earners.a mark: do you share this view of the u.k.? empty than half glass half full? alberto: the outcome is eventually binary. the government has been trying to across tonight the final decision -- been trying to procrastinate the final decision. there is a problem with a potential cliff the fact later in time. -- cliff effect later in time. there is still 200 pounds of consumer debt unsecured. years, whilest few

consumers were deleveraging, part of the blame is on the government's programs with the help to buy, which allows people to borrow and buy houses with only 5% down payment. there has been a support to consumer leverage. the bank is about to do another hike. this will double some base rates. cliff not in a environment, but we are in a taxation environment for consumer wage and spending. joining us,you for julian chillingworth and alberto gallo. let's see what is going on in this press conference in china. the vice finance minister and

vice commerce minister both speaking. not want a trade war. a trade war is lose-lose for china and the united states. china calling for dialogue to settle disputes. wangiatory measures, mr. says. mr.a is open to dialogue, wang says. let's look at premarket trade in the u.s. the indications are we will see stocks open lower today. these are the industries that could be affected by the levees implemented by china today. carmakers, look at boeing in the premarket. gm, ford, caterpillar. heading in a

similar direction. dow jones futures down. s&p futures down by 1.5%. money is moving into gold. you look at our function, the yen rising. it is a classic flight to safety day. bond yields falling. the bloomberg u.s. dollar spot index is down. presstinue to follow this conference. a lot going on today. the biggest country yet to try to address the gender pay gap. unexpected 9000 companies are legally required to report the expected 9000 an companies are legally required to report the differences in pay between male and female employees.

we have denise wilson white, working to increase the number by 2020. what we have had so far, by the way, more than 9000 companies have reported. some have voluntarily reported numbers. there is a lack of women in the highest paid roles. a negativeu have gender pay gap. how did you achieve this? real estate is where women are missing from the top pay quartile. it is the top three worst in terms of gender pay gap. we are trying to build a high

performing team. that means diversity across the board. we have been doing a lot of things. leadership from the top. it talks about stopping bad behavior and creating a strong workplace culture, how you recruit people, how you promote people, how you build your talent pipeline. lastly, about creating the right balance around gender, family-friendly policies. maternity and paternity pay, flexible working, things that benefit men and women. nejra: the lack of women in senior roles has been highlighted. if you report on an adjusted basis, some u.s. firms say there pay gap it -- say the pay gap is

only 1%. hsbc is at 59%. this is showing a cause more than a symptom. gender pay gap reporting is important for addressing a quality in the work place and making the workplace fair. one teaching that has come out of it is a lack of women in senior roles and a predominance of women in more junior roles. that is what we need to address. what have you uncovered in your review? denise: barriers facing women to senior progression are complex and compounding. we have gone to a voluntary forme in the u.k. increasing representation of women, we have learned a huge

amount other countries have not. bias, thereonscious culture that does not suit women failed to thrive and survive in that culture which is predominantly male. british business is founded on meritocracy. we are beginning to blow that apart. a true meritocracy, choosing the best person from the job -- for the job, would not consistently produce white males to take up our positions. mark: what do we do about the occupational gap? doneay there is work to be . what are you doing to address that? alison: culture goes a long way.

today, i have a deadline were companies have to share their for, creates momentum change. it is a powerful thing. we measure what matters. put theirinesses numbers out there so everyone can see has created a conversation across british business. it is about talent and how british business pools that. 50% of the talent in this country is female. the business case has been made. business needs to use this as a watershed moment to get on and make progress. the work that you have done in getting senior women into the boardroom has been a great start. today, the data shines the light

on the executive pipeline. there is really good practice out there. having the benchmark. it is good for the airline industry and construction industry to say there are good reasons for that, but there is differentiation in different sectors. we have increased the number of women on board. 700 at women are sitting on the ftse board. we have -- that is fantastic. mark: thank you for joining us. this is bloomberg. ♪

tom: this morning tit for tat. markets react to chingechirningse crushes

soybeans. des moines, we have a problem. how will boeing and g.m. open at 9:30 wall street time? winning. the president is not a criminal target. not grant. president trump. all the president's lawyers however say keep quiet. in winning, i guess. spotify down 11% from the first trade. they got the deal done. good morning, everyone. this is bloomberg "surveillance." guy johnson in london in for francine lacqua. guy, i believe economic data out of the e.u.. tell us about it. guy lon trichet used to say the c.p.i. data, it is breaking as we speak. coming through at 1%. that matches the prior number. softer on the survey number which was put forward at 1.1. the eurozone still struggling to

generate inflation. that's a fact that is going to have to be krt, particularly if that trade story shortens the economic cycle. can't generate inflation now. tom: we do a lot of lengthy international trade. we'll do that across "surveillance" today. michael mckee scheduled to join us. right now with our first word rig here is taylor tax 1,600 american products. the u.s. is targeting high-tech items such as sem conductors. president trump has complained intellectualolates property laws. the shooter at youtube was angry with the company because it kept

paying her for videos she posted. her father warned police she might be headed to youtube. she killed herself after wuninged three people. robert mueller told white house lawyers president trump remains under investigation but he does not consider the president a criminal target at this time. he reiterated his need to interview the president. and opec's oil output in march was the lowest in a year. production among the 14 members over the cartel sold just 32 million barrels a day. the last since last april. curbed its allies have production in an attempt to boost oil prices. powered by more than 2700 journalists and analysts. i'm taylor riggs.

this is bloomberg. tom: there is a huge reaction to the market. soft to begin with but now down. dow futures down almost 400 points on 200-day moving average. the vix ell visited. the vix trades early. there is soybeans down at the bottom. guy? guy: let's talk about what's happening here in europe. the german economy exposed to a trade war. hsbc trading down by 1.55%. then the industrials here in europe. let's talk about assignmentance down 1.-- siemens. g.m. trading down sharply. airbus could be a winner from this.

airbus up by .74. tom: killer soybean chart. it is a 10-day on soybeans flat. no news. a little bit of trade, up we go. here is the drama we have seen over the last hour and a half. we're bouncing here, well under 1,000 on the contrast. we'll have to watch it. i have a great long-term chart on soybeans we'll show across "surveillance" today. i'll put that on twitter for radio london. guy: some of these big industrial stocks in the united states will open following pretrade. take a look at what's happening now. boeing down really sharply. down 3.4% right now. we're anticipating we will see some of these industrial stocks move to the downside. you can find this on your bloomberg b.a. is the code.

prepre is what you need to put in. down by 5 and a bit. we're seeing similar stories for g.m. and similar stories and these industrial stock also have a tough morning. tom: kevin to join us. politically this goes across part of the president's core base in the midwest. not only boeing, chicago, but also of course soybeans with a huge impact in iowa in the adjacent states. guy: let's talk about this story in more detail. let's go to beijing. we're joined by tom. tom, can we now call this a trade war? tom: i think it is semantics. it is a trade skirmish. it is the opening shots of a trade war. i think the market reaction clearly has been very averse. they see a negative trajectory

from here. at this point, though, we're still talking about a fairly limited economic impact. $50 million. that is not chump change but it is not going to do more than shave fraction of a percent off of china's g.d.p. guy: how shall i calibrate china's response this morning? the key that it is targeting soybeans? this is an economic response to china generating, it is a political response that china is generating. tom: yeah, i think there is three points i would make about the chinese response, guy. the first is it is proportionate, 50 billion to 50 billion. they are not escalate. second, it is immediate. they are showing they mean business. they waited a while to respond to steel and aluminum tariffs earlier on the year. this time they reacted on the

same day. and as you suggest, it is political. soybeans, automobiles, aircraft. these are some of the most high profile chinese imports. tom: we're listening to the advice of the finance minister of china as he explains the chinese position on what is a skirmish or the beginning of a trade war. two things. first of all, here is the reality. i can't stand soybeans. my teen eats these things by the bushels. what is so interesting about these soybeans is maybe they are from iowa but then they are repackaged in china. the bag says made in china, up in the famed bloomberg food court. this is all back and forth. it is intertwined between the two nations, tom, isn't it? tom: yeah, absolutely. i think the important point to keep in mind is that this is a global trade system. it is very hard for the u.s. to

have an impact on china when it acts union latly. -- unilateraly. if china doesn't buy soybeans from the u.s., it can get them from brazil. if they don't buy boeing, they can get airbus. if the u.s. imposes tariffs on chinese semiconductors, well, how are they going to do that without hitting companies like apple who is deeply immeshed in the global supply chain. tom: that is a great article. it was put out on twitter yesterday. a great short read on the interdependencies here. here we go. iowa is in fact critical to the u.s.-china relationship. some american counties could suffer job losses as high as 40%. adam posen's peterson institute found. a 5,30 some years ago,

junior minister stayed with a couple in a farming community of 20,000 people sleeping in their son's bedroom whose walls were covered in football-themed wall paper. the point is this leader of china has a visceral understanding of mr. bran steady's iowa, doesn't he? >> tom: i think that is right. as the european union said when the trutch administration threatened steel tariffs, well, if you do this, we're going to come off jack daniels andujarly daveredson. i think the chinese response can be considered in the same terms. they are reacting in a way it hits the u.s. political heartland. it could hurt trump and the republicans in the upcoming midterm elections. they are really testing the political resolve of the u.s.

dministration. guy: of late thighs chortes have let their commodities depreciate. are we at the point to call that into question? tom: that is a really important question. we have started to see indications that china has started to lean against market pressure for currency appreciation. saw some weakness coming on the yuan today on expectations that china would respond to a trade war with currency weakness. at the same time, we're not too far away from that very scary period back in 2015, 2016 when yuan weakness and capital outflows posted exten rble hreats to china's -- existential threats.

guy: tom, thank you very much indeed. bloomberg's chief economist in beijing. do we have an understanding about how this is going to affect our portfolios? do we up our cash balances? do we increase our options in terms of kind of what kind of volatility we're expecting? how do i take what we have just been hearing about and turn it into portfolio -- >> huge number of moving parts. the fed's thing is dealing with the trade situation itself. do you think it is going to escalate? if you don't think it is going to escalate and the midterms and the need to have a rising stock market is going to limit the administration's agenda here then you say pro risk. then you also need to think about let's say that scenario doesn't play out. how does moving pars,

the fed play in here? how about the central banks? at the start of year it was about global policy normalizeation. will we find out the fed much more supportive and put on hold some of their plans? a huge number of changes. for us, we thinks about looking through from the trade noise and we don't think it is going to escalate. the underlying tail winds, corporate earning, i think it is still very good. guy: the fed chair speebs on friday. how much of what he says will be dominated by what we just heard? >> that is a big question. i think the market has got itself into an assessment of powell and the fed under powell that it is going to be much less reactive and much less supportive. it has decided it wants to get back to normal and it is going to take a lot of downside news to put it off this projected

path. i'm not so sure. these central banks have work really hard to generate these recoveries. there is still not that much sign that inflation is coming through in a significant way. maybe we'll find out when he speaks on friday that they are data dependent and are going to take some of this news into account, more than the market currently is. tom: good morning. the distractions are there and all. what is a call on what i should do with my money. forget about trade and brecks and guy johnson's three-week vacation coming up. what do i need to do with my money in the second quarter? >> you need to look at the underlying momentum for earnings. still, the tax effects from states, still looks very strong and if i think about decomposing that earnings outlook into top lines, where funds are clearly getting a little bit more comfortable about pricing power, particularly in certain sectors,

there is still not a lot of wage growth. funds are able to push down on costs. then i think the outlook for earnings is still very strong. i think the central banks are going to be reactive. they are going to keep trying to push that recovery along. it is still a very prorisk tilt in our view. tom: the pro risk tilt and the idea of being onboard with a new higher short term rate, what chairman powell and others have run, does it make cash a different asset than it was last year? >> i certainly think -- one of the conversations we have been having about is building some balance to your portfolio at this stage. now of course when you are building because you are worried about a recession, then government bonds is where you want to be. if you're building because you are worried about inflation or your onomy getting -- bonds might not do what you want them to do.

that is where cash plays a better role. guy: karen is going to stick around. assetins us from jpmorgan management. you're watching the chinese response that is taking place this morning that is moving markets in such a big way. you can watch it on bloomberg this morning. boeing is trading down.35% pretrade. we're going to carry on the conversation in a bit. up next, the oecd's secretary general. that conversation is coming up at 10:15 in london. thathsd that's coming up. that's how the markets look right now. this is bloomberg. ♪

taylor: this is bloomberg "surveillance." deutsche bank is checking out the supervisory board. they have three other candidates to take over for existing board members this year. shareholders will vote on the floor next month. they have been struggling to turn the company around. billionaire of softbank group is trying to get a foothold in the cash rich insurance industry. stakere in talks to buy a in swiss re. there is a report that the world's largest advertising company is looking into

allegations of inappropriate behavior by the c.e.o. there is no comment from smp orrell or the company. that's your bloomberg business flash. guy? tom? tom: thank you so much. guy johnson in london. i'm tom keene in new york. china will respond with a substantial set, i believe it is 106 trade up thes. the vice minister of finance for china speaking out with his colleague, the vice minister of ommerce as they outline in typical asian length of discussion, their comments on these actions. boeing, g.m., directly attacking the midwest of america with tariffs on soybeans as well. soybean futures are down 4.2% as well.

there is no one, and i mean no one better to speak to on in c.d. with g than the his service to mexico. wonderful to speak to you this morning. i want to know the effects of china-u.s., u.s.-china, china-u.s. to the emerging markets of this globe. what does it mean, not for mexico, not the n-11 nations. what does it mean for emerging markets around the world? >> it is not good news for emerging markets. not good news, period. now this is the response to the teel and aluminum tariffs. it is some a somewhat limited response. it is calculated to deal with the size of the exports of chinese products to the united states, on aluminum and steel.

there is a better way here designed by the g-20 and that means the united states and china and all the g-20 leaders ich is the global forum on excess steel capacity which we established to deal with the substance to have the problem. if we don't deal with the substance over the problem, we will continue to deal only with the manifestations, putting tariffs on each other. the oecd is the facilitator on this global forum. it is working. it is making progress. we should give it a chance. tom: within that and giving it a chance, the fact is the president of the united states doesn't want to facilitate anything. he is looking at that in a very discreet, unilateral basis. can there be a move from a multilateral discourse over to some form of bilateral solutions to get us off this trade war tactic? >> clearly, china and the united

states would have to be part of the solution, but the multilateral setting is the one that will work when you're talking about excess capacity. and here you're talking excess capacity not only in steel and aluminum, there is also in chemicals and lumber and glass and a number of other things. dealing with this and creating a way in which we can address these fundamental issues rather than applying tariffs to each other is clearly the better way. it is going to be in everybody's best interest. as you said, it is not just for the disadvantaged of the emerging economies. it is bad news for everybody. guy: isn't america being treated unfairly? shouldn't there be some change in the way of trade the way these two countries work? >> it has to do with comparative advantage and productive fifment now if there are unfair practices, there is a place and there is a way in which you can

denounce them and take them and get a judgment and then zpwrenalt sanctions if necessary. that is called the world trade organization. guy: the u.s. going down this route indicates it doesn't feel that method works anymore. >> well, i would say there is the world trade organization. when you're talking about excess past, which is a specific problem, it is a massive question. we have not 1/3 of the total capacity of steel is surplus. ok? so the problem is no countries are selling it below cost and creating a lot of pressures around the world. you know, a lot of companies are being shut and people being laid off. the way to deal with that is to reduce capacity. in an organized negotiated way rather than in this -- through the sanction way. guy: ok. karen, is multilateralism

working at this point? there a lot of rocks being thrown at globalization and at the multilateral process which doesn't seem to be functioning. in many ways the trump administration has grown frustrated with that and as a result it is responding in the way that it is. have we gone too far with multilateralism? >> i think you're right. unfortunately i think the process should work. but clearly the politicians are not feeling that they are getting sufficient scale response from these multilateral organizations. it is now i think for them to say right, we're stepping in. we have a role to play. we can act quickly. we can be the mediator in this. and they need to do that really promptly because i think the longer we go through days and weeks where they sit on the sidelines and say we could play a role here, then i think that question will then not being the

basis for the discussion anymore is going to continue. >> this was a tailor made solution to a problem that was meant to be faster and more focused and that is what's happening. tom: mr. secretary general. i want to bring up a chart. i did this chart just for you to impress you the bloomberg knowledge. this is inflation-adjusted soybeans back half a century. there is a huge boom that i studied in school in 1970's boom. what is important is that the chart clearly shows the commodity deflation across many globalizations. can the new globalize acings and can the new logistics, is its possible that can survive in a commodity deflation? >> you and i learned in the same schools that there is a fundamental question of supply and demand. and there is also a question of course of changing attitudes and

changing of the patterns of consumption by the public. then you take those things into account and you get a resulting price. there have been these booms in he prices of raw materials and then an adjustment, almost a predictable cycle. i would think that today what we're seeing is the normalizeation but there is a very massive change in con assumption patterns in china. tom: we're going to come back with the secretary general and karen ward as well. stay with us. worldwide. this is bloomberg. ♪ welcome to the xfinity store.

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with xfinity mobile. plus ask how to keep your current phone. visit your local xfinity store today. tom: good morning. guy johnson in london and i'm tom keene in new york. futures up the bloomberg -37, dow futures -429, and that puts

us on the 200 day moving average on the dow. right now with a news briefing on tariffs, first word news with taylor riggs. taylor: a tit-for-tat trade war between the two world's largest economies is escalating. they will impose tight 5% tariffs on a wide range of american products, including soybeans, cars, and airplanes. that came after the trump administration imposed tariffs on $50 billion of chinese goods. chineseying to change intellectual property practices. daughterr of the suspected in the youtube shooting says she hated the company. he told the bay area news group that she was angry that you to quit paying her for the videos she posted on the platform. cyberattacks on u.s. pipeline companies are increasing. operator has reported

that its electronic communications system was shut down over the last few days. three other companies have confirmed they were hit by cyberattacks. last month, the government warned that russian hackers were conducting assaults on the electric grid and other targets. president trump says he will deploy the u.s. military to guard the border with mexico. he is also told mexican leaders who will drop out of the north american free trade agreement unless they agree to help secure the border. the president has been unable to persuade congress to give him money for a border wall. global news 24 hours a day to by more than 20 some journalists and analysts in more than 120 countries, i'm taylor riggs. .his is bloomberg tom: we welcome our global audience. both speaking about these tariff announcements are china. as said in the opening, it is a tit-for-tat.

ward is joining -- karen ward is joining us and michael mckee is onset. you will remember as does the secretary general, president reagan and others going after japan. why is going after china and president trump different than going after japan and president reagan? michael: the issues are different is that what we are accusing china of his intellectual property theft. the question with japan was unfair trade caps and various barriers. president reagan took the japanese to note - negotiate he . he got them to agree to an voluntary trade quotas. tom: this is compartmentalized.

soybeans are really not that big a deal. do not tell that to iowa. michael: they are a big deal. are probably the world's most widely used crop after coin. rn. soybean oil is used in cooking oil across asia and animal feed, very important around the world. edamame toaving at show the trade war between u.s. and china. what can the oec and madame lagarde do and the world bank? >> i can only speak for the oec that the idea discussions are better than applying the hair tariffs, it's better to talk.

this example of how are we dealing with the question of some voluntary reductions of the exports, etc., i think it's a good example of how we can talk about it rather than start to applying tariffs. the problem is not just the areas that are affected, which this case you noted to the $50 billion mark. they are very large. at the third of the total exports of the united states into china. the other question is the spillover effect. thet of all come all chinese products will be more expensive in the united states and vice versa, but also there will be a spillover effect and other sectors. there will be spillover effects in other countries. there also be the temptation to go this direction in order to settle any other differences. this is a bad way. this is a lose lose. you.karen, let me talk to

does europe's sort of benefit? the latest sanctions target the boeing 737 800. they have limited the weight class for the aircraft affected. matchesales pretty much the 7372 doe7, -- zero cap an opportunit the 737. does europe have an opportunity? karen: the latter. we see europe as the big play on global trade. when trade is expanding and global cap x is expanding as aesop through the course of last year, great news for europe. europe is always in the spotlight and that will always remain a loser even if it's not the epicenter of the discussion. >> everybody loses here. it's atell you also that

very big country and there's a very big surplus and one of the european countries. the problem is you cannot negotiate with individual countries when you're talking about trade in europe. that makes it very difficult to deal with these bilateral surpluses. airbuslove how you bring into this and michael mckee takes it further by saying, wait a minute. we're looking western centric. you are saying, they are building enough plants in china. there are two civilian aircraft producers in the world and china has tried to build a third. jet aircraft are extraordinarily complicated and difficult to build. they are trying to entice the u.s. manufacturers and the european manufacturers over to china to help get some of that intellectual property and some of that expertise.

boeing has demand from china to fill so it does make sense for boeing. china's long-term plan is to develop its own aircraft company to rival those two. if you are getting involved in trade disputes about this, gets a confiscated -- it gets very complicated. guy: airbus does have a plant in china. it is mainly focused on narrow bodies. they are producing to aircraft a month from that plant. are the europeans more embedded in the china market and does that play to their advantage? you talk to people in germany at themoment and they tell you conversation flow between beijing and berlin at the moment is incredibly high. michael: boeing is opening a plant in china. china southern airways's chief said they need both companies because they cannot produce

enough airlines to meet chinese demand over the short-term, the next 10 years or so. both companies are bank played off against each other by the chinese. it does not appear anyone has a specific event. the bottom line is china wants the expertise and to fill the hole for the time being and then essentially in the long run make their own. tom: we are advantaged by you being here on trade, but i must ask about mexico. can you explain for the global audience the distinctions and interest in this mexican presidential election? how do you observe that election in mexico? >> the election is today's old -- two days old. it's very early days. we will see changes throughout. iod, so iree month per

think it's a little early to say which way it's going to go. it's going to be mostly the issues and that's the economy and the jobs. security issue. there's also the question of transparency, integrity, and corruption limiting very high. tom: let us speak of mexico's northern border. the president sending out a tweet about america's southern border. for us howrpret mexican officials look at this caravan from vendors that is walking north toward america. onel: i think it is specific instance of the flow of people that are moving towards the united states through mexico. knownk what people don't

is the enormous amount of cooperation. every day and every hour of the day between the united states and mexico that goes on in order to deal with these issues. as the flow from mexico to the united states has ebbed and sometimes becoming negative as mexicans returned to mexico for opportunities, the question of the central americans is something one has to deal with because they go through mexico. -- and actually it's happening in the ground that greater and greater corporation between mexico and the united states is helping to deal with the issue. guy: the higher the trade tensions get with china and united states, can i assume that terms to likelihood that we get in after them? -- get nafta done? angel: no, i think nobody wins.

this is bad. issues, up a number of which should not be mixing up. today we have all these arguments about the border and about the wall and about this and nafta. there are other questions in the case of korea. then there's the question of the issues with steel and aluminum for the countries not exempted. then there is the exemption, which is up to the end of may. what will happen after the end of may? how is that going to be dealt with? it looks like it is some kind of short hanging in there. resolvedngs have to be and they have to be resolved in a way which is consistent. has provenfree trade

over the last 50-70 years that it is net positive. the question of the modalities may be have to be adjusted. was actually launched and created and it was good for everybody, but there was no internet then. it has to be updated, upgraded, it has to be changed. we are not saying it doesn't have to be done, but those instruments that created competitive regions like nafta today is vis-a-vis the rest of the world. products from the rest of the world coming into nafta, they have be strengthened and upgraded. guy: thank you very much for coming to see us. l of the oecd.ange karen ward is going to stick around. let's take a look at the big moves in the united states this morning. we are certainly seeing individual names being targeted by the market already.

as you can see, we have boeing trading down in the pretrade. tesla softer on the back of what we have seen out of china this morning. this is bloomberg. ♪

guy: 45 minutes past the hour. i am guy johnson and tom keene in new york. white house insiders say there are no active discussions over the turn of power in the trump administration despite twitter attacks against the company and jeff bezos. karen ward is still with us. the white house says nothing doing. the trump tweets say something different. what gives? >> the white house certainly

itself does not say. guy: five sources. there are many. >> trump has a lot to say on twitter. it's hard to know really from a regulatory or legal perspective he can do to tackle amazon at this stage. amazon, when it talks about the dominance people assert it has, it's really in e-commerce and not commerce as a whole. it wants to be compared to walmart for instance. the government does not control the postal service either. it runs independently and does not take taxpayer dollars. the one thing it can do is attack amazon's ability to get federal contracts. there is a federal contract for cloud services, which is a huge profit driver for them. that could be a target of punishment. tom: the solution of tech companies is to hire every lobbyist moving on k street.

is amazon like that? is amazon heavily lobbied in washington? alex: amazon is very well-positioned there. amazon has been there for a long time. the thing that we have seen in recent years is the new arrivals with the likes of facebook and google, they have been manning up in the past five years, but amazon has been there quite a while. tom: thank you so much. greatly appreciate it with bloomberg news. wonderful yesterday on the coverage of spotify. karen ward with us as well. the technology stocks are abroad set. which part of technology is attractive to jpmorgan asset management? karen: i think the underlying trend toward automation, towards robotics, that is sound. that is a very long-term trend. we have shrinking working populations to maintain gdp. we are going to need to continue on this path of automation.

thinking about that as a long-term trend is something we are absolutely happy with. thinking about the different components of that, it may happen in surprising ways. it may not necessarily be a clear tech company. they may be some of the inputs and the semi conductors, etc. run,ech thing is a long sound thing. there are elements changing within that. do: what this is about is you capture revenue growth, which is the drug of the tech companies, amazon, netflix, and the like, or do you work down the income statement? how will the margins be over the next two years in general down the income statement? karen: i think we are thinking about all the areas of compromise at the moment in the same way, which is how much pricing power does each individual firm or sector have?

that is changing dramatically. you can see that certain sectors are seeing their pricing power return. technologieslder in the heat of disruption have got no pricing power still. then there's the question of how wage growth is picking up and how input costs are changing. i do not think that is a tech issue. that's the key question as we think across every sector right now. guy: how the portfolios are over weight sayings at the moment? -- fangs at the moment? the market has gotten narrow and narrow. if i want more hopefully of -- my portfolio to outperform, i've got to have them. is that something i need to still have? karen: we have been thinking more about this sort of automation, robotics, and the

role of big data and how that is changing the global corporate landscape in a much broader sense. i'm not sure for everyone it is that narrow. we do not think it should be that narrow. this is a much bigger story and they're much more obvious ways, but there is a long-term tech story to play. guy: thanks to karen ward of jpmorgan asset management. claymore conversation surrounding the china story, which is certainly moving markets. boeing trading down by 5.75% pre-trading markets. this is bloomberg. ♪

tom: huge news flow. it's a sad story, but not for wall street. budgedeutsche bank breaks a huge barrier. we are under that, down a little bit. a nine euro handle would be unthinkable, but that's a huge deal. nicholas copper in the finance team reporting jpmorgan says get to it and limit the u.s. business. guy johnson? % as we speak.

u.k. firms report wage disparities. the country is the biggest yet to try and address the gender 9000ap and expected companies are legally required to report the differences paid between male and female employees. let's discuss. what are we going to learn to day? >> we're going to learn that the average pay difference between men and women, we're going to learn about the proportion of men women paid bonuses and the proportion of men and women in each paid quartile. what has overwhelming come out of the data is that there is a gender pay gap, but the reason why is there is a lack of women in those seniormost high-paying roles. guy: i'm here is to know what the disparity looks like. nejra: let me give you some examples.

out of the big banks, the worst is hsbc with that average pay gap of 59%. goldman sachs coming out with the average pay gap of 56%. some of the football clubs are worse than that. the players salary is included in that, but you could ask why aren't female football players more? on the best performing and you have glaxosmithkline at 3%. tom: we studied all this in school. guy johnson nails it about the median and the mode. what is the statistical wringer of this? or is this simply a view of 30,000 feet of a given firm? nejra: a lot of people have welcomed the statistical rigor of this. includingfirms do, the banks come is report a gender pay gap voluntarily, but they adjust the numbers.

when they do that, some of the big banks say the pay gap is only 1%. hsbc andto the 59% of goldman sachs of 56%, a bit of a difference. when you talk about the mean and the median, one economist pointed out the median and show one number. paints and even worse picture and shows you how women are not paid as well. tom: thank you so much for that. we have so much to talk about here on "bloomberg surveillance." china reacts to president trump. stay with us. markets lower. ♪

♪ tom: this morning, tit-for-tat. markets react as china pushes soybeans. don't one, we have a problem.

-- des moines, we have a problem. boeing in gm down sharp in trading. president trump is not a target. all the president's lawyers begged him please be quiet. winning again, i guess. ask,fy streams a bid and down 11% from the first trade. they get the deal done. this is "bloomberg surveillance." i'm tom keene in new york. guy johnson in london. observedws flow as he earlier with european inflation. inflationttle lesser complicating things for mr. mario draghi and mr. kearney. guy: the core number was softer than anticipated. it is the core number we are focusing on and that is where the ecb has really focused of late. the headline number affected by all kinds of things. all kinds of things can enter up the usefulness of that data come

up the core number continues to be a problem. if you assume the trade story escalates from here and that slows down global growth, the lack of inflation plus the short cycle chris a problem for the ecb. tom: we will do a complete data check in a moment. for the first word news, here's taylor riggs. taylor: china has struck back against proposed u.s. tariffs on chinese made goods. beijing's low post .5% import taxes on 106 american products, including soybeans, cars, and aircraft. that matches the scale of tariffs announced by the trumpet ministration. they are targeting semi conductors. president trump is complaining that china is violating intellectual property laws. the suspect at the youtube shooting was angry with the company because a quit paying her for videos she posted. that is according to the women's father who want police that she

might be headed to youtube. the woman killed herself after wounding three people. special counsel robert mueller has told white house lawyers that president trump remains under investigation, but according to "the washington post," he does not consider a president the current -- the president a criminal target at this time. he reiterated his need to interview the president. output inl march was the lowest. that is the least since last april. one of the factors was a big decline in venezuela's output. opec and its allies have curbed fo production in a successful attempt to curb oil prices. 24 hours a day powered by 2700 was and analysts in more than 120 countries, i'm taylor riggs. this is bloomberg.

tom: real changes here as well. features at 23 .533. lily right on that moving day -- really right on that moving the average. c where the vix is. a higher number with more angst in the market. soybean futures, we are becoming familiar with and i will have a chart on that in a moment. guy: let's look at some of the other numbers and give you an idea of what's happening in the european space. if there is one economy in europe exposed to global trade, it's the german economy. the dax index is trading down by 1.32% this morning. 1.73%. down by hsbc down by 1.36%. around .57.

boeing trading down sharply pretrade right now. tom: deutsche bank breaking 11 euros. jpmorgan publishes this morning with a report on deutsche bank saying fix the united states and quickly. let me go to the bloomberg. this chart matters as it's got to be soybeans. do you like that? is a little bit of a technical glitch we are having right now with me in the background. big deal.own a i will put soybeans out for bloomberg radio. what do you have this morning? guy: good to be transparent. let me show you the chart interesting.is the chinese have put a weight class when it comes to the aircraft that they are going to target. is a boeingcks in 737 800 but right in the middle

of that weight class is general dynamics gulfstream. these are the kind of aircraft targeted. at boeing 787 dreamliner or triple seven, they are not going to be affected by this targeting. its interesting how the chinese are going after this one. to michael mckee's point, there is an aircraft that compete in that class of their targeting. general dynamics as well. gm is trading lower as well. if you want to pull up these charts, we have a new fantastic function. look at that. g tv -- you can basically browse all the charts we are featuring on bloomberg television and catch up on all the analysis. you can save them, which play a people will be doing. tom: we welcome our global audience. what a great job our team has done putting that together. to the politics and the

international relations, we are with calvin's really -- kevin cirilli in washington and emma o'brien. mr. kevin cirilli, let me start with you. respond to. trump these attacks on iowa, boeing, and gm? kevin: number one, he will just double down or secondly he will back off. we should note that the details of his original trade policy that he has released with regards to china are still waiting to emerge. this is being perceived as a warning shot. it's very important to note that boeing and caterpilla, the pressure they can put on the white house. this is around the corner for midterms and this will hurt conservatives and read republicans in states like iowa all throughout the country. this is a midterm issue for him as well. tom: great observation from

iowa. let's go to beijing right now. we see look at beijing, the video from the vice ministers of finance and commerce. help the president translate what you observed in beijing this morning. what did they say? what was their angle? emma: we had that an initial list put out with those spectacular numbers matching the $50 billion and the 25%. going for those products that are regarded as the nuclear option like soybeans, the aircraft as you mentioned. then we got into the press conference and the rhetoric was more the same. when i think we are seeing here is china is tried to get trump's attention and trying to tell him that they want to get back to the negotiating table. that was the overwhelming message from the vice ministers . they said if you want to fight a trade war, we will fight a trade war with the, but if you want to talk, our door is still open. step?: what is the next

what is left in the chinese covered if it wants to hit back at this point in time? i'm curious as to how the escalation works around this. is currency next? do we hit other aspects of the agricultural sector next? to the chinese still have in their back pocket? emma: it does seem like they've gone from zero to 100 in one day from that $3 billion initial round of tariffs to really matching with the $50 billion today. there are still weapons in the arsenal. they could hit the education trade for example. discouraging chinese students from going overseas to study at u.s. colleges. they can make life hard for u.s. companies here in china. obviously, intel, apple, other u.s. companies have big manufacturing operations here. they could hold up a whole

manner of things for those companies. ways theyny different could go at it. there's also been suggestion that they could mess with the yuan. it could be used like the evaluating it or the other way around as a political tool in this fight. they do have a few things up their sleeve. my impression is they have gone very splashy and very intentionally big to get the president attention and try to get back to the negotiating table. guy: do you think that will work? do you think the white house will be surprised at the speed and ferocity of the response at the beijing? kevin: what's interesting and to pick up on that last point is that china has criticized the administration in terms of who exactly they are negotiating with. i speak with a lot of sources in whatngton as well that say is president trump's ultimate end goal and what are they hoping to get to? that is the point of confusion

right now. no one knows exactly where the president wants to take the u.s.-china relationship to. that has raised a lot of confusion. tom: maybe he wants to take it to des moines. i love this in "the atlantic" magazine with a cute photo of the little takes. iowa is critical to the relationship yo. some counties could suffer job losses as high as 40%. stayed with a couple in a farming community of 20,000 people, sleeping in her son's bedroom, whose walls were covered in football themed philadelphia eagles wallpaper. this is the reality that the president has to do with. former governor branstad going to tell mr. trump? kevin: you would argue that they

would say he has the back off. if you look at the policy, senator chuck grassley from iowa has been very much against what the president has been doing because they know this hurts farmers. president trump -- he did not win iowa during the campaign, but he had a strong showing in the iowa caucuses. it was a large part because of the farmers that got behind him as was the energy sector out there. this hurts the middle of the country. people are going to make that case. he has got to sell this as something that is ultimately going to help them. he also has to sell that he knows what direction he is taking the country and with regards to this relationship. tom: along that line, who does president xi have to sell in china? it's a different politics to be kind about it. what is the domestic politics of this trade war for president xi in china? emma: that's a really good

question. it's sort of talks to the idea that the bark might be worse than the bite in terms of this $50 billion package announced a few hours ago. attacking the soybeans trade hurts china as much as it hurts the u.s. they are very reliant on this $50 billion a year trade. they need the soybeans to feed pigs for the big pork industry. they cannot get soybeans from anywhere else really for the quantity they need at this time of year. they are putting things on the table that are big and flashy and hurt themselves. they are saying we are willing to go there. we are willing to do this. it's taken them back to the table and show him that they will go there. it's to scare them back to the talks. tom: thanks for staying late in beijing.

kevin cirilli as always is wonderful in washington. many other stories and the market deteriorating now. the futures down. let's get to this chart as we go out. i want to show this as we go. this is deutsche bank and it is just deteriorated further down to 10.88 euros. the trend has not found a bid as well. coming up on our central banks, chris rupke next. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i'm taylor riggs. let's get the bloomberg business flash. deutsche bank is shaking up its supervisory board. it has proposed a former merrill lynch ceo to take over from existing board members this year.

ceo john cryan has been struggling to turn the bank around. that led the chairman told fox of potential -- talks of potential successors. china get a foothold in the cash rich reinsurance is trade. it is in preliminary talks to buy a stake. the stake is unlikely to exceed 10%. report that the world's largest advertising cap and looking into allegations of improper personal behavior by ceo martin sorrell. sayswall street journal" it is also investigating possible misuse of company assets. there's no comment from sorrel or the company. that is your bloomberg business flash. tom: let me look at the market right now. guy johnson pointing out that second leg down minutes ago and it continues. that's a big move in the last 10 minutes. down 554 points.

market, down 18% on the dow would be 21,000 at 300. we have two economic stars with michael mckee and we will migrate over to fed discussion and christopher joins us as well . let me start with you on the are star. what is our start? chris: it is the law back williams model. it is essentially real short-term interest rates longer-term. what is the potential rate? that came down and i don't know theyhe estimated -- estimate it, but they estimate it collapsed during the session. just from 2% down to zero. and as one of the reasons why rates cannot go up. they used to think the potential rate, the normal rate was two

percentage points higher than it is today. tom: this is john williams of san francisco. hugely respected and you have interviewed him many times. how far is john williams at the new york fed if he heads up there from chairman powell? is there a difference between powell and williams? michael: not in terms of current policies. the difference is john williams has a phd in economics and has been one of the most known ponte policy experts of the generation. powell understands a little about modern tape politics now that he has been on the fed for a few years, but john williams is the into whic intellectual he right now. randy quarles is not an economist. . jay powell is not an economist. brainerd is, but that's it. you look for john williams for ideas. one of the things the fed is considering now is do we don't the 2% inflation target and go

to some other scheme? 2% isn't working. guy: to that point, the fed chair speaks in chicago on friday if my bloomberg is correct, which am absolutely certain it is. how much is what he's going to talk about going to revolve around trade? -- to this trade issue upset could this trade issue upset current thinking and models? michael: the trade issue could be huge and emphasize could because it down the road. it's a small part of both economies at the moment. if it escalates, it could be a big deal. if you are saying if, the fed cannot deal with it. it has to do with what it can model and anticipate. they cannot factor it into their considerations. it as something they are keeping an ion, but it

will not influence the fed's monetary policy decisions right now. they are looking at jobs. friday is jobs day in the united states. they will be looking at incomes and whether wages are going up and whether we are finally getting an employment low enough that it pushes wages up on a regular basis. that will be much more important to their thinking going forward. guy: there's a lot of ifs and buts in the process. to worry the trade issue could shorten the economic cycle and bring forward any recession that could be coming? chris: what it does is that it generates tremendous uncertainty on the part of businesses and how they have arranged their supply chains to get goods coming to the country and whether they will move additional factories offshore. i think that uncertainty factor -- don't forget uncertainty if it's more or a trade war, it could really impact businesses investment decisions. investment is the key driver

of economic growth over time. i'm worried about what they're doing on both sides. at the moment, it looks like they're trying to do some sort of positioning at the bargaining table eventually. they're hitting each other pretty hard, china and the u.s.. i do not know how much these tariffs are going to be slapped on there and start affecting exports yet. it looks like a negotiating ploy on both sides at the moment. i say that as the dow futures are now down 600 points. guy: i was about to make that point. the market is taking this reasonably seriously and markets in europe are taking this quite seriously as well. the u.s. in many ways should be relatively protected. the u.s. is a relatively closed economy compared to the european economy. is it actually europe that could end up suffering the most as a result of this? is it a country like germany heavily geared toward global trade that could feel tension? chris: i am always struck by

exports in every nation as a key driver of growth as well as investment. we areays struck by that always convinced that world economic growth is picking up this year and looking better. it is really this year story. if you look at the breakdown, it is really the u.s. where growth was revised up this year. every other country -- china, japan, the european union -- all those growth areas are going down. tom: here's a chart right now. i will try to do this for radio. gtb -- if you have a bloomberg terminal, you will be as smart as mike mckee. this is the dow futures. i have the february crisis in the middle. we are getting the rapidly. how do central bankers look at the equity markets? chairman greenspan really paid attention to the markets. dothe modern chair people -- the modern chair people really

pay attention to the dreaded stock market? michael: they got horrified by the idea of the greenspan put. the new on the head when he said this could impact business confidence. cause businesses to pull back on investment, the fed has to worry about what the growth rate is going to be and whether they will start laying off people because they're not making as big of profits. go upct that markets and down in fear he will not affect what it does. they only make decisions really four times a year that matter. we have got a long time until we get somewhere. behind himre during the last press conference. do we need more print transparency and chitchat in the afternoon from chairman powell? chris: don't forget back in 2004 and 2006 that they raised rates a time to your.

it was different. they say they are only going to go three times a year. maybe they do not need those eight times. guy: does this work in europe? mario draghi is out there every meeting. does it work? guy: it provides clarity. remember that the ecb did not publish what it calls accounts until relatively recently. degree ofme transparency, but a press conference definitely works. it provides -- i think in the last period in which we have been trying to understand what forward guidance means, it has been a more useful process is much of the central bank can provide that guidance tacitly or not tacitly. when we get into that does not it's anymore, i think going to be a very different kind of experience. and we wait and watch

will figure out exactly what's happening. about -- ia little want to come back to these markets. i'm watching another significant drop for the dow. i have a mixed price on my screen that is showing the dow down 2.5% and it has taken a big leg lower. it is going to be interesting to see exactly what happens. next to bloomberg's mike mckee and chris is going to stay with us. tom: very good. it will be interesting to see as well. one more question with michael on an exceptionally busy day, what will you listen for from washington today? do you look for the senator from iowa? do you look for the president of the united states? do you look at his tweets? michael: there's no public event on the president's schedule so there's nothing we can watch for except tweets, but the next move is up to him. the chinese have said what they would do. does he go back after them?

tom: how does mr. navarra respond to what we saw? michael: from everything that we know about what you think about china, i would say respond strongly. tom: thank you very much. we will look at economics, finance, and the movement into investment as well. let me tell you about the for the conversation on this wired into the regulation and process of washington. sheila bair on bloomberg and the 8:00 hour today. stay with us with more data checks. this is bloomberg. ♪

♪ tom: good morning everyone. guy johnson in london. i'm tom keene in new york. markets reacting profoundly worldwide to the actions of china as they list a number of

import taxes, tariffs on the united states. -564.tures i am seeing correlation in stronger yen almost to a one of five handle this morning. our first word news, here's taylor riggs. taylor: tit-for-tat trade war between the two largest economies is escalating. tariffs on american made soybeanssuch as , autos, and airplanes. of the suspect in the shooting at you tube headquarters says his daughter hated the company. police near san francisco say the woman killed herself after wounding three people.

the suspect's father tase t desk says she was angry that youtube -- says she was angry that youtube quit paying her. in "the telegraph" newspaper, britain's prime minister hit out at the difference between men and women's earnings, one of the "burning injustices in gender equality, and progress remains far too slow." president trump says he will deploy the u.s. military to guard the border with mexico. he has also told mexican leaders he will drop out of nafta unless they agree to help secure the border. the president has been unable to persuade congress to give him money for the border wall. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thank you so much.

when the news flow changes, we change. links advertising into technology like no one i know. spotify, amazon, facebook, even general motors. but he also knows the state of chaos in the advertising business, none more than the "wall street journal" report yesterday afternoon of martin sorrell. we are thrilled to have him on, but he is really beleaguered right now. what is the less you read in "the wall street journal?" very: the allegations are vague, so we don't really know. i think what is going to concentrate minds around is concession. absolutely bring it to the forefront for investors. that brings up a whole host of other questions. there is no clear number, and there's pros and cons to not having a number two. tom: it is sort of like goldman

sachs that do this in an organized and transparent, visible manner. sir martin has been doing this for 35, 40 years. >> to a large degree that is true. you could argue that is a downside to the approach. i think there is far less of a hierarchy and agencies. i observed in my time in the industry that in an agency, powers which you can tell others to submit to, it is much more about persuading others to support you then you can command and control in a bank. tom: is it time to exit a leader? there is a time where you want to exit. martinmartin -- has sir overstayed his welcome, if you will? >> i am sure there are investors that would prefer that. i would not say that that is necessarily true.

what should elon do? elon musk of tesla? >> i don't know. they are a whole other university problems, i'm sure. hopefully everything else goes away, but i really don't cover tesla. i think this is going to play out in terms of whether of how there mindful agency can grow with new leadership. we will see how that plays out. how much more bad news can get priced into wpp? i think your issue of who is going to be next, the stock has been hammered hard as of late. what is the fair value for this stock? is this a perfect storm for the business to deal with right now?

does it need someone to step in and figure all this out? it is could argue that worth more than one of the stocks trading, one of the only stocks that has a buy rating at this time. i don't know. could it go lower? are there worse conditions? the expectations are so poor there is no expectation for growth easier -- growth this year. there's not much expectation for margin improvement. does there need to be someone else to provide a vision? maybe. i think investors would respond to any clarity around long-term growth. guy: can i draw a line between what has happened with facebook recently, effectively and advertising business, and what has happened with wpp?

do we need to rethink exactly how that relationship is going to work. ands likely the facebooks other companies likely to face more regulatory standards going forward. how is that likely to affect the vpp? -- wpp? >> i think regulatory action on facebook is more likely to be an issue, maybe even something not like that -- not unlike that in the u.s. it could be an issue for facebook. but i don't see regulation impacting the agencies. their business devolves into whatever marketers need. --guy: they tried to resolve the planning problem by doing a deal. would that be possible at wpp? >> the way this has played out

does introduce new possibilities because if you play this out and is there was a new leader put in place, it is possible someone would have a different vision for how the country would evolve , and that could very well include position in the company to be sold. as it stands right now, wpp is less likely to be sold or be --olved in transition with in transaction with another agency calling company. chris i want you to elaborate now on the scene where hearing from mr. weezer. there's all these nuances of creative destruction. explain once again in the conway in econ 101. >> manufacturing was different.

it was a larger part of the economy. different industries were up and down. now it is technology, and the internet is going to do away with various jobs. i think it is still a good thing, but maybe the market is value in this a little too much. if you look at some of the earnings of amazon and facebook, the price-earnings ratio of these highflying companies is very large. the leadership of disney is saying we are going to leave conventional tv and do it our way. is that the theme in your world brand over the next five years? >> i think companies will benefit from trying to be the source of their own creative destruction, anticipating where the world is going and recognizing the need to leave some of their business behind.

you can give them credit they they -- credit that they have been more vocal about doing that. if facebook, for example, recognized data privacy is going to be a huge issue destructive to their existing business and get ahead of it, it would hurt their business in the near term, but help them in the long run. i just pull it back to one of the topics we have been discussing this morning, what has happened with china? at the heart of this issue and what the trump administration has been talking about is intellectual property. . does what we can see right now between china and united states affect the technology sector? it is something you are looking at to understand? is there an opportunity that may come out of this? do you think going forward that ip will be better protected? considering that is where we started come how does this ultimately end up affecting the sector? >> it is really interesting.

inna has very limited impact most of the advertising companies i cover except for wpp. it is the single most exposed advertising agency between north america and europe in china. most of the companies have no exposure in china, so they are not impacted by that. they are impacted by economic trends that come from changes in tariffs. tom: who is your disruptive model right now? in your world grind some which company is getting disruption right the most! -- the most? i am going to suggest it is not facebook. >> your point on disney is not a bad one >>. it is really hard -- is not a bad one. i don't think that most companies have positions on that. tom: that is where we are today. thank you so much.

we've got all sorts of movements in the markets, down 524 points in the futures, 600 earlier or getting right there. leanl sandberg will forward with us in the 3:00 our. stay with us. this is bloomberg. ♪

♪ taylor: let's get the bloomberg business flash. president trump has been attacking amazon on twitter, but according to people who know you're with the matter, there are no active discussions about turning the power of the administration against the company.

one person said the president raised the idea of having the postal service boost rates for delivering amazon packages, but his staff explained the rates are set by a commission. billionaire activist investor paul singer digging -- taking aim at hyundai. hyundai says the changes proposed last month will benefit all stakeholders. it was one of the worst quarters ever for legendary hedge fund --ager david i've more manager david einhorn. last week, bloomberg reported that his fund dropped 14% in the first quarter. that is your bloomberg business flash. guy: shares in deutsche bank --aching the 11 euros level

the 11 million euros level -- the 11 euro level. significant is 11 as a line in the sand for investments, do you think? not pretty tot is see, but as long as we are not at the level where we were in the fourth quarter 2016 when there is really a lot of concern about the bank and the way forward and whether it could be a viable bank among some investors, that is kind of the fundamental psychological level. 10 obviously is the area you don't want to go close to because that is another psychological level. if you cross that out, it doesn't look pretty. thatjpmorgan pointing out maybe bb k should pull back from

the united states. s has taken responsibility for a lot of the action. how big of a blow is it personally for him that this is not performing? guest: it is a big blow. one of the first investor conferences, he was asked by an analyst about growth potentials in asia. he said the u.s. is such an important market for us, and spent a long time praising the u.s. and how important they were for deutsche bank. if the bank was to follow advice and scale back their equities business and corporate clients business in the united states, that would be a big blow because it is also the identity of the back area -- identity of the bank. nicholas, it is something a

lot of people have talked about, that j.p. morgan says, let's do it. i want to know where you are in germany what the board's want to do. i don't think banking worldwide understands the unique structure of the deutsche bank board. how out of patience are they? guest: the board is not necessarily one homogenous entity. tom: agreed. guest: there are some investors who are represented by individual board members, essentially, even if they are not officially so. for example, hna group. they may have individual views as to how to proceed. some people may want to see cryan go. some people may want to see him stay at have restructuring. a lot of people are behind the fact that the bank needs to

overhaul itself, to bring back sort of the cost control capital levels to where they should be. they are divided on how quickly they need to be winning back revenues, how quickly they need to be winning back market share. i would say that is the key differential in investors at the moment. tom: stock price gives boards of directors a certain urgency. we saw it was citigroup a few years ago with the gentleman from the back of a lie -- of alai. i want to know the consensus in germany to fix this institution. i don't have a clear answer on that. what is the immediacy in berlin to fix this important national institution? guest: i don't think the german authorities care that much about the share price. tom: oh come on. they've got to! guest: there are representatives

of individual shareholders on the board who really want to see that addressed more quickly. they want to see a bump in the share price happen sooner. but cryan himself has said he is not managing the bank in the short term for the share price, and what the government makes in the share price is not their main concern. their main concern is seeing this bank on a safer footing, less complex, less risk, and at a later stage want the bank to develop. they want the bank to be able to accompany german companies and generate more revenue in that sense. but right now for them, it is not the primary aspect. it is the massive investors in the company. they are the ones really ramping up that pressure. guy: thank you very much indeed. behind deutsche bank

him, if you are interested. tv is something you need to pay attention to. it gives you all the charts we are using here on bloomberg television, and the analysis going with it. that is the landing page for tonight's deutsche bank chart you are looking at. this is bloomberg.

♪ tom: -45 on s&p futures. guy johnson looking at dow futures as well, -542 this morning. good morning to all of you worldwide. singh christopher is with us umfg, looking- of at deutsche bank and all that is going on with these trade wars in china and the united states. written the he has smartest note linking fixed income and to all of our economics on wall street. chris, you own this chart. what did the gloom crew get wrong about curve flattening? , wet: you know, flattening

have various fed members turned over so much. aboutre very concerned the curve flattening here because they have read that when the curve inverts come a recession is around the corner -- inverts, a recession is around the corner. i have it going close to zero over the next two and a half years. it is important to realize -- and powell, i am starting to , noted in the press conference that when the curve inverted before it was because the fed raise rates to very high levels. it is not the same story right now. short-term rates are low, so a curb flattening or inverting does not mean -- curve verting doesr in not mean a recession. tom: yields are way down here, so you have different dynamics.

guy johnson, that just played beautifully on radio. guy: absolutely. the pointnter to you are making, the bull market is not really reacting to the news flow this morning in the way that stocks are. can you explain that? guest: i can't. people think financial market conditions tightening, the stock 10% from theg start of the year, will not fedct said rate changing -- rate changing. the market at the moment, fixed income market, doesn't see stocks as being something that is going to take a rate hike off the table. tom: how big a deal is wage growth and jobs reporting? >> it is big because the bond market says it is, but i like what powell said.

the market thinks higher wages mean inflation, but it is really chicken or egg. i think realistically we would have more wages if there was more inflation. tom: thank you so much. bill gross scheduled to be with us on friday. let me do futures on the way out. we got foreign-exchange, dow futures -540, s&p futures a little worse earlier, but near lows for the day. stay with us worldwide on china and on washington. this is bloomberg. ♪

♪ >> trade turmoil. china smacks 25% tariffs on u.s.

products in response to tariffs on chinese goods. soybeans caught in the crosshairs of a trade war, causing turmoil for midwest farmers. where do you hide in a tit-for-tat trade war? >> welcome to "bloomberg daybreak." i'm david westin. let's talk about ripping up the script. this is how markets are doing. it looks to be a very brutal open here in the u.s.. s&p futures now down by over 1.5%, 44 points. it is a similar story in the currency market. the yen moves higher as there is a safe haven bid there. what is interesting to me is the lack of bid in the treasury market. yields