esident calls pr for another $100 billion in tariffs. powell's await jay update on the economy. sheryl sandberg, the coo of the embattled social network, talks to bloomberg about regaining confidence of the 2 billion users.

good morning and welcome to bloomberg surveillance. i am francine lacqua. we have a great lineup of guests. mark barton in london. mark: a good day to you. investors once again waking up in europe to the threat of an escalating trade spat in china and the united states, the stocks of hundred down by 0.5%, falling for the third day. yesterday we saw the biggest 600 sincethe stoxx june of 2016. we are back to escalating tensions once again, on track for the second weekly gain for the benchmark. when in comes to currencies, yes, the dollar is rising against the yen. but when you look at the dollar and the yen against the 16 pee rs, the main trading partners of those two currencies, they are

the two currencies ascending today. the dollar marginally rising against the end. the 10 year yield, 2.8%. these tradet tension started has principally been witnessed in equity market. e lightning rod, where risks have been prevalent. have not seen much movement and the bloomberg commodity index, which is another ligh tning rod, given the concerns from ananate escalating trading war, you have got to bloomberg commodity index, which is down by 0.5% today, francine. francine: i am here throughout the day. we will be joined by the former italian prime minister.

jacob franco will also be speaking to us about market correction. the focus will be on these trade wars. italy still does not have a government and if you have a government, that means deficit and public finances will go on. then, we have to ask ourselves where exactly this country will go next. here is the bloomberg first word news. reporter: donald trump said a deal could be reached soon on a revamp of nafta. it had previously been reported that trump wanted an outline agreement so he and the leaders of canada and mexico could announce this at the summit next friday. korea's first female president has been sentenced to 24 years in prison. this comes after she was found

guilty of crimes ranging from bribery to coercion, abuse of power and collusion of state secrets. this was handed down by a panel of three judges and was more lenient than the 30 years sought by prosecutors. lula argued he should not be jailed until he scored every appeal, but his jailing does not believe the rule him out of the running of the october election. it means he will not return to power. the chairman of the country's election commission said the vote will take place within 10 days. wasier, the former premier fan from campaigning for 30 days, a move that could dent his chances of winning. and in south korea, workers of

the general motors have trashed their ceo after being told they will not get a bonus because of cash prizes. a video on youtube shows about one dozen people kicking or throwing chairs before removing a large desk. the company confirms a "violent incident" that resulted in significant damage to company property. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. . am nejra cehic this is bloomberg. francine: thank you. let's talk more of the markets. u.s. teachers point lower after president trump -- he was futures point lower after president trump ordered $100 billion of tariffs on chinese imports. it shows a possible escalation on what investors fear could become an all-out trade war between the world's two largest economies. the chinese state agency found that beijing would fight back. for more, let's get straight to hong kong with our asian economics correspondent. enda curran, what options does

china have now? good morning, francine. it does appear we have a significant ramping up of tensions. it asks whether china would move twond placing tariffs, other economic barriers, such as limiting u.s. investment in c hina itself, or by culling orders for u.s. goods. there is the fear that if we go down a tit-for-tat environment, arechina's total imports only $130 billion of u.s. goods -- if we continue to go down that route, china could move into very tricky territory indeed. we could be moving beyond tariff barriers and into barriers on actual goods and investment. enda, we have heard from

donald trump. when will you hear from president xi? it is a great question. we have had some commentary from the official chinese trust and commercehe responding today. the president is going to deliver a rich on tuesday at the roll up forum, the equivalent of china's davos, with hundreds of foreign company executives and foreign investors and indeed, regional government leaders off ofng on the island will, where president xi deliver a keynote speech on tuesday. there are expectations that he the platform to preach china's desire to open up the economy, but he could also use this as a platform to strike back against mr. trump's rhetoric. it will be interesting to see how he balances the pushback against u.s. protectionism,

while also delivering on his promise to open up china is for the world. mark: and thank you to enda curran. julian howard is here the head of multi-asset solutions. than hiss bark worse bite? that is what it comes down to, isn't it? this idea,till like we have a 60 day period to come up with a better deal. there has been so much noise on both sides that it will force other than to come up with a race saving deal that could ironically produce trade liberalization for china and improve global markets as a whole. julian, if you are an investor in the markets, do you wait in till happens to do a selloff?

or do you just ignore it, even if it escalates and try and temper these moods? julian: well, my sense is that it will get worse before it gets better. we have now had retaliation on the part of china. i think it worth over the weekend into next week. ,ut it is worth bearing in mind that if you look at the nafta negotiation, it looks like there could be some traction there and it looks like donald in particular, he seems to have content in auto particular. i think there is hope and from the perspective of markets and investors, this could he an opportunity. but it takes bravery to do that. julian,: right, because i guess the worst case and i/o is the trade war escalates to a point where it hurts -- the worst case scenario is the trade war escalates to a point where it hurts global gdp.

julian: the estimates i have seen for negative gdp range from .1% to .3%. .3% is starting to become a bit working, but .1% can be survived. a correction in the markets is not warranted. if you look at the tariffs bill from the 1930's as a reason for the global depression -- but i think economists are quite divided on what precise impact that particular tariff bill was. i think in this case, the more active parallel is the 2002 bush tariffs. mark: how have you repositioned her portfolio since the volatility kicked off at the end of january? ulian: the main thing we did was not to panic and not to start selling down risk. we have very tactically sort of

added around the edges, particularly chinese technology companies, as far as a reason for them to sell up to the degree they did. just because of facebook and taifriffs. some of the other chinese technology companies have been looking at them jealously for several. last year, we were not dissipating and that we get the selloff and it is a good time to get in, perhaps. you need the time horizon and the patients because there could be more volatility within the next few weeks. julian, thank you so much. julian howard stays with us. we have plenty more coming here. the narrow policy differences with the five-star movement. we speak to the former italian prime minister, maria monte.

this is bloomberg. beijing says it will counter u.s. protectionism at any cost. we will be speaking about that with andrew sheng. we'll be right back this is bloomberg. ♪

mark: economics, finance and politics. i am mark barton and bloomberg business flash is next. nejra: the former jpmorgan executive was contacted by recruiters to replace deutsche bank's ceo john cryan. according to people familiar with the matter, though the cricketers did not have a formal

mandate at the time of the approach, he was sounded out as part of the search. did not respond to a request for comment. john cryan said previously he was committed to the role. the facebook cielo has outlined the way she is responding to the privacy crisis. sheryl sandberg said for the first time that some advertisers have curle curtail spending and have acknowledged that her team has a long way to go to reassure wary customers. had 10,000berg: we people working in security at the beginning of the year and at the end of this year alone we will have 20,000. we are massively investing in and we areology doing this to make sure we get to a place where we can proactively protect people's data. samsung electronics has reported higher than projected profits.

demand for the memory chips remains strong enough to outweigh concerns about displaying supplies to apple. trump has renewed his attack on amazon, saying he is taking a look at what he calls this on even playing field, expecting the tax situation to be investigated. said earlier in the week that the white house was not preparing punitive action toward amazon, but it was not clear whether the comments from the president indicated a potential shift. that is the bloomberg business flash. francine: italy's euro skeptic closer tooved forming a government. election produced no clear winner. the five-star chief has out ruled any deal involving the

former president's party. so, can they settle their differences? and should markets be concerned about a populist run? joining us now for the workshop engine -- the former italian prime minister. and the president of the brooklyn university. thank you,. atemember, we were looking the italian election, looking at what could happen with the next government here in italy. how do you see things going now? it looks like we could be having a populist government. what does that mean for you? there has been a huge populist success, both the five-star movement and the league. of i think the degree populism is going down a bit by the day.

and as they approach whatever the smelln, power and of governing, they become more pragmatic, both the five-star and league. one aspect, which is particularly important in this back tracking of populism is the , which waso the euro the distinguishing sign of both. it is no longer like this. thegoing off of consultations with the president, we have discussed the five-star movement. said, of course, when i am prime minister, i will remain a member of the alliance, a remembe member of the u.n. and y union. francine: both parties have

offered in their manifesto, increasing the deficit. what does that mean for italy, where the recovery is there, but quite fragile? mario: this is a extremely delicate point because forget about most of the promises issued by both parties and any party for that matter. now that these populist parties are firmly on the side of staying in the euro, they must have consequences in terms of domestic policies. as you said, the situation in italy is remarkably improved, relative to a few years ago, but still needs some further consolidation. so, there would be there too a degree of realism to be injected

into the starting degree of populism. francine: do you worry that this spat between the u.s. and china will escalate into global tarif fs? monti: yes, i think we are couldrade war and this create a looming expansion of the trade war. of course, the consequences thewould be very negative for the world. on that italy, too, obviously. there shouldime, be another factor which should speak in favor of a greater cohesion in the eu, also on the part of italy. this would moderate lastly, some populist anti-eu moods around. francine: but if the trade war

escalates, could it push the world economy into a recession? mario monti: it could. i would hope the cumulative experience of leaders will influence him too to become slightly less populist, as the italian leaders are trying to evolve. so, this must not really be allowed to escalate out of control. eu can exercise a moderating and of course, we on the that germany is finger pointed by the u.s. and others for its surplus.ssive they do not call it excessive,

but it is a huge surplus. within the rest of the world, how to deal with internal imbalances within the union the little used policy out of brussels, the macroeconomic balance procedure, which is triggered not just when ountries have an excessive public finance policy or debt, but if they have growing and exceeding trade surpluses that imbalance the economy. francine: wouldn't that be brussels going to war with germany effectively, meanign tht germans are be less likel -- meaning the germans of the less likely to integrate? mario monti: if i was in brussels, as i was a number of years ago, i would be tougher on

germany on this macroeconomic environment. but also be tougher on those countries, like friends, spain. -- like france, spain. they still have excessive government. will puti believe this germany in a condition -- in a position to say to brussels, we made one side of this policy, but on the whole, you asked for the discipline of europe and how could we germans disagree? francine: what will italy look like if the ecb president were to be german? is it time for a german to be head of the european central bank? mario monti: i believe leaders of the european institutions should act and in most cases, they do act irrespective of their nationality. at any rate, independently from

the passport of the president of the ecb, my own, modest point of view is that it is high time traits of some gradualism, not too much, o qe, which was vital a few years ago. it has been turned into a distorting mechanism of economic policies in the sense that it throws around a fog -- it allows the authorities in countries not to see the reality with a degree of brightness which means in some cases budgetary consideration. obstructionl of the

is taken away, for the betterment of the overall policy stnace of the eu. francine: do you see almost the market functions when the ecb tapers a lot of their qe. the market function and the italian spread, if they rise, on the next check government. mario monti: yes, on any government. i mean, we have lived through, six years ago, moments, 2011 to was anen the spread over-nervous signal of the underlying imbalances, then when the markets were doing a huge job, excessive, after having been sleeping for many years after the inception of the euro,

they woke up. but now, we are at the other extreme. not because markets do not perform their function, but hugese this throwing in of masses of liquidity buys so many government bonds. youcine: mario monti, thank for joining us today. mario monti, the former italian prime minister. and for many years, the commissioner in brussels and we will be right back and talk a little bit more about china, speaking to andrew sheng about regulation. this is bloomberg. ♪

mark: this is bloomberg surveillance. let's get the bloomberg first world news.

nejra: donald trump has set a deal may be reached soon on nafta while downplaying executions that it will happen next week. he and the leaders of canada and mexico can make an announcement at the summit of the americas which starts next friday. justin trudeau said earlier yesterday the nafta talks have picked up momentum. korea's first female president has been sentenced to 24 years in prison. that was after she was found guilty of crimes running from bribery to coercion. by sentence handed down three judges was more lenient than the 30th sort by prosecutors. she can appeal. jacob zuma's corruption trial has been adjourned until june the eighth. it came after a request by state attorneys that was supported by the defense. charges today 16

to bribes he allegedly took from arms dealers. brazilian judge has ordered the arrest of a former president after his top court rejected his appeal against imprisonment. he has been sentenced to 11 years. he argued he should be jailed until he explored every legal appeal but the supreme court denied that. not rule himoes out in october's election but it seems unlikely. workers at general motors have trashed their ceos office. a dozen people were shown to kicking and throwing chairs before removing a large desk. , quote,any confirmed a violent incident at their executive offices. a day news 24 hours powered by more than 2700 journalists and i was in more than 120 countries. i'm nejra cehic, this is bloomberg.

francine: chadha said it will fight tariffs at any cost. you study and tensions raised concern among investors and clinical leaders. the former prime minister said, we are in a trade war. what kind of wrist this is posed to financial services? join us now is and are chang. is the chief advisor of the china banking coalition. let's talk about the regulatory environment in china. what do you misunderstand about it? china understands very clearly that finance must serve the real sector. its derivative of the real sector and the tail cannot wag the dog. the real issue is about real

economy. we should not be allowed to destabilize the real economy. that perspective is the understood clearly. second point is that china is one of the largest economies in the world. it used to be 50% of gdp announce around 40. high percentage economies have a leverage problem. it's between debt and equity. it's the -- it's quite clear that it takes time to develop the equity market. roughly in the last two or three years, only 10 to 15% has gone to the ipo process. clearly, the chinese are rebuilding the capital market. we configure 18 the whole financial system. the way it is done sequentially,

the chinese focus on the real economy first. what do you mean about that? there has been overinvestment and a lot of it is financed by debt. what has been going on for the last five years, is the chinese have been getting rid of the excess inventory. getting rid of the excess capacity. reigning in the us so ease. but they are facing very new situations. what do we mean by that? the chinese smes have been estremely -- the chinese so have been very successful. the private sector as the technological but forms of top of utilities. francine: that is being enhanced

but could get out of control. his early doubt in your mind of the situations have unraveled? andrew: no. if you talk about china, the japanese have even higher. the chinese economy is great much like the chinese. it's a net lender to the world, not a net borrower. if they were a net borrower, i would worry. but they're not. it's still running a slight surplus on the current account. it's very responsible fiscal budget. the budget deficit is less than 3% of gdp. the point is now the engineering back towards deleveraging program would require building step-by-step the capital markets. the chinese have been much more successful and very much misunderstood the west.

but it really means is, when we look at the financial markets, we look at the new model. that's the olympics. when you now need to build is not the universities, you need to build the secondary schools. need to build the primary schools. the fourth new market and the third market is how to breathe graduate tops to the second tier market. that is the third and fourth new markets. it started happening area the private equity market in china is already too in a half times the size of the u.s.. they have grown rapidly and are not as sophisticated as the p market and the west, but some of them are near that. see's what you begin to

some of these top firms are moving out from the adrs back to the cdr's. andrew: -- francine: how much will china open it system? i think it's inevitable. it's not quite up to european standards but inside it is growing. the savings is very large. -- thatis that large large, what is needed is when the population begins to age, it needs a better r.o.e.. that's the area where i think the chinese understand some of the best asset managers are in america and europe. opening up to these would help strengthen the asset management industry in china. how do you think that will happen? how gradual it be?

the direction has been discussed very clearly. the opening up is coming. does it hurt the opening up of the financial system? andrew: we need to understand the dimons between noise and a signal. the basic noise about posturing. when you move from a unipolar system to a multipolar system, unipolar power needs to posture. that's very understandable. the same way when he begins to posture, other people also begin to posture. that we see in the global game is inevitable. what is the signal? some of the posturing is due to the fact that the world we see 30 years ago, the demographic shock, we installed the berlin wall, something like two to 3 billion global labor force

joined the global markets. creating a shock to the labor markets of the best economies. 30 years later, the advanced market labor force seeing very little improvement in living standards, sunday will have improved but not us area me want leadership to do something about it. this is not just about china. it's about the addition of the indian labor, the asian labor, etc.. but we must understand what is the good news? rest of news is as the the world moves into middle and advanced income, they will create a new engine of growth. losenot going to be a lose. they could be a win-win situation. francine: in the short-term it could be lose-lose if this possible trade war escalates. i am basically an

optimist. i believe the good sense will prevail. you have noticed already there has been some toning down. the lists that have been prepared are not actual action yet. i think sooner or later people come to good sense negotiations. francine: what the quickest way take more time to opening of financial system? think chinan't wants to hurt the u.s. or anyone was to hurt anyone else. opening of china can only be good for the world. it's good for china, it's good for asia. you look at mr. trump's latest positioning and he understands this. he's a very good negotiator. i think everyone feels that if you want to get a better deal, there will be a lot of negotiating space.

he is the chief adviser of the china banking repertory commission. i headed back to you, mark. mark: let's get to our other big story today. jobs in the fed. we are expected to see the lowest jobless rate in 17 years. employment figures could signal expectation the fed it will hike rates four times this year to avoid the economy overheating. but as raphael bostic said, he isn't concerned. the trend is going the right direction. i think we're going to hit 2% sometime in the next quarter or two. i'm comfortable going above the 2% to some amount, 2.2, 2.3. i don't get the crisis of overheating, necessarily. mark: julian heart is still here. extra sticking around.

some might say that powells speech later in chicago might be if not more important than today's u.s. jobs report given the noise we've been in the midst of lately. julian: i think what sink urging is that he's much more about show me than being predict given a deterministic. i think that characterized the previous regime which was about, unemployed and slow because patient should be going up because our models in the code suggest that. was very encouraging is that jerome powell want to see evidence. if the jobs report comes out today we have higher wage inflation, i don't think he will get overly excited about it. he would take it any longer context and decide on the path of the longer picture. that's much more sensible. the problem is the bond market has become hypersensitive. the mere hint of inflation and the market goes into a spin. we saw this in early february. and wagejob inflation

inflation number of 2.9%. the market has recovered since then. but we don't have inflation problem. down the different components, there's a bit of inflation coming from very unconnected hearts of the economy. surfaces -- hospital services, trucking, i think jerome powell recognizes it. he also sniped the participation rate. the participation rate is very low. into that gets higher his luck worry about wages. adding this regime is very encouraging. i hope to see an -- a continuation of this show me attitude. given what you have just said, where the buying opportunities the market? i think the buying

opportunities, not so much from what happens around inflation but around this trade war. particularly, in china and nonsocial media technology this been dragged on fairly, i think that's interesting. if you are brave, you could go into social media because there is this argument that for regulation to come through, how is washington going to do this? they can barely legislate anything at the moment. we all get worried about regulation on social media: what happened? it's like brexit. there's just a lot of talk going on around regulation of facebook but it may be years away. if you are brave and you feel the valuation is interesting than some of these the social media stocks could be a buy. ring the nonsocial media is more attractive. you don't have at risk for the prices of come down. francine:'s monetary policy the

biggest risk to assess right now are critical in the form something else? it's the biggest perceived risk. i don't think it's an actual risk. the bond market is hypersensitive around what is happening to wage growth and inflation. for bindingsgument the market if we do get a slightly higher wage number. you do get this sort of value ofion of the equities. but on the does and inflation problem but maybe if the market overreacts it could be a buy on the long-term basis. julian howard, head of multi-asset solutions. watch the jay powell speech in chicago a little later about the economic output. 1:30 your time. hereg up, we'll prevented from sheryl sandberg. she says to work to solve the dates and currency problem.

♪ mark: economics, politics, this is bloomberg surveillance.

we are going to be speaking to the national economic council director, larry cutler. a.m. new york time. he will be fascinating to hear his views on the ongoing spat between the u.s. and china. let's get the bloomberg business flash. nejra: former jpmorgan executive met james is said to be among possible replacements for deutsche bank's ceo. according those familiar, on the recruiters did not have a formal mandate, he was found that is part of the search. the deutsche bank official declined to comment. the client said previously he's committed to the role. samsung has announced higher than expected profit. point $7 billion. demand for its memory chips remained strong enough to outweigh concerns about supply

loss to apple. president donald trump is looking of the two-way a tax on amazon. he expects them to be investigated and there should be a decision from the spring court. trump eight said the white house was not preparing printed measures but it wasn't immediately clear whether the president's comments indicate a shift. two funds will excuse -- exclude firearms sellers in the wake of the florida shooting. the etf, which will start trading on or about april the 12th, will track invest results of an index that is made mostly with small-cap u.s. companies. they also filed initial registration statement for the u.s. get bond etf which will also exclude producers of civilian firearms. facebook clo's sheryl sandberg has reassured investors

that only a few advertisers are spending. shares are down more than 10%. sandberg told bloomberg emily chang that facebook's leadership takes full responsibility for the problems and that she still believes deeply in zuckerberg's leadership. i feel deeply personally responsible because there are real mistakes that we made in that i made. i think when you take a step back and you think about what has happened, for a long time we were really focused on building social experiences. a lot of good happen because of that. when we saw problems, we would shut down the problem. the specific case of the friend to friend sharing that happened with cambridge analytica, that case was shut down in 2015. do untildidn't recently but we are doing now is take a broader view. looking to be more restrictive in waste data could be misused.

we also didn't build our operations fast enough and that is on me. we had 10,000 people working security at the beginning of the year. at the end of this year alone more than doubled to 20,000. we are massively investing in smart technology and were doing all this to make sure that we get to a place where we can proactively protect people. >> facebook has constructed a business model beverages personal data that users share with facebook. you are the chief architect of that. assuming the business model evolve, how that impacted bottom line? how that impacts profitability. >> we have never run this company for short-term gains and it never run a to maximize profits. we run it for the long-term health of our committee and business. we announced two quarters a good of these investments are big and they will impact profitability. that's ok with us because the right thing to do. we will update at the next quarter.

you mentioned a few advertisers have caused the spending because of this. hobbies that pause? it's a few advertisers the what matters is not how big it is, what matters the questions they're asking. advertises are people who use facebook and so are investors. everyone wants to know the same thing which is are you protecting people's data. i think the advertisers and people use facebook also want to know that the good things will continue. those are really important as well. >> mark has been asked if he's the right person to lead. do you believe he is? he said he is. >> i believe deeply in mark. he had a vision for what social services and social sharing could be in the vision remains very important. along with me and all of us, he takes full responsibility for what is happening here we are making a very important shift.

we are going to keep building social products via sharing is so important people all over the world. or going to be much more proactive. i'm not going to say we won't find more problems, we well. we are going to continue to find problems and continue to shut down situations when we find them. this is a forever thing because security is an arms race. this is something we're signed up for not just now but on an ongoing basis. sheryl sandberg speaking to him a chang. the ongoing spat between china and the u.s.'s excavating. trump announcing more tariffs. equities are falling. all of these currencies down in the -- down against the dollar. risee seeing bond yields today. this is a great chart.

the selloff in u.s. tech shares means european stock now connected and correlated -- less can eric did and correlated than the economics as crisis. tech is only 5% of the stoxx 600. 25% of the s&p. for the eurozone, look at this. this is going back to 2013. may 2013. level since economists are puzzling over the range of different culprits. it points a slower economic growth. we've had reports of inflation output and retail sales failing these expectations. finally, the gold or ratio is history. the two-year uptrend in crude is a guide. orher gold is set to rally

oil is set for correction according to intelligence. one ounce of gold now buys around 21 barrels of oil compared to the 21.4 average are the last two years. surveillance continues the next hour. the team joins me out of new york. trades,our expert about tariffs, china and monetary policy. we are in italy. we will go through your market checking talk about jay powell and jobs data. this is bloomberg. ♪

soon as

francine: war of words. president trump calls for another $100 million of tari ffs. today we have the jump to report in investors wait the update on the economy. thatt jpmorgan executive diamond, next chief executive of deutsche bank. we talk banks. francine and tom, reunited. this is bloomberg surveillance and i am live from chernobyl. there is a lot of talk on china, monetary policy, but the view could not be better. tom: francine, one of the deepest lakes in the world. i was flabbergasted, it is twice as deep as the acclaimed finger lakes in new york. you are right on the border with switzerland, right?

i am.ne: i am on the other side -- i think george clooney's houses on the other side. first, let's get straight to the bloomberg first word news with taylor riggs. taylor: the war of words over president trump's proposed tariffs escalated today. ordered hist administration to consider terrorists on the additional $100 billion of chinese goods. to reach afforts deal to stay off the conflict. the trump administration will send as many as 4000 national guard troops to the border with mexico. the plan is for them to stay there until president trump's long-sought after wall is built. the government does not saying whether or not the troops will be armed. .omeland security and sentenced to 24 years and wasn't used last

year and convicted of crimes ranging from bribery to lending of state secrets. formerbrazil, the president lula has been ordered to turn himself in the afternoon. his lawyers are still trying to reverse the supreme court's ruling. corruptionuma's trial has been put on hold and he will be back in court jiune 8. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i am taylor riggs and this is bloomberg. so much.ks equities, bonds, currencies and commodities is off of the trade wars and president trump's

comments. the dow futures, down 200 right now. i'm not sure how far we are from record dow highs, but we were getting there before. a little bit of curb flattening, next screen. at 1900, backere t to point outnt that the turkish lira is unraveling. the dollar-euro, we look at euro-lira. bitcoin cannot find a bid. we go to the bloomberg right now and this'll be out on gtv . i have never done this chart, but this is trade weighted turkish lira and for those of you mathematically inclined on friday, it is a long access and you see this consistent, gorgeous curve, it shows the gamma, the complexity and the

exhilaration of a weakening trade weighted lira, a weakening of 62% since 2008. just a stunning emerging-market story of the challenges for the turkish lira as well. in italy, francine lacqua. francine? francine: i'm glad you brought up the turkish lira. this is the home are today. with the negotiations foreign government which could be very populous. the jobs data in the u.s. today is expected to show another uptick, but it is jay powell's speech that investors will be watching. there are ongoing tensions about a trade war and the equity selloff -- they want to know if it impacts fed policy. with me here in italy for the

forum. let me kick off with you if you are a market investor, do you worry about the trade war escalating? >> i think the key remains monetary policy. so, central things right now are printing about $100 billion of extra capital per month. that's $1.2 trillion per year. the trade war so far, you are fs onng about tarif imports of $150 billion. europe, 10% of the $60 billion loss. you are comparing $1.2 trillion with $15 billion. francine: do you agree with that? the underlying concern is that if the trade war escalates, it could take the world economy into a recession. >> at the moment we are talking

about a war of words rather than actual tariffs. theou look at fx markets, initial response was risky currencies selling off. actually, the moves were small quickly reversed. markets will come to the conclusion that we have heard donald trump threatening a lot of things with nafta and in the end, it has not materialized. tom: within this is our history. have we ever seen this before? elsa: i do not know what you mean by this -- [laughter] ana: but this is definitely unprecedented president. we have certainly not seen this kind of approach to international negotiations. it does leave the chinese counterparts in a difficult position of not being able to fully anticipate what the u.s. president could do. most people agree that china has more to lose with the

escalation of a trade war. you have to look at the u.s. exports to china and the relative nature of the u.s. economy. behind the scenes, i would imagine chinese officials will be less aggressive than they are in the public sphere. tom: if the trade war of the united states the rhetoric of 1600 pennsylvania, is it all plus, plus, plus for europe and brussels? entirely. so far, we have not seen much i rhetoric, but we do have the treasury report on currency manipulators coming up and it will be interesting to see who makes it onto that list. there have been accusations that armany is reflecting component to week for the fundamentals. it will be interesting to see if the euro comes more into focus.

francine: we spoke to mario deputyand the former prime minister of germany. they say germany will be in the firing line of president trump and european countries, including italy, should force germany to deal with the surplus. would that be fair? it is fair in a way, but again, look at the numbers and look at the, tariff imports on china. so, i can actually for once, agree with donald trump's position. why should there be a 25% import on china and 2% in the u.s. and 10% in europe? the number should be equalized. the position that really needs to address the trade balance -- gotin reality, they have

to invest more. you cannot say germany has a trade surplus. what about wyoming and kansas city? so, clearly the level of the where is not set out for california should be. it is the weighted average of the nation. europe is a monetary union and as a result, does reflect the weighted average of the monetary union. cannot take the best area and say, that is where the currency should be. it makes no sense. francine: should europe have spoken up and said, we have a problem of intellectual property theft from china? officials are with trump, trying to get a better deal with china. as international property, they have to because there have been several examples of chinese companies stealing intellectual property. a couple years ago, the italian officials brought up an example of how intellectual property has

been installed. chinese it shipped to china, a different brand. is clearly illegal. it cannot only talk like an adult, they have got to behave like one as well. tom: what you see on your desk of emerging-market currencies, the turkish lira, 4. 06, an ugly number. how does the g2 and g3 arguments of china full over to european currencies? an interesting point because everybody is focused on the bilateral trade between the u.s. and china, but is a globall trade value trade. a lot of the chinese exports to the u.s. include imported parts from korea, taiwan and elsewhere in the region. actually, the collateral damage might be greater for some of the smaller countries producing

parts for exports to china that then go to the u.s., rather than for china itself. tom: william klein at the peterson interstate was classic on this, a good quote years ago, writing about the knock on effect. it is not discrete or euro-dollar, dollar-yen, or dollar anr-renminbi. what should we observed to see those knock on effects? is it simply the adjacent countries to china? asian strategist has been doing quite a lot of work, looking at the value added within the global value chain. there are some like hong kong and singapore which in the face of it appear highly exposed. it is not clear how much domestic value they are contributing. then you have the likes of taiwan, korea -- a lot of regional players. beneficiaries might be the north american partners, mexico and canada, which seem to be on the track for getting some sort of nafta arrangement in

place. elsa, at the same time, if you see a lot of these asian countries -- does china automatically do more trade with some of the asian partners? does that the philippines a leg up to the the spat with the u.s.? : it depends on whether you think those u.s. imports to china are actually substitutable. when you look at the exports to china that china appears to be targeting, a lot of them are multicultural exports. it will not likely be the cabinet. you could see some benefit for some of the larger commodity producers elsewhere in the world, whether that is brazil, argentina or new zealand. i would be worried about the local manufacturing basis. me ask you about deutsche bank because i am sure when i was away, how many times did you show deutsche bank shares? five times a day.

of placement, the become point does this entangled? do they need to change leadership so investors refocus on fundamentals of the bank. i think investors need to decide what type of anger they want. i think there is a position of john cryan who wants to significantly reduce the size of ment in the u.s. francine: what about deutsche shares? davide: we do not purchase deutsche shares. francine: what would it take for you to buy them? i do not believe deutsche bank would compete with investment banking in the united states i believe the company has got to invest in the u.s. meaning, deutsche bank is strong on global cash management.

. investment banking equity, m&a from the u.s. because you cannot compete with profit.al he makes price the net profit year of markets today. the fact that you think you so, what iain -- think, it will convince me if the significant shrink costs the investment banks and we will refocus on the core business, which has nothing to do with u.s. investment banking. footage is your favorite stock right now? we own jpmorgan and yesterday you said they could grow regardless of the economic activity. when it was the $40 target price

around $100, we still own it. milbank in the world actually has the numbers, not even ubs. so, it's the highest quality earnings you could find today. he will continue elsewhere on our london disk. c capitalith rb markets. let me show you the bank of america chart. down we go, under 11-y euros. there was a jump back and pulled back today. we will do it right on bloomberg surveillance.

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morning, everyone. this is bloomberg surveillance and today we are live from italy and new york. tom, it is not really a hardship. at trade wars. equities trade unserved for a net joining us ouijak this is

something we do not know the we an entrepreneur at the

white house, compress to drop. he's negotiating with china. and he is trying to broker a deal with china. go along with the u.s., pressuring china to be and i think that a crated this huge tension and it will lead to retaliation. the chinese affiliate or negotiate's donald trump.

this shows you had to be surgical and not only target companies, but how targets remain volatile for politicians that remain golden, but for the dr.ian activated this moche nabarro has a trade theory and one of those trade

leakages, they have a trade theory they do not see. i think the biggest problem i have is favorites. policy a protectionist has had enough. when donald trump introduced you and wempt because of have a bigger event to try to get into the favor of the president, which is exactly what the president wants, but it is not very good for the united states. peter nabarro as this advocates is it a jumperum

if we are indeed a family, we should discuss the family life with some president trump in the war, especially after the germanyent look, we are italy, over sprinters for

than the next hour. francine, what do you observe in the friends in, brady negotiations are continuing. a president trump. canould actually be federal we really live without a government for the next 12 months. a think it is government theding more mean you

negotiations, that is a mistake. the fact that it should and that is exactly what he is doing. the other thing, which i think is the right thing, the precondition looks have that not strong connection. and if the government president trump.

i do not believe this is trading or nine john, their life on a jpmorgan per se with each of her, come a president each of her, come a president with derivatives retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. 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: that's a wonderful annual meeting in italy. we will give you spirited

conversation through the morning and in italy as well. there's a small matter of job stay in america. a good job ofone giving you conversation. bill gross will be with us and the 8:00 hour. spin to the to the white house and we do that with lawrence kudlow. cohnhas just replace gary -- he has just replaced gary cohn. right now a busy day. first word news with taylor riggs. taylor: china says it does not want a trade war, but is ready to fight one. beijing responded after president trump ordered his administration to consider tariffs on the next $100 billion on chinese made products. it was an unexpected move that could damage both sides from

turning down the heat and preventing the conflict from getting worse. there are more signs that the three nafta countries may find common ground on a trade agreement. robert lighthizer meets with his counterparts today in washington. demandsoftened this i on auto production but is seeking other concessions. president trump says he did not know about a hush money payment to stormy daniels. it was made to stay quiet about an alleged sexual encounter. his lawyer says he paid daniels out of his own pocket. the president has denied having a relationship with a woman. in malaysia, it may be a turning point for the prime minister and the ruling coalition that has been in power for six decades. he has called for an election while voters are unhappy about inflation and allegations of corruption. his main opponent is the former prime minister who defected from

his party back in 2016. global news 24 hours a day powered by 2700 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. much.ne: thank you so the jobs data is expected to show an uptick, but it is fed chair jay powell's speech that investors will be watching. with ongoing worries about a trade war, they will want to know if it affects fed policy. joining us now is jacob frankel. we are live from the forum in italy. thank you so much. what concerns you the most? we have these trade wars and possible extra tariffs. is it good to turn ugly or is the risk in monetary policy globally? jacob: the real new risks of the past few weeks are in the trade

area. it's not because a terrorist and . countertariff/it's it's the possibility of a snowball and talking about arguing rather than negotiating. there is a group of people who that is trumps style of negotiation. if that is the case, i wish it was and i would be much relieved , but occasionally things get out of hand. the important thing is we know. if you ask everyone here at the conference or anywhere else, it's in the interest of the world to have a trade war? allyanswer uniform would be of course not. how do we minimize the damage? i think that's the real issue. at the present time, the actions that have been taking place or

announced and not yet fully implement it are relatively measured. one side says something, the other one response. the important thing is to make sure it does not get out of hand. if its negotiations, one needs to ask what is really the important element critical for the united states? i'm told it's really bit issue of intellectual property rights and things of that type. what is really important for china, etc.? what it boils down to negotiations is make sure you get the minimum that you need, be willing to give up on things less important to you, and then an agreement can come. that is important. we are talking about the two largest economies in the world. francine: we saw a bit of reaction in the markets and it's not that much. why? monetarya fog of policy that clouds the risks in the world economy? jacob: i think those are two

important but separate issues. i think and i hope that they will remain separate. the issue of the monetary policy reflects a long-term strategy. the long-term strategy of the fed has been we want to wait for the economy to recover to make sure there is sufficient robustness and not specific data like jobs data or today. there is a consensus the u.s. economy is recovering. the unemployment rate has fallen. labor markets are approved. propolicy has been extension. the corporate tax reduction has been very positive. the repatriation of profits will be very positive. that the regulation will be very positive. all these things are good stuff. that is not in danger by negative atmosphere that comes from trade. tom: good morning from new york.

you are experienced at the bank of israel with expecting the unexpected. i do not want you to speak about mr. diamond letter yesterday. i know that you are in a different division and different space and mr. jamie dimon speaks for itself. i do want to ask you about the president setting us up to be more fragile given certain in exogenistharks -- in zogeni shocks. is america more fragile at the moment? jacob: the economic rhetoric is a matter of size and it is evolving cou. this new economic rhetoric needs to mature and grow. too not find it instructive have an antagonistic approach, especially when we are talking

about important matters that require negotiations, engagement, collaboration. we are talking about a very interdependent world in which one large country confronts another large country. nothing good can come out of it for the rest of the world. i think it's the responsibility of the leaders to really come to common ground. you mentioned jamie dimon's letter. i want you to be aware that this is one of the most thoughtful letters and sequence of letters that every year he writes. i recommend that you look back and see how well reasoned those arguments have been. tom: let me make this clear and i said this yesterday. this is 46 pages. whether you agree or disagree with jamie dimon, every single mba candidate in america should read this cover to cover to see what it says about finance management and global accord. jacob, you are one of our original researchers on the dynamics of foreign exchange.

what are you worried about about dollar dynamics? was the observation you have on the ambiguity of where the u.s. dollar sits right now? dollar value in the foreign exchange market represents current policies, future policies by us and as well as our trading partners, and i think it will be extremely dangerous and probably futile to try to manipulate such an evolving price. the important element is that each company in each country should create a sufficiently robust environment for itself to be able to manage volatility rather than hope that some policymakers will take active roles to minimize or reduce the volatility in the market. it's a reflection of study policies. that is why i am so much in favor of steady as you go policies whether it's on the

fiscal front or the monetary front or the regulatory front. uncertainty is not good for the markets. i think it is clarity and transparent to the art of one can make. francine: is there uncertainty in parts of the market? is a country or region that worries you the most? jacob: of course. months,ook the past few everybody was talking about north korea. everyone was talking about iran. everyone was talking about other parts of the world. people were talking about exit, which is not -- brexit which is not only economic policies. there's ample sources of uncertainty outside the direct jurisdiction of policy making but have profound implications for the economic realities. that is why i repeat again to make sure your boat is strong

enough to rescind the wind. always,unable especially if you're in a smaller country, to change the wind. it is only you who can strengthen the boat. francine: where is the strongest wind coming from? the worry about china? jacob: china, first of all, is a giant. it's a giant with huge size. it has been the most important trade destination for everyone. share in the world output is jettin gigantic and everyone has to be concerned that any sense of uncertainty in our country will be exported to the rest of the world. the way to address it is to engage rather than to confront. one could argue that what we see be then the rhetoric may rhetoric of negotiations. we will have to wait and see.

this is my wishful thinking. we are talking about negotiations that will end up where we are all living happily ever after rather than a skirmish that exploded into a war. we don't need it. francine: could this be the end of the wto? if it is, what does it do to the world economy? jacob: i think it would be a disaster if it is. the trading system is one of the mechanisms by which the countries are interconnected with each other. the perspective of shared internationally by which one countries growth is transmitted to the rest of the world. he wto is the network of roads and highways that connect those important countries. why should we put blocks on it? we should clear it up. francine: jacob, thank you so much. he is the jpmorgan international chairman and he stays with us. we have plenty coming up here from the river banks of lake como. later today, jay powell

discusses his economic outlook at the economic club of chicago. follow along on your terminal by running live go. that's at 1:30 p.m. in new york and 6:30 p.m. in london. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i'm taylor riggs. let's get the bloomberg business flash. samsung reported better-than-expected profit in the first quarter. demand for the south korean conglomerates memory chip remained strong. according to people

familiar with the talks, recruiters contacted a former hea hedge fund trader that kurt the debacle. he has signaled that he wants to remain in the u.s.. crisis is starting to hit facebook's revenue. sheryl sandberg says that some advertisers have curtailed spending. in an interview with bloomberg, sandberg discussed facebook's next move. we also didn't build our operations fast enough and that's on me. we had 10,000 people working in security at the beginning of the year. at the end of this year alone, we were more than doubled to 20,000. we are massively investing in smart technologies. and we are doing all this to make sure we get to a place where we can proactively protect people's data. taylor: facebook ceo mark zuckerberg will testify about the issue next week at a congressional hearing.

that is your bloomberg business flash. tom: thank you so much. it's a very important news day obviously with the u.s. job economy front and center. discussion of deutsche bank as taylor mentioned. but this is important. on the shores of lake como in a ver the very north of italy is francine lacqua with a wonderful guest to join us a bit. right now, jacob frankel. as public service to israel the government of the bank of israel and he joins us today for perspective. yesterday, jamie dimon talked about jpmorgan. we all know he talks about a good balance sheet. how is the balance sheet of fortress america right now? we do have a tax cut and that we have a guns and butter budget like you and i have never seen. what is the state of fiscal america that you observe? the is a short-term issue

and a medium-term issue. i will start with a medium-term and the long-term. of courseaphy is determining the long-term situation. if you look at the structure of the federal budget, you will see that because of aging, a very large proportion of the budget goes to health care and related matters like this, which means that the discretionary budget that is left for everything else is very limited and declining. this means that as we get a few years down the road, there will be no way to avoid the tough question of changing the nature of the contract between citizens and their government. there no way that the government can provide the citizens what is promised without charging the citizens to pay for it.

what it means in the short link which is entitlement. -- language is entitlement. there's no way of the long run that the united states and many other countries can continue to sail with fiscal health without reducing the amount of entitlements, which are now in the system. what this means is that the hot potato will need to be addressed sooner than later even though it will haunt you in the long run could the responsibility of policy requires you to address it now. it requires kurds and responsibility and looking you straight in the eyes of the citizens and saying, ladies and german, we must change the rules of the game when it comes to retirement age in various issues of that type. excuse me coul w. we got a delay so i little bit

of interrupting. i don't want you to do a single point ten-year estimate. i want to suggest your reading of history of nations that have done what the united states is doing. is it a glide path to higher interest rates or a jump condition where one day you just wake up with higher yields? in a world of transparency, there should be as little surprises as possible. therefore, we are not going to expect to have suddenly a new reality. gradualt is going to be and the fed will navigate misdirection. -- in this direction. it has to be bolstered by strong supply-side economics. i'm a strong supporter of the reduction in the corporate tax rate and also the measures that

induce the business sector to expand. that the only way you can convince people to invest, higher, and improve jobs and increase the number of jobs. once this is there, optimism will also come to the economy. tax revenue will also come to the economy. the willingness of the inizenship to participate the longer-term challenges, including adjustment of the entitlements, but this requires showing results in the beginning. hope is not a strategy. you must show resolve. francis bacon once said hope is a fantastic breakfast but a terrible supper. we are now at supper time. we need to show results. you cannot only say hope, hope, it will be ok. that is why when the measures were announced, the markets responded positively.

when the trade measures were announced, the market responded negatively. the market is not stupid. that is why we do not need to play with fire. tom: what's interesting is a research note that talked about a president who wants to have dessert before his vegetables, which i guessed is the same allusion we heard about breakfast and lunch. i know that you are having dessert before vegetables. francine: are you kidding me? i only have banana splits for both breakfast and lunch. jacob: it's only because of time zones. our dinnertime is their breakfast. francine: otherwise we eat the healthy stuff. and you look at the fed you're talking about hope, it's basically animal spirits and united states. they have a tax cut that should help with investments, but there is a supply chain that could be effective five -- affected by the trade war on tariffs.

do you believe that she can write to us -- chief executives will invest more or holding back because of the trade tensions? jacob: those are two distinct though complement to the issues. both relate to public policy. however, they are distinct because it affects the economy in different ways. both need to be addressed. the past decade, i'm talking about the decade since the birth of the financial crisis. the federal reserve has been extremely active in stimulating the economy and properly sp olved. disregard monetary policy had to step beyond the normal boundaries. now the economy has begun recovering, i think it is perfectly good time for not only the fed to continue normalization but to continue it on an ongoing basis. the fed has announced 2018 there will be. a federal tax rate

hike. 2019 is the same. you will not overshoot. the reason why you will not overshoot is that you are so far away from any concept of long-run equilibrium. is not run by a robot. that is why the policy is data dependent. it's not in an opportunistic way but a strategic way. francine: are you nervous in any way, shape, or form that the fed is not run by an academic? we seem to get the feeling that jay powell is going to look at the economy before making a decision but will not going to two much theory about what can happen to the economy two years down the line. is that dangerous? jacob: jay powell is the chairman of the fed and not a newcomer. he has been in the fed for years. it is composed of the presidents of various regions. the machinery is working and has been working.

i've no concern whatsoever. it's a very congenial, well functioning body. this is the last of my concerns. tom: professor come as we look forward and go to the imf spring meetings, francine and i hope to be there with good conversation. what do we need to a cop was at the imf spring meetings -- accomplish at the imf spring meetings given the discourse of this early april? jacob: we need to make sure that anyone who can speak up about the danger of trade war should speak up. 1931, of a well -- a very well-intentioned senator and a very well and attention congressman brought about a tariff. it brought a huge rise in tariffs across the board and

huge reduction and growth and may have been the catalyst for the great depression. that is not the depression we want to go. the international monetary fund's meeting brings together representatives of all economy's largest small. they should speak loud and clear. do not destroy the highways. don't destroy the mechanisms that connect us to th rest of the world. bank, they the world were born in the aftermath of the second world war. that was a notion that the world must rebuild itself, recover, reengage, and create a mechanism by which the international interests are internalized into policies. hence, the fora that brings all these countries together. this means that we should cherish these fora. we should cherish it and talk,

talk, talk. francine: thank you so much. jacob with jpmorgan international. i like the way that he was talking about the trade between countries being like infrastructure. coming up in the next hour, nouriel will be joining us. we will be talking to him about a correction the market and tariffs and trade. this is bloomberg. ♪ welcome to the xfinity store.

i can tell you about... streaming the most free tv shows and movies on the go. yeah, and... xfinity internet. it's so fast! and you can save by... by getting up to 5 mobile lines included. whoa, you're good. i'm just getting started. ♪ simple. easy. awesome. come see how you could save $400 or more a year

with xfinity mobile. plus ask how to keep your current phone. visit your local xfinity store today. ♪ tom: this morning, the president stopped a today market meltdown in its tracks.

double or nothing -- make tariffs great again. the dollar strengthens. how will china respond? how will jeffrey bezos respond? to the president read "the washington post" over the weekend? it is jobs day in america. we go lakeside in italy to measure the jobs that is the united states economy. we are live from our bloomberg world headquarters in new york. i'm tom keene. mo ise shores of lake co francine lacqua. cernobbio?init francine: is a popular town not only because george clooney has a house next door, but one of the most renowned economic backdrop for weddings and i think "star wars" was shot here.

people come here to talk business and finance and it's very academic. you get a sense of what academia thanks through the models the world will go. out set to be on trade and tariffs. tom: scheduled to be joining us here and trade front and center. let's get started with that on job stay with first word news with taylor riggs. taylor: a war of words over president trump's tariffs escalating today. china is promising to go to the end and at any cost. hispresident is ordering administration to consider an additional $100 billion of tariffs on chinese goods. that is forcing people to reach a deal to stave off the conflict. the trump administration will send as many as 4000 national guard troops to the border with mexico. the plan is for them to stay there until president trump's long-sought after wall is built.

that a tradeoubt war has begun. the former italian prime minister spoke to francine lacqua. francine: yes, i think we -- >> yes, i think we are in a trade war. i think it is there with possibly a looming expansion of that trade war. of course, the consequences will be very negative throughout the world. trump administration has given europe a waiver on steel and aluminum tariffs, but that waiver expires may 1. in south korea, the former president has been sentenced to 24 years in present. she was arrested last year and convicted of crimes from bribery to leaking of state secrets. part can appeal the sentence. in brazil, the former president da silva has been given a rest more for his corruption conviction. he was ordered to turn himself

and by this afternoon. 's lawyers are trying to reverse this up in court's ruling that he must go to prison while his cases on appeal. in south africa, former president jacob zuma's corruption trial has been put on hold. he will be back in court june 8. it's related to bribes that he allegedly took from weapons dealers. global news 24 hours a day powered by 27 journalists and analysts in more than 120 countries, i'm taylor riggs. this is bloomberg. tom: equities, bonds, currencies, commodities -- what crazy volatility this week. we go the other way it off the presidents comments of trade. everything else pretty much churning in the non-correlation equities has been interesting. the vix 20.26. i would note the turkish lira. i will get that to that in a moment. bitcoin -- i cannot find a bid.

maybe i will try to get a bitcoin chart up later. it's a classic southern border trending down chart as well. let's go to the bloomberg. i've never shown this chart before. trade weighted turkish lira and you do this because of the oddities of turkey and the balance between the euro, lira, and dollar lira. this is a gorgeous chart that we are doing for carl riccadonna because it's a long chart. this should be a straight line with most trends. it's not. it is gorgeously and persistently curved. we will use that banner with the next chart. curvee have got here is a and acceleration in a weakening turkish lira. that is my fault that banner went up. on jobs day, let's dive into it and get our banners life. drooped mattis is with us and

carl riccadonna did not get the memo. where is your bowtie? you look snappy. do they let you into metlife's doors with that bowtie? drew: it's a surveillance bowtie. tom: it's a collectors item. look for them on ebay. that's the way i would do it coul. ebay was creative destruction at its high point. overlay where we are in the jobs economy with all this new technology. jamie dimon said yesterday in his letter that technology is good for america. is it? drew: it is. one of the things we should be looking for in terms of whether the cycle is going to extend or not is when we begin to see a sustained take up in layoffs, which doesn't necessarily have to be a negative. it could be that the latest begins a chart a little more. more,turns a little

people will migrate to jobs that better fit their abilities. you will see wages begin to rise on that. we still have a relatively stagnant labor market although it's a tight labor market. tom: there's a sub 4% gdp banner. this is the carl riccadonna chart. you brought me this chart, which is a prospective bank of 4% and under unemployment rate. bring up the chart right now. we're at 4% and we make it a 3% handle today. back to the 1960's and back to eisenhower deflation, do you link a sub 4% employment rate with eisenhower deflation? carl: i think it's a little bit of a lazy narrative to just go back to the 1960's episode and said last time we were below 4% we ended up in the stagflationary 1970's. that does not have to be the case this time around. there are parallels, but they are stark differences. one of those could be a

productivity renaissance, going back to the notion of creative destruction and whatnot. we are finally getting to a point in the cycle where businesses are starting to make those capital investments to enhance their efficiency or boost productivity, which has really been a major laggard of the cycle. tom: i want to go to the heart of the jobs report today. we will get 100,000 or whatever. that is more than we are supposed to create. we are creating excess jobs now? do i have that right? drew: we have been creating excess jobs for a long time in the breakeven rate is in the low hundreds. if we are anywhere above 150, we are in that access. tom: 190 is the number. drew: which strikes me as very low given what happened to adp and some of the other indicators of the last couple of weeks. i'm surprised to see at that low. it does suggest today that there might be some upside potential in terms of confidence coming out of this number. tom: i've never done this on tv

before. this is the actual screen we use on bloomberg radio. it's a little busy for television, but carl riccadonna, you know these numbers will come thatere at 8:30 a.m. and 190 is the number everyone looks at. i know down here you're looking at wage growth. what do you expect to see? carl: absolutely. number isdline, that closer to 210 so there is upside risk to that number. that being said we know there are good job gains in the economy so the real focus is on the stress points in the labor market and the fact that the andployment rate may drop that could generate wage pressures. i'm concerned that we could get a head fake in march. march could look a lot like what we saw coming out of the january report, which incidentally came on groundhog day. it is groundhog day all over

again where we have a significant whether impairment in the economy in march. we had for n fourth nor'easter's. we often get an upside surprise on average hourly earnings. last time that happened, the market went into a four-day swing. the the risk is that the markets overreact, setting up for jay powell later on. tom: let us sell the brilliance of the bowtied one/ . you had a historic analysis on the weather affect of american gdp. you stop the industry with a careful study of why the first quarter is soggy. let's review that again. do you buy the one off of the first quarter? whether the research show? drew: that there was a persistent underperformance of the u.s. economy in q1. they are seasonally adjusted,

but there's a problem with the seasonal adjustment and the u.s. government was letter recommended. -- was slow to recognize it. it.y economist missed when we look back and corrected for it, q1 is usually week and the other cor carters are usually strong compared to where they should be. there is no reason to expect, although the government is aware and trying to fix it, that it persists. hq1 could be a weak quarter. tom: we have a vision of three zip codes in the island of manhattan. carl riccadonna can see as far central new jersey and the fighting tigers. other than that, we don't see america. the best conversation i had yesterday was with a professor at iowa state. we talked soybeans and the realities of a farm 87 miles below des moines. those jobs are threatened, aren't they this jobs day?

carl: we look at nonfarm payroll. the issues that productivity has soared so dramatically in the agricultural sector over the last hundred years that there are simply not that many people actually employed in the agricultural industry. there could be negative blowback from trade sanctions and whatnot , but that is really not going to move the needle on the brother labor market picture -- broader labor market picture. these tariffs are resonating very well in rust belt states. there's a lot of focus on potential negative fallout for the president as we look at the agricultural states. if anything, he is reinforcing his support throughout the rest rust belt. tom: i got the memo from the executive producers of "bloomberg surveillance." carl riccadonna is toast because he did not wear a bow tie today. thank you so much. we will continue with the bow tie on drew.

alan krueger scheduled to be somewhere in the building. bill gross will join us on television and radio. we will lock into that linkage of his unconstrained markets and our politics. that we move on to an important conversation with lawrence kudlow. we will do that in the 9:00 hour. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i'm taylor riggs. the data privacy crisis is starting to hit facebook's revenue. sandberg says that some advertisers have curtailed spending. an interview with bloomberg, sandberg discussed mark zuckerberg's leadership. >> i believe deeply in mark.

mark had a vision for what social services and social starin sharing could be and that vision remains important. mark along with me and all this take full responsible the for what's happening here. taylor: zuckerberg will testify before a house committee next week. that is your bloomberg business flash. tom: thank you so much. francine lacqua and italy and i'm tom keene in new york on job state. we migrate down to our chief washington correspondent, kevin cirilli. how big a surprise is the president's announcement last ?ight gekko it immediately went viral, but what i wasn't a surprise to see $100 billion? to larrywas speaking kudlow and he has said nothing is enacted yet. this is still a lot a fiery rhetoric. . inside the beltway, the focus is

on the divide of the white house as well as the farmer situation. andhave the soybean markets your interview with the iowa folks yesterday. is isader take away any of this going to get enacted or will we see what we saw with the carveouts where 70 plus percent of the market share was empted?ely ex tom: whether you are pro-trump tired. we're what is the level of livid of the free traders around the president? i don't understand how they have a voice into the weekend. kevin: i think that in terms of the folks like secretary ross as well as larry kudlow and secretary mnuchin, i do think they have a voice and elaine

it's a pleasant -- a lane into president trump's ear. that's a really good illustration of where the president ultimately arrives on these decisions. he goes out suggesting one thing. i don't want to say backs off, but when it comes to enacting it, it's a different policy. that's the push that i hear from a lot of the sources that i talked with. the flip side of that is st what thes again business community wants. if you are heading into midterms and you are the republican leadership, this gets you very uneasy to your donors. that you couple it with the energy policy with what's going on with secretary prewitt. is a lot of uneasy republican donors right now looking for some consistency. overall is this

just president trump trying to get a better deal? is he going to sit down and negotiate? is the essence that the eu may actually -- there a sense that the eu may actually square with the president? kevin: that's a great point. there is a sense that the president is ultimately going to try to form some coalition of a --illing as mr. co. with mr. kudlow put it to me yesterday. they feel and europe feels this as well that china has taken advantage of these trade practices for quite some time. the deal is so bad right now that it can't get much worse. china, of course, is saying game on. the thinking inside of 1500 pennsylvania avenue is that it cannot get much worse. why not try to bring them to the negotiating table? i asked what the ultimate end goal is and larry kudlow kept it simple. growth you told me. tom: someone suggest the

president needs to get on the yacht when he's down in florida to find out what to come along. you never know what the shocks are going to be. kevin cirilli, our chief washington correspondent. a chart very quickly with twin deficits. here we are with april and we will come out with a redo of a new fiscal deficit. we saw a greater trade balance yesterday. do you believe in a redo of the trade deficits in the next two to four years? trade deficit know, but budget deficit, yes. that's probably the most underreported story out there, not a criticism. bloomingt has been out and eventually it will migrate out of treasury bills and into longer duration securities like the 10-year note. that's one of the reasons why at metlife that we expect ten-year yields will begin to rise. it will rise not just on the economy and growth but also on the available supply. tom: we wanted to go back and

revisit this. drew with us from metlife this morning. i love it more on what we will do today. a little bit of a conversation with alan krueger come out with a redo of his classic book on terror. alan krueger on the american labor economy. stay with us from italy and new york. this is bloomberg. ♪

tom: good morning. "bloomberg surveillance."

francine lacqua on the shores of lake como. i'm in new york on a job say. s day. alisa martinuzzi joins us. what you need to know is that she is encyclopedic on european banking. in our last hour, he did not mince words. he said deutsche bank has the wrong vision and they cannot compete with goldman sachs, jpmorgan, and others. is mr. cryan ready to make those tough decisions? alisa: i think that it has been clear for some time that this is clearly a massive challenge for them. what we have been picking up the last week or so is a review of the investment banking business with a particular focus on the u.s. is indeed what john cryan is looking at. focused very much on that as you point out.

what does that mean for the future john cryan? the more that their speculation and rumors out there that deutsche bank is looking at this or that executive to replace him, does he get weaker by the day? elisa: it clearly doesn't help. over the last week or so, we have heard a number of reports. we even reported ourselves today that recruiters have been in potentiallyamon to replace john cryan. is word has been that he as committed as ever to the job. the speculation is not doing anything to underline confidence in the bank and the leadership. we have seen that in the share price, which is down again today. francine: are the different factions? if the board once something else , is it a battle inside deutsche bank? is it just deutsche bank against shareholders? elisa: it's apparent that there are factions.

we have ambassador to say crya an is the architect of the strategy and there's a chairman in place for six years and who has been through a number of ceos in the strategy is still under question. you have investors pulling in different directions. that's part of what we are seeing an resulting in the issue. francine: thank you so much. we will be back with drew matus. also coming up as a conversation with nouriel roubini. we talk assets and trade. this is bloomberg. ♪

tom: coming up in moments, a spirited conversation to say the least. i want to find out, first of all, what you and i have been trying to figure outcome which is this trade tensions. do they escalate? the someone try to put them down? i also want to ask him to talk to us about assets. i think that would be pretty significant. i would agree with that strongly.

with first word news, here's taylor riggs. taylor: china says it does not want a trade war, but is ready to fight one. facing responded after president trump ordered his administrations to consider tariffs on an additional $100 billion of chinese products. it was an unexpected move. that the more signs countries may find common ground on the trade agreement nafta. is saidp administration to have softened its demands on auto, production -- auto production, but is still seeking other concessions. german authorities have ordered the release of former cabinet leader held since march 25. spain one semester ready to face charges of rebellion for organizing an independent referendum. he will have to remain in germany.

in malaysia, it may be a turning point for prime minister nazak and the ruling coalition that has been in power for six decades. voters are unhappy about inflation and allegations of corruption. formern opponent is prime minister mohammed, who defected from the party in 2016. 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: thanks so much. drew matus with us with metlife. tom going to go back important comments on the fiscal space. let's bring up the chart deficit to gdp. this is sort of the typical chart with a horrific deficit here years ago, obviously, the great recession. this recent rollover, do you gdp?a model of deficit to

guest: i don't, but if you are looking at this year, we could talk about 5%, or is not this year, next year. we are talking about big numbers. we are talking about a fed rolling their balance sheet down. not only do you have the deficit to deal with, you have to replace the debt to fed. your issuance numbers are ballooning out. it is not like we have been narrowing deficits. we also have a lot of deficit maturing. tom: that is important to metlife. let's go into your portfolio managers. , they insurance company are talking short-term is five years, long-term 30 years. in ao you manage long-term deficit to gdp apply to present?

guest: a lot of what we do is actually in the credit space and in things like structured finance. we are in real estate, we do ag. we have expertise in a lot of areas. for each portfolio, we have to look at what we are actually looking at. tom: do you bring that in because the fiscal mess we are going to be in? guest: not necessarily. it is much more important to manage the assets versus liabilities and always keep that in the forefront. you don't want to much of a mismatch between the duration of assets and duration of liabilities. when you are thinking about it, you need to think about where rates are heading and why they are heading there. is interest rates -- interest rates go up and it is inflationary, that has a different effect than if we are heading for higher rates because of real economic growth. tom: a conversation with

lawrence kudlow today, thrilled he is taking on this public duty with the president. i know what he is going to tell jon ferro in the night like our. sb 9:00 hour -- the 9:00 our. is there evidence that we you can grow your way out of a big tax cut and set of budgets? guest: usually it's kind of hard to make the direct linkages from an economic standpoint. the argument really boils down to an argument about what our national priorities are and whether we should be funding or not funding certain things or what level of taxation is appropriate given the demands of the economy and the demands of decide howultimately much we are supposed to spend and bring in in texas. tom: just to cut -- in taxes. tom: just to cut to the chase, the issue year is it is not

1986. it is not ronald reagan. hispresident pays homage in nostalgia to ronald reagan, but our debt to gdp is arguably --ple or double or what it double of what it was in the 1980's. guest: yes, on an ongoing basis the deficit is getting quite large. the fact we are an expansion is a problem because if we go into a downturn and we have a number like that, we are looking at the government having very little flexibility of stabilizing. in terms of risk it increases the overall amount of risk in the economy to run a deficit this large. in terms of the growth outlook, though, i think the consumer has spoken on that. consumers very optimistic. markets are obviously in favor. of course, we haven't seen the rise in yields you would anticipate, which people would point to as a sign that markets are ok with that as well. tom: drew matus with metlife.

an important speech today. i've been there, way up the side scraper best the skyscraper overlooking lake michigan -- skyscraper overlooking lake michigan. i was informed on twitter i'm an idiot. no, it is a deep lake in russia, lake baikal. jerome powell in the 1:00 hour. it is bloomberg. ♪

♪ is "bloomberg

surveillance." they did a crisis that's the data crisis set -- the data crisis cindy be hitting facebook's funding for the first time. >> we also didn't build our operations tasks enough, and that is on me. at the end of this year alone, we more than doubled to 20,000. we are massively investing in smart technology, and we are doing all of this to make sure that we get to a place where we can proactively protect people's data. markr: facebook ceo zuckerberg will testify about the issue next week in a congressional hearing. a former j.p. morgan chase executive is among those being sounded out to replace deutsche bank's ceo. recruiters contacted the former hedge fund trader who helps cleanup jpmorgan's trading

debacle. he's said to have signaled he wants to remain in the u.s. that is your bloomberg business flash. tom, francine? francine: thank you so much. we have plenty to talk about here on the river banks of lake -- lake como. let's get to our next guest, nouriel roubini. side often on the downbeat of world economy and world growth. thank you for joining "bloomberg surveillance." what do we do from here? does the trade tension escalate and become a trade war, or will he goes be tempered? guest: the honest answer is we don't know.

is justmists say trump trying to increase his bargaining power and is using these threats as a way of opening up china. i have a slightly more thoseistic view because who are internationalists are out. you have gary cohn leaving the administration, and people like peter navarro and president himself that are protectionist. you have pompeo in secretary of more hawkishuch security advisor in john bolton

suggesting that the roaster with china will be one of rivalry. francine: if this is about bargaining with the u.s., getting a fairer deal, can protectionist measures actually help the economy? can the u.s. economy be better off if president trump of the administration get a better deal with china? the risk is that it becomes a whole scale trade war. they doubled down with the $50 billion, and overnight the president is saying another $100 billion of tariffs. the $50s retaliated on billion, and they are going to if the u.s. imposes another $100 billion of tariffs. the u.s. might sanction china because of its opening market , in this could

escalate into a full scale trade war. tom: that is all well and good, , we aremore important drew matus of metlife of his -- off of his trip to china. they are trying to build up their own sphere of influence in the region. tom: this is critical. robert kaplan out with his new book "the return of marco polo." can't say enough about it, but is it nostalgia for the 13th century? what is the reality of building what marco polo lived years ago?

guest: i think they are trying to find new markets and diversify their risk away from the west. i think when we try to put everything in context about what is going on today, we can see , these little battles we are having, as we are uncertain as to where they want to head, and they are uncertain exactly what we want. china ispresident of looking to the indian ocean as one part of that new silk road. he is obviously looking west through his deeply troubled western china. the president of the united states i would say of looking west to west virginia. says inssor roubini italy, there's almost two dialogues going on in this traits that. >> what are the very best trade spat -- trade spat. >> the u.s. and china

fundamentally don't understand each other and we tend to talk past each other. i think you are seeing that now. the president's actions, the administration's actions probably come outside of new york city, are playing pretty well. tom: i would hundred percent agree with that, and i think the president is aware of that, and so is dr. navarro. it is playing well, but at some point in dodge in his shocks can come on -- endogenous shocks can come on. >> you can actually see this in the size of the tariffs. probably 10% of chinese exports to the united states, china retaliate with the same number but it represents a much larger of the u.s. exports to china. i think that is an example of the two countries talking past each other. from the chinese point of view they were just matching what we were doing.

from the u.s. point of view, the ups the ante, perhaps. that is where the risk is, and that is why people are concerned is because it is very easy for these misunderstandings to get out of hand. tom: dr. roubini, what will in upper hand to the president's message? does the dollar bring discipline to the president's message? that advisersre are going to be up to convince to change tact on protectionism in china. if anything, some of them are economic nationalists and security hawks. i think the discipline is eventually going to come from the market. we have seen how this ride of best this rise of trade 10 -- this rise of trade tension has led to significant market correction. were it to escalate, you have

more of a correction. at the end of the day, i think it is going to be market driven rather than his own advisors forcing him to change tact. a trade war is a negative sum game. in trade wars, everybody is a loser. that is what we are facing right now. francine: let's go back to market correction. if this escalates, how much would be wiped off global markets? does it impact chinese markets, the u.s., or global markets? guest: it depends on the size of the trade war. recent market correction has been driven not just by fears of a trade war, but also u.s. inflation. there are many factors at play. , of course,that during the great depression the

collapse of the stock market, there is a reason this trade war escalates would damage economic growth. the ecb presented numbers based on an estimate about economic damage. ,t is going to be significant not just for the u.s. and china, but for europe and the emerging markets. all, a say that first of repricing of equities has occurred, and paradoxically bond yields go lower. februaryot higher in because they were worried about surprise on the upside in u.s. inflation. tom: you and i have talked about your doubt of supply side

economics. even glenn aubert at columbia business school has questioned the certitude of president trump's supply-side economics. what is your problem with trump's supply-side economics? guest: all sorts of studies suggest that the economic impact of a tax cut on growth is going to be very modest, and we're u.s. to have a widening of fiscal density between the tax cut in the spending increase. usually massive fiscal deficits are during war or recession. that will leave us with less fiscal space the next time we have a recession.

fiscal stimulus could lead to an overheating of the economy. a pickup in inflation more than the fed and markets expect. the fed is planning on three hikes this year, three next year, but analysts say the highest could be four or five, 24 next year. this is best up to four next year -- up to four next year. this is something markets are not prepared for. a correction on the stock market will become a full-scale bear market. if you add to that the perfectionist risk, slow down for growth, inflation adds to this risk to the economy. that is why markets are becoming nervous. francine: with the trumpet ministration allow a stronger dollar? -- would be trump administration allow a stronger dollar? guest: the official policy is on a weaker dollar because those

who voted for trump me to have jobs and income. but if you have tightened , it could lead over time to a strengthening of the u.s. dollar. that is going to further hurt the jobs and income of the u.s. -- u.s. worker. so over the next year or so, the u.s. trade deficit is going to widen to another 1% of gdp, and that is going to create more trade and currency tensions. tom: francine unloaded her bitcoin. she did brilliantly on that. i believe she is picking up george clooney's wooden boat for a small amount after the show is over. francine: the house, not the

boat. tom: that's true. single best chart right now on bitcoin. we haven't shown this in days. this is a beyond elegant chart. bitcoin is trending south. what i see our governments finally pushing against the nirvana of bitcoin. what do you see? first of all, as i said, this was a double. around 6000. that means they lost about two to 70% thatbout 2/3 is viable. the governments are going to start to track down on fraud, money population, stuff that is actually legal, like in the case

of ico. therefore, from here on i see furtherble deteriorating overtime. tom: let me bring in drew matus with some final thoughts. he talked about bitcoin in the effervescence of bitcoin and all of that. a more philosophical question around an unemployment rate that digits, even out to 45 -- four or five digits. is it a gilded age? is it a photography, or are we migrating away from the inequalities of the last decade come are weacy migrating away from the qualities of the last decade? guest: productivity is the key to all of this. acceleratesity

because growth accelerates, then perhaps the tax cut would be seen as being one of the great things that have been done. when you look back in history come when you look back at 1961, 1982, the two big tax reform packages that have been done in the past few decades, those economic cycles extended from was double the average cycle during that time. . p -- duringat time that time period. is that plays out during this cycle it means we are in the middle part of the cycle rather than late stage. the timing for the end of the cycle becomes really indeterminate, but much further away than people would probably expect. tom: thank you so much. francine, our most interesting day in italy. i loved your conversation with luigi. -- he waszynga alice strong because he put it all together. if you have a government which needs to spend a lot more and

overlay that with these tariffs and trade, giving it is such an export rich economy, it could really get hurt in the future. tom: safe travels this friday and into the weekend. it is jobs day. boy is it a different jobs day than, say, april 2008. we will get constrained perspective from jim gross. we will go up with the headline data. stay with lawrence kudlow to join us later as well. this is bloomberg. ♪ retail.

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

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ anchor: fight to the end. trade war of words.

president trump pushes tariffs on $100 billion more on chinese products. investors pull $9.9 billion out of u.s. equities this week. bonds unfazed. and job growth expected to moderate in march as markets look at fed chair powell's speech in chicago for direction. david: welcome. i'm david westin, here with alix steel. just when we thought things were getting boring. alix: boom, the president had some ideas less today -- ideas yesterday. we are well off the lows of the session. we saw a huge move down and s&p futures overnight. dollar-yen now unchanged. yang was actually a little stronger on that safe haven bid, but nevertheless to now call.