♪ >> talking to down trade tensions. this china willing to negotiate? investors breathe a huge sigh of relief. land of the rising rates. before the boj chief economist says that a hike is likely within a year as inflation accelerates higher-than-expected. admits that the data of most of its to begin users could have been accessed, but mark zuckerberg insists he is still the best person to run the company. ♪

welcome to "bloomberg surveillance." let's check in on the markets. what a rally we are witnessing today. the stoxx 600 is up by 1.6% after falling for the last couple of days. concerns about a global trade war dissipating a little bit today. bloomberg u.s. dollar index gaining as well. as you can see, the yield on the u.s. 10 year is rising. the big data please tomorrow is the u.s. jobs report -- piece tomorrow is that u.s. job support. the bond market has barely budged. it has been purely an equity led. selloff coming up, we are going to speak to the chief executive officer of abu dhabi financial group about what is next for the company. big interview coming up in the next hour.

also coming up later this morning, robert sinche gives us his global outlook. and tonight of course, we have sheryl sandberg speaking in one of the first injuries since the facebook scandal -- data scandal breach. -- data breach. >> the u.s. and china have indicated they are willing to negotiate on escalating frictions. white house national economic council director larry kudlow spent much of yesterday trying to calm markets after the countries announced tariffs. trump is sending national guard forces to assist border authorities along the u.s.-mexico border. the move was due to america's security being under threat from " illegal activity, including

drug smuggling. the memorandum did not say how many troops would be sent to the border, or for how long. the white house has signaled that the u.s. is committed to keeping troops in syria to fight the islamic state. presidentne day after donald trump wants to get out of the war very soon and bring u.s. troops home. he said he is committed to inminating -- and syria -- syria. the vote by the nation's top court paved the way for the imprisonment of the front runner and brazil's october election. the judge who prosecuted lula is now --.

the bank of japan is likely to raise its yield target within one year, according to the central bank's former chief economist. he said it will adjust its target for 10 year government bond yields after gains and consumer prices, excluding fresh food and energy rose 1%. the saudi general entertainment authority has announced a deals to bring it shows such as a disney on ice to the kingdom. amc entertainment has said it is planning at least 100 new theaters. the marble experience will open later this year and national geographic plans a series of events. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am nejra cehic. this is bloomberg. >> thanks a lot. to berkets appeared

increasingly optimistic that a full-blown trade war between the u.s. and china may be avoided. u.s. stocks turning positive yesterday as larry kudlow said that the countries still have time to work out their differences. china's ambassador to the u.s. also said it dialogue was his first choice. this is what our guest on bloomberg had to say about the prospect of a trade war. >> i think right now we are locked in a traditional game of chicken. the only way to make a double threat is to be prepared to cherry out that threat. i think the potential for a trade war is far higher than at has been for a decade now -- it has been for a decade now. >> i am not expecting this to be what you saw announced in the last 24 hours to be the and the game -- the end game. >> we are confident that -- will prevail. >> we think he is willing participant in trying to press

much harder than what we are used to for better trade arrangements for the u.s. that means a bumpy ride, i think. >> the development between the united states and china is very unfortunate, because i think these two countries are enjoying the most benefits of this global trade. >> let's bring in the managing editor for europe bloomberg news. let's start with you. concerns dialed it down yesterday afternoon -- dialed down yesterday afternoon. >> indeed. larry kudlow spent some time yesterday trying to calm things down. we are at least two weeks away from any tariffs being slapped on anything, so there is on it time to talk. we have seen this before where the president gets to indulge

his frustrations and aggressiveness, and over time things get dialed back. doesw with the u.s. sending the military to the border, and then we saw that it was just the national guard. there is plenty of rope to reel back in. >> jeremy, within the asset space it has been equities, which has been a lightning rod of concern when it comes to trade. asleepties have all be -- obviously been the lightning rod. we are going back to a little bit more of george or in terms of negotiations. i think in the context of the equities space, clearly what we do see is equities selling. the u.s. dollar is under a little bit of pressure. the yen is a traditional beneficiary, which is bad for

the bank of japan in terms of inflation targets. we also see the euro performing a little bit better as well. they are potential beneficiaries of a trade war between the u.s. and china, and of course that could be at the benefit of europe. >> besides europe, who us benefits? >> if you think about the trade war dynamics than you can start thinking about those economies that are open and oriented to trading becoming the net losers. those are the ones where potentially there are greater degrees of insulation. an obviousng counterpoint, the swiss franc, and somewhere like norway. >> is there more willingness from the chinese side to enter into dialogue? is there more of a reticence from the u.s. side? behind are both parties willing

to negotiate? >> the point was made yesterday that negotiations are taking place behind the scenes. again, except for a singular person of the occupant of the white house, i think everybody both on the chinese and u.s. side are trying to dial things the talkingms of about some sort of settlement. what that turns out to be, who knows. >> trump wants some sort of victory, doesn't he? even if he does not levy the tariffs that were announced, he still wants some victory ahead of the midterms. if this plays out he is hit pretty hard in those farming states. >> you can be sure that he will claim a victory, no doubt. that was what was immediately seen. bloomberg did a trip -- terrific

map of the biggest losers from the trade war. in redere cuts to trade states, trump states, and the central and north central midwest of the united states. stretch is here with us. bloomberg users can interact with the charts that we have been showing you. analysis,p on key save charts for the future, you can do all that. do stay tuned. bloomberg. ♪

♪ economics, finance, politics,

this is "bloomberg surveillance." let's get the bloomberg business flash. here is nejra cehic. moody's has cut barclays net rating. it also says that writings from other u.k. banks could be affected. it expects the changes to leave the bigger earning swings for barclays capital markets. facebook has said that data on most of its 2 billion users could have been accessed improperly. the company said it has removed a feature that let users enter phone numbers or email addresses into facebook's search tool to find other people. >> i am the first to admit that we did not take a broad enough of view of what our responsibilities were. i also think it is important to keep in mind that these are

billions of people who love the services we are building because they are getting real value in being able to connect and build relationships on a day-to-day basis. that is something i am proud of doing and i know we're going to keep on doing that. nejra: facebook coo sheryl sandberg joins bloomberg for her first interview of the day later. oracle co-ceo criticize the bidding process for a cloud computing contract and a dinner with donald trump. they complain that it seems designed for amazon to win. trumpet made no indication he would interfere in the bidding. the president has repeatedly attacked amazon and its ceo, jeff bezos. that is your bloomberg business flash. >> the boj is likely to raise its yield target within one year, according to its former

chief economist. cui tiankai says the central --. --ay trumps criticism president trump's chris is in of the you and it could. -- jeremy stretch is here, head fxg10 epic strategy -- strategy. it has been a long gear, hasn't it -- year, hasn't it -- it will be a long gear, wanted -- ye ar, won't it. >> we have been looking for an adjustment in boj policy for the last couple of months. that is one of the reasons we have been constructive on the yen. i think this realization has obviously started to take hold. we see investors really materially paring back positions

in the course of recent weeks. there are trade relation concerns in that as well. i think in the context of the markets been to sanguine, i think that has starts to -- it started to diminish. 100?ll we break through near that 104 get , 105 threshold, expect those comments to go in -- come in. i think we are going to be trading closer to 100 as we go through the year. i think the 95 handle is probably a story for 2019 rather than 2018. >> we have got the u.s. treasury's semiannual currency report that could come within the next month. japan, southhina, korea, germany, and switzerland

were on the monitoring list. the u.s. could brand china a currency manipulator, it has threatened it, but it has not happened. given the backdrop, it is uninteresting report. -- an interesting report. >> it is interesting. we see this perennial concern that china is going to be named, but it hasn't. oft is perhaps a degree politicize asian -- politicize asian in the process -- i think it is worth keeping in line some of the other bilateral relationships. we have seen china and the nafta members being the ones that have been most pertinent when it comes to trade discussions. that is something to keep in

mind in terms of another front to be opened. it could be brought into the process under the treasury --. >> with the jobs report out of the u.s. tomorrow, does all of this trade, tit-for-tat rhetoric change the dynamic when it comes to the fed? we had one fmo see member talk about it -- fomc member talk about it yesterday. hikes looking too optimistic? or is it too early? >> we have assumed there would be three hikes in 2018 and we still sit with that presumption. in a weekrising that of payrolls it has not been the preeminent topic of conversation that it normally is. we have been very much focused on the trade dynamics and the trade concerns. in a sense markets have been almost forgetting about that

tomorrow. if we see another strong employment gain or a sign of earnings taking up, that might reawaken the market as to whether there should be three or four hikes. we don't think the trade tensions will crystallize into anything to dramatic, but the rise and trading tensions -- in trading tensions will still be a factor. ,> jeremy stretch stays with us head of fx strategy at cibc. facebook now admits that most of its 2 billion users could be vulnerable. that is next. this is bloomberg. ♪

♪ watching are "bloomberg surveillance." let's talk about facebook. outlining waysay in which the privacy of its 2 billion users might have been compromised. of the that, shares social network routing aftermarket zuckerberg stoked optimism. he defended the company and his leadership. >> i am the first to admit that we did not take a broad enough of view of what our responsibilities were, but i also think it is important to keep in mind that there are billions of will of the services we are building because they are getting real value in "to connect and build relationships on a day-to-day basis.

that is something that i am proud of our company for doing, and i think -- and "keep on doing that -- and we will keep on doing that. mark: what were the big takeaways from that call? >> we have a number on the number of accounts that may have been accessed by cambridge analytica. they previously thought it was 50 million. tweeting analytica was during this entire conference call and they are denying it is not that many. the second big thing that happened was facebook released a , orof data disclosures actually some changes they are andng in terms of api's have could access the information. they are removing this feature a specifican search

phone number or email address in the search bar. that could be the sports you like it, the teams you like, the tv shows that you like. some of these reports have been saying that -- asking the question, did facebook go far enough? this just shows how much information facebook had outside to harness, and they're asking white are they just telling us now that's why are they just telling us now? mark: was mark zuckerberg convincing? >> he has said this has not affected their stock. this lucrative data is what advertisers want and that is why we saw the shares rise. that is what investors want. what happens next week when he goes to congress?

the europeans want to see him as well. tois send that he is going send lieutenants to the europe and u.k. to speak to lawmakers and regulators there, that they want to see him in person. mark: australia starts a formal investigation as well. think you so much. sheryl sandberg joins us for her first interview of the day at 8:00 p.m. u.k. time. do not this -- missed this interview. could the bank of england be in trouble if it delays a rate hike beyond today? we will have a conversation on that. this is bloomberg. ♪

♪ francine: welcome back -- mark: welcome back from our london headquarters in london. the bank of england expected to hike rates at next month's meeting. this is coming just in time

according to bloomberg economics. wage growth is finally gathering speed. analysts say that any hesitation would probably result in the economy overheating. we will talk about this in a second with the jeremy stretch of cibc. mi falling to 51.7 -- you 31.7.lling to -- 51.7. bad weather taking its toll in march with growth slowing. there is heightened economic uncertainty, meaning that overall growth probably slowed in the first quarter. based on industry surveys, estimates expansion of .3% down from .4% at the end of 2017.

the services pmi dropping. it is far weaker than forecast and lowest since july of 2016, just after the brexit vote. industry alsoding feeling the effects of the unusually bad weather in march. the pmi for manufacturing published earlier this week was little changed. now,estion to jeremy right is because the drop in the pmi was weather-related, does it change the underlying views of the officials at the bank of england? jeremy: first of all, partly weather-related. i think the impact of the consumer confidence element should not be downplayed. i think that is an important dynamic. i think in the context of the bank of england, they are set in that presumption of a rate hike.

in the context of these retreating pmi indices, there could be a risk that the number could be sub trend. we may come if we look at the dynamics, may only get a quarter increase of .2. that is a risk. i think the bank are very clearly predestined, or at least anticipating that they need to raise rates. the not convinced about overheating argument come up i think there is still plenty of significant headwinds there being faced by the consumer, even if we are on the verge of a crossover in terms of positive wage earnings -- earnings growth. worriese brexit overplayed? the view is by some of the forecasters that it is at the top of the charts, 8% from now until the end of the year rise

in sterling. you're not quite that bullish, are you? jeremy: i am not that bullish. absolutely markets have improved the sentiment because of the immediate exit fears -- brexit appears that we have seen in terms of the traditional -- initial divorce fears. we are discounting effectively a bank of england hike. we have good news on the brexit scenario in terms of what he had seen. we have seen that reflected in the dynamics in terms of sterling positioning. what is going to be the characterization, what is going to be the extenuating factor that is going to drive sterling materially higher? h radio being negotiated -- a trade deal not the -- the negotiated? that is not going to be the case. risks let -- political

can never be ignored in the u.k.. you have elections coming. i think sterling could lose some of its impetus before having a slightly better period. mark: could we have another rate hike in 2018? could that be asking for too much. jeremy: the way that markets often tend to operate, that when relativelyves and a short space of time -- in a relatively short space of time, is that imply that we see another hike in november? i think that is what the market will try and discount. i think it will be the case of -- of to what carney says -- up to what carney says in that press briefing. mark: the last figure shows that currency deficits have narrowed a little bit. jeremy: it is still over 4%.

mark: why does that not weigh on sterling moore? more?rling britain is not thrown in that debate, why not? jeremy: it is not thrown into that debate to the same extent. it is an economy that has significant investment income flows. that, what we are is that sterling tendsto underperform -- to underperform. it does tend to have a variance in terms of risk appetite. i think there is a modicum of influence from the current deficit -- current currency deficit, but i think the trend has improved. we are moving away from the 5%, 6% threshold.

i don't think we should ignore that currency count. ank: in the midst of escalating trade war, sterling you think would underperform. jeremy: u.k. trade relationships are already up for negotiation. if we see signs or we were to see signs of a deceleration and global trade and trade flows -- in global trade and trade flows, that is going to be detrimental to the u.k. toertheless, if there were be potential trade barriers or trade frictions, that would not play particularly well to the u.k. mark: thanks for joining us, jeremy stretch, head of fx strategy at cibc. coming up, we gauge the public mood with brexit. we speak to the abu dhabi financial group. this is bloomberg. ♪

♪ welcome back to our weekly brexit show live from our london headquarters. -- showst polling from that the public thinks brexit was the wrong decision in hindsight and will leave britain were soft economically, but that the government should continue with its current negotiating terms. --ning us is britain's u.k. bloomberg's u.k. politics reporter. this is a fascinating poll. all of your polls are fascinating, markets, but so many things to discuss about.

what is the most interesting finding? out of all the questions that you pulled, which i have written down -- polled, which i have written down, and of all the questions which one had the best -- the most interesting response? >> will think that brexit is going to be bad for jobs -- people think that brexit is going to be bad for jobs, for british influence in the world, and yet the only number that matters is that brexit will be to lower immigration rather than hire immigration. as long as that number seems to be about 50% it does not seem like there is real signs of regret. mark: is that what you read? as long as that number stays positive, theresa may can be content?

she has had a few good weeks, to be fair. >> yes. i would view it as it were from the other end of the telescope. a majority of members of parliament think that brexit is a bad idea. majority of the members of parliament think that brexit will leave their constituents poorer. the, a clear number of members of parliament cannot see a way not to do brexit. those who think it is a bad idea and will leave their oorerituents p nonetheless think they would be badly punished by their constituents if they did anything to stop it. the emigration answer is as good a answer as any as to why that is. mark: which reflects in your

question, would it be legitimate np's toplease to -- reject the final deal. on the final deal, this meaningful vote, you can merge up to stick with brexit. >> that is very much shaped by the fact that article percent of remainders who still think that ers say theymain do not like it, but say it has to happen. the question comes when we turn to the issue of the second referendum. should there be a second referendum? about 36%.els lie at should there not be a second referendum? support at 42%. mark: what if it was discovered that there was cheating going

on, or something? >> exactly. this may help explain why that second referendum support level has been creeping up. point ofr the halfway 40%. secondion to a referendum is closer to 40%. i think your question of cheating might be really important here. the facebook information, the donation scandal, the question of cambridge analytica, all of this leads nearly half of remainers believe that had the referendum been run fairly, they would have won. mark: we talk about and i read

in your daily articles, the noise is getting louder for a second referendum. going tot mean it is happen, but the noise is getting more audible. >> let me step back a bit. i had a very interesting conversation with a tory mp who is absolutely loyal to the tory party section of the plane. i would be astonished if he ever voted for anything else. he said to me, maybe brexit will not happen. i thought, that is an astonishing thing for you to say. there are various people who have set their faces against this, or at the very least of minimizing the kind of bugs it that we have -- kind of brexit that we have.

a member of parliament thought it might not happen. is theerybody agrees on way that you kill a referendum is with another referendum. there is a problem that having gone to the country and said to lots of people, many of whom do not normally vote, and you say to them, i know you feel that we do not listen to you and we are all aloof and not interested in you, but i promise you if you come over here and vote on this thing, this time we will listen to you. how do you then go back to those people and say, i know that we said that we would listen to you, but we would just like you to come and undo the thing that you did. we don't want to listen to you. that is democratically, politically there a difficult. you have this odd situation.

for me the most interesting thing about theresa may was that acceptsexcepts the -- the argument that essentially the political problem in brexit is how to minimize the economic damage of brexit. she is not saying how can we find economic opportunities from this. that is not what she is saying. she is saying, we need to minimize the economic harm. once you have started down that road, there is a sort of moment where the answer is, we can just not do it at all. that solves that problem, but it is very democratically hard to do. >> and the public don't believe that is a good enough reason not to do it. voters went into the ballot booth believing that brexit would harm the economy and thinking that was a price worth

paying. haveey would rather theresa may negotiate rather than jeremy corbyn. is that the case? >> yes. only 14% trust jeremy corbyn. >> jeremy corbyn is having a tough week. >> the thing to understand about jeremy corbyn is that he is absolutely unassailable as the labor leader. it is hard to imagine what he could do that would cost him his job as labor leader. let's be clear. it emerged that he had offered support for a clearly anti-semitic painting on a wall in london that was being taken down. his supporters back him. he says he did not realize it was anti-semitic. there is no very good explanation for how you came to the offering of that kind of

support. one possibility is that i offered support and lots of things without looking at them. it is not a great look for a party leader. another one is, i thought it was quite a good mural, which is even worse. his supporters view the whole thing as a plot. they view it as smears to get rid of him. [laughter] mark: there is nothing he can do, essentially, to get himself removed. >> yeah. and during a time where there is worries about brexit, about the economy, about the government's handling of security concerns in the country, it is still the case that the conservative party leads the labour party in the opinion polls right now. that is very telling indeed. mark: we could go on for hours. sadly we are dictated by the time.

up next we speak to the abu dhabi financial group. facebook -- with facebook and its peers under the microscope, is now the time to bet on startups? this is bloomberg. ♪

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♪ -- cine: mark: economics, finance, politics, this is "bloomberg surveillance." the abu dhabi financial group is buying a stake in 500 startups, boosting its involvement in the tech space. it will be followed by substantial capital injections wit. with tech companies under more scrutiny than ever, is now the time to be investing? an interesting time given the spotlight on technology firms. >> absolutely. 500 is a different breed of technology companies. it focuses on venture capital investment. it has a global reach and every single company. i think it is very much different than the mature technology giants that are out

there today. mark: what do you make of the negative news flow towards some of these mature technology giants, whether it is facebook, president trump at second amazon, -- attacking amazon, tesla? >> i think to be fair, those companies are continually disrupting the status quo. they are improving the lives of people and the economy in the longer term. we have seen the changes in the way we live in the last 20 years. there will be scrutiny and challenges, that i think that is the short-term. mark: can you tell us how much you are investing, and what sort of stake it will give you? >> it is a strategic stake. we have invested in the company itself, in the model company itself. severaltups manages

venture capital funds and is in several different countries, about 18 countries in every single consonant. 500 startups is unique. it is one of the most active -- was one of the most active investors and 2017 -- in 2017. we have been in touch with a dfg. we have great chemistry with the team and decide it lasted was the right time to take a stake in the company. mark: will you set up funding in middle east technology firms? >> we already have one. startups,d with 500 there would now be more activity in the middle east. mark: what is good right now and where he are you investing get -- where are you investing it? what are the enticing sectors? >> we have recently embarked on the technology space. we have built our own technology

platform and augmented it with this. we are very much focused on the gcc region at the moment. we have had recently different stakes in different financial services companies in the gcc and middle east also. we see this as a great opportunity. mark: you said back in december that you wanted to purchase another asset manager. any progress on that? who are you looking at and where? what sort of money do you have to spend in this case? >> we have hired someone already to look for a certain firm that we can acquire. mark: what would be suitable? >> something that has the same culture that we do and same dna in terms of entrepreneurship approach. a firm that can easily be brought onto adfg.

our focus will be north america and europe. mark: what is your strategy to these investments? >> that exhibit -- is a very good question. both companies were turbulent companies. they have had massive issues in the past. we have taken helmet of those companies -- helm of those companies in the past two years and have made a great turn around with them. mark: thank you very much for joining us. the ceo of the abu dhabi financial group. surveillance continues next with tom keene and guy johnson. this is bloomberg. ♪

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♪ tom: get used to it, we are trying, massive gyration in the

stock market, should and can central bankers ignore our new political volatility? they caravan is halted. the nafta talks. the national guard to the southern border. tomorrow is jobs than with chairman powell's wage inflation. this is bloomberg surveillance. i am tom keene in new york and guy johnson is in london, you look like the beast from the east who has had a snowstorm effect on economic growth in the united kingdom. guy: absolutely. sharply, one of the worst numbers since brexit. i will show you in a moment. seeing a little bit a drop-off in the data, the snow is the beast of the east he is referring to. just in case you are worried about what i look like.

tom: here with the first word news is kailey leinz. and chinae u.s. signaling they are willing to talk to avoid trade war. larry kudlow says there is still time to work out the differences after each country announced tariffs on the other's products. the chinese ambassador to the uss negotiated -- the trump administration is backing off one of the biggest sticking points in negotiations for the new north american free trade agreement. is softening its demand for more north american continent and car manufacturing and the administration is pushing to reach a stopgap deal this month. there is more evidence that facebook failed to protect privacy on making billions from the information, they says data from 2 billion users could have been accessed improperly and facebook has removed a feature that lets users enter phone numbers or the mail addresses

into a search tool to find people. in brazil, the former president is heading to prison. hissupreme court rejected appeal to stay free while appealing a 12 year sentence for corruption. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. this is bloomberg. tom: thank you. equities, bonds, currencies, commodities. a historic day yesterday. guy did a great job of showing the u.k. reaction as we had a wild new york. up 700 points today, another nine on s&p futures with dow futures up 46 points. risk on field across all oil a bump yesterday. from may 20n huge 3, 24, averaged 20.02.

the only thing that makes sense is the idea that the 30 year bond at 306 let out from the 299 yesterday. guy: amazing how center the action was in equities. in europe this morning, dax up an0%, an economy that has explosion of global trade with yesterday suffering and bounces today. dividends in the european space. euro-dollar is 1.2264. jerome powell tomorrow. the poor services data out of the u.k., sterling rate is falling a little bit. the dollar is big. despite up 9/10 of 1%, the downgrade. tom: we will talk about that. deutsche bank with a bounce today. this tribe matters, 18 to pick from -- this chart matters, 18 to pick from. the dow with a gap down, world

coming to an end as it was yesterday, down 500 points during surveillance yesterday and we launched 784 points intraday higher. amount, the new volatility, i will get gray. already.- wait, gray the new volatility. provided reason for the blood to give pumping. i will put your chart in context. tom: please. guy: yesterday, one mind with the price swing. a chart showing down moves, greater than 300 points. ending in positive territory. 1999, showing to the context of yesterday 785 point move and how many times we

have seen that. not very often. bigger moves over the last few weeks. tom: can i steal that from you with g tv ? guy: it is already happened. hillary clark spent a lot of time holding the chart and the more we get it out there, the better for everybody. let's talk about what yesterday tells us going forward, global equity market whiplash, from this time yesterday, when the terror of story was really big and factored into the market. was really bigy and factored into the markets. hans-guenter redeker from morgan stanley is here and edmund shing from bnp paribas. what can i learn from yesterday? >> equity markets over the last few weeks have rediscovered we see morend

normalizing volatility. that is about it. youou want to get further, may argue that we have seen, if you look at big etf's in the u.s., s&p 500, biggest etf, big know,ws, retail, as you when retail investors exit, the smart money should be coming back in and vice versa. a good time for smart money to come back in. guy: the most heavily shorted stocks yesterday in the united states rally the most. a squeeze factor. why did that other asset classes play? >> in the fx market, people try to get guidance from what equity markets are doing on volatility is doing. our view is that markets still have a lot of risk. that was the reason we saw a that people said risk

or appetite should be into portfolios. we saw yesterday that wears an overreaction to what came out on the trade side. you need to look into what are the implications of what have been trade tariffs. -- ourumnists estimate economist estimate it will be "percent on each side of china and the united states. what the fed was saying, they have a number of a quarter percentage points. that is rounding errors. at the same time, we see the fiscal stimulus coming into the united states, which came effective from mid february on. most of that has not yet seen in data. last week, we have a situation where the market was paying and you could see that, bond yields going down and corporate bond spread widening. we said it does not make sense.

an environment of a fiscal stimulus. for the equity market to come , you need to get an inflation concern and we are not. . tom: we are not there yet. we saw it in the u.k. yesterday and maybe we will see it with jobs market tomorrow. i am an optimist and i want to take advantage of the political and market volatility we see. which currently parrot expresses that most clearest -- currency pair expresses that most clearest? >> on risk sensitivity and sensitivity to commodities, you will find there are two currencies, sterling and norway. , we are now also heading in the environment where the dollar correction, that has a lot to do, global growth looks strong, not as synchronized as

it looked in january. the data coming out of europe, we have seen that the surprise indexes for europe were falling 11.a fast this paste cents 20 ago,we have done two weeks we said in dollar yen, 1.05 look to the upside and not to the downside. in respective euro-dollar, look to the downside and not the upside. as the dollar correction playing out against low currencies. what is the risk to the strategy? inflation. labor market tomorrow report showing sharper increase on wages, under those circumstances , you may have to look for a broadening of u.s. dollar rebound. you would get the australian dollar and canadian dollar, coming under selling pressure. we are playing dollars drink

against low yield because we do not believe it is time to prepare for higher wages. tom: edmund shing, when i look at equity derivatives and a way to take the opportunity here, if i am optimistic, how do you express that in the equity space? >> you know as well as i do, because you have equity of derivatives, talking probability , right now, i would argue that some of the best probabilities could be stressed by upside option, calls and call spreads. in some of the higher volatility indexes, or equity sectors, you may want to play a call spread. let's say you believe global trade concerns calm down, you want to play mining because commodity indexes are on the rise in terms of prices. that will drive earnings. the sector has been hit by global trade worries. europeanreceipt, the

-- call spreads have higher volatility. maybe coming back to this point, u.k. can be interesting because the ftse 100 has been the biggest underperformer year to date of all developed equity markets. it is a globalized index with hot commodity components, mining and oil. this could be the market you want. tom: it was something yesterday to say the least. hans redeker and [applause] of -- and edmund shing of bnp paribas are here. spotify trying to find a bit after a few days of trading with deutsche bank, barclays, how .bout the headaches at facebook she is the chief operating officer and may be the chief hand holder for mark zuckerberg, sheryl sandberg in the 3:00 hour. this is bloomberg. ♪

♪ >> this is bloomberg surveillance. let's get the bloomberg business flash. saying pet food can help reinvigorate sales as they agreed to buy a company. the premium dog and cat food maker is backed by celebrity chef rachael ray. it is has got barclays debt rating one level above junk. barclays may not be the only one as movie says the credit rating for some of the biggest british banks. those regulations fourth barclays two separate investment

banking activities from retail operations designed to protect consumers cash. the head of ubs investment bank says he has a very aggressive plan for the u.s. he is doubling down on a pledge to ramp up the president and wall street go making and tells bloomberg he wants to assemble leading teams for sectors such as retail and software. a person briefed on the strategy says ubs will double the number of senior level of bankers within the americas within 3-5 years. tom: thank you. guy johnson, the story she just did is to me the most fascinating story in banking this month so far. we have a european bank that cannot leave america. ubs stepping up again -- staffing up again. how can these banks leave america? i never observe that where you pull away from new york, have

you? guy: the problem with the strategy is the americans are big in europe. that is where the problem is in that. i know suggesting european banks need to do that to deal with the constructs they currently have. tom: fascinating to see the back-and-forth. they cannot talk about banking employment or fed and about the important job stay tomorrow. hans redeker of morgan stanley and edmund shing of bnp paribas. there seems to be a new technology disinflation. all the arguments about where inflation is seems to be wrapped around a study of all these new technologies. are we misjudging where inflation should be, and do we have to set everything lower? >> always dangerous to look at one topic. saysweek, another study workers replacement of

will be a total global -- 66 million. significantly lower number than what had been suggested. to look at the technology progress and that impact it could have on wages, i think you need to look at that in broader terms. in the past 20-30 years, a very important development, the integration of the asian and chinese labor force into the global production process, which came on the back of a significant capital expenditure boom in china. we have seen the china price deflating for many years. when you look at durable consumer goods exported out of china, they have been deflating since the year 2000. this is going back into positive price territory. on top of that, the renminbi

depreciated -- it appreciates against the u.s. dollar but as weling -- it implies that have to think about the china price and the impact it will have on global process. -- price. tom: where does bnp paribas see inflation, u.s. -- you can --ber soggy and mario draghi is it soggy inflation the central banks will have to deal with? perhaps. short-term, we should separate the two time frames. over the next two months, things will be slow to figure out, particularly in europe and the eurozone, we still have quite a wide output gap in many countries and a lot of people still unemployed, particularly the youth. especially in france, italy, spain. to the end of this year, i believe the inflation

pressures pick up and this may be more of an h2 question but it will happen. thehat point, we will see bond market turnaround instead of a flattening of the bond the g10 rate strategists believe we will see a steepening on the back of this resurgence of inflation. this is being signaled by ppi numbers and the price component of the pmi indices in the u.s. and elsewhere. just a matter of time in our view. guy: germany, the output gap has closed, evidence and the pmi data suggest german companies are at capacity constrained. why are we getting wage inflation as a result? >> in pockets, already happening. the wage agreement above what we have seen for several years. other partsts and of the economy may have to follow. in the past come in an environment with lower wages, the sector which was exposed to

global competition that was leaving the downturn on waging creases. there, we have seen the turnaround. it means watch integration and i think inflation is on a slope trend to higher levels -- slow trend to higher levels. guy: edmund shing and hans redeker will stick around. withg up, a conversation the atlanta fed president at 11:00 a.m. in new york and 4:00 p.m. in london. this is bloomberg. ♪

♪ welcome. i am guy johnson in london and tom keene is in new york. andtility, hans redeker edmund shing are with us. cboe skew index. getting pointy-headed. volatility has been picking up late judging the vix. prices out of the money options, not at the money options. why is the skew down as much as it is an does it tell us the market is not wind protection from big swings and what we could see in the way equities position? >> cboe skew index, i do not want to bore viewers, from our point of view, not the best way to calculate steve, not properly

normalized. it can give misleading impressions. in isolation. we see that clients have been buying protection on the downside. through the last few months. rushing and panicking no, but buying. more put buying been call buying. maybe these you index is not the best reflection of reality in terms of investors hedging. guy: are your salespeople finding investors are anticipating bigger swings? we had a chart showing the swing yesterday in the dow. is there an expectation we will see more price swings? >> i think yes, i come back to the point that i made before, 2017 was abnormally low in terms of, not just equity market volatility but volatility everywhere. equity market implied volatility reflected that and was incredibly low. investors were old into a false sense of security, wi-fi

protection if it -- why buy protection until it drops a much? we have had it with a call. -- a wake-up call. this year will not be such plain sailing. guy: edmund shing and hans redeker joining us from morgan stanley. coming up on surveillance tomorrow, francine lacqua, one of the best gigs, internet via -- she will be in on the shores of the italian lake. at a workshop. a nice place to be feared starting at 4:00 a.m. and 9:00 a.m. in london. this is bloomberg. ♪

tom says good morning. guy johnson with a derivative chat. , i insist edmund

talk to us. does that work, in this new volatility? does your greek world of skew variance, does it work in this new volatility? let's go back to derivatives 101. i am not going to get into the definition. that will bore the pants off of your viewers. way. put it this forget normal distribution. they do not work in equity markets. that is the truth. havee end of the day, we fat tails. fat tails will always

get you. with our first word news, here is kaylee. kailey: the leaders of the u.s. and china wait to see who blanks first. both have announced plans to impose tariffs on each other's products. there is time to back down. the u.s. tariffs cannot be imposed for 60 days. the head of the environmental protection agency has allies backing him. they are mounting a campaign to keep scott pruitt in office while he fights ethical allegations. , wanting been arguing to keep a man who has been a champion of deregulation. trump is sending the national guard. they will work with states on the border to determine where

guardsmen will be deployed. is likely toapan raise interest rates in a year, chiefing to the former economist. implant -- inflation is rising faster than expected. toy four hours a day, powered by more than 2700 journey -- journalists and analysts in more than 120 countries. currentzil's presidential candidate may be heading to present -- to prison. this just months before the presidential election in the country. bureau chief on assignment in berlin.

it is early over and brazil right now, so that is good for us. talk us through what this means. this is a good outcome for the financial markets. >> this is the man barack obama once called the most popular politician on earth and now he probably faces a prison sentence of up to 12 years. will be difficult for him to bounce back after this. everyone agrees he will not be running in this year's election. welcome thiss will news. he was the front runner. since he left office, he has turned more left, become more

radical. that is what spooked investors. he has pledged to undo market friendly reforms brazil has been undertaking in the last couple of months. to what extent can he influence elections from inside the prison cell? most people agree that is limitedlu. la-- limited. lula on facebook is not the same as lula on the streets. guy: what will the likely outcome of the election be? investors will be a plodding, somewhat hopeful, we are likely to see a rally. short-lived. the second person after lula is admitsr army chief, who

he knows nothing about economics at all. in the mainstream centrist reform candidates, they do not go beyond a single digits in the polls. go beforelong way to we know who has a chance to win. it is a wide-open field. tom: i am thunderstruck trying to find an equivalent to mr. lula's downfall. how does the financial community year arc of and 30 this politician? we struggle to find a template. it has not been seen. the closest you may calm is the polish leader, from a similar

background, labor of movement, ran into trouble himself after he was in the presidency. lula was a wall street darling when he was in office. in part, due to the commodity rally we saw the time, money was flowing in. brazil was doing well. it all went south from there. when the commodity boom was over, brazil began running out of money, they started heterodox policies. what investors want is stability. they want clarity on who is going to calm out of this. theil is emerging from worst recession on record. this is a breaking point for brazil. strongly bounces back or not. to show a chart i have never shown. weighted brazil.

up we go, 2000. strong brazilian reality. the total collapse. what do you make of this rollover here? the recent rollover in the ial.ilian re it is going to be very important. if you break above that, you could see momentum build up for the brazilian rial. you need to look at global liquidity conditions.

what is going to happen to u.s. yields. offers aget it still significant real yield. the righto find environment for that. there is risk looming up. if inflation is ticking up, you have the increase in premiums, that trade is not going to look great. we have some may be opportunistic moves towards , but they turned neutral on emerging markets three or four weeks ago. we stay on the neutral and we m to get ready to go into negative.

that is dependent on what is happening on the condition of the globe in respect of growth of versus inflation. higher wage indications are coming up out of the united states. that would not be tolerated by the market. it could have huge impact. we think it is too early to assume that. if that is happening, you have to know you need to go the other direction and bill then the possibility -- and a build in the possibility of --. >> does brazil benefit from that? it is one of the big producers of soybeans. hans: you have redistribution of the soy trade. prices somebody set to increase, that could be brazil.

the real big thing is driven by liquidity. we have too much liquidity in the system. glut ofat i call the european and japanese savings. we have to make a judgment on that. it is about getting the clear idea and going out and trade. tom: thank you. we are going to give you a briefing. huge volatility yesterday with futures. bloomberg up seven points right now. your morning briefing on bloomberg radio.

bloomberg daybreak, our digital product. good morning radio london. this is bloomberg. ♪

banking in america and recovering european banking. we have to look at barclays. the soap opera of deutsche bank. we get with stephen morris. how global is barclays? are they a little united kingdom bank? >> they have the remainder of the lehman brothers business in new york.

that is really their only two investment banking centers. it will fail or succeed. what they need to do is get higher returns from their u.s. business. nothe moment, they are making headway in winning back market share. i had a conversation with a man at the -- at davos. in terms of who has the better business mix, barclays is in the better situation. they have a good u.k. retail bank and eight good global -- and a good global credit card business. deutsche bank does not have that. that is why they are trading at such a steep discount.

guy: explain why barclays has a lower rating than deutsche bank. aforementioned retail bank is separated from the investment bank and they cannot help fund each other, they cannot share profits. the ratings downgrade from moody's is a reflection of that. the investment bank will have to live and i on its own and earn its own keep. -- live and die on its own and earn its own keep. barclays has a lot of expensive debt it wants to refinance this year in the next. it has been telling investors it can save up to $1 billion by doing this. your credit rating is downgraded, you might have to pay more than you expected. there is the risk you could be -- in investment banking markets

if your rate is low. there one notch below deutsche bank. guy: an interesting story to see how the deutsche bank story develops around us. thank you. you the gtvgo. you can access of this on your bloomberg. you will find the charts and your analysis. this is bloomberg. ♪

kailey: let's get the bloomberg business flash. credit card in savings customers might not be the only once misled by wells fargo. some clients were steered into investments that maximize revenue for the banks and compensation for its employees. wells fargo says it's actions did not harm clients.

sands has doubled adelson's pay. it is more than $26 million. the largest casino operator paid in shares$1 billion dividends held by adelson, his wife and trust. the saudi's have announced deals to bring shows from cirque du soleil and national geographic to the country. open as many as 100 theaters in saudi arabia. 's nextlks to form italy government began yesterday. today, they get on to the big parties. the president will meet with leaders to assess if a majority can be found.

according to a senior state official, he is unlikely to. how many times do you get asked about italy? my guess is not often. >> over the past few weeks, nobody was talking about it. the big safety net is japan. when you talk about italy, you talk about peripheral threats. you are pumping billions into .he european market

this money flow comes in and you have an election result and people cry it is bad for italy. you have more money coming in. the deflationary characteristics of the policy. it offered value to them. the japanese are smart enough to see that. therefore, this money comes in, you have stability. nobody is concerned about the issue. the japanese and mario draghi are going to rescue the european bond market. >> i don't think the european

equities market needs rescuing. just because we don't have the same degree in europe, we still have robust global trade. that will help the eurozone as a big net exporter. the strength in germany is still ripping out to the other economies. like the german manufacturing. have the problem with italy, as well, attached to the same country. i want to rip up the script and talk about spotify and the transition. of companies doing or pretending to work with the new playbook. you are in the heart of the

process, working with rates of change around it. are we trying to find a new rulebook for markets in finance as witnessed by what we saw was spotify? look at the broader picture, what we see across the banking sector to is revenue in this type of business has been shrinking. ipo's are not as profitable as they were. biggere trying to get a piece of what is becoming a smaller pie. the way spotify has placed , it isves on the market another example of how the pie continues to shrink. companies are saying we can save money and we don't need to pay rig fees to the investment banks. plenty of investment banks will do cutprice deals for their

services. trending towards concentration on the new york stock exchange as one example, the london stock exchange, are we seeing a concentration of these to greater volatility? greaterecessarily volatility, but we are seeing greater pulling of liquidity -- pooling of liquidity. we want to see better liquidity. the drive behind regulation is improving visibility, transparent. push.s the way regulators liquidity is an obvious outcome of that type of move. tom: thank you. we greatly appreciate it. what an extraordinary day yesterday. kind of remember the

emotion of down, down, down. then, with mr. kudlow, the complete turnaround. >> we used to have the fed put, now we have the kudlow put. it is unusual for a person in his position, i would argue. tom: dow futures up 64. we continue this discussion. a perfect day to speak with robert, to look at the correlations among the market historicis perspective. from london, new york, stay with us. this is bloomberg. ♪

trying, central

bankers ignore our political volatility. i am guy johnson -- i am tom keene. we have guy johnson. it harkens back to the warren buffett letters of another time and place. i want to go to our reporter who covers jpmorgan. what stood out this year for you? foremost, comments

on trade and isolation. he made recommendations on the actionable -- from china and making sure we have right information at those needs are not that. says the u.s. has legitimate grievances with china. he takes a risk balance tone. the letter itself was quite colorful. help me with alan goldstein's work. why is he the only guy who can write this letter? we don't get a letter like this from brian moynahan, mr. staley in london. what is unique about james dimon? >> he is using this letter to

talk on a bigger platform. last night, i was reading through warren buffett's letters. he talks about jamie dimon's letter. the subsequent day, he went on to say jamie thinks more about ans letter and he uses it as opportunity to talk about everything from his share price to succession, to management issues, one of my favorite part of the letters. is: what is interesting maybe amazon is not the place to be. he still sees a ton of opportunities. he has not done. that is interesting considering what people are talking about him doing next. ton of opportunity everywhere, including fixed income, currencies, places that

have had issues across wall street. lays out risk in the global financial market. brexit leads the list again. comments were toned down from last year. he adds cyber to this list. guy: what does he say about the fed? what is his background case surrounding the economy? >> he puts qe as one of the big risks. beis something we have to prepared for, given the u.s. has subpar economic growth over the last eight years. thank you. much more on this from bloomberg news. jamie on the cover. this is a real document. a ton of work put into this.

the people at jpmorgan, i wandered through it. bring up some of the few tidbits of 46 pages. in the past five years, we have bought back more money than god in stock. goes into an exercise of about how things are richer now. growth, it is about hiring and training bankers. the single most important moment in 46 pages is it is hard work. we need a fortress balance sheet. what would a dimon b without that? be withoutletter that? to talk no one better to on wall street on this than robert. he has 10 year at bear stearns,

bank of america. an extraordinary letter. as you look at the bankers you have dealt with, how does this guy get away with this when nobody else does? he has done a masterful job at jpmorgan. when you do that, you get a level of credibility. he has expanded that beyond the normal we met of a ceo of a bank and talk about a bunch of issues. andoes it in an intelligent rational way. , may beuffett's letters in past years, were similar to this. it is a terrific platform. tom: he was sent out to the hinterlands and comes back with -- a lot of people do not remember how suspect -- who is this kid who is going to run

jpmorgan? his management style is high-energy. he shifted to the international space. he is almost running for secretary of treasury. do you see this guy migrating from this position after he builds that skyscraper over to public service? >> it is hard to find anyone who would have that level of credibility coming in. he is respected. he is thoughtful. he is an engaging guy. i could see him in the political sphere. the in something like treasury department, he would be a terrific secretary of the treasury for somebody. guy: do you think the president will read this letter? you think larry kudlow will read this letter? do you think anybody in the white house will read this letter? the president, i doubt it.

46 pages is not in his normal re-mess. larry, i think he will read this and take some thoughtful views from it. i am not sure, knowing larry and his views, that ian jamie are that far apart in terms of important issues, particularly on china trade. they both think free trade is good, but they think fair trade is good. they believe we do not have a level playing field now. to thehave only been white house once. i saw jamie dimon walking out the door. it was interesting he was there. houseohn was in the white at that point. n'syou think mr. coh experience will put jamie dimon off doing anything in that direction? >> it would be a stretch for

jamie to join this administration. sometime in the future, we will see what happens politically and what his options might be. tom: i had a conversation with mr. diamond. it was short and private. a trueheard there was globalist. the back eight pages of this is an adamant statement rebutting the president of the united states. he mentioned trump twice. global after a post-world war ii america. that is where he wants to be. do you see american banking as a lead instrument to get us back to what we knew creek? k what we knew paris trump -- new pre trump? banks are in better condition to be that leading agent of globalization.

jpmorgan is perfectly situated for that. bob lived this with two major banks years ago. because weing back are not allowing them to be bigger? is it time to let these guys go bigger? headingoks like we are in that direction. the model the administration is putting forward is as long as you have sufficient capital, you can grow. moving away from micromanagement, maintaining prudent, but i think the financial industry is one that is poised for continued growth in the u.s.. these are global banks. is 46 pages.

i'm sure you can get it on the jp morgan website. this is a primer for anyone and finance and business. it is a primer for what and an mmd should look like. right now, we go to first word news in new york. the u.s. and china signaled they are willing to talk to avoid a trade war. larry kudlow says there is time to work out the differences after each country announced .ariffs the negotiation is still beijing's preference. from's administration is backing key points in the trade agreement. they're softening their demand for more north american content in american car manufacturing.

there is more evidence facebook failed to protect people's privacy. the social media giant says data on most of its users could have been accessed improperly. in brazil, it looks like the former president is heading to president -- heading to prison. lula leads opinion polls for the october election. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. peabody will join us later today on bloomberg in the 1:00 p.m. hour. he is extraordinary on banks.

look for that in the 8:00 new york our. a quickly data check. we will talk about it with euro coming in on dollar strength. , 19.92. the 30 year bond is a proxy. that should be green, up three basis points. bitcoin, no-bid. guy: let's talk about what is happening in europe. one point 83%. breaking news surrounding chrysler. it is at the bottom of the screen. the u.s. markets a little later on. leak data out of the eurozone this morning. weak data out of the u.k..

140.56 is where the cable rate is trading. tom: amazing news flow today. we have the dimon letter and volatility, and then we have washington. kevin, i am reading robert onapiro's new book, which is our military. you have to tell me, national guard to the southern border, whatever it said, where is that the national guard is supposed to sit on any border of the united states? i was talking about this he other day. what they are saying is that is the president saying he wants an all-encompassing strategy that includes a boosting border and

to enhance immigration or ice services. that is the way he communicates. tom: we are going to take a cpa in the pennsylvania national guard and put him 40 miles west of el paso? is that what we are going to do? >> that is what is on the table. it comes at a time when the president is frustrated with congress. today, trump is expected to arrive in west virginia to give some type of speech. that is a battleground state in the midterm elections. formanchin is up reelection. it is interesting because it is arguably, he would be one of the democrats willing to work with this administration, but that is the seat the white house feels they can pick up.

guy: have you seen polling on how the latest trade that is resonating within the rust belt, areas where we could see an effect coming through? the thinking amongst sources inside the white house and sources connected to the white house is the trade policy is going to help the president with regards to the base of this coalition, which is not just republicans. it is independent voters. on the flipside, the business community is against this. what you are seeing in terms of the actual policy and the actual

nuances the business community is against this. these are opening shots being fired on trade talks. whether or not it ratchets it up, we do not know. very good. kevin cirilli, thank you so much. on theis with us politics. i mentioned political volatility. you are going to tell me to ignore politics. baloney. it is there through everything we do. how do you deal with a national guard at the southern border? realizearkets should how the president operates. he is a negotiator. extreme positions and moves back towards a rational stance. we are seeing that with nafta.

rip up nafta, using nafta as a threat. we come into this period, two weeks into the americas conference and suddenly it is -- let's do some compromise and get nafta done. i have never heard a country say we are going to put on massive amounts of tariffs in six months. on forare putting them good reason, you do not say i'm going to do this in six months unless it is part of a negotiation. that is what is going on. that has been indicated by the administration. tom: i was looking at yen earlier. 1.0704.en, weaker over the last few days. she is a little distracted.

operating officer. 3:00 this afternoon. this is bloomberg. ♪

this is "bloomberg surveillance." i am kailey leinz. betting pet food can reinvigorate sales. they are backed by celebrity chef rachael ray. the head of ubs's investment bank has an aggressive plan for the u.s. -- yououbling down on

want to assemble leading teams for sector such as retail and software. ubs will double the number of senior level within three to five years. moody's has cut barclays debt rating one level above junk. credit ratings for some of the biggest british banks could be affected. those regulations forced barclays two separate activities from retail operations. that is the bloomberg business flash. the chair is speaking in chicago. bob at joins us still on set in new york. you talked about the fact of the market needs to understand how the president operates. chair think the federal

understands? result, do you think he ignores the trade issue for now? >> they put it on the back burner. it is a level of uncertainty. if you look at what is transpiring on the trade side, three to six months ago, the fed would have said the biggest risk was nafta. like nafta is moving towards a conclusion, some compromises. it is not becoming a major issue. orientation,'s tariffs that might go into effect six months from now, not something they will factor into the decision-making process. given the dynamics of the timing of inflation last year, we will in significant increases year-over-year inflation rates

reported for the u.s. over the next march, april, may, june period. about traderry issues if and when they materialized. guy: is it three or four this year? >> yes. three is definite. they will have to look at what happens to financial conditions, the trade side. we have forgotten, on the fiscal side, things will materialize they are over the -- will materialize there over the second half of the year. a solidd end up with four because the economy shows good momentum. economy pmi,he all it is a weighted average of the

manufacturing and services sector. the three month moving average hit a record high. are worried about -- is the economy softening? three monthsghest for that measure of the economy that we have had in the last 20 years. hike, wead the march get a june hike, a september hike. we depend on these things that are more than six months out from now. 48 hours has taught me things. , theond market gravitational effect of what the fed is up to is massive in terms of the balance sheet, what it is doing in terms of exit from policy. allave seen the indices over the place. the bond market has not moved. are we getting our arms around an understanding of how big an effect this is? >> i think so.

the rallies we saw in the bond market was small. that tells us the trend to bond yields is higher. we will see those materialized through the course of the year, in line with what the fed does. to say the 10 year treasury yield might hit 350 is not a stretch at all. g tv , you can go in and search. sinchering up the bob chart. it is a common chart. the inflation adjusted short-term fed funds rate, we are back to zero. this is not normal. the headline is where we are in the sphere of nowhere near

normal. >> absolutely not. there is about 10 basis points on that measure. if you look at it over the last 1.15%rs, the average is average. if you look at the yield curve, monetary policy is tight. the real said funds rate, it is nowhere near normal. we need another 100 basis points. coming up later, raphael with the atlanta fed. this is bloomberg. ♪ this wi-fi is fast.

i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is

simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. ♪ tom: "bloomberg surveillance" london pensively looking at his bloomberg terminal, which is what we do to make the show go forward. 19,000 employees

and a lot of them are doing technology every day. we do not apologize for that. let me show you one of the new miracles of bloomberg which gives us an edge each and every day. i know, it is total geek fest. this is gtb go where you can see .- gtv my ugly chart failed. daniel curtis' is brilliant. here is an aria clark chart. all of our charts in one place so you are smarter in your morning meetings on global wall street. gtv. we are proud of that as well. also proud of how we get into first word news. here is kailey leinz. kailey: the leaders of the u.s. and china are waiting to see who blinks first in a high-stakes fight over trade. both announced plans to impose

tariffs. attention has turned to whether president trump will try to make a deal or squeeze beijing harder parade u.s. tariffs cannot be days.d for 60 the embattled head of the environmental protection agency has an army of an servant of industry allies backing him mounting an aggressive campaign to keep scott pruitt in office a series ofhts ethical allegations. ceos have been trawling -- calling president trump, arguing against firing a man they see as a champion of deregulation. president trump is sending in the national guard to work with states on the mexico border to determine where guardsmen will be deployed. president obama and george w. bush both percent national guard troops to the border as well. the bank of japan is likely to raise interest rates within a year according to the dental bank's former chief -- central bank's former chief economist. he says the boj will act when

the core rate hits 1%. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. guy: thanks very much. let's get into the industrials, the big story yesterday. boeing seen dodging any real pain from a trade war between the united states and china. who are likely to be the main winners and losers? ivan feinseth, chief investment officer at tigress financial partners joins us. good morning, morgan stanley saying boeing has approved -- improved risk reward metrics after the tariffs yesterday. do you agree with that? ivan: absolutely. i think there will be little impact to boeing on the tariffs. tom: would you have bought before -- guy: would you have bought before and would you buy now? ivan: i would have bought

yesterday during the selloff and i would also buy it this morning. i believe the stock will rally back up and continue to make new highs. the recent high at the end of february was $371 and i think there is potential to trade above that. guy: you like boeing, you like the oem's, what about the supply chain? is that where the pain gets felt? ivan: n. i think boeing -- no. business will's remain in and they will experience strong demand as they continue to meet demand for new planes. there is significant demand for 737s especially in china and the transcontinental flights driving strong demand for 787 and 777. tom: i do not know if you had the privilege of studying with

bodie up and boston university, but this is about finance. jamie dimon demands globalist america. tell me about the industrial companies and meeting after meeting after conference call and meeting, what do you see from american industrial managers as they confront the president and need to do business abroad? what is the mood, what is the sweat right now? ivan: i think the president's goal is a fairer trade policy and somewhat reduce the trade deficit with countries like china. industrialadvanced countries have trade deficits with pools of labor, countries that provide pools of labor. i think the demand of products for leading industrial products in the u.s., specifically boeing and caterpillar are benefiting from global growth. and i think that the trade

dispute is more of a posture and two extreme points in the beginning of a negotiation by the u.s. and china and will not restrictive tariffs on either side. tom: how the you respond to the media hype that we will lose a lot of jobs over the president's trade policy? paul krugman and others bring it up in a wonderful article in the new york times yesterday. are we going to lose jobs at caterpillar, at boeing, and at the american suppliers? not think so. i think caterpillar has recently announced some layoffs, but it has more to do with business reorganization and the ability to increase production without increasing labor. i do not think it is specifically tied to tariffs. be a significant increase in tariffs, but even

the slight increase would not be a job killer in any way. guy: can i come back to this issue of boeing. your point that you do not -- we probably will not see tariffs. if we were to see those tariffs, the chinese were talking about a specific weight class that incorporates the gulfstream, the this is whered come as you say, boeing will sell a lot of airplanes going forward, but also an area where coming in.mpetition they cannot produce the bigger aircraft, but they can produce single aisle. is this an indication of chinese aspiration going forward? i think that is partially part of the issue. still, the wrap up in competition will take some time. i think boeing still dominates

the long haul and the short-haul market. would you buy airbus over boeing at this point in time because of the political risk? ivan: no. i would buy boeing. guy: why not? ivan: i think boeing is a better value, is gaining share, for the most part, and is experiencing strong demand for planes and boeing is also a tremendous dispense play and there is an increase in global defense spending and they are a cybersecurity play and a satellite communication play, they are a lot more than just an airplane manufacturer. tom: we are probably seeing more long-term there than some of us. -- a look at the industrial space as well. we have much more to talk about, robert sinche with us. your radio briefing coast to coast early morning, robert moon, karen moskow, they do that

on bloomberg radio across all of our platforms, boston, washington, the bay area. .irius xm channel 119 this is bloomberg. ♪

♪ is "bloomberg surveillance." business the bloomberg flash parade credit card and savings customers may not be the only ones misled by wells fargo. the wealth management division -- steered into investments that maximized revenue for the bank and compensation for employees. that'sts reviewed -- according to documents reviewed by bloomberg and people familiar with the matter. las vegas fans have more than

doubled the ceos pay. it's more than $26 million, the world largest -- world's largest casino cash in on theis cashing goodwill tour by the saudi prince. amc entertainment will open as many as 100 theaters in saudi arabia. that is the bloomberg business flash. tom: thank you so much. guy johnson in london and i am tom keene in new york. a german who writes short sharp notes at brookings, john hudak is with us. -- a gentleman who writes short, sharp notes at brookings, john hudak is with us. your note, scathing half a page is really something on tariffs. the back 10 pages is a primal

american multinational scream over, we need to do trade, we need to keep the world war ii foundation. is jamie dimon on the same page as the american public or is he speaking for a plutocracy? jamie dimon is speaking to and with an american public that continues to want a strong american economy. i think what he is saying at the end of his letter should be a wake-up call to the white house. this is a man who understands the american economy and the world economy and understands that this tedious process that we have where we are governing public policy by the president's twitter account can be damaging. tom: you were brutal in your letter, there's a balance to how think tanks write. you call the president a petulant child. discuss. john: the president is acting as

if he is a high school student who is fighting with individuals who he does not get along with social media. that is not a way an american president or any professional should behave himself, particularly one whose words and sucher rhetoric can have significant short-term and long-term effects on the american economy. tom: i look at this right now and i wonder who the adult in the room is. we have a military adult supposedly indie secretary of defense -- in the secretary of defense, is secretary mattis -- or do we need someone like a secretary dimon? unclear if secretary mnuchin has the way to get through to the president in the seeminglyary mattis is able to. often times it seems like the cabinet is doing a cleanup operation trying to meet what withresident's rhetoric is

either the realities of the constitution or laws or themes of public policy should be. steve mnuchin hasn't done a great job of that thus far. if the president's rhetoric really clamps down on the economy, a lot of eyes will be turned to him to exactly that. guy: how do democrats take advantage of this? john: democrats can take advantage in two different ways. first, they can paint the president as someone who is unstable, someone who is acting in ways beneath the presidency, and someone who is using his twitter account in ways that damage the economy. the other end of the spectrum are democrats from states that whose trade policies will actually play well for democrats who have been singing the songs of chinese dominance for a long time and now a republican president is there to join hands with them and saying. guy: do you think the president

-- and you talk about his actions on twitter, do you think the president will curtail this activity into the the terms or ramp it up? john: i think the president is not going to be shy in the lead up to the midterms. as the president moves forward, he sees his ability to communicate with the american public via social media as an important part of his presidency whether that frustrates fellow republicans, whether that stafferss white house doesn't matter. he sees that as his important communication tool and he thinks he gets a big bang for his buck. tom: the only reason hudak came on the show is we have robert sinche. there's a huge dollar ambiguity. rates rise, fed rises, dollar stronger, yet we have this immensely squishy dollar right now. what is a think tank guy supposed to do with robert sinche's ambiguity?

robert: we are starting to see the impact of the dollar now. if you look at manufacturing activity and pmi reports, they are softening up in europe and staying extraordinarily strong in the u.s. if you think about sort of the historic work on the dollar and the impact on the economy, look at 12 month to 18 month flags -- lags. seetime in 2018, we should positive impact of the weaker dollar on the economy. i think we see that in the manufacturing sector now. the second issue is why the dollar is so squishy. i would argue that in an environment where capital flows are dominated by fixed income, then interest rate differentials matter antimatter a lot. this has not been a global -- itnment dominated by has been dominated by equity flows and when it is, interest rate differentials don't matter.

if we get to a point where equity markets are volatile and going nowhere, that's where we see the market shift back to a rate focus and then i think the dollar picks up a bit. tom: you know the small shop peterson institute, a couple buildings down the street from you guys at brookings, william klein at the peterson institute wrote years ago a 10 or 12 page paper that said you cannot just look at dollar-yen, euro-dollar, there is a co-mingling and a blend of currencies when we say dollar. which pair or thrust matters on trade? is it dollar-yen? robert: i don't think as much as it used to. i think it's euro-dollar. tom: euro-dollar matters right now? robert: i think it matters significantly in terms of third-party competitiveness. we have been talking about the airline industry and i think the dollar is benefiting u.s. producers. i think we will see that across

the board in the first half of this year. again, i think we are seeing early stages of it with relative performance of any fracturing pmi index is during the first quarter. guy: to take it from another angle, the dollar is the global collins the -- currency and the fed is the world's central bank. every time the president tweets, does that undermine the credibility of the dollar? does it undermine the institutions around it? the rest of the world pays a lot of attention to this kind of stuff. i am wondering if america pays a lot of attention. it is our currency, but your problem. does that apply here? john: i do not think the president's rhetoric, particularly flippant comments undermine america's institutions. what i do think it does is in jack's uncertainty -- injects uncertainty into the case.

it's about what the president will continue to do. over the long-term, whether institutions respond in ways that push back against what the president wants to do when those choices are harmful will determine whether those institutions actually have that long-term benefit and long-term stability that i think not only americans, but countries around the world look to and depend on. sinche, thank you so much for being with us. john hudak, thank you so much for being with us. bob sinche is going to stick around. this function allows you to access the charts we rely on so heavily and spend so much time building and crafting to generate these kinds of products. this is bloomberg. ♪

bloomberg.com -- ♪

"bloomberg surveillance" thank you for being with us today. . robert sinche with our single best chart in for bob sinche. there can only be one chart, euro-dollar was more important than any other pair for the president and for us with trade and here is one of the great joys of the bloomberg, this is synthetic euro, i will put this out for radio london. the inverted deutsche mark on -- left side go back 30, 40 years and it's amazing we were -- we are smack dab where we were. robert: i do not think it is the level of euro-dollar that is an issue.

the level i think is fine. i think that will impact trade is the euro has a significant move up in a 12-month period. last year one of the big stories of the year was surprising strength out of the eurozone, surprising strength out of the eurozone, particularly out of the managing sector and a lot of that was the weakness of the euro we saw in late 2016 into 2017. that is reversing and i think it will have economic effect going forward. tom: bring up the chart one more time if you could anthony. -- if you could, anthony. here is the gloom crew. this would be the plaza accord and all of that. do you fear those kinds of brutal moves given the new globalization and the interdependencies of our global financial system? robert: i don't think so. -- tom: you can be more optimistic.

robert: with interdependencies, you are not going to get the inreme moves we have seen the past. if you look at the chart over time, the amplitude of variations has been going down. i think that is the fact that markets are more efficient, that we are seeing the economies really sort of blend together globally and you also don't have the thing stream levels of inflation -- extreme levels of inflation. i think when you look at the confluence of forces, we get very excited about much smaller moves than we used to 20 or 30 years ago. guy: mario draghi spent a lot of time and effort making sure the euro zone economy gets back on an even keel. do you think he will let the single currency upset that? do you not think he will push back? robert: i think if the euro were to continue to move higher at the same pace that we saw over

the last year, then, yes, i think it is an issue for the ecb. it is kind of stabilizing and i think they can live with that. tom: bob sinche, thank you so much, particularly for your thoughts on the jpmorgan letter. bob sinche doesn't like me to say historic perspective because it makes him and me look like fossils. we appreciate bob sinche's efforts this morning. we will drive forward the conversation, bloomberg radio worldwide. don pharaoh will do a better -- john ferro will do a better foreign-exchange check than i do. stay with us.

♪ >> round two. -- jamie dimon says

he can help solve the problem. the amazon of wall street. jamie dimon has big plans for the bank to go bigger. he wants to expand almost everywhere. 2% movengs, s&p sees seven times this year, pressing new portfolio for the normal. david: welcome to "bloomberg daybreak." here with alix steel, the star of "commodities edge." >> if you have your inner commodity nerd residing in your soul, you can join me. should watch the show the same way i should read the back of the new york post to learn about sports. if you are an equity bowl, you are breathing a sigh of relief today, s&p futures up by nine points after being