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. yields down by about one basis

point, and crude lower. to me that means markets are still waiting see for jobs, different than we saw on wednesday. david: geopolitics all around, whether it is iran or china. the united states and china ramped up their trade rhetoric overnight with president trump calling for new tariffs on another 100 billion dollars of imports from china and the chinese government saying it will "follow suit to the end, no matter what the price." we welcome our chief asian economics correspondent. i'm going to put up a chart now that shows the level of imports china has from the united states overall according to u.s. census data. 100 only important about $50 billion worth of goods from us, so how could they impose billion?n $150 reporter: it is a great question. i have seen some figures suggesting it is less than $150

billion, which questions just how china will respond and where this goes next. we have at statement from the commerce ministry today saying it will defend china's people in the nation to the end, like you said. there will be a press conference about an hour now where we get more details. they thinking now among economists and analysts is china may move beyond the world of tariffs and into the world of existingf barriers for u.s. firms or investment in china. in a sense we are now going to uncharted territory unless negotiations find a middle ground in all of this and find a way out. we are headed down a much more difficult trade past than anticipated as recently as a few weeks ago. david: i wonder whether the administration extend -- administration understands the extent to which he companies have made investments in china. for example, general motors manufactures their cars in

china. they can really be hurt if china put their mind to it. reporter: absolutely. they got a supply chain which is very interleague and deeply woven, so you can't just tackle china. you would hurt other countries and companies as well. but also a significant amount of u.s. investment in china and u.s. profits generated in china are not captured in the good data. for example, starbucks opened its biggest store in the world in china at the end of last year. you know that does the land is operating in china. apple sells huge amounts of the iphone. there are other u.s. automakers as well. story is a capture all of the trade happening between the u.s. and china. that is why economists say the u.s. might be vulnerable to nontariff barriers if that is the root china chooses. david: think you much for reporting from china today --

the route china chooses. david: thank you so much for reporting from china today. we welcome bloomberg's chief economist and lisa abraham of it mowicz.sa abra ustr found overwhelming evidence that china's unreasonable actions are harming the u.s. economy. --na has chosen to respond this looks like we are moving towards a trade war. what would that do? let's assume it actually developed into a trade war. not there yet. what would do to the u.s. and global economies? >> it is very important that it is a war of words at this point, not an actual trade war >>. we're still in the talking -- trade war.

it is still in the talking period. if this is a traditional trade skirmish, he who is running the trade deficit basically holds the majority of the cards in the negotiation. china is dealing with an economy they are trying to shift away from being an export-based economy and promote service sector activity, but this is a challenge. they are having a growth slowdown. theth as expected to be slowest since the early 1990's and their economy. but the u.s. is not having a problem with a to slow economy. the u.s. is running the trade deficit, so if they can't get the products from china, they can probably get them somewhere else. find a new market to sell their products, so the u.s. has leverage in that regard. the u.s. also has leverage and the fact that, as we will find out later this morning, the labor market is in extremely healthy condition. growth markets look good. with the u.s. not very

vulnerable in this situation, that means that president trump can kind of push this along to a larger degree without having to avoid it. haidi: the five-day chart thevid: emily: --alix: five-day chart of s&p futures tells a very interesting story. >> ok. i want to break out a couple of points. first of all, u.s. stock market is diverging or the least correlated with european stock markets since 2006, moving to its own beat as a reacts to the various war of words. acond, there is perhaps s but you saw that in the flows this week with almost $10

billion out of u.s. equity funds and nearly $4 billion into u.s. treasury funds. people don't want to deal with the uncertainty. especially short-term bonds. it is important not to categorize all treasuries as the same, but short-term debt is offering some substantial yields, especially if you leverage it up. my point being, people are looking for that safety because yes, it might just a more parts than fight. it might not a mountain and -- bite, but it is just not worth it for investors. this is actually a phenomenal question, and frankly i think it is the question today. the question to me is, does this indicate the people see it as a much higher yield going forward because china might stop buying treasuries or because of the supply demand dynamic? maybe this is why we haven't

seen yields go down more during the risk off rallies. that said, people at least in the u.s. are going into treasuries right now more than they have in the past few years. david: let's go back to our third story, which is jobs. let's look at what is now being forecast. first of all, that is what happened last month. the unemployment rate may actually go down to 4%, and average hourly earnings ticking up. how much of this is whether? -- is weather? does playnth weather a significant role. the one we saw in january with severe winter weather, impacting maybe not the number of jobs created, but the number of hours worked. whether curtailment is significant, and that often

nudges hourly earnings higher. onwe get an upside surprise average earnings, it could create some instability and you market. it certainly did when the january jobs report came out. that i think is the risk today. maybe there is a little bit of a buffer because everyone will look at the jobs report and say, what is chair powell going to say this afternoon when he speaks in chicago? maybe that can stop the cascading effect this time around. you see that data come if you get something unusual in average yearly earnings, start looking for something unusual. all of that will provide clues if there really was a weather impact. alix: thank you guys very much. coming up, more on this escalating trade war of words. .hat is in china's toolbox

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david: china was quick to respond overnight to president trump's call for an additional $100 billion of tariffs on

--nese imports welcome now the person to who we turn to anytime when he to understand statements like that from the chinese government. she now serves as vice chair of the paulson institute and ceo of her own company. she joins us now on the phone. thank you for taking the time. explain to us executive what to make of the chinese response. guest: the chinese have been well prepared for any action coming from the trump administration. madeinly president trump no secret that china was going to be a target. we are facing a very unique situation were present best president -- president xi has consolidated his leadership, and has therefore been able to take very swift action as we saw in

the immediate response the chinese had to the first round of tariff announcements. david: as a practical matter, have ansident xi advantage because of the nature of his government and the way his country is run? if you're in the united states, we already have the agriculture industry saying, what are you doing? you can't do this to us. does president xi have any resistance to actions that could hurt people? guest: he certainly does have a position from some of the -- opposition from some of the chinese domestic industry. we've gotten into this situation because we haven't seen significant market opening in china. there's a strong domestic lobby against foreign competition. he does face that, and the chinese know that in order to , the question is going to be is it enough for the trump administration? they know they are going to have to take certain market opening measures. david: you said it before on our

air that there is room for ,mprovement on the chinese part and financial markets and things like that. this china have a clear sense from the united states right now of what it is we want? guest: i'm not sure any of us understand what it is the trump administration defines as success in resolving this. we know there are specific egregious, have been for example, and financial services there's not been significant market opening. in order to take action, the chinese need to take very bold steps. they need to stop the leakage of tech transfer as a condition for market opening and lift certain equity restrictions. but what is enough is not clear. i think for the administration, , and usually how these negotiations go is you start a negotiation, and if you can't reach agreement on a clear set of prints that of

principles, you go to sanctions -- clear set of principles, you go to sanctions. in this case they started with sanctions. david: you understand working with the united states government when it comes to trade, particularly negotiating wto. give us a sense of the politics in washington right now. i will read a quote right now from republican senator from nebraska been sass. "hopefully the president is just blowing off steam again, but if he is even half serious, this is not your cup -- is nuts." what influence could republicans on the hill have on trade policies at this point? guest: they are concerned in this market opening about the strategic nature of chinese investment in the u.s., but that said, we are very interlocked economically and dependent on china economically in terms of our exports, their contributions

to global economic growth, and it will hurt our industries if we don't see action. hopefully what the administration is doing his part of a plan. if there are clear terms the chinese need to meet to resolve this, it would give industry and people on the hill much more comfort. possibilitys the that this is deeper than a trade war? i was talking to some people in the market and say they think perhaps it is president trump versus xi and it is actually a power struggle more so than underlying trade deficit. is there any credence to that argument? guest: i think it is very interesting and hard to tell if that is his motivation, president trump has said one of his best head of state relationships is with president xi. even when he was announcing tariffs for the first time, he made a point of saying he was good friends with president xi and a friend of china, which is kind of an unusual way of

starting an announcement that you are making on sanctions. i would find it hard to believe that it is a power play personally, but looking at china has a strategic competitor, there's definitely an element to that. alix: thank you so much for joining us. coming up, how should markets respond to this? ele says stay invested, but where is the big question. this is bloomberg. ♪

alix: investors fleeing u.s. stocks for bonds. dumping $9.9 billion in u.s. equities. ubsing us now is

management's global cio. you have said stay invested. where? guest: we are still overweight versus these high-grade bonds, in part because i think one of the stories we have seen unfold this year is the way that those bonds just can't be the same kind of diversifier for many portfolios out there this year. while equities are more difficult as volatility reaches average levels, where else do you go? certainly bonds are less attractive. so we are talking about hedge funds and other alternatives. i think there's private equity as well. the point about hedge funds is back in the days when i was in the hedge fund world coming to be would expect a 20% return. it has become a lot more institutionalized, but it is still something that is less

correlated to equity, and that gives you a diversifier. alix: this is a chart that has really struck our fancy this whole week. in treasurieslity and u.s. equities. the white line is u.s. equities. why is this happening? period now is a before earnings get released and we get what we believe will be a reconfirmation of the global growth story were so much has happened, going back to chairman weell saying that dot plot, are not so accurate and our forecast. then we have mr. bolton's appointment, changes in the white house, questions about tech companies, and then you layer in this chance of a trade war on top of that. i think there is a lot going on in a period where the economic data, we haven't got that we confirmation yet.

david: if this continues you have heightened volatility, but not so much in equity and debt. this would make you want to come out of equities somewhat. guest: and people have. you have a 5% increase in the equity risk premium right now. some of that is getting baked in. i think what would really start to concern us as if we started to see these bond spreads widen considerably from here. if the bond market got more involved, then we would be concerned. alix: equity volatility is really only of the u.s. this is the vix versus european volatility. is can see that the vix topping european volatility, which usually doesn't happen. does this create opportunity? guest: yes and no. i hate to use the word technical reasons for that, but as we all

know the fix is being played -- the vix is being played a lot more as a hedge. ist i think that reflects something we still see couple which is a stronger growth acceleration in growth in europe, even if it has come off of some of the highest recent levels. if someone was to come through today and say construct me a portfolio, what do you tell me? is the10 years challenge, but i certainly think we get a lot of people that talk to us. there are some underlying features of that portfolio. what we try to do is tell people in this world today where governments are pursuing so many different strategies around debt and fiscal policy and trade policy, you have to be globally diversified because you don't know which one of these economies is going to win. you want to be diversified across asset classes and eventually currencies as well. david: you're talking about

fiscal policy, not banks or monetary policy. to what extent are you changing your investment decisions because we have less intervention coming from central banks? guest: we've changed it some because of that. we think that in this later part of the cycle where you are still getting that economic stimulus from the central banks, there still is opportunity to the upside. but as the fed starts to tighten and some of that stimulus comes out, and some of these other forces come into play, that is why we are getting this volatility and why we've put on a few hedges in our portfolio as well. alix: what do you do with procyclical aspects in your investment portfolio? back a littleared bit and put on some hedges like the s&p 500, but it is a little too early to give up on global

growth. remember, one of the stories is the fact that this fiscal stimulus is coming through, and at least in the near term that should be very good for the u.s. economy. alix: was the one thing you don't want to invest in right now? guest: i think it is the very high grade developed market bonds. i just don't think they can provide the same cushion that they have in the past over the medium-term. in the short term we do think the u.s. 10 year got a little bit ahead of itself. alix: great stuff, mark. so great to get your perspective. coming up, trade tensions may affected markets, but will it do the same for the global economy? this is bloomberg. ♪ this wi-fi is fast.

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daybreak." if you look at the euro dollar situation, you had weaker data all week over in europe. holding firm,ill and dollar-yen pretty much flat on the day as we head into those jobs numbers. the fix still elevated -- the vix still elevated. david? david: let's get a headline on what is making headlines outside the business world. kailey leinz is here was first word news. kailey: china says it doesn't want a trade war, but it is ready to fight one. beijing responded today after president trump ordered his administration to consider tariffs on an extra $100 billion in chinese made products. it was an unexpected move that could damage efforts on both

sides to turn down the heat and prevent the conflict from getting worse. there are more signs that the three nasa countries may find common ground -- nafta countries may find common ground on the trade agreement. the trump administration is said to have softened its demands on auto production, but is still seeking other concessions. in south korea, former president park geun-hye has been sentenced to 24 years in prison. she was impeached last year over an influence peddling scandal and was convicted of crimes ranging from bribery to leaking state secrets. she can appeal the sentence. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. david: we have some breaking news right now. there are reports out that an investor has approached kristin meister of bank of america to run deutsche bank. it is a question of rather john

cryan would be keeping his job. now there is a report that the head of global corporate investment banking for bank of america merrill lynch christian meisner has been approached about the possibility of running deutsche bank. alix: he apparently is not currently interested in the deutsche bank world, but he is one of a few senior bankers outside of europe who has been sounded out. we heard that a former jpmorgan executive is also among the candidates. the question is, who is going to want to pick up this baton? you sell it happened to john cryan. he came in, change plans like 17 times, the stock got hammered. who is going to want to take that on? david: there seems to be a fundamental disagreement between john cryan and the chairman. part of that job is are you wonder percent aligned with the chairman because you don't want to take that job if you are not 100% aligned with the fellow who is the chairman. alix: owner of the broader takeaway is that john cryan is definitely done, it is just a matter of time. crossing thes just

wire, for this is speculation i'm about to come of it christian wisner is an investment banker. there were reports that the chairman wanted to double down on investment banking -- christian meisner is an investment banker. there were reports that the chairman wanted to double down investment banking. i'm sure he has good relationships with the german regulators. we have no idea this will pan out if it is true, but the initial reports are that christian meissner of bank of america possibly replacing john cryan. alix: much more coming up and we did deeper into this plan. david: back to jobs data now, expected out and a bit down from february. economists estimate 185,000 jobs unemployment rate to

get to 4%. joining us now is michael mckee come a bloomberg's international economics and policy correspondent. just before you go into the lock up and find out with the numbers really are, what are you looking for? michael: it is an interesting report because it will matter to about eight: 31, and then we will all turn our attention to what jay powell is going to say. is not expected to do anything until june, so we really need some kind of outlying number, which means you do not really need to pay attention to the headline job creation number unless it is really strange and not unemployment unless he gets to a 3% handle. what people will do is try to pick apart the report, what it tells us about the economy at this point. allred bringing a lot of people back into the labor force? -- are we bringing a lot of people back into the labor force? that is the argument the administration made for its tax cut plan.

it is kind of a strange one because that is a really volatile series. it has been up, down, up, down. everyone looks at the year-over-year. it takes up to almost 3% and then fell back down. we are going to try to parse this and take it apart to get a feel for where the economy is, but it is not really going to matter in terms of your portfolio positioning because the fed is a ways away from doing anything. alix: the standout in the last jobs report was retail construction. how much give back are we expecting in that? michael: that is hard to say because that is based on seasonal factors, when you have a lot of hiring in december in november. usually you get some payback in january, which we didn't get. we might start to see that. some of the interesting areas to look at will be construction because of the weather. it was very strong last month. has reported that

their factories are running full tilt. for they able to find more workers to bring onto payrolls? let's stick a look at some of the areas that might be affected by trump terrace. we will -- trump tariffs. we will look at the primary metal producers and see if anyone of being hired or fired. alix: joining us now is megan greene, metlife's chief economist. come inside the bloomberg and you can see the pce price index. going back to the 1960's, once you hit that cyclical low you had inflation double in the next year. what are you thinking? guest: they will all come down to the labor force participation month.hich jumped last alix: like my computer just dead. best just did -- just did. [laughter] if that comes up we will

see an effect. if you see the unemployment get into the low 3%, historically we see a recession shortly thereafter. it would be a low three handle that i would really worry about. david: go back to months -- go back two months. do you think we learned our lesson? the markets really went off a cliff in the vix went way up. lesson?learned our guest: i hope so, but i doubt it. the markets are still primed for seeing some kind of sign which you see right now, which is a light cycle surge in inflation. i think this stage could last so long we are probably not going to get one. construction last month was really strong, partly off the back of weather. same with transportation. we had four nor'easter's in boston, where i am based.

march might have a different mix of data. more important than the headline figure is where we are adding jobs. if we have a drop in high wage sectors, the aggregate average hourly earnings figure could be lower. alix: interesting. what is also interesting is in survey, firms are raising compensation over the past three months. do you expect that to continue? is it large, medium, or small that makes a difference? guest: the medium and small sized companies formed the backbone of our economy like most developed countries. they have been reporting raising wages for a while. we are just not getting a whole lot of wage growth come through in aggregate, probably because we are adding loads of jobs in service-based sectors, and those are low-wage, low our ♪ -- low hour sectors. david: are the wage numbers

becoming out of date in the sense that we don't change the non-cash compensation portion of it? jobs are changing in the united states. the way we get compensation is not just what we report a w-2. guest: absolutely. it causes distortions in all the data. alix: we are talking about the strength of the economy, and all of the time we are talking about the possibility of a trade war in the background here. the false equity prices in response to the u.s. announcement to oppose -- to impose a tariff on steel and aluminum have already contribute into tighter financial conditions. excelling he was starting to warn about the broader repercussions. what do you see? guest: i think that is right the market moves have tightened financial conditions a little bit i think the markets totally overreacted to the steel and a littleterrace --

bit. i think the markets totally overreacted to the steel and aluminum terrace -- aluminum tariffs. . china has been measured in the response. very quickly they are going to run out of goods to place tariffs on. increasingly they will move to things that have nothing to do with trade like positioning away from u.s. treasuries, potentially devaluing the currency, things like that that are tools they can use that have nothing to do with trade. david: could they actually have more profound ramifications for the global economy? guest: absolutely. it is worth considering what is in china's best interest as well. they are not going to dump treasuries or devalue the currency massively, but they could tweak these things. the u.s. is issuing tons of debt , so there are concerns about demand for u.s. treasuries. that would be a powerful move for china. alix: you had a great note this

morning that said basically we data here,enough meaning we need a trade deficit matter what. guest: it is a reduction of our investment and national savings. the other way to address it to make we are really upset, is to raise our national savings. we are not doing that in the public sector because we are blowing out our deficit, but we are going to have to in the private sector. if people are saving more they are not consuming as much. it could push us into a recession. you have to wonder if it is really worth it. david: i'm sure a lot of people are wondering that. american businessman who got a big cut from the tax break on the one hand, on the other hand we have this specter of real trade conflict, if not war. is it essentially taking back with our right hand what we gave with our left? guest: yes.

insofar as we provided the stimulus measures from the tax bill and spending bill, these dragged on and competitiveness. they could also push through in terms of inflation. they just don't have the pricing ,ower as they try to maintain edition. david: thank you for coming today. coming up, john cryan's days at deutsche bank may be numbered. we take a look at that next in wall street beat. as you come in today, you can tune in on our radio and listen to tom keene and jon ferro from 7:00 to 9:00. can beerg surveillance" heard across the united states on sirius xm radio. live from new york, this is bloomberg. ♪

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♪ kailey: this is "bloomberg daybreak." coming up in the next half hour, bill gross, janice henderson -- janus henderson's fund manager. alix: on wall street beat come up we cover what wall street is buzzing about this morning. cryan's, the search for replacement at deutsche bank heat up. moment been psalm on -- mohammad bin salman on takes corporate america by storm. checkou ever had come to

-- kambucha? david: i have not. alix: it has a little bit of hope all in it. it is fermented -- of alcohol limit. it is -- of alcohol in it. it is fermented. david: we have christian meissn er since that headline was written. the days for john cryan do look like they are numbered at this point. reporter: they do. and yesterday,ay and both of these cases it is names said to have been approached by recruiters. in both cases it is unclear if they are actually interested in the job, but i think what is crystallizing, as you said, is numberedn's days are come really making a full-court press to find a replacement. david: it is always dangerous because this is like tom-toms beating. we don't know what is going on,

but it is fun to talk about nonetheless. these are very different candidates. they would likely lead the bank in very different directions. reporter: right. i think that is an indication of the ongoing turmoil within deutsche bank in terms of what is the best move for the next. maybe compete more in the u.s. or refocus back on banking in europe. having and, meissner corporate investing banking for aound, zames is known jamiesor possibly for dimon at j.p. morgan chase, but that obviously did not pan out. as you said, they are very different potential candidates in their background. alix: that is what we heard earlier from michael haefele. here's what he said to bloomberg. >> investors need to decide what kind of bank they want. so far what i can see is still

split views. i think that is the position of john cryan, who was to significantly reduce the size of investment banks in the u.s., and probably the view of the chairman who wants to keep presence there. that deutsche bank to get out of the u.s. altogether. iporter: one of the questions had is what is the digital fallout of this going on for a long time. you are almost hoping some of this news is leaking out in terms of the potential candidates, but that they are really close because for employees and shareholders the longer this drags out, the more damage there may be done. but also they may not have a lot of people to pull from, and this is a really hard job to take on. david: it is not as if this has been a very stable bank. this is want of a couple of years of redoing and reinventing and rebuilding. they will have to do it yet again. one thing that strikes me from

mr. meissner is his name. he is german and he speaks german fluently, and it is deutsche bank. as a practical matter, you're going to need someone who knows the german regulators pretty well. reporter: that is a great point, and also the workers. the bulk of the workers are in germany. he could potentially rally the troops at a bank that has been battered for a long time. alix: i do have to go to the last story, kambucha at goldman sachs. it is an interesting culture in how goldman sachs is trying to take on tech. they are talking to other opportunities in silicon valley. reporter: that's right, and they are changing the workplace environment in order to attract tech talent. i think a lot of the banks are doing this. in the old days, engineers and coders are relegated to the back office and didn't really interact with other people at the bank. now you're seeing the napoli come to the forefront, but essentially get cooler offices.

this does tie into deutsche bank in some ways. if you want to attract top talent, you are competing with tech. how is deutsche bank going to get those people? david: all these banks are trying to become tech companies. that is true of auto companies and everybody else. it is really affected by benefits, maternity leave and things like that out of silicon valley. reporter: absolutely, enforceable work schedules, another one really important to millennial workers, eco-friendly buildings. it will be interesting to see how the banks adapt to become technology companies, or at least compete. david: becky for being here, bloomberg's peggy collins. coming up, ski outings and sausage platters. i can't even believe this as i read it. german companies are scrambling to find qualified workers. more on what i am watching next, german jobs. alix: bloomberg users can interact with all the charts

we've checked out today. thev you can look at charts, click on it and watch what we were talking about on tv. these are the charts we think are the most important for you to know today, so check it out. this is bloomberg. ♪

david: we are focusing on jobs, but it is not just u.s. jobs. it is also german jobs i am taking a look at today because there's a terrific piece this week about the german job situation. they are running out of workers and have to do extreme things to try to get workers to come in. carol is going to take us through this. they got aight now one million open jobs, about the population of munich. we are not just talking about really skilled jobs. we hear that story conscious -- story constantly. we are talking about low skilled jobs, factory workers.

there's a 20-year-old factory apprentice, and people are competing for his skills. i should also a point out that germany's unemployment is at a record low, 5.3% in march. alix: how do you compensate this people? reporter: it is not necessarily higher wages. what they are doing is interesting incentives. this guy, when he was being recruited, and his recruitment package they offered a trip to new york if he did well in his first year. he did well in his first year, so he came to new york on the company's dime. there's other things. sausage platters. there's this company, and auto parts manufacturer that supplies to bmw and porsche. they rely a lot on foreign workers, so they are trying to attract them. they can't always be higher wages because they had to stay competitive globally. they are welcoming workers,

providing them company-owned housing, and giving them welcome platters in the hills of the black forest of local hammond sausages. david: set -- ham and sausages. david: sausages are relatively important to germans, from what i hear. it is interesting you talk about foreign workers because there's a lot of concern about immigration in europe. are these workers from within europe? reporter: from within europe, yes, from poland and so on. it is difficult because there has been a real pushback, and that is something the german special bank has been concerned about, that this pushback against immigration, something we see in our country, in terms of if you are looking for ways to grow the labor force, germany has another problem of engaging the abolition. look at japan and what is -- the population. click at what is happening in japan and the united states. are doingy they things like company-owned housing. alix: you can't even look at

average hourly earnings anymore. in aet the job report few minutes, but it is the eci. reporter: i should point out wages have gone up about 13% over the last five years in germany, but again, companies in germany want to stay competitive globally, so they have to be careful about raising their costs. david: we will have to ask michael mckee about the sausages. [laughter] tune into "bloomberg businessweek" on tv and radio on saturdays and sundays. ,oming up, alan krueger professor of economics at princeton university. >>

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with xfinity mobile. plus ask how to keep your current phone. visit your local xfinity store today. president trump pushes for

tariffs on $100 billion more of chinese products. , investors pull 9.9 billion dollars out of equities this week. jobs growth is expected to moderate in marches they look for powell's speech for direction. david: welcome to bloomberg daybreak, it's jobs day. you were looking at washington, a lot is going on. we have the trade representatives. writes forrd who them says what is this weekend going to rain? what front-page editorials will we see in the global times? what do you do with the new director of the nec? literally, anything can happen. david: how do you want to be positioned at the close of the day today?

you've got two days where anything can happen. alix: markets had been taking this in stride. we ares down by 1%, moving over just a little bit. it wants to be a stronger dollar story. the dollar yen is weaker. safety,ant to go for are you buying treasuries? we have yields lower by one basis point despite the fact we saw the biggest implosion of u.s. treasuries in two years and domestic investment. there is a flow. you would think it would be stronger based on the political risks we are seeing. oil is off 1%. david: we turn to kaylee with first word news. >> that war of words over the tariffs escalated today. china's vowing to fight the tariffs to the end and at any cost. the president ordered his

administration to consider tariffs on $100 billion in chinese goods. that could unravel officials to reach a deal to stave off the conflict. there are more signs the three nafta countries may find common ground. meetsrade representative with his counterparts today in washington. the trump administration is said to have softened its demands on auto production. in germany, he's been released from prison. chargesccident to face for organizing an independence referendum. he posted bail and will have to remain in germany. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. alix: thank you so much. trade tensions are sinking stocks again.

the volatility is in scaring everyone off. equities are a bit more dubious. they have a higher margin of error around them. other things may revert faster than equities. >> they became aware of a pattern that everything mattered in the last hour of trading. that has fallen apart. >> you've got more volatility in the market. they are paying attention of things it shouldn't. i think the market is trying to find its footing. >> it has to do with uncertainty around policy. those reactions make a lot of sense. i don't see the volatility as a fundamental problem that we need to be worrying about. all of these things, it's complicated. we have to be mindful and keep an eye on all that. >> there is opportunity to the upside. to tighten in the

stimulus comes out and other forces come into play, that's why we are getting this volatility. alix: joining this is alan krueger. he is a former white house chief economist. happy friday. we've been interested in the volatility in equities not reflected in fx. how do you understand that? alan: the uncertainty is mainly policy. shotse day after day of about was going to happen to our trade policy. larry kudlow tries to cool nerves down. he must be looking for what happened to the rug underneath him. are: do you feel markets focusing in on what we should be looking at when it comes to trade? alan: i think markets don't know how to price in the risk of a trade war. we don't know of we are at the

beginning or the end. situation, we are facing the difference between risk and uncertainty. you can quantify one of them. whatn't really quantify the ups and downs in the challenges are going to be. alix: the last time you were here, you were talking about valuation in the market. i want to put this into perspective. this is the ratio for the s&p. since 2016.een this how do you feel that valuations now? alan: last month, i thought they were high. equities fell 8%. i'm not going to go out on a limb again. it still seems a little bit rich. i figure depends on what happens with growth going forward. i think we are the late stage of the cycle of that's going to be a challenge. if we see a pickup in wages, that puts downward pressure on

it. david: different markets seem to be pricing it different ways. the equity market is really reacting day by day, not so much debt. is one wrong in one right? is there a reason why they are pricing in differently? alan: they face different conditions. it's clear that is going to rise. we are looking at trillion dollar budget deficits. there is more certainty when it comes to the debt market. the fed is clear about the physical policy side. david: is it possible to compensate for whatever is priced into the bond market? you would expect yields to go down. issued, are more bonds is that counter the effect? alan: that's probably why we've seen stable yields, they are going in opposite directions. you have concerns with what

going on with the value of a dollar. you would normally see it rising. it's been weakening. that is related to concerns about economic policy. alix: now we have the trade issue. talking about the profitability of china doing things like not importing soybeans from the u.s. import 35 million tons. brazil and argentina are the others. one thing about soybeans, 95% comes from foreign country. exportsat brazil, and 12 million tons elsewhere in the world. there is no possible that they can replace them from brazil or argentina. you have very poor growing conditions in argentina and brazil. implementation of this would be very difficult. alix: what do you think about that idea? alan: china is targeted.

we've seen they are good in implementing the policies and the u.s. is slow because of our process. you have to go through a bunch of hoops. i wouldn't be surprised if china's measures take place before the trump administration puts in place its tariffs. that due to any negotiations ongoing? gun or moveded the before we did, wouldn't that stop the negotiations western mark --? therei think the irony is are reasons why we should be negotiating with china. they need to do a better job of protecting our intellectual property. it's to their detriment and ours. the way to bring that about it; countries the negotiates with china. david: is there a conflict here?

we've set for some time they should do a better job with intellectual property. initiative which is very important, is it based on them getting access to intellectual property? can you give that up? alan: china has been growing so rapidly. they are doing a better job of protecting intellectual property. the reason why china doesn't have a very good at of music is because there was no protection of intellectual property or royalties. that is changing. i think they are recognizing a need to move the policy in different directions. we are going to be innovative on their own. they are not taking our technology. they will improve existing technology. alix: how does it play out in that u.s. economy when you want to hire people? alan: it's not good for

business. uncertainty is bad for business. if guess be wondering was going to happen to your exports. i think this is not good for confidence. causeoing to continue to volatility in the financial markets. it's that for family planning. shave points off gdp growth. david: alan will be staying with us. we have an interview with larry kudlow. that's on the open at 9:30 a.m. business, weall discuss the second-biggest payroll processing company. this is bloomberg. ♪

david: we are focused on the jobs market. as robust as it's been overall, we see some trailing off in numbers as you can see from this indicator. ceoelcome now the paycheck and alan krueger of university is still with us. thank you for giving this to us. one out of every 12 americans in

the private sector, give us where the smaller businesses are in employment. marty: we are seeing in our employment watch moderate job growth for small businesses, under 50 employees. it has decelerated a bit for the last few months. we are down 1% from last year. you see unemployment at 4% for the last five months, it's more on the supply side it it's tough for businesses to find qualified workers. david: do you see it should open higher wages? that drives up the price. marty: that's the interesting thing. we peaked in under 3% hourly earnings increase. now we are back down to 2.7%. we haven't seen that is much. it's very interesting to see that part of it. over february,ch

we did see 2.94%. i think you will start to see wages go up. david: we showing another chart you gave us which shows the white line trailing off. down and haveent come back up a little bit. one thing i've been worried about is there's not enough competition in the job market, that we see conditions that should drive stronger wage growth as you said, they can find enough workers. wages.e not raising i'm curious if that is something you see with your clients. marty: it's pockets, it's where specific jobs and those needs are. you also see wages go higher because of minimum wage increases for some of the frontline services. there is competition for certain jobs.

isber one issue right now hiring, recruiting, attracting qualified workers for the right positions. i think it's tougher on a small business to hire. they don't have as much of the recruiting and support in the benefit packages large companies do. alix: a lot of what we talk about is the divergence in wages. you have lower paying jobs that distorts the hourly earnings. when you look at the industry performance, businesses are adding jobs. it seems to be things like public administration is number one, then construction, then trade and transportation. what do you notice? the largesttill see growth rate is leisure and hospitality or other services. that's a good thing.

people are spending a little bit more of discretionary money. that's a very positive thing as consumers are spending more. the bad thing is they are the lower wage positions. they will be helped by minimum wage increases. you see where i can't find the more i'm going to work hours and pick up productivity. we've seenrea where a lot of job growth is in the contracting sector, contracting out payroll services. are you continuing to see growth? do you see this segment of the economy where they are outsourcing roles like personnel or human resources or payroll? marty: i hope so for our sake.

becauseore of that human resource needs are getting more complex, especially for small businesses. we knew to the federal government reducing regulations, we see states increasing minimumons and changing wages and the paid family leave act. that makes it more difficult. companies are outsourcing insurance. those things are very complicated for them. in general, contractor services increasing. is i think you see a gig economy, more people want to have more flexibility. we see more of that. this is what they are looking for. more -- mobility

is there? qc situations it might restrict people, like non-compete clauses? marty: you see some of that. it's more specific jobs. it's going to be the professional jobs which are growing slower anyway. don't see that in small businesses and the trades. i don't think we hear that much. there is a mobility issue of people not moving as much. were peoplehat, move to different states. we see people more tied to their areas. it's hard to recruit unless you are in the south or someplace where there is a more influx of people looking for work. there is the whole noncompete thing it. take on thet your issues we see in tc, trade wars,

etc. if you look at ceo confidence, is holding up. what is the trickle-down in the optimism? marty: i think it's going to be dependent on your business. if small businesses are taking imports, they are going to be hurt or concerned about what's going on. if many small businesses are more regional and they won't be impacted. it depends on your business. where there is uncertainty, small businesses are more concerned. they have a lot more at risk. they can't go with the flow is much. we have some concern, but nothing yet unless you are in one of those niche offerings. alix: it's really great to get your perspective. thank you so much. alan will be sticking with us. ,, the u.s. dollar is on track for a second weekly gain.

have we finally bottomed in the dollar? provide extra? this is bloomberg. ♪

alix: were we going to see from the market? this is a function of the bloomberg. is the stronger dollar a story? it's heading for the fourth day in five, the first since february. the canadian dollar is outperforming. heavily bombed in the dollar? brown: there is a lot of support for the dollar. it's been writing it through the traded turbulence. the fed is hiking and on the path to continue hiking. we have a strong economy and jobs market. we will see more of that data today. wage data has been relatively

ok. there is a lot of momentum for the dollar. if you look at the past several weeks, it's a buy everything else program. the ecb might hike this year. the bank of japan might hike soon or within the year. by emerging markets, it's like a buyer with the else program. emerging markets are cooling, the euro in the yen are cooling a little bit. the dollar is coming back into play. there is a lot of momentum in the dollar. alix: for the jobs number today, is it going to be an asymmetric risk? brad: it's going to be noisy. we had the big number last time. there's usually a letdown after that. we have seasonality is that come into play. the market is looking for a wide range. 175 is where our head is at.

we could be on the other side. the market probably won't react heavily. i think the market is looking for some positive confirmation. that could allow an impulse to the dollar. it could be a for the dollar doesn't react much do negativity. david: is there any chance the dollar is spoiled because there is a chance the president will give the trade deficit down? brand: that is a component of it. i think that is a good component of it. he will influence the trade balance, that would be positive for the dollar. that's a longer-term theme. this tit-for-tat we are in with the chinese, it's not generating a huge amount of negativity for the economy. neither economy is going to suffer.

it is going to create confusion in the supply chain. in the end, we will be ok. the markets are getting their head around that. the headline did not tell us to badly. the dollar dropped and rebounded. we are back to where we started. where is the safe haven and currency? i'm not sure i know anymore? brad: that's a very good question. the market tends to pick them based on what the emergency of the day is. the yen is classically a safe haven, the swiss. rise, dollar continues to the u.s. dollar is going to remain the preferred safe haven. becausewill still be you get a lot of repatriation flows from japanese locals.

-- thee with us with swiss. david: thank you so much for being with us today. minutes away from getting the job report. i won't ask you for the number. what i do want to know is what is not -- one of her you're looking at. alan: i care about labor force. last week we saw a big jump in labor force. i would like to see if that continues. --or force protection participation has been stable. i like to see if we are going to see workers coming back to the labor force. that provides an extra cushion which allows the fed to move more slowly. alix: they're different explanations to people coming back in.

what did your work show? alan: fewer people are retiring it. fewer people are leaving the labor force. we don't see people coming back. we see some people who been out of work come back, not many come back through unemployment. total, we see the a continued slowdown in the transition from being back in the labor force. fewer people are leaving. david: are they staying in the labor force longer because they live longer and feel better? or do they make less money and they don't have a retirement savings? alan: there is a lot of both of that. the group that has done well in the economy is healthy as they get older. they stay in longer. the group that can't afford to retire are staying in the labor force longer.

there is some of both. alix: alan is sticking with us. we are about a minute away from the jobs report. points off are up 18 the lows of the session. has dataess in europe rolling. retail sales are sluggish. that's why the dax is down. stronger dollar story. you have a little bit of a safe open -- haven risk coming in. you see buying in the treasury market into the jobs number. 280 is heavy on the 10 year. the vix is staying elevated, up i one. -- by one. the question is how do you manage risk heading into the jobs number and a weekend where anything can happen?

is number we are looking for 185,000 jobs. ?ill we get that let's go to michael mckee outside the labor department with the numbers. miss, justbig 103,000 jobs created, the fewest since september. not only that, january and february are revised lower by 50,000. unemployment stays at 4.1%. the one bright spot that we do see is average hourly earnings is up .3%. takeout supervisors, the people on the factory floor so wages up 2.4%. the biggest gains were in manufacturing and health services. factory jobs are boosting wages. the major job in february for

15,000ction is a loss of construction jobs. the big jump in the labor force reversed. the labor force shrinks by 153,000. no jobs were created in the coal mining. the medical fabricators were hiring, 8800 jobs and there. this is no jobs report this president is going to between about. thanks very much. we will come back to you. allen, every single month is a solid report. alan: this is what we could expect. is a reasonable report. we should see job growth slowing down. the giveback is what i had been expecting. thatage growth is a sign the job market is getting tight.

this is the kind of report we should be looking for. it shows you how volatile things are. last month was the opposite. i think the markets will respond to this report because it was such a big miss. it suggests we are starting to get some limits and that's going to be a constraint on growth. i think there will be a reaction to this. it's the kind of report we should be looking at going forward. david: we are putting up market reactions to it. up.bonds seem to be are moving lower on the dollar dropped like a stone. you have a nice bit in gold. this is report the fed will take notice of. it suggests we see the restrictions of the job market coming to the fore. the labor force did not grow in the wage number will get their

attention. only the highlight, 103,000 jobs were added in march and the unemployment rate stays steady. it's a disappointment in the market. tom: bloomberg television worldwide, good morning. william gross is with us. you take those moving averages, do you look at them? and a give caution two-month payroll revision of -50. as it a better report than that? bill: it's lousy. the moving averages too many. i do think this is a week report.

consideration,ey .3 is what was expected. that averages down to .2. that isn't much change. i would think this makes for more caution in light of the global trade situation we see. we are just going to have to see. i think the fed it will be cautious going forward. i've always thought about a one or two. ,avid: if we got wage growth you've got to take inflation out of that to get your real adjusted wage growth. do we have inflation-adjusted wage growth? bill: it doesn't sound like we have much. that's an interesting chart in front of me. david: it looks so good on radio. it's gorgeous.

bill, continue. 1980, real wages of flatlined. output has basically doubled. where his that productivity gone to? it hasn't gone to wages. goal is to get wages up and the inflation rate at 2% or more, i don't think it's doing much of a job. this.an: you talk with it's going to see it pay off. we have a appetite ticket. all of the downside seems to be in equities. can you explain why you think that is? bill: high-yield is doing ok. high-yield tends to have volatility.

high-yield tends to have a vix related volatility of about five, a quarter of what the stock market does. it is a slow-moving type of average. investors weigh on high-yield to see the number of defaults going forward. they've been relatively benign. say in addition to that in things making the short workout over the past month or so is the global trade situation and economic problems that higher interest rates place on low quality corporate credit. forces the credit wider. jonathan: what i'm trying to ask is is there a more optimal way of expressing this hit against risk appetite away from credit into equities were the volatility is contained and

isolated. bill: it may be contained i guess. it's hard for me to make that description. it's a little sophisticated, but puts,lling calls and which is the benchmark for the high-yield market. it to the extent that it doesn't move six basis points one way or another. expecting high-yield to gradually move higher. if it doesn't move lower, then it pays off. tom: bill gross is with us. i do want to turn to the politics in financial theory and economic theory. i'm going to cut to the chase. i guess you are a critical what the president is saying. what does he most get wrong?

bill: he gets the trade deficit wrong. as most economists will affirm is the result of overconsumption and under saving on the part of the united states. our savings ratio is down to 2%. 3% isade deficit of basically relatively high. we like to buy things and not saved. we will have a trade deficit because we buy things and if we can't buy enough we buy overseas. that doesn't mean we aren't being gamed isom countries in terms of tariffs or technology or cheaper goods and services. mean there is little way to change the situation by imposing david:. what do you made from larry kudlow?

he's going to be here in about 45 minutes. what does lawrence kudlow and other free traders, even secretary ross, what do they need to do to stop the discourse that has a political tinge. we all understand his angle on that. china, whatect on does kudlow need to do to cap start that process this weekend? calm theneeds to verbal tweeting down. thateds to acknowledge trump is a negotiator and that's part of his process, to go to extremes like he did last night. is there a semblance of truth to that? 100 billionbe behind that?

market, there are risk premiums. verbalization and tweeting on the part of trade. you have real tariffs being imposed. that raises the equity premium. it for prices. it raises and 4% in terms of the stock market. david: that was bill gross talking with tom keene and jonathan ferro. up, we will talk to the ceo of a job matching startup. it he's coming up next. this is bloomberg. ♪

kaylee: the coming up in the next hour, 30 kudlow, the national economic council director. now to your business flash, the privacy crisis is starting to head facebook's revenue. chief operating officer sheryl sandberg said some advertisers have curtailed spending. they are trying to reassure customers about building privacy into the system. japan is concentrated a deal for a british drugmaker. not an obstacle.

as $50d be worth as much billion. the pentagon has told like he's market of find ways to reduce the estimate to own and operate the jet. that's according to the defense department. bloomberg reported the air force may have to cut its purchases by one third of it cannot reduce support costs by 38%. that is your bloomberg business flash. david: u.s. employers added 103,000 jobs in march. earnings came in at 2.7% in the jobless rate held at 4.1%. it was a disappointment. editor andnow is the michael mckee is still with us from the labor department. let's start with the equity target. : we were down a lot more.

we had that big way to blow out the couple of months ago, you saw the market rally because there was an expectation that would get the fed off the ledge. the story then was we had a lot of job growth, but the wage growth wasn't as high as people thought. we're seeing that flip today. the jobs growth isn't as strong, but we see what a that could be giving people a reason to think that might be enough to get the fed to walk it back. they more concern what this does for the economy, or what it means for what the fed might do? there's anyo think real doubt about the strength of the economy for the intermediate term. it's about what powell and the fed are going to do. are their numbers in this that changes their view? alix: we will get some data on that later.

mr. powell is speaking in chicago this afternoon. what will be the rhetoric? much he's not going to see . if the fed doesn't like to look at one number and say it means much. we are two months away from the next decision that could result in a rate increase. they will talk more about the overall strength of the economy, which is pretty good. we might bp geeking it but were not going down much. we didn't see a lot of job creation and we didn't see a lot of job loss either, except in by the weather. companies can't find workers, is it because they are at the end of what they need to hire? that's what the fed is going to be looking for. alix: in terms of job growth overall, you are looking at a 1.8% pace. to make the fed

it continue to move slowly. mike: they look at a long time out. they are looking at a forecast of what is going to happen. there is a one-month wobble, that doesn't change the long-term judiciary. wages are still going up very slowly. the unemployment rate for staying steady. it fits their model. three ratedel said hikes, you are still within those and you're probably still going to get them. alix: it is moving off the movement and we are at neutral. equity markets are moving on its own. aanks very much, it was pleasure to talk to. i want to dig deeper into the labor market, millennials. according to the bureau of labor statistics, in the last five

years for millennials, there's an increase in the employment level. in spite of a good macro economy, they face the challenge of finding a job. join us from los angeles is patrick jones, the founder. it's a startup company that collects millennial career seekers to jobs. what is the market like a fun graduating college right now? patrick: good morning. the job market right now is pretty robust. when you look at the macro people, first time entry-level workers who don't have a lot of experience, you want to put that potential on them. they have a very challenging job market through underemployment. one of the numbers that's difficult to unpack is funny of students that look across the stage with a degree will end up in a job, but it won't be

commensurate with the investment they made in getting that degree. number is around 40% in spite of the good job market that exists today and through the recession leading up to today. that's a challenge if you are loading up on debt with a high expectation that having attained this degree i will have a robust paying job opportunity as a result. david: how much of that problem is because they don't have the right skills as opposed to they can't find the right place? in the: once interesting work we've been engaged in with this in the conversations we are , here with young people in california it's not a function of skill, is what employers look at readiness. it's not a sufficient proxy for what employers really want from

young people, which is high initiative, a level of asmunication that you hear soft skills. a lot of smart young people are coming out of college, but they are not quite ready to compete with the productivity demands and the communication demands of the quick learning demands of the work place requires of them. alix: i want to get your thoughts on this. mike: the interesting thing is if you have a college degree, you have a better chance of getting a job. the unemployment rate for people with a college degree is 22%. -- 2.2%. they have a much better shot at getting a job. with the labor force the way it is, employers struggling to find workers, it's getting to be a better environment coming out of college. they need people. if they can't find older

workers, they will give the younger people a shot. 103%e adding enough jobs, is probably more than we need to absorb the new entrance into the workforce. alix: that's for your business comes in. you helped place people. what is your success rate? patrick: the success rate is pretty good. process isme and the we are an innovation above the average job board. people are looking for predictive attributes of performance and success. we are using analytics to predict the talent to help match students regardless of their degree. we have a particular focus on liberal arts students because they have the hardest time

translating their degree into a job function. we are excited about the results so far. betave another meaningful trial at ucla this quarter. we are excited about the breath of companies we are connecting these kids too. alix: great perspective. thanks for sticking around with us. coming up, the russian sanctions keep coming. they are asking 20 on the list. bloomberg users can interact with the church shown on -- charts shown on this program. this is bloomberg. ♪

alix: i am watching russia.

sanctions on a seven oligarchs and 17 officials. this is the big list for you. does this count? david: this is a big step. everyone has been saying wire to going against the oligarchs? until you go after the individuals, he is britain's favorite industrialist. he owns a lot of the power business. they are saying they have to do they want to get serious on russia. they've got to go after the people close to him. marketou do see reaction. the ruble has been in the doghouse since february. it is having a reaction in the currency market. with donaldare this trump saying he will meet with put in? david: this is what the u.k. has

not done yet. if you really want to get tough, this is what you have to do. they have invested a lot in real estate in london. step for theor trump administration. alix: with the jobs numbers are disappointed in the market reaction we see, a weaker dollar is coming in. on monday, we are traveling. there in atlanta, one of fastest-growing business subs in the country. we have a spectacular list of fortune 500 company. this is bloomberg. ♪

♪ jonathan: from new york city, i'm jonathan ferro. this is the countdown to the open. ♪

jonathan: coming up, wages come in under the line fitting the fed's slow and steady model. the trump administration considering tariffs on another $100 billion of goods. stock markets snapping back following a three-day winning streak. 30 minutes away from the cash open. the story looks like this, futures still soft but way off the overnight session lows. 6/10 of 1%. 1/10dollar up by not even of 1%. yields down three basis points on the u.s. 10 year. that is where we begin with the payroll report, the economy missing economists' estimates.